Tag: Objectives

What is the value of marketing?

Marketing professionals are always under pressure to add value to an organisation’s brand or identity.  But what does adding value look like?  The answer is that the definition of value depends on the type of organisation and the developmental stage of that organisation.  If you are going to measure the success of your marketing activity on the addition of value, you need to define the measures of value to be used from the outset.

For many businesses the sole measure of marketing success is financial return on investment.  Such a measure is important but you should consider the wider aspects of value in measuring marketing success.  That could mean a wide range of results including increasing consumer advocacy, the expansion of your product or service range, increasing the number and types of distribution channel used by your organisation or even by changing your organisational structure.

In the latest edition of Catalyst, the Chartered Institute of Marketing’s quarterly magazine, several different organisations give examples of the value of marketing to their business:

  1. The first example is a small family business which makes curry sauces.  For years the owners of the company were wholly focused on getting their products into shops.  The focus was on the place and product elements of the marketing mix and other mix factors such as promotion, price, process and physical evidence were all but excluded.  In 2016, the firm’s proprietors decided to take a wider view of their marketing activities.  They wanted to develop a brand identity and grow beyond their existing distribution chain.  To develop the brand, they found they needed to tell their brand story more effectively and they needed to develop a consumer focus.  By analysing the response from their customers they found that their business was seen as a fun, family brand with a tasty product.  To engage with their consumers, the firm developed a range of promotional materials focused on their fun image.  They were also able to use the responses from their customer survey as evidence in achieving a distribution deal with a major supermarket chain.  For this business marketing success wasn’t just improved financial returns, it was a closer link to their customer base, increased distribution and the creation of a brand identity.
  2. The second example was a major arts and entertainment venue.  This venue contained museums, a theatre, retail units, bars and coffee shops.  Each of these activities were used by different customer segments. Each group of customers had different value expectations.  Using strategic marketing plans, the venue was able to develop distinct strategies for different groups of target customers.  The management of the venue had the perception that customers came to their venue to see a particular piece of art or a particular show.  Market research showed that there was a commonality between different customer segments, that they wanted to go out to the venue and have a good time.  Marketing value to this organisation was the development of closer ties to its varied customer base and the development of feedback systems to ensure that what was offered by the venue met the expectations of visitors.
  3. The third example given in Catalyst was a publisher of academic textbooks.  Marketing told this business that their client base differed from its consumer base.  The firm marketed its books to academics and saw itself as part of the academic community.  However, it was undergraduate students who were the consumers of its products and services.  The firm therefore had to produce texts which academics would refer as standard texts for their students but which also met the educational expectations of those students.  The organisation found that different marketing channels were appropriate for different academic sectors.  Marketing value to this business was the ability to widen their communications strategy and to match the communication expectations of different recipient segments.
  4. The final example is a firm which produces virtual reality software for industry.  for many years, this organisation saw its success as the success of its customers.  However, management realised that they were good at telling other people’s story and not their own.  By applying strategic marketing, the firm was able to redefine itself in the market.  It was able to focus on the critical parts of its business and to discount areas which were no longer relevant.  This led to a complete reorganisation of the business’s structure to better match its new priorities.

The above examples clearly show that marketing value and success are not simply a matter of financial return.  There are a wide range of non-financial measures which define marketing success.

 

Defining marketing and why projects fail

I was chatting with a fellow member of the federation of Small Businesses at a recent networking event.  He mentioned that he had been at a talk given by the owner of a successful small business who commented that she had built her business without doing any marketing.  This was a statement which I found incredulous.

I suspect the business owner giving the talk was incorrectly defining marketing.  What she meant was that she had built her business without the use of print or television advertising.  If it is the business I am thinking of, I know she has used social media and the internet,  I also know she has used sales representatives and entered into arrangements with beauty salons to promote her products.  She may not have used traditional advertising but she has used alternative promotional channels AND THAT IS ONLY A SMALL PART OF HER MARKETING MIX.

In his book Principles of Marketing, a standard marketing text for graduates, Philip Kotler describes the forms of marketing used by businesses as they grow.

The first stage is described by Kotler as entrepreneurial marketing.  This is a company living by its wits.  Marketing activity is done on a whim, often based as the perceptions of market conditions in the mind of the business owner.  There is a considerable use of guerrilla and surprise marketing.  Marketing activity isn’t planned; it takes as and when the business proprietor believes it to be necessary.

As a business grows it is no longer possible to exist solely on unplanned marketing activities.  A business moves to a state of formulated marketing.  the scale of the business and the need to satisfy the needs of wider stakeholder groups requires a structured approach to marketing.  This is the standard marketing process in most businesses.

