A Five-Step Approach to Creating a Marketing Strategy

A Five-Step Approach to Creating a Marketing StrategyAuthor: Kevin ClancyCreated by Craig Kohn1In order to continue to thrive, companies must acquire and keep customers. As a result, marketing and sales has become an area of increasing focus for companies of all sizes.

For more information: http://www.marketingpower.com/ResourceLibrary/Pages/Best%20Practices/AFive-StepApproachtoCreatingaMarketingStrategy.aspxKevin Clancy has published numerous articles on advertising, marketing, and social science research and has consulted for three decades with major corporations around the world, including American Express, AT&T, McDonald's, ExxonMobil, Pepsi, Pfizer, Saks Fifth Avenue, The New York Times, and Universal Studios.Overview2Creating an effective marketing strategy is based on a five-step process:Step 1: Understanding the market climate and marketing strengths and weaknesses Step 2: Developing a marketing strategy Step 3: Building a marketing plan Step 4: Implementing the plan Step 5: Monitoring the success of the plan

Overview (cont.)3Real marketing strategy provides a roadmap to creating and delivering true value to distinct groups of customers. All successful marketing strategies must begin and end with the customerThey cannot be an afterthought or taken as a givenMarketers must test their assumptions about their customers constantly.

Marketing, in a nutshell4

A Roadmap to Creating and Delivering True Value to Distinct Groups of CustomersMarketing, in a nutshell5Here we go

6In fact, many confuse solid marketing strategy with pure tactics, or what we like to call, "brand juice:Visual identityclever tag linescreative "essence" advertisingedgy nameswell-designed web sitesbig ticket giveaway promotionspublicity buzz-making

Marketing Confusion7All are key ingredients in brand juice and elements of marketing, but they are supporting elements.

To be effective, such supporting elements must be part of a more comprehensive plan.

Just Do It is not enough8Real marketing strategy provides a roadmap to creating and delivering true value to distinct groups of customers.

All successful marketing strategies must begin and end with the customerthey cannot be an afterthought or taken as a givenso marketers must test their assumptions about their customers constantly.Marketing

9What goes into a marketing strategy? A cohesive combination of: Targeting to whom are you going to market your products and services? Positioning how are you going to differentiate yourself from competitors?

Product/Service Attributeswhat attributes/features will the product/service have? Marketing Communicationshow are you going to reach the target and with what message? Pricingwhat price will you charge the target? Distributionwhat channels will you use to sell the product or service? Customer Servicehow will you manage additional customer needs?

Whats in Your Wallet?The Four Ps of Marketing: Product, Pricing, Placement, Promotion10Of these components, targeting and positioning are the two most critical elements.

To paraphrase marketing guru Phil Kotler, if you nail the targeting and positioning, everything else falls into place.

The targeting decision identifying the people you want to direct your marketing efforts towards is one of the first issues a marketer considers. We Deliver for You!11

Targeting is knowing where to concentrate forces. "To win a war you need to know where to attack," Dwight Eisenhower might have said to an audience of business managers.

"We wouldnt have brought the Nazis to their knees if we had landed the Allied forces at Calais instead of the beaches of Normandy." Nurofen. Targeted Relief For Pain.12Most marketers agree that focusing on subsets of current and potential customers is the most efficient way to develop a marketing programThis immediately begs the question, which subset? Men vs. WomenTeens vs. Middle AgedUrban vs. RuralRich vs. PoorFamily vs. SingleBe Like Mike13We recommend marketers discover segments by looking at a combination of all possible market drivers such as: Category involvement: how important purchases in this category are to the buyer? Product preference motivators: what characteristics are most motivating? Product purchasing patterns: how frequently do they buy? Media habits: what do buyers watch, read, listen to? Sociographics: how strong is their ethnic affiliation and religiosity? Demographics: what is their income, age, and level of education? Psychographics: what are their lifestyle attitudes?

Market Drivers14The key to nailing targeting is finding the most efficient, scientific way of segmenting the market and to choose a target group based on its potential profit contribution.

Marketers can calculate with reasonable accuracyhow much it will cost to reach people in a target grouphow many will buy the product or serviceand how much money they will give to one particular company using both secondary and primary data. The Taste of a New Generation15CASE STUDY: For years, gas stations never had to compete for customers people bought gas when they needed gas.

