June 2009 Archives

Taking a long trip is like marketing. You need to pick a direction, which will determine what to pack -- shorts and sandals for summer, or coats and gloves for winter -- and who you will meet along the way.
The same is true for marketing. Once you pick a marketing direction, all of your marketing programs need to be aligned to move the company in that direction, which will determine what type of customers you'll pick up along that route.

The importantce of choosing the right strategic marketing direction

Marketing Strategy - Strategic Market Direction To show the importance of picking the right strategic marketing direction and sticking with it, take a look at the history of Sears. For many years Sears was the low price leader for many products that consumers buy.

Not today. Wal-Mart is the low price leader, and Sears is struggling.

What happened to Sears?

During the past 30 years Sears tried several times to change from its successful low-price marketing strategy to an upscale strategy. Each time that Sears added expensive products and changed stores to a sophisticated look, they alienated loyal customer and failed to attract upscale shoppers.

Sears was the Wal-Mart of the '50s and '60s and the largest retailer in the country until the early 1980s. Then the company drifted upwards into the mushy middle. Sears wasn't cheap and it wasn't chic. (Today, Wal-Mart is more than seven times the size of Sears. Furthermore Wal-Mart's net profit margin last year was twice as much as Sears: 3.4% vs. 1.6%.)

At the same time Sam Walton pursued the "low cost leader" strategy that was so successful when Wal-Mart was starting out in rural northwest Arkansas.
Choosing a marketing strategy appropriate for your company starts by analyzing the information you've gathered on your industry, your customers, and your competition.

Identifying market segments and buying motivations

Then, you'll want to consider questions such as:

  • Is your overall industry growing or shrinking?

  • What is your market within that industry?

  • How do you segment that market?

  • What are the buying motivations for each segment?

  • What are your strengths and opportunities in each segment?

  • What is in your product development pipeline for the next several years?

Based on questions like these you can decide how you want to be perceived by customers. In other words, your overall market strategy. There are many potential market strategies you can choose from, but normally one market strategy will result in the highest possible revenue and profits for your unique company.

Pricing products to match customer perceptions

Once you've chosen an overall market strategy you can decide on a pricing strategy that fits. You can't have a "high quality and service" market strategy and the lowest prices. You can't make a profit -- and it will confuse your customers. So, choose a pricing strategy that matches your market segments and competitive environment.
Strategic marketing mind map overview
Once you have your market strategy and a pricing strategy, you can create a reasonable budget for revenue, expenses, and profit.

I like to capture these decisions in a marketing strategy mind map using a product such as SmartDraw and link it to detailed documents and spreadsheets. This helps senior executives at a company easily see the big picture, then interactively drill down to the their detailed analysis and decisions.

Planning for marketing programs

Then, with a sound marketing strategy and budget, you can then develop detailed plans for each of your marketing programs -- from marketing communications to sales, distribution, and service.

A good marketing strategy is based on good data. That's why it's important to start the strategic marketing planning process with data about your industry and specific market, and about your customers.

Industry and market data

When your industry is growing, your company is probably growing, too. And, when your industry is starting to trend downward, it's time to update your strategic marketing plan to reduce the impact of your industry contracting. There are several types of data that can provide insights into how your industry is trending: Market analytics for strategic marketing plan mind map
  • Political and other external influences
  • Macro economic trends
  • Industry size and growth
  • Competitor size and growth

Customer behavior data

Most companies have an abundance of data about their customers that goes unused, such as:
  • Web analytics data on how visitors perform on your Web site
  • Customer purchase history on which products are re-ordered with other products, and which types of customers buy which products
  • Won-lost data on which prospects did not purchase from your company, and whether a competitor received the order
In addition to the internal data about customers, data needs to be gathered on non-customers, too. Unless your company's market share is over 50%, more people buy from competitors than from you. This means non-customers hold the key to your company's future growth, so research the market to learn how to meet the needs of those potential customers. There are two ways to obtain this market research data:
  • Primary research - Hire a market research firm to contact a representative sample of the market.
  • Secondary research - Find market research that's been published about the company's markets or about a market segment.
Despite their names, secondary research is done first, and primary research is done second.

Online monitoring

Buyers are now shifting from relying on manufacturers for product information to participating in online conversations about a company's products.

Marketers now need to track user generated content on all of the social media sites, forums, blogs, video sharing sites, and other ways the Internet distributes information about your company and brands.

Monitoring these online conversations can help you understand changes in customer behavior and product purchase patterns.

Turning data into Information

Lots of data by itself doesn't help in creating a marketing strategy. What's needed is a good analysis of the data. In other words, information on how potential customers feel, think, and act. And, it helps to create a good mind map showing customer behavior.

Good market researchers are skilled in the art of spotting patterns in the data and highlighting significant relationships between marketing activities and purchase behavior. In other words, market researchers turn data into the information that's needed to make sound marketing strategy decisions.

Gathering data on the industry, market, and your customers is the first step in formulating an effective strategic marketing plan.

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Comapping is online mind mapping software to manage and share information.