For very large businesses, there is still a requirement to be fleet of foot and not to be predictable.  Kotler suggests that these businesses use an ‘intrapreneurial’ approach to marketing.  He uses as an example Virgin, the conglomerate owned by Richard Branson.

Virgin is not just big brands such as Virgin Music and Virgin Atlantic, it is made up of over 200 separate businesses and several hundred legal entities.  Branson encourages his staff to come up with new business ideas within the group umbrella.  He is constantly searching for new market opportunities and new business concepts.  Not all of these succeed and several only exist in the short term, such as Virgin Cola, but several grow into significant market players e.g. Virgin Money and Virgin Holidays.

By encouraging his employees to act as entrepreneurs within his company, Branson can adapt to new markets and new technologies quicker than his competitors.  He wants his staff to act as market disruptors.  If Virgin is constantly changing the rules of the market, it is more difficult for his competitors to gain a commercial advantage. Virgin is also made up of linked but separate commercial units.  This means that if one unit fails, there is a smaller risk of that failure being a contagion affecting other business units.

Clearly, the CEO who was giving the talk was at Kotler’s stage one.  If she is to grow to a business which can compete with the multi-nationals which dominate her particular market, she may need to take a leaf out of Virgin’s book.

On a separate matter, I have being doing some CPD in relation to my project management skills and was taking notes from the book Project Management by Dennis Lock.  Again, this is a standard text for business and engineering graduates.

In the book, Lock states that a major reason for project failure is a poor project definition.  He lists ten reasons why inappropriate project definitions can mean that a project can fail at the outset.  These are:

  1. The project scope is not clearly stated and understood
  2. Vague technical requirements
  3. Estimates of cost, timescale and expected benefits are over-optimistic
  4. The risk assessment is incomplete or flawed
  5. The intended project strategy is inappropriate
  6. Insufficient regard is given to cash flows and the provision of funds
  7. The interests and concerns of stakeholders are not taken into account
  8. Undue regard is given to the motivations of people undertaking the project
  9. Insufficient regard is given to the reactions of those affected by the project by changes imposed upon them
  10. Politics and personal goals overtake the aims of the project.

Reading Lock’s list, I couldn’t help thinking of Brexit.  In particular the comments of Sir Amyas Morse, the head of the National Audit Office who has complained that the UK government proposals for leaving the European Union are “vague” and that there is a lack of cross-departmental work in government which could “crack open Brexit like the first tap on a chocolate orange”.

I concur,  the UK approach to Brexit appears so slapdash, it will likely cause severe damage to the UK economy and be disastrous for the UK business community.

Ten Sources of Competitive Advantage

In The Origin of Species by Natural Selection, published in 1859, Charles Darwin wrote:

“The most successful species are those which adapt to the changing environment.  The most successful individuals are those with the greatest competitive advantage over others.”

Darwin’s words apply equally if you replace the word individuals with businesses. The strategic tool used in business to develop and sustain competitive advantages is marketing.

Michael Porter proposed that a superior competitive advantage grows out of the value the firm is able to create from its customers which exceeds the cost of creating that competitive advantage.  ‘Value’ is what the customer is willing to pay.  ‘Superior’ stems from offering lower prices compared to your competitors for equivalent benefits of by providing greater benefits which are more than offset by a higher price.

Porter suggests that value chain analysis should be used to identify where customers see value.  The firm’s scarce resources can then be targeted in those areas.  He argues there are five key areas where competitive advantages can be developed:

  1. When you bring in raw materials: so a chef may develop competitive advantage by only using organic ingredients.
  2. When those raw materials are processed and modified; so our chef cooks them in a particularly skilful or special way
  3. Through the distribution of the modified raw materials: which has seen the rise of services such as Deliveroo, Ocado and Just Eat.
  4. In the marketing of those finished products;  the development of a specific marketing mix
  5. Through customer services both before and after sale.

The following anonymous quote also applies:

“The only truly sustainable competitive advantage comes from out-innovating the competition”.

Every time a product-market combination changes, so does the relative strengths and weaknesses of market actors.

Often the problem is not gaining a competitive advantage but sustaining it over time.  Many firms are first to market with a new technology, product or business model only to be overtaken by more agile competitors.  For example Tesco was the first cut price supermarket but it lost its focus on cost reduction.  The arrival of Lidl and Aldi in the UK supermarket environment has placed significant pressure on Tesco and other discount retailers such as Asda.  If you are following a low-cost strategy you need to be ruthless in driving costs from your business.  If that focus is lost you will fail.  A prime example was Kwiksave.

Davidson (1987|) said:

“Competitive advantage is achieved when you do something better than your competitors.  I you do one thing better than competitors or a number of smaller advantage can be combined, you have an exploitable competitive advantage.  One or more competitive advantages are usually necessary in order to develop a winning strategy and that this in turn should enable a company to achieve above average growth and profits”

Davidson then identified what he believed to be the ten most significant potential competitive advantages.