It was a necessity, not a luxury and people paid whatever price was determined by the market.

Gas stations merely had to charge what everyone else was charging.

Pax Gasolina16By the 1990s, gas price wars had begun. Major businesses had to separate themselves from the crowd to make enough from their sales.Why couldnt they just charge above the equilibrium price?What does this imply about the role of marketing in economics?Oh OhSpaghettios!17Mobil Corporation (now ExxonMobil), one of the most innovative marketers, commissioned a large-scale study to better understand its customers and prospects. The study results, reported in the Wall Street Journal, form the basis for the Mobil Friendly Serve campaign. The study found five distinct consumer groups, all roughly the same size numerically. Taking on the world's toughest energy challenges18Car Buffs are generally high-income, middle-aged men who drive 25,000 to 50,000 miles a year. They buy a premium gasoline with a credit card, purchase sandwiches and drinks from the convenience store, and will sometimes wash their cars at the car wash. Car Buffs19Loyalists are men and women with moderate to high incomes who are loyal to a brand and sometimes to a particular station. They frequently buy premium gasoline and pay in cash. LoyalistsBrand loyalty is the number one goal of every marketing campaign20Speedsters are upwardly mobile Gen Xers. They are constantly on the go, live in their cars and snack heavily from the convenience store. Speedsters21Soccer Moms are usually housewives who shuttle their children around during the day and use whatever gasoline station is based in town or along their route of travel.Soccer Moms22Price Shoppers generally are not loyal either to a brand or to a particular station and rarely buy the premium line. They are frequently on tight budgets and efforts to woo them have been the basis of marketing strategies for years. Price Shoppers23Analysis of the data revealed that while Car Buffs and Loyalists represented only 38 percent of the population, they accounted for 77 percent of the potential profitability.

24Once Mobil knew the target, it knewwhom to talk towhere to find themhow to communicate with themwith what mediaabout which products and servicesat what price

25As the Journal reported: These targets want classier snacks from the convenience storehuman contactquality productstop-notch, quick serviceprivileges for loyal users attendants who recognize themand a nationally available brand. They also want a reasonably competitive price, but thats not the most important consideration. Have It Your Way, Everyday26Mobil addressed the needs of these two groups with Friendly Serve a marketing campaign characterized by:clean restroomscappuccino in the convenience storesa concierge to assist customersand more recently a Speedpass payment system. Stations that have implemented the Friendly Serve program have seen double-digit sales and profit increases. How does this relate to the demand curve?Pardon meSpeedpass a good example of how to establish brand loyalty. Its just like a Starbucks gift card. If you have the card and a choice between two coffee places, youll go to Starbucks because you feel a connection with them.27Clearly making the right targeting decision takes time certainly more than the five minutes most marketers dedicate to it.

Intuitively obvious target groups are rarely the most profitableThis Is Your Brain28Marketers that take the time to devise a market segmentation plan and discover the most profitable target will find themselves far ahead of the competition even this early in the marketing strategy process.

Nutshell: take the time to find your most profitable target audience!The Idea People29In marketing, we could approach buyers like ERs approach patientsAn ER knows that they cannot save every patient during major emergencies. They must divide patients into three groups: 1) will live without treatment; 2) will die even with treatment; 3) will only live with treatmentER staff will focus on group 3 because they can impact the outcome more.Buyer Triage30In marketing, it makes the most sense to focus on the potential buyers that will only purchase our product because of an effective marketing campaign.i.e. some people will buy our product regardless (e.g. truck drivers & fuel)Some people will not buy our product no matter what we do (e.g. teenagers & dentures)Those who will buy only with a marketing campaign should be the target audience

Marketing Triage31Once a marketer has identified the financially optimal target group, the next step is positioning.

Buyers have very little time to ponder product decisionsProducts and services that stand for something important or remembered for something significant have an advantage. 32A powerful positioning leads to a powerful brand.

Positioning is a difficult concept because it embodies the value proposition the bundle of benefits and attributes a company wants to offer buyers at a certain price to positively differentiate the product or brand from competitorsHuh?33Consider each aspect separately:

The bundle of benefits and attributes

a company wants to offer buyers

at a certain price

to positively differentiate the product or brand

from competitors

Positioning34The bundle of benefits and attributesThe reasons for buying a product a company wants to offer buyers As they apply to a specific customerat a certain price At the correct priceto positively differentiate the product or brand Should make the product unique in comparison to other productsfrom competitorsFrom other companies

Positioning35The reasons (as they apply to a specific customer) for buying your product at the correct price should make the product unique in comparison to the same product from other companies.Positioning, restated36Usually, the positioning is a one- or two-sentence statement that captures the message a marketer wants to imprint in the minds of customers and prospects. It could even be one word!

