CRAFTING A BIG-PICTURE MARKETING STRATEGY IN THE DIGITAL ECONOMY
This post was originally published as a white paper entitled “Crafting a Big-picture Marketing Strategy in the Digital Economy, written by strategy consultant, J C Sum.
According to Enterprise Singapore, approximately 50% – 70% of Small & Medium Enterprises (SMEs) fail within the first 18 months1. Harvard Business Review noted that many businesses fail due to not having a strategy. Many businesses also failed because they had strategies that were not actually strategies2. Coschedule’s “State of Marketing Strategy + Management” reported that top marketers document their strategy and are 313% more likely to succeed than those that do not3.
While there are different reasons why businesses fail, a lack of strategy or having the right strategy is one of the most common reasons why many businesses do not last. Without a sound strategy that fits a business or its market’s needs, even the best tactics will not ensure long-term survival, let alone success.
The challenge many brand owners have is coming up with the right marketing strategy for their company. For those that have no formal education or training in marketing or business strategy, the whole concept can seem quite abstract and daunting.
Some entrepreneurs have natural instincts and an innate strategic marketing mind. These individuals are able to visualise the long-term goals of a business and intuitively know how to map a plan to get there. However, most business owners or managers may not be as gifted in that way. But the great news is that it is possible to learn and employ time-tested strategy tools and frameworks to craft the necessary strategy.
In this post, we will explore how to craft a big-picture marketing strategy to maximise revenue and reduce costs.
MARKETING IN THE DIGITALLY EVOLVING WORLD
Technological disruption has fundamentally changed industries and how businesses produce, distribute, and operate. The digitally evolving world has also changed the way customers buy, and in turn, changed the way entrepreneurs, business owners and marketers sell to their customers.
According to a survey by Microsoft and market research firm IDC Asia Pacific, nearly 75% of Singapore firms have gone digital due to Covid-194 (The Straits Times, 10 Sep 2020). The Ministry for Trade & Industry has also urged companies to transform digitally in order to stay competitive in the new economy5 (The Straits Times, 22 Sep 2020).
However, businesses should avoid the knee-jerk inclination to immediately digitize their business. When it comes to marketing in the digital economy, many businesses, especially offline ones, make the mistake of engaging in digital marketing immediately. Without understanding the real benefits and challenges of digital marketing, they set up social media advertising campaigns in the hopes to drive traffic to their website or product page. Thousands of dollars spent and a dozen clicks later, the poor return on investment suggests marketing in the digital world is not working for the company.
While that line of thinking is not tactically wrong, it is not strategically correct. But before you think about redesigning your website, running ads on social media, or hiring a digital marketing agency, you must take a step back from just thinking about tactics.
Tactics are on-the-ground tools that are deployed to connect with and convert customers. To be effective, tactics must be guided by strategy. Strategy is the conceptualized roadmap that guides long-term vision and goals. It defines future direction, sets the framework, and defines top-level resource allocation. A tactic is an action you take to execute the strategy. It is a technique, tool or method you will employ to obtain a ‘measurable result’.
Sun Tzu had a poetic explanation of strategy and tactics:
“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat6.”
In marketing terms, a marketing strategy is a master plan that aligns directly with your revenue targets, marketing objectives, long-term vision, ethics, and business goals. Marketing tactics often involve generating leads, advertising, sales promotions, and other activities that directly support your strategic marketing plan. Marketing strategy and tactics are interdependent and employed in combination. But strategy determines and directs tactics. Strategy provides direction and a roadmap for the organization and its team members. A sound strategy that fits the business and its market’s needs will also provide long-term sustainable results.
While it may be apparent that developing a marketing strategy is essential for your business’s long-term sustainability, the idea of actually crafting a marketing strategy can be abstract and challenging. In the next sections, we will explore how to go about crafting your marketing strategy from the ground up.
DETERMINE A MARKETING GOAL
The first step in crafting a marketing strategy is to determine a marketing goal. A marketing goal is not a broad vision for the company but supports the long-term aspiration of the company in incremental steps and evolves along the way.
Examples of a vision (which are not marketing goals) include:
- To become the most valuable brand in the world.
- To make a widget that everyone wants.
- To be valued at 10 billion dollars.
- To have a widget in every household in 5 years.
- To become the top widget maker in the country.
A marketing goal should be specific, realistic and have a timeframe. Examples of marketing goals include:
- To increase sales of widgets by 35% this year.
- To capture 20% of the widget market within 2 years.
- To increase website traffic by 50% and increase sales conversion from 20% to 35%.
- To generate revenue of $1.5 million by the 2nd quarter of next year.
- To increase brand awareness of the widget among consumers aged 18 to 25 years old within 2 years.
Once you have determined your marketing goal, you can craft a strategy that will serve as a roadmap to serve that objective. Developing a marketing strategy is a combination of skill, experience, and creativity. In the next section, we will explore a framework that can be employed to help guide your strategy-crafting process.