  1. A superior product or service offer
  2. A perceived advantage or superiority in the minds of consumers (the sale of bottled water or designer clothes).
  3. Low-cost operations through high productivity, low overheads etc.
  4. Global experience, skills or coverage (e.g. Coca Cola or McDonald’s)
  5. Legal advantages such as intellectual property rights
  6. Superior contacts and relationships with both internal and external stakeholders
  7. Economies of scale
  8. An offensive attitude; a competitive toughness and a determination to win
  9. Superior competencies in areas like design, distribution and professional ability
  10. Superior assets e.g. property and distribution outlets.  In recent years many firms have invested in their distribution and warehousing systems often introducing sophisticated robotic technologies.

To Davidson’s ten areas of competitive advantage you can add:

  • Intellectual capital – developing a strong knowledge base across your business
  • A willingness to innovate:  Virgin Group consists of over 200 companies only a small number of which are well-known.  Virgin places great importance on innovation.  At the current time Elon Musk’s Tesla are developing a hyper-loop mass transportation system, Uber are investing in flying taxis and Amazon are looking at automated drones for deliveries.
  • Investing in market research to get a better understanding of costs and target market attitudes
  • Superior technologies: such as the use of robots and cloud computing.
  • Complex selling processes. Microsoft are currently investing heavily in the promotion of Office 365.  Instead of consumers and businesses buying the software outright, it is sold on a subscription basis.  Microsoft then receive a regular injection to their cash flow.
  • There is an advantage in having the ability to be the first into a market (although this may not be sustainable).  You must look at your speed to market.
  • The development of a brand image and reputation (e.g. BMW as the ultimate driving experience)
  • Focusing on giving excellent service to your customers (“not customer satisfaction but customer delight”)
  • Efficient supply chain management.

The critical factor in any successful business is the creation of strong competitive advantages and sustaining them over time.  Far to many businesses are either first to market or first to innovate but lose any advantages they develop by concentrating of financial objectives over their wider vision.

Developing Competitive Advantage

In my home town, there are two independent cinemas.  One has taken the route of Porter’s niche generic strategy and concentrates on art house cinema.  The other, a family-owned cinema has taken a different strategic route, it shows the same range of films as the big chains but it does so in such a way as to give it a unique market presence.  It thrives by taking its unique attributes and using them to create points of competitive advantage.

The aim of marketing is to create value for customers and, in return to capture value from them.  Companies with effective marketing strategies win and keep customers by understanding their needs, by developing customer-focused marketing programmes and by building relationships with those customers.

There are three stages involved in the creation of competitive advantage:

  1. Identifying your competitors,
  2. develop competitive strategies,
  3. balance your customer orientation against your competitor orientation.

The family owned cinema competes directly against the large multiplex chains. He has analysed the market and regularly looks for changes in the way the big cinema chains present their products and services.  These are his direct competitors.  But he has gone further.

Many smaller firms have competitor myopia.  They carefully monitor their direct competition and they forget about wider latent competitors.  This doesn’t affect only small firms.  Kodak went bankrupt because it concentrated of competitors making 35mm film (such as Fuji and Ilford). Kodak was slow to recognise the rise of digital cameras manufactured by consumer electronics firms (ironic as Kodak effectively invented the digital camera).  Tower Records went bankrupt not because of other discount record stores but because it failed to see the rise of the digital download.  Borders Books went bust because it didn’t anticipate the rise of Amazon and the internet bookshop.

All these firms failed by ignoring the changes in the wider economic environment.  All were killed off by their latent, not their direct competitors.

The owners of the independent cinema didn’t just look at what the multiplex cinema chains were doing.  He recognised that consumers had wider opportunities to use their leisure time.  He wasn’t just competing against other cinemas, he was competing against theatres, bars, sports clubs and music venues.  If he was to survive and thrive he had to create a product which drew consumers away from these other sources of entertainment.

Once you have identified your competitors, you have to assess them.  You need to identify their objectives and their strategy.  You need to identify their strengths and weaknesses and you need to estimate how they will react to your strategy.

The independent cinema saw that the multiplex cinemas were aiming to attract large numbers of consumers simultaneously by offering the same film on multiple screens.  It was effectively the warehousing of entertainment.  Often they offered only the most basic of food options and only offered soft drinks.  The aim was to factory process movie entertainment e.g. consumers were processed through the site, entering the cinema through a large foyer but leaving through a separate exit.  He also found that many multiplexes were located at out of town malls and shopping centres.

Having examined both the direct and latent competition, the cinema owner looked at his business strengths and developed a strategy to use them.  He realised he couldn’t compete head on with the large chains and that he had to do things differently.

