There are many things you could do. There are fewer things you should do. And there are only one or two things you will do - the essence of strategy in just three sentences. Thanks for listening to my TED talk.
The game of chess is a good analogy. White goes first and has twenty opening moves to choose from. These are the things the player could do. According to chess theory, only five of these opening moves give any sort of advantage. It’s one of these five moves they probably should do. And in over 90% of all chess games, it is one of these five moves that gets played. This is what got done.
Business is obviously a little more complicated. Chess is an abstract strategy game with clear rules and structure. Business, and life in general, is a more chaotic system created by an impenetrable network of causes and effects. Choices are essentially infinite and deciding what to do can feel overwhelming.
And with that brief set-up let’s get to the point of this article. I believe 90% of all marketing/product/business strategies can be covered with just twenty-four strategic initiatives sitting under four broad strategic objectives.
It is both a useful checklist and a potential prompt. When you list all your options on one page it makes short work of the ‘what shall we do’ and leaves you to invest your time on the much more important ‘how will we do it’. That is the point behind this idea. A sort of manifesto for action.
What to do with spare time
Lockdown has given many of us more time we didn’t ask for and weren’t sure what to do with. Once I got bored with baking banana bread and pondering the mystery as to why all my clothes seem to be shrinking, I decided to review some of the marketing strategy projects I have worked on globally over the last ten years. What struck me was the degree of similarity that existed within such a diverse pool of products and markets.
From aircraft engines in the USA to pharmaceuticals in Brazil, from agricultural products in Vietnam to infant nutrition in Columbia, the same type of strategic initiatives cropped up time and again.
So, this is my attempt to put some structure around marketing strategy. It is not a unified theory of everything, and I don’t expect the Nobel prize people to come knocking anytime soon, but it is an attempt to begin to codify marketing strategy. It is a work in progress for which I would welcome your thoughts and ideas.
Marketing strategy, a play in four acts: Act 1 The Goal
You start with an overarching goal. The thing you are trying to achieve. This needs to be clear and focused. It should contain what you are trying to achieve “Increase sales of the RG-40 Harmonic Condenser from 10 per quarter to 14 per quarter…” Whom you are focusing on “… by focusing on design engineers in the medical device manufacturing market…” The geographic scope “…in Western Europe…” And a time frame “… within the next 18 months”.
This ‘what – who – where – when’ framework keeps things concise and succinct. Make sure you use objective measures and avoid superlatives and you are good to go.
I should mention that there is an important question before you get to the what – who – where – when stage and that is why. Deciding why you should choose one goal over another is an important discipline but it won’t be covered here. For expediency, I am just assuming the why question has been answered.
Continuing this classic interrogative approach, we complete the journey with the question ‘how’. On to act 2.
Act 2: The Objectives
Objectives are the broad areas of strategic focus. The levers you can pull to make a positive change. Each objective has six strategic initiatives sitting under it (to be revealed in act 3). A strategic plan could focus on one objective or all four – your only constraint is resources.
- The first objective is to ‘increase sales and marketing effectiveness’ a fairly obvious and pretty broad topic. At its simplest, it means being top of your customer’s minds when they are considering a relevant purchase. This objective covers building your brand, promotions, advertising, campaigns, lead generation segmentation and sales force effectiveness. I think of this objective broadly as increasing the mental availability of your product.
- The second objective is ‘develop your product and total offer’. Making your product or service better than it was before. Creating differentiation from your competition. Introducing a completely new product, improving the performance of an existing product, or adding new features or services. If you are building a better mousetrap this is the objective, you need.
- The third objective is to improve distribution and availability. Increasing the physical and virtual availability of your product or service. Clearly, this would include expanding your physical distribution network but also covers adding salespeople or improving your order-to-delivery process. It includes the shop window of your online presence. Anything that gets your product or business in front of more people or makes it easier for them to buy from you sits here.
- The fourth and final objective is to change your price or pricing model. Anything to do with the amount your customers pay or how they pay it is covered here. From a wholesale change to your revenue model to simple discounts. If it impacts the price, this is the objective for you.
One goal and four broad objectives. These can be summarized as increase your products mental and physical availability, build a better mousetrap, optimize price. It’s time for the third act and those twenty-four strategic initiatives.
Act 3: The strategic Initiatives
This is a work in progress. These are where I have landed after some thought and reflection. I am sure they will change/develop. If you have suggestions, please share. Strategic initiatives are more narrowly focused than objectives but not as specific as tactics. They are a bridge between the two.