THE MARKETING INVERTED PYRAMID™
One way to craft your marketing strategy is to understand different aspects of marketing and how they form the foundation of your business. This will then provide a clear guide of the strategy you should employ, followed by the tactics to be implemented. One can understand the different aspects of marketing by using a marketing framework.
The “Marketing Mix”, coined by Neil Borden, in 19497 and the subsequent simplification of the model into the “4Ps of marketing”, developed by E. Jerome McCarthy in the 1960s8, are examples of traditional marketing frameworks. However, many marketers have pointed out that the frameworks are outdated. Contrarians have pointed out the 4Ps of marketing that highlight product, price, place and promotion do not adequately capture today’s market conditions and digital landscape.
“Product” emphasizes building a better mousetrap instead of focusing on solutions for customers. Value is a more important differentiator than “price”. “Place” is very much flipped on its head in the digital world. And, “promotion” as interruption marketing is obsolete in today’s social media world where customers have a voice. Of course, one can argue that this is just semantics. But words do have meaning, and intent can be powerful. I agree that McCarthy’s 4Ps of marketing that highlight product, price, place and promotion does not adequately capture today’s market conditions and digital landscape. But it was never designed for today’s digitally evolving world. Nor, was it intended as a fundamental business strategy.
The model I developed is called the Marketing Inverted PyramidTM9 and concisely represents how marketing forms the foundation of business strategy. While the individual concepts are by no means original to me, it is the particular way the framework is put together that is useful in understanding how different aspects of marketing drive the strategy of a business, and in turn, tactics.
Three sides of an upside-down pyramid represent the Marketing Inverted PyramidTM. Each side represents one aspect of marketing, namely:
- Value Creation
- Brand Equity
Each aspect represents one stage of the marketing process that lays the foundation of the business.
All businesses start with value creation; specifically, understanding the market needs and creating value in the form of a product or service that solves a problem or fulfils a need.
Communication refers to all forms of promotional and customer engagement activities to develop relationships with prospects and customers to market the value created.
Brand equity is the value of a brand. That value is determined by customer perception of and experiences with the brand. Positive brand equity will psychologically strengthen the value of the product or service created at the start.
All three aspects of marketing work in a successive cyclical manner indefinitely. Each aspect reinforces the other, and together guide the strategy and tactics of the business.
Let us have a closer look at all the elements of the Marketing Inverted PyramidTM.
Marketing As Value Creation
Value creation can be considered the core of marketing. It is to understand what the market needs and creating a product or service of value to fulfil that need. You can only create value for the market when you know what it needs.
One reason why businesses are not as successful as they can be or why they fail in general is because they fail to research the market. They end up creating a product that does not have a place in the market or does not add value to customers in the target market. Sometimes we fall in love with our product or service and think that everyone will feel the same way. Unfortunately, that is not the case. So, the right approach is first to examine your market feasibility, viability, and potential business opportunities. It is the understanding of your market opportunities that guides the creation, presentation and marketing of your product. Unfortunately, most businesses work the other way around.
Russell Brunson, the creator of Click Funnels, said: “Don’t fall in love with a product; fall in love with a market. If you spend all your effort building the most perfect product and hope that there’s a market, you’re going to be disappointed.” New York Times Best-selling Author, Seth Godin, articulated it in a different way: “Don’t find customers for your products, find products for your customers”.
Understanding the market does not mean just soliciting feedback from stakeholders or industry partners in the market. The goal of the value creator is to identify opportunities that you can exploit. It takes a high degree of creativity to analyse feedback, market data and indicators and identify where value is needed.
After all, Henry Ford was right when he said, “If I had asked the public what they wanted, they would have said a faster horse”. The same can be said of Apple with the introduction of the iPod and iPhone. Of course, you might not consider yourself the next Ford, Jobs or Zuckerberg, or have a revolutionary product and have the resources to market it. However, the basic principles of value creation can still apply to your business. Once you understand your market and have identified an unfulfilled need, you can think of how you can create value in the form of a product, service, solution or even content.
A big part of value creation is innovation. Inherent to marketing as value creation is the need to understand the market. Since innovation is a part of value creation, innovation also requires a keen understanding of the market. Researching the market to understand customer pain points and unfulfilled needs will guide the direction of your innovation.
Fundamentally, innovation means introducing something new to your business. While innovation is mostly associated with upgrading existing products or developing new products, innovation can also create value by:
- Leveraging on existing products by creating variations for different markets or media platforms.
- Developing or modifying products to create alternative revenue streams such as through a subscription-based model or automatic recurring billing.
- Adopting a new pricing structure that will attract new customers, such as upfront pricing or bundle deals.
- Adding value to existing products, services or markets to differentiate the business from its competitors and increase the perceived value to the customers and markets.
- Improving business processes to increase productivity and efficiency.
- Improving workflow or logistic processes to cut down production time.
- Reducing fixed or variable costs through digital automation and replacing manual labour.
- Enhancing customer experience to increase customer retention and advocacy.
Marketing As Communication
In the first stage of marketing, you created value in the form of developing a product or service that the market needs. However, even after you create a fantastic product, you still must sell the idea and convince people to pay for it. That is where marketing as communication comes in.