His cinema had been built in the 1930sin an art deco style.  It was located in a leafy suburb of the city and there was little off street parking in the vicinity.  His father had carried out some building work to split the large auditorium into three screens; the smallest of which was a fifty seat screening room.

He may have been showing the same product as the multiplexes, mass market blockbusters, but he realised that his venue could do it in a different way.  He installed sofa-like twin seats in his main auditorium.  He opened up a bar at the back of the auditorium so that customers could order drinks at their seats.  He showed double features with an intermission so that consumers could use the bar between films.  The smallest screen could be booked for private parties.  He used the 1930s atmosphere of his venue to build on the image of a golden age of cinema.  Staff would welcome customers to the venue and escort them to their seats.  He offers a wide-range of food and snacks, not just popcorn and nachos.  He was intent on making a visit to the cinema an event, not just an option to take up spare time. Customers are given the ‘red carpet treatment’.

Being in the suburbs, he was also keen to develop his cinema as a community asset.  He runs a cinema club where regular customers can get discounted tickets and the opportunity to see advance screenings.  He runs traditional kid’s Saturday morning film clubs and late night screenings of horror films.  He retains many customers because they see his cinema not just as a commercial venture but as an important community asset.

The family-run cinema also benefits from his competition.  The rise of the multiplex has meant a huge upturn in people going to the cinema.  In the 1970s and 1980s, cinema was in trouble.  Many venues were closing or being converted into bingo halls and nightclubs.  Now more people go to the cinema than in its golden period of the 1930s and 1940s.  The multiplex chains have allowed the development of blockbuster movies often with budgets of over a hundred million dollars.  They have increased total demand for cinemas and have allowed the development of new technologies such as surround sound, high definition and 3D.

When Apple created the Ipad, it was described by some commentators as the ‘Kindle killer’.  They expected Apple’s tablet to destroy the market for Amazon’s e-reader.  Instead, the Ipad increased the demand for tablets hugely.  Apple took the Ipad concept and turned the kindle into a multi use tablet, not just an e-reader and sales rocketed.

The independent cinemas owners worked hard to identify an uncontested market space.  They realised that there is no such thing as a one size fits all marketing strategy.  They also realised that they couldn’t follow a ‘me too’ strategy where they simply copied the strategies of their competitors.  They recognised that they needed to develop different strategies to those of their competitors and to provide a different product option for consumers.

 

What determines your advertising spend?

Determining how much you are going to spend on your marketing communications can be a difficult process.  It is difficult to quantify precisely the amounts needed to complete all the required tasks.  Communications budgets do not fit neatly into accounting practices.  The diversity of communication’s tools available makes it difficult to allocate spending appropriately.  the budget setting process can be less than clear-cut.

There are four main sets of stakeholder in the setting of communications budgets:

  1. The organisation
  2. Communications (advertising) agencies
  3. Media providers (TV companies, publishers)
  4. Production and fulfilment houses

There can be difficulties in the appropriate allocation of budgets between these parties.  Difficulties can be both political and financial.  For example, is your digital marketing spend the responsibility of your marketing team or is it overly influenced by IT professionals who know the technical detail?

Increasingly, in the modern world, there is audience and media fragmentation.  There are now hundreds of television stations, not the three or four of the 1970s.  This means smaller audiences.  In the 1970s it was not unusual for audiences to be ten to fifteen million.  Now an audience of 5 million is seen as high.

Consumers have changing priorities and increasingly, due to the worldwide web, there is a global perspective in marketing.

Over the decades, several methods of assessing communications and other marketing budgets have been developed.  These are added to traditional unscientific methods used in small businesses.

  1. Marginal Analysis – Which compares promotional expenditure with sales and profit margins.  The aim is to find the point where marginal revenue is equal to marginal costs.  At this point profits are maximised.  At a certain point promotional spend does not cause a further increase in sales,  After this point, profit margins will fall because of promotional saturation.  There are many issues with marginal analysis.  It doesn’t take account of your competitors’ reaction to your promotional expenditure.  It assumes that your products are evenly distributed across your market. It also assumes that communications are the only factor affecting sales.
  2. Arbitrary – This is often known as ‘chairperson’s rules’.  The boss sets the communications budget of gut feeling.  Budget is allocated on a guess.  Budgets are allocated ‘on the hoof’.  No attempt is made to consider need, strategy or environmental changes.  No budgets should be set in this way.
  3. Inertia – Communications budgets are always the same.  There is a failure to respond to market and environmental challenges.  Again, this is not a way to set any budget.
  4. Media Multiplier – This recognises changes in the cost of media charges and inflation.  Budgets are changed to account for increases and decreases in these costs.  Such a strategy assumes that marketing strategy never changes.
  5. Percentage of Sales – Communications budgets are set as a percentage of past sales or expected sales e.g. Communications budget is 5% of turnover. This can be a backward-looking strategy and can make no account of sales potential.  The result can be a limiting of your performance.
  6. Affordable – This is often seen as a sophisticated method relatively free of risk.  Each unit of output is allocated a share of the cost of production and a share value-added activity costs such as packaging.  An allowance is made for profits.  What is left over is spent on communications.  This is often used in companies which are product not customer focused.  If your market fluctuates it can be a vague calculation.  It can also lead to new opportunities being missed.