Ok so here they are, six strategic initiatives under each of the four objectives
Sales and marketing effectiveness
- Raise brand/product awareness – brand recall and brand recognition. Do your potential customers know you? Would they remember you with a prompt? Embed your business/product in their mind with relevant, credible, and distinctive positioning. Be the product customers think of when considering your product category.
- Increase leads/sales activation – Sales funnels work, and they start with prospects and end with orders. Increase what goes into the funnel and you will increase what comes out the other end.
- Develop segment/niche approach – If you can’t be all things to all people be a very important thing to some people.
- Improves salesforce effectiveness – Improve sales process and skills. Create a sales playbook to allow degrees of freedom around a structured process. Add new sales tools and collateral. Increase conversion rates and shorten the sales cycle time.
- Align incentive plans – You get what you pay for, well most times you do. Manage the inputs and reward the outputs. When variable compensation is aligned with a common purpose, you improve performance.
- Reposition current offer – Sometimes it isn’t the product that needs changing it is how the product is positioned. Revitalize old sausages with some new sizzle.
Product and total offer
- Improve current product performance – whatever you do, do it better. Improve what the customer cares about. All products age – don’t wait until they are nearly dead to fix them.
- Add new features to an existing product – We all like a little extra. Where possible extend a products life by adding new functionality.
- Introduce new product/brand – Nothing stays still, adding new products and services will enrich your portfolio. It will also insulate you from the future.
- Redesign product – form, not function – You don’t always have to start with a new product. Adding a bit of design and pizazz can breathe new life into old products.
- Include services with current products – what else can you do for your customers? What would they appreciate that makes buying your product easier or more compelling?
- Create a new value offer – Premium or discount or mid-market, many of your products may have rivals that focus on different parts of the value equation. Why not join them?
Distribution and availability
- Develop your distribution network – Increase availability and visibility. Get your product in front of as many potential customers as possible. Be where the customers are.
- Improve order to delivery process – Remove all barriers to purchase. One-click ordering, smartphone apps, automatic replenishment etc.
- Enhance pre-purchase experience – The ‘showroom’ experience. Allow customers to get hands-on with your product. Increase familiarity. Let them try before they buy.
- Expand geographic reach – add offices or distribution into new countries. Work with agents and distributors worldwide.
- Add salespeople – We addressed sales force effectiveness earlier. This is about getting boots on the ground. As a rule, the more doors you knock, the more conversations you will have, and the more sales you will make.
- Enrich online presence – Focus on user experience, design all interfaces for the customer not for you. Increase engagement across all relevant channels.
Price and pricing model
- Design a new revenue model – The framework for generating your financial income. Subscriptions, licensing, pay per use, freemium, etc. There are many ways you turn your value offer into cash.
- Practice revenue management –A flexible system that attempts to optimize the price paid based on a deep understanding of the balance between supply and demand at specific times. Common in hotels and airlines and other perishable commodity markets. Similar to the Uber surge pricing model.
- Utilize price skimming – Offering a new product at an initial price to capture the first wave of demand (early adopters) and then reducing, over time, to capture the next level of potential demand. Sometimes known as ‘riding down the demand curve’. A good partner for new product introductions (see initiative 21)
- Apply non-linear pricing – When the price is not strictly proportionate to the amount purchased. Quantity discounts, rebates and two-part tariffs are the most common applications on non-linear pricing. Price bundling is a special case and has its very own initiative
- Create price bundles – A special case of non-linear pricing. Products and services are bundled together into a packaged offer. The balance to be struck is between the discount (cost) and incremental revenue (benefit).
- Optimize price/volume – finding the profit-maximizing price. Understanding the marginal costs of your offer and your price response curve to find the only price that maximizes your contribution or gross profit.
Act four: The tactics
Nothing changes unless action is taken. Too often, more time is spent thinking and planning than doing. The flaw in this approach is obvious.
A more common, and less serious, error is to start with the tactics without much strategic thought, a sort of ‘ready, fire, aim’ approach. I say less serious as doing something is usually better than doing nothing.
The best way, as in most endeavours, is the middle way. Appropriate time spent thinking strategically to inform your tactics and actions.
There can be no defined list of tactics. You have a multitude to pick from. The important part is alignment. Following the goal – objective – strategy – tactic framework should create some harmony and linkage from your strategic intent all the way through to your daily actions.
And that is that, although I have just noticed that goals, objectives, strategy, and tactics make a memorable acronym. Turns out our four-act play is a GOST story.
I would love to know what you think. (About the idea, not the terrible ghost story pun).