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Strategic Marketing: Demystified
by Christine Crandell
In today's time compressed business environment, the ability to spot new trends first and leverage them into opportunities is crucial. That requires an organizational culture based on innovation, a mechanism to detect trends early, and a business 'not as usual' framework.
These days, the place where this capability seems most important is Marketing. The evolution towards micro-markets, product based profitability, and value based solutions has redefined Marketing's contribution metric. No longer can Marketing focus just on promotion, short term efforts, and public relations - it must accept new responsibilities for focusing the organization on customer value, speed and innovation.
There is no doubt that Marketing's role will become more pivotal as the next decade draws near. The future portends of increasingly, horizontally allianced organizations brought together to create compelling, zero-error customer value, based on core competencies. In order to fulfill Marketing's new responsibilities, it must change from executing familiar bolt-on tactics that brighten short term performance - to real market planning based on true strategic marketing. Why? Because strategic marketing can provide the right framework for sustainable success in the market.
Marketing's new strategic role means new responsibilities for ensuring that the value the company has chosen to deliver to the market, can in fact be delivered when promised. Value is developed and delivered through product and service development, pricing, and distribution. Communicating the value to the market is done through the sales force, promotions, advertising, marcom, the Internet and other vehicles. Marketing must ensure all value elements are developed and delivered to customer expectations with seamless continuity.
There are many misconceptions as to what Strategic Marketing is. Let's demystify the confusion. Fundamentally, strategic marketing embodies four core components - segmenting the market, selecting the right target markets, defining the value proposition and communicating the value to the target markets. With the right tools and some strategic analysis, we can quantify who will buy, how many will buy, why they buy and when specific markets will buy. These are vital data points in developing an effective marketing plan that can secure and sustain mind and marketshare. Each of the four core components are addressed below:
Market segmentation breaks up the market into identifiable groups based on demographics, technology adoption, operational parameters, and situational factors. Each group is then assessed for its attractiveness in terms of number of prospective customers, average selling price, product/vendor loyalty characteristics, and need/benefits.
Once the potential opportunity size is determined for each group, they are prioritized based upon their attractiveness, the Company's competitive position and buyer characteristics. Usually the most lucrative groups are selected as the target market segments although strategic groups are not uncommon. For many companies, going through this phase of the process holds some surprises - frequently the right target markets that are uncovered are not what was assumed nor expected.
The third component is developing a compelling value proposition - focusing on perceived product benefits from the target markets' perspective. A compelling value proposition will leverage the product's differentiating attributes - done right, it sets it apart from the competition. Keep in mind that a differentiator is included in crafting the value proposition only if it is highly valued by, and affordable to, the target market, yet, not easily replicated by the competition.
The value proposition is so important - it will provide the foundation for positioning the company and its products. That's why the value proposition must be externally driven by the target market and, once crafted, validated with that same market. Too often, the value proposition and positioning strategy are not validated with target markets and miss the mark. The product is either under positioned, over positioned, or doubtfully positioned which results in market confusion. Such positioning rarely hits the market's sweet spot.
Strategic marketing's final component is the precursor to tactical marketing - communicating the value. Once the target market segments are identified, prioritized, and validated, how to best 'reach' them must be determined. What a market segment reacts to in terms of messages and communication vehicles should drive how the value is communicated.
Strategic marketing can make or break your company. The mix of strategies used over time to communicate the value to customers and the market must be constantly monitored. In anticipation of market shifts, Marketing must take the lead in rapidly analyzing changing factors and adjusting the marketing strategy accordingly. Adjusting the strategy on a timely basis to maintain effective communications leads to sustainability. Indeed, the ability to embrace change and quickly rethink, adjust and improve processes and offerings is key and through sustainability comes market leadership.
Demystified, the bottom line is this - real sustainable growth can be realized only with the right target markets and a consistent, clearly communicated value based on durable product differentiators. And that requires strategic marketing.
Christine Crandell is president and co-founder of NBS/New Business Strategies, a market strategy firm.
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