Quantitative approaches to budget setting include:

  1. Objective and Task (often referred to as Zero Budgeting) – The resources required to achieve each objective are determined.  The costs of each of these resources is aggregated to form an overall budget.  The focus of management is the achievement of goals.  Sophisticated monitoring and feedback mechanisms need to be developed.  What is often missed is a strategic focus.  Objective and task can be good for individual campaigns but bad in terms of overall strategy.  It can also result in regular ‘bun fights’ for budget allocation and cause resentment amongst the staff of different departments.  It can be a disaster for staff morale as resentment between teams can develop.  Often Payout Plans need to be developed where two or three future revenues and costs are estimated to ensure budget expenditure is recouped.  Sensitivity analysis is also used to peg back expenditure because costs are larger than expected or sales develop too slowly.  This leads to objectives being changed mid-stream and strategies altered to reduce the payback period.
  2. Competitor Parity – You spend the same percentage of overall budget on your communications as that of your competitors.  This assumes that everyone in the market is the same and that everybody has the same strategy.  You are not necessarily comparing like with like.  This can lead to a ‘me too’ attitude to marketing and it ignores qualitative aspects of communications.
  3. Advertising to Sales Ratio – where you take account of your market share in your advertising spend.  This assumes a direct correlation between advertising and sales.  It also assumes that you can calculate the overall promotional spend of the market as a whole and of your competitors.  By comparing your communications spend to the market average, you can assess whether you have economies of scale or if your communications are working harder for each pound spent.  A/S ratio can be a valuable indicator as to overall communications spend but not the value of individual campaigns.
  4. Share of Voice – This method is commonly used by marketing professionals.  Basically it is a measure of who shouts loudest in the market.  It measures your share of advertising spend (Adspend) as a percentage of what is spent in your market as a whole.  It is often combined with market share.  Where share of voice and share of market are equal, equilibrium is achieved.  In such circumstances, when communications spending is increased, the market share will increase; and vice-versa.  A useful calculation is to compare your share of market with your competitor’s share of voice:
    1. If both are high, the best strategy is to spend on communications to defend your market position
    2. If your competitor’s share of voice is high, but your share of market is low, it is best to find a niche position, to decrease advertising spend and find other ways to promote your products.
    3. If your competitor’s share of voice is low and your share of market high, you need to hold your position and moderate your advertising spend to maximise income.
    4. Where both are low, there is the opportunity to attack your competitor’s market position through adspend and take advantage of growth opportunities.

Where Share of Voice is greater than Share of Market, investment brands are defined.  These may be new products or products in the growth stage of their lifespan.

Where Share of Voice is less than Market Share, there is opportunity for profit taking.  These may be mature brands and cash cows.

In assessing share of voice, it is important to note:

  1. That new products often require higher communications spending than long-established products.
  2. That smaller brands often have smaller profit margins than larger competitors due to economies of scale and the requirement to have a higher proportion of adspend to sales.
  3. That large brands are often milked for profits and their share of voice is regularly smaller than their market share.

Marketing success is often measured through Share of Voice as opposed to budget size.  It also has to be remembered that a large proportion of communications spend is used to retain a market position rather than to attract new customers.

In determining the appropriate level of communications spend, you need to take account of:

  1. your organisations structure, strategy, direction and values
  2. your available financial resources
  3. the activities of your competitors and wider market conditions
  4. The economic confidence of consumers and retailers
  5. Your required level of product development and your marketing objectives.

The setting of communications budgets needs a strategic approach.

Think before jumping on the social media bandwagon

Last Thursday, I attended the regular small business networking meeting arranged by my local branch of the Federation of Small Businesses.  By the end of that meeting, I was fuming.  The focus of my anger, that evening’s talk entitled Five Things You Must Do Now on Social Media.

I was angry at the length of the talk; at these events contributors are supposed to give presentation of around 20 minutes, the speaker talked for over an hour.  However, I was even angrier at the content of the presentation.

The speaker, like me, was a member of the Chartered Institute of Marketing.  Yet in her talk on the latest hot topics in social media marketing there was not a single mention of strategy, of objectives, of monitoring activity or of return on investment.  There was also no mention of the potential hazards of using social media as a marketing communications channel.