It describes your product or service and how it is different from and therefore better than the competitions. Accepted Everywhere You Want to BePositioning depends a lot on your target audience. You position entirely on what customers want to hear. If you dont benefit them, they dont care about you.37Examples of long-running positioning strategies for companies or brands include: Easy to useApple Exceptional Performance for driving enthusiastsBMW SoftnessCharmin tissue Authentic, real, originalCoke Guaranteed next-day deliveryFederal Express Wholesome family entertainmentDisney Improves the quality of lifeGE

Egs38StrengthHefty plastic bags Accepted everywhereVisa SafetyVolvo For the youthful, hip generationPepsi Thrills and excitement for preteens and adultsUniversal Studios Theme Park Nutritious, low-fat, low-calorie foodHealthy Choice Pure, clean, naturalIvory Soap Good value for family mealsTaco Bell

Egs39At its core, positioning is the reason why people buy one product rather than another.

They believe it offers greater value, strength, prestige, fun, safety or nutrition (or some combination of elements) than another product or service. Because those other guys suck40If marketers had unlimited time and a prospects undivided attention, they could tell him everything about the product or service.

But a company does not have endless time, and prospects are notoriously inattentive. The most any business can say are those few things prospects care about and will remember.

A Diamond Is Forever41Marketers want to fix a succinct message in peoples heads toinduce trial and use among prospective buyers -Or- reinforce current purchasing among current customers.

Positioning is valuable because when you have it, the other marketing elements follow naturally: pricingmarketing communicationsmarketing promotiondistributionIt's the cheesiest.42As you segment a market, simultaneously investigate all potential attributes and benefits that might motivate customers in a category. ProductServicePersonnelImageBreakfast of Champions.43At this point the company does not know if any of them actually motivate behavior.

The goal is to generate a long list of attributes and benefits from buying a product that might form the basis for a powerful positioning strategy. i.e. you wanna make a laundry list of all the good stuff that happens when you buy product X

Does she or doesn't she?44These should represent both attributes and benefits of the product and tangible and intangible facets.Huh? Lets break it down:

Attributes and benefits of the producti.e. The reason for buying the product

Tangible and intangible facetsTangible: any physical feature of the product; spare parts; delivery or installation; a regular service visit; a warranty agreementIntangible: an aspect of the product or service offering that has a value but is difficult to see or quantify (for instance, peace-of-mind, reliability, consistency). Need A Moment?45These should represent both attributes and benefits of the product and tangible and intangible facets.

In other words, your laundry list should include not only why someone would buy a product, but also the side benefits of the product.E.g. you buy a car because it gets good mileage, has a good engine, looks good, etc., but you would also consider the warranty and the babes/dudes youll pick up in your new corvette. Positioning, defined46To uncover these attributes and benefits, a company might do acategory scanexploratory researchpersonality assessmentsocial values analysisemotional explorationor some combination of all five.Reveal Your Inner Beauty47A category scan is a close review of all the products attributes and benefits, tangible and emotional, that competitors in the category employ.

Category Scan48Exploratory research includes focus groups, in-depth interviews, or both. Marketers should not rely on the outcome of focus groups to make the final positioning decision. The focus groups do not produce the positioning, but rather ideas for the list of attributes and benefits. Exploratory Research49Marketers also use personality assessments, social values analysis, and emotional exploration for positioning information.These are beyond the scope of this course; they require intense research from people who devote their entire life-long careers to forming expertise in these areas. As a high school course with a one-month unit in marketingwell, that probably just isnt us.SorryThe Rest50Like the targeting decision, the positioning decision is not one that should be made in a one-hour meeting.

Since the items on the list become the elements of the brands positioning and the connecting threads of an entire strategy, the list must be as all encompassing and creative as possible. Good to the last drop.51Once a company has a list, management reduces it.

The reduced list is turned into a questionnaire to determine how motivating each of the attribute and benefit characteristics is to the market target.