Communication is the aspect of marketing that would be familiar to all marketers, business owners and corporate leaders. It is the marketing promotional efforts to expose the product, service or brand to the marketplace. Traditionally, marketing promotion includes activities like direct marketing, sales promotion, personal selling, advertising and public relation.
In the digitally evolving world, uni-directional marketing promotion hardly exists anymore. Even traditional print, TV, radio and outdoor advertising and promotions direct the audience to an online channel like a website or social media account. And, all digital marketing channels are communication-based; your website, social media platforms, email, instant messaging, video chat, paid ads, etc. Marketing in the digitally evolving world is no longer promotion but communication.
In order to craft a sound marketing strategy that will resonate with today’s consumers, marketers must have a keen understanding and in-depth knowledge of the different forms of traditional and digital marketing communication available to them.
Marketing As Brand Equity
“Your brand is what other people say about you when you’re not in the room.”
~ Jeff Bezos, Amazon CEO
The third aspect of marketing in the Marketing Inverted PyramidTM is brand equity. Branding is the process of building brand equity and is a positive result of the first two aspects of marketing, value creation and communication. Brand equity is the value and power of the brand that determines its worth. That value is determined by the collective consumers’ perception of, expectations of, and experiences with the brand. So branding is creating a perception in the minds of the customers.
If people think highly of a brand, it has positive brand equity. When a brand consistently under-delivers and disappoints to the point where people recommend that others avoid it, it has negative brand equity.
Building brand equity is a long-term strategy. But if done well, it can provide many benefits to a business. Some ways brand equity can be measured is using metrics such as:
- The price premium that the brand charges over other brands for the same category of product.
- The additional volume of sales generated by the brand as compared to other brands in the same category.
- The popularity or positive image of the brand among its target customers. This can be measured through surveys or the number of users/ fans/ followers on social media platforms.
- The share prices of the company that owns the brand if it is a publicly listed company.
USING THE MARKETING INVERTED PYRAMID™ TO CRAFT STRATEGY
The three facets of marketing as depicted above as three sides of the Marketing Inverted PyramidTM show how they work in succession and feed back to form an infinite cycle. The examination and fulfilling each of these aspects of marketing will guide your marketing strategy and subsequently, tactics.
Here is how to use the Marketing Inverted PyramidTM to craft a strategy for your business.
Step 1 – Identify the Value You Bring to the Market
Have a hard look at and evaluate your offerings to the market. Does the product or service you provide fulfil a need in the market? Or does it just add to an already saturated marketplace?
The basic underlying concept of value in marketing is human needs. The basic human needs may include money, food, clothing, shelter, freedom, companionship and love, to name a few. Society, culture, and individual personality shape human needs, and therefore their perception of value.
Value in marketing is known as customer-perceived value. The critical phrase in that sentence is ‘customer-perceived’. Value is subjective and relative. The derivation of value is not equally important to all customers. The value is defined by the individual or collective individuals when talking about a market segment.
It is also essential to understand the difference between value and price. One of Warren Buffett’s most famous quotes (via Benjamin Graham) is: “Price is what you pay; value is what you get”. Essentially, price is the amount of money that you are asked to pay for something, while value is what you feel the thing you paid for is worth. The most important distinction between price and value is the fact that price is arbitrary, and value is fundamental.
For example, if you receive a meaningful gift from a close friend, you may treasure that gift immensely and would not consider selling it for even $1000. You may value the gift at more than $1000 even though your friend paid $10 for it. That $10 price tag was set by the seller, for reasons known only to him. If a 3rd party offered to buy the gift, she might offer only $8 because she does not value the same gift as much as you do. So, the price of the gift is arbitrary, but the value is fundamental as the underlying value has meaning to the individual.
Of course, at times price may be one representation of value as well. For example, a quality product or service that is priced cheaply can be a viewed as good value. However, during the value creation process, you should not be overly influenced or concerned with price at this point, unless that is your singular value proposition. You want to create a product or service that provides customers with solutions and benefits that give them the most value and satisfaction.
Step 2 – Determine Marketing Communication Channels
After you have established the value your offering brings to the market, the next step is to identify the marketing communication channels that are best suited to communicate this value. The communication channels you choose largely depend on your target audience. So, it is essential you have a clear idea of who your target audience is and what channels should be used to best connect with them.
Today’s marketers have a combination of traditional marketing and digital marketing channels at their disposal. Traditional marketing includes direct mailing, organizing events, participation in tradeshows & conferences, print ads, radio ads, television ads, outdoor media, and offline public relations. Digital marketing includes website design and development, paid advertising, search engine optimization, social media marketing and content marketing.
As the world progressively continues to shift online, businesses need to practice hybrid marketing, a combination of traditional and digital marketing. Boundaries between traditionally distinct industries have been erased, and the lines between marketing, customer experience, corporate communications, innovation and insight are increasingly blurred.
Customers expect a seamless and consistent experience interacting with brands from