I therefore dug out my textbooks and looked at what experts in digital marketing had to say on the subject of social media.  I referred to Dave Chaffey’s book Digital Marketing (Dave also runs the excellent Smart Insights website) and the SOSTAC method advocated by PR Smith.  These two individuals are probably the most renowned academics working in the field of digital marketing.

PR Smith uses the acronym SOSTAC to define the process of creating a digital marketing plan.  In fact, it is such a useful system of planning development, it can be used across marketing planning.  It stands for Situation, Objectives, Strategy, Tactics, Action, Control.

Social Media is a single communications channel.  It is a tactic not a strategy.  It seems that some operating in the field of social media marketing have forgotten this and treat their speciality as an overarching marketing strategy.  It isn’t and it should not be treated as such.  By all means use social media marketing in your business but that activity should be the result of a careful analysis of your businesses market position and the attributes of your target audience.  So,if I was promoting a fashion brand to teenagers, social media would be a priority communications channel and I would likely want to invest heavily in it.  If I was promoting stair lifts to pensioners, I would prioritise more traditional forms of marketing communication.  It seems some marketers operating in the field of social media have developed a myopic view of communications which may be of little use to many small businesses.

Then there was the title of the talk, “Things you MUST do”.  Sorry, but that is plain wrong.  It infers that the activities MUST be carried out by all businesses.  Surely a better approach is to carry out those activities which best fit your business model, your client base and your available resources.

The speaker had previously worked for a major motor car manufacturer and had now set up their own social media consultancy.  The talk was to small businesses most of whom were either one-man-bands or had fewer than five employees.  There seemed to be little recognition from the speaker as to the resources available to the speaker’s former employer than to the attending audience.

I will quickly list the five things the speaker highlighted:

  1. Using Live Video
  2. Becoming a LinkedIn all-star
  3. Asking for emails
  4. Spending some money as organic reach was dying on social media sites
  5. Getting creative.

The idea that small businesses would be able to produce suitable Live Video seemed a stretch.  Having organised press conferences and media events, I can attest to how difficult it can be to produce successful content on a recorded basis, let alone live.  Sometimes the most confident CEO can turn into a blathering idiot the moment a camera is thrust in their face or a microphone pushed under their nose.  If you are planning such an event, it is always best to have someone with sufficient media training to run the event and to prompt nervous participants.  In my old career, I worked with the likes of Lynn Faulds Wood, John Stapleton and Carol Smylie.  These are broadcast journalists and presenters who could expertly direct those not used to such exposure through an interview.  This is an important skill which many small business people will not have.

The live video idea was mentioned for things like product demonstrations and launches.  It is always worth remembering Murphy’s Law; if anything can go wrong, it will.  I have seen hilarious examples of content from product demonstrations that have gone horribly wrong.  At least those will be remembered.  What is far worse are dull, boring demonstrations which do not stick in the mind.

Live video content is not as easy as it appears, particularly if you are doing an activity such as product demonstration.  Channels such as QVC tend to use employed product demonstrators to give a professional gloss to product launches and ‘how to guides’.

Dee et Al. (2007) argued that social media was increasingly important in influencing consumer perceptions about brands.  They argued that there was a big difference in what was appropriate content depending on factors such as age demographics, gender and the type of product.  They found very few product types which had popularity in all market segments e.g. movies, cars and restaurants.  In short, you need to carefully analyse your target customer segments and design appropriate content.

Microsoft, who part own Facebook, increasingly expect businesses using that platform to pay for the promotion of commercial content.  They are also adamant that consumers must be able to interact with the brand content.  They advise:

  1.  You must understand your customers motivations for using social media.  That content must match the topics they already discuss and match the life stage of those networking.
  2. You need to express yourself as a brand.  A logo and a brand name are not enough.  You have to develop a brand personality which includes a side of the brand not normally seen.
  3. You must understand the consumers motivations for the use of social media and mirror motivations.
  4. You need to create and maintain good conversations.  Those discussions must resonate with the audience and once started a conversation must be followed through. I follow a number of small business networking groups on twitter.  the bad ones are where people end up tweeting about their dogs, the weather or their holidays AND DON’T STICK TO THE SUBJECT OF THEIR BUSINESS.
  5. You have to empower participants.  Let those who network with you express themselves through your brand.  This could be through the use of apps or widgets
  6. You need to identify and nurture online brand advocates and use reputation management tools.
  7. You have to follow the golden rules of Social media
    1. Behave like a social networker
    2. Be creative
    3. Be honest
    4. Be individual
    5. Be conscious of your audience
    6. Update regularly

One firm which is at the forefront of the use of social media for marketing is Ugg, the sheepskin boot manufacturer.  They identify brand fans and give them opportunities to work for Ugg.  They use celebrities as brand advocates and they pay a number of bloggers and vloggers to develop a brand community.  These bloggers don’t only write about Ugg products but they discuss wider ‘youth’ issues such as music and wider fashion trends.