It also determines how buyers perceive competing brands on each of them. 52After marketers discover what motivates consumers and the perception of their products or services and those of competitors, they can rank-order a final list of category characteristics or potential positioning themes.

In short, we are narrowing the list within our groups, and then using a survey to figure out what aspects of our positioning have the greatest impact on our target market.53Now the task becomes a creative one.

Marketers develop a message strategy that puts the product or service in the most positive light using the most powerful attributes on the most important target audience.

From there the advertising and marketing communications people go to work. Better things for better living through chemistry.54CASE STUDY: For example, facing deregulation, a tiny company called Green Mountain Power (now Green Mountain Energy) located in Burlington, Vermont, started to worry about competing with national power companies that could afford price cuts to attract customers. The company could not become the low-cost provider.

Green Mountain Power55Instead, it began to look at other differentiating factors for power. The company discovered a significant number of customers wanted clean energy and would pay more for environmentally friendly power. Green Mountain created a powerful positioning statement, Power provided by the raging rivers of North America, the prevailing winds, and the sun. No coal, no nuke, no kidding.

No Coal, No Nuke, No Kidding56As the Green Mountain example illustrates, do not automatically select a low-price positioning even in a commodity category. i.e. even if you sell a luxury, where small changes in pricing creates a big change in demand, having the lowest price may NOT be the best idea!More Bang For Your Buck57Offering the lowest price only works in the long run when the company is the lowest cost producer.

Otherwise the lowest-price positioning is not sustainable and will drive the company toward bankruptcy. It takes a licking and keeps on ticking.58Formulating the remaining components of marketing strategy should reflect the needs, interests, habits, and behaviors of the target group and the motivating attributes of the positioning. Before starting a marketing campaign, you MUST know your:Target Group: needs, interests, habits, behaviorsPositioning: attributes and benefits from buying a product, as well as tangible and intangible benefitsA Mind Is A Terrible Thing to WasteAll of these things change when you start considering international marketing. Example: European McDonalds are different than American McDonalds because the target audience is different. The problem: people travel. What will they think when they see something different while abroad and like it more than what they have at home?59SummaryCompanies must acquire and keep customers this is the purpose of marketing.A marketing strategy provides a roadmap to creating and delivering true value to distinct groups of customers. successful marketing strategies must begin and end with the customermany confuse solid marketing strategy with pure tactics - supporting elements must be part of a more comprehensive planMarketing strategy is primarily composed of Targeting to whom are you going to market your products and services? Positioning how are you going to differentiate yourself from competitors? Also: Product/service attributes, communication, pricing, distribution, and customer serviceTargeting is knowing where (or on whom) to concentrate forces. The key to nailing targeting is finding the most efficient, scientific way of segmenting the market and to choose a target group based on its potential profit contribution.

60SummaryPositioning: Buyers have very little time to ponder product decisionsProducts and services that stand for something important or remembered for something significant have an advantage. The reasons (as they apply to a specific customer) for buying your product at the correct price should make the product unique in comparison to the same product from other companies.Usually, the positioning is a one- or two-sentence statement that captures the message a marketer wants to imprint in the minds of customers and prospects. It could even be one word! E.g. SafetyVolvo At its core, positioning is the reason why people buy one product rather than another. Marketers want to fix a succinct message in peoples heads toinduce trial and use among prospective buyers -Or- reinforce current purchasing among current customers.

61Strategy: The goal is to generate a long list of attributes and benefits from buying a product that might form the basis for a powerful positioning strategy. i.e. you wanna make a laundry list of all the good stuff that happens when you buy product Xyour laundry list should include not only why someone would buy a product, but also the side benefits of the product.To uncover these attributes and benefits, a company might do acategory scan- a close review of all the products attributes and benefits, tangible and emotional, that competitors in the category employ. exploratory research - focus groups, in-depth interviews, or both. After marketers discover what motivates consumers and the perception of their products or services and those of competitors, they can make a final list of category characteristics or potential positioning themes. From there the advertising and marketing communications people go to work.

Summary62Full Text Article: http://www.marketingpower.com/ResourceLibrary/Pages/Best%20Practices/AFive-StepApproachtoCreatingaMarketingStrategy.aspxAmerican Marketing Association: http://www.marketingpower.com/Pages/default.aspxMarketing Terms:http://www.bizjobs.com/business_glossary.php

Additional Sources6364