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 directionTo 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.
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.