Ugg are very careful that the brand advocates match their brand image.  They were furious when Oprah Winfrey promoted their boots on her television channel as she was outside their young fashion-conscious demographic.

In Digital Marketing, Dave Chaffey discusses the advantages and disadvantages of using social media to develop viral marketing campaigns.

He argues that social media, used correctly, can be a relatively inexpensive viral agent to speak to a large audience and that it can be a good tool for developing customer referral through electronic word of mouth.  However, he warns that for that activity to be truly productive you already need to have the ear of major market influencers.  This can be evidenced in Ugg’s use of celebrities and paid bloggers.

Chaffey also argue that social media can be a high risk marketing communications strategy.  It requires significant initial investment to develop the ‘viral agent’ and to seed the communications programme.

He also warns that many users of social media see the use of portals such as Twitter for commercial purposes as a misappropriation.  People use social media to socialise and during such times do not want to be pestered by brands.

It is often difficult to develop appropriate content for social media channels.  It has to engage the audience and encourage sharing.

Then there is the need to seed the viral activity through the use of key influencers,  This can backfire.  For example, several sports personalities have received criticism when they have promoted products through social media without mentioning that they are being paid to do so.

If a piece of social media goes viral, it can break one of two ways.  It can generate a positive reaction or it can be negative.  It is extremely difficult to judge which of these two paths a viral campaign will follow.  There may well be a need for ongoing and vigilant reputation management.

In conclusion, on its own, social media may not be a sufficient strategy for small businesses.  You need to back it up with more traditional marketing communications activities.  You need to look at your customer engagement ladder.  For many businesses, social media should be focussed on the retention of existing customers than on new customer acquisition.  At best, it is a route to turn existing regular customers into brand advocates.

Social media and other online activities only work well when they are part of a wider marketing communications mix AND you have the time and resources to commit to the social media channel.  You need to decide whether social media is going to be a continuous activity or whether it is going to be part of individual campaigns.  If continuous significant ongoing investment is required.  You also need to balance investment between individual online tools and monitor the return that the investment brings in.  There is no point in having a hugely successful piece of online content if nobody buys your product.

I believe many smaller businesses see social media as a quick and easy fix to their promotional activities.  It isn’t.  It is a tactic which requires careful consideration of viral content and you need to attract key social media influencers.  If those things are not achieved, intensive investment in social media can be a huge waste of time, money and effort.

How to assess a strategic marketing plan

How do you assess whether a proposed marketing plan is appropriate for your business?

Well the answer depends on four factors:

  1.  Your target market
  2.  Your core positioning
  3.  Your price positioning
  4.  Your total value proposition
  5.  Your distribution strategy
  6.  Your communication strategy

Many managers still see their target market as everybody.  That may be the case for a firm who produces staple goods but even they may limit their marketing activity.  for example Coca Cola do not see children as a target market (even though children consume their products).  If you are trying to be ‘all things to all men’, you may be wasting valuable resources and not making the most of your specific corporate attributes.

It is important that you base your marketing activity on one or two core attributes which position you within the market.  For example, Volvo promote safety, Rolls Royce highlight luxury and BMW advance the core attribute of driving experience; IBM focus on service quality and Aldi on value for money.  All these brands are positioned on one core attribute.  Some firms have more than one core attribute but no more than two or three attributes.

There are various price positioning strategies:

  1. More for more – For example, BMW cars are sold at a price premium but consumers can expect higher quality engineering and service provision.  A family friend regularly purchased a Mercedes from a dealership near Murrayfield.  They arranged to service and valet his vehicle whilst he attended Scotland Rugby internationals.
  2. More for the same – Pepsi sell their Cola at a similar price to that of Coca Cola but in larger bottles.
  3. The same for less – Aldi advertises that its own brand products are of a similar quality to that of high profile brands but at a lower cost.
  4. Less for much less – Used by no frills car brands.  You may not get electric windows or air conditioning in your car but you pay a cheap price.
  5. More for less – Used by companies using loss leader strategies, for example BOGOF (Buy one get one free).

Total value proposition is the answer to the question ‘why should I buy from you?’.  It is your product’s core attribute together with those attributes which surround it (halo attributes such as service provision and packaging).  It is the factors which ensure that consumers buy your products rather than those of your competitors.

Your distribution strategy is how your goods reach your target customer.  For example, the rise of internet banking has seen the closure of high street branches; the post office has moved into acting as a delivery agent for direct mail as email has reduced letter postage.

Your communication strategy is how you tell your target customer that your goods are available.  What is the strategic objective of each form of communication you use?  How are communications budgets to be allocated.  Are you aiming to elicit an emotional or a rational response from your target market?

Each of these five factors must be part of a consistent, joined-up strategy.

Ask yourself the following questions to assess whether  proposed marketing plan is sound:

  1.  Does it include new and exciting opportunities?
  2.  Does it highlight significant threats?
  3.  Does it include clearly defined target markets?
  4.  Will consumers in the target market see your offer as superior?
  5.  Is the proposed strategy consistent and does it use the appropriate marketing tools?
  6.  What is the probability of the plan meeting its declared objectives?
  7. What would be the outcome if you only gave 80% of the requested resources to the plan?
  8. What would the marketing plan be if you gave your marketing strategist 120% of the requested resources?

Mission, vision, aims and objectives

A strategic marketing plan aims to address four questions in relation to an organisation:

  • Where are we now?
  • Where would we like to be?
  • How do we get there? and
  • Are we on course to meet that target

So a strategic marketing plan should:

  • Define the ‘mission’ of the business
  • Audit the existing market
  • Identify strengths and weaknesses
  • Set objectives
  • Develop a core strategy which takes account of target segments through variations in the marketing mix
  • Set timescales and describe control measures

Regarding the first of these actions; defining the business mission, I have come across several organisations who seem confused as to what their mission is.  In many cases they confuse the business mission with their commercial vision.

Ackoff defined the mission of a business as, “A broadly defined, enduring statement that distinguishes a business from others of that type i.e. It must last over time, be specific to the organisation and be a source of differentiation.

Many business mission statements I have read are too generic or they do not accurately define the business and more importantly, its culture and values.

A business mission statement is about the present situation; the ‘here and now’.  A vision statement should represent the future i.e. where you want the business to go not where it is now.

A vision statement is usually short, often a single sentence or phrase.  For example Samsung’s current vision statement, which runs until 2020, is ‘Inspire the world, create the future’.  Lloyd’s Banking group’s vision is ‘To be the best bank for the future’.

Mission statements are usually, but not always longer, running to a couple of paragraphs or a page of bullet points.  A mission statement should:

  • Describe the customer group to be served.
  • Refer to the customer needs to be satisfied.
  • Describe the process through which those needs are to be satisfied.

Google’s mission statement is: “To organise the world’s information and make it universally acceptable and usable”

For many years, Canon Photocopiers mission statement was ‘Beat Xerox’.

Often a mission statement gives wider intent than the physical actions of a company.  For example, Apple’s mission statement makes no mention of the manufacture and sale of computers, phones and digital music players.  It is to “solve customer’s information problems”.

An effective mission statement should:

  • Show a solid understanding of the business.
  • Show the strong personal conviction of the business leader and their motivation.  For example, Disney’s mission statement is to ‘make people happy’ reflecting the motivation of its founder Walt Disney.
  • Create the strategic intent of winning throughout the organisation.  It should build common purpose.
  • Enable success:
    • by giving managers the authority to make strategic decisions without micro-management by senior managers.
    • Senior managers role is to reflect the interests of stakeholders through policy development and monitoring those policies.

An appropriate and accurate mission statement is key to marketing planning.  It defines which opportunities and threats are to be addressed and it defines the boundaries which new opportunities must be set within.

Where a mission statement is either too long, or short, to easily communicate, a marketing plan will often include an elevator pitch.  This is a short description of what a business is about.  It is written with a journey in an elevator.  You get on at the ground floor with another passenger and by the time you get out at your destination you have described your business to that other passenger.

Once you have properly defined your businesses vision and mission, it is time to set aims and objectives.

Aims relate to the long-term and to the business vision.  Samsung’s vision statement related to the decade between 2010 and 2020.  If these aims are met, the organisation will achieve its vision.

Objectives relate to the current business mission.  They are for the shorter-term and should be SMART (Specific, Measurable, Achievable, Realistic, Time-bound).  Often they are set annually and they should be reviewed regularly.

In the sitcom ‘Only Fools and Horses’ one of the character Del Boy’s catchphrases is an example of a very poor business objective:

  • It is not specific.  It does not say how the Trotters are to become millionaires and it usually refers to the latest money-making wheeze or scam.
  • There is a time limit but is it realistic? As Del Boy is usually operating on the margins of bankruptcy, how achievable is it that he will earn a lot of money quickly?
  • There is no indication as to how this target will be monitored e.g. is there any measurement of income on a weekly or monthly basis, measurement of increases in sales or growth in the customer base?

The vision statement, mission statement, aims and SMART objectives are the framework around which a successful marketing strategy, and a successful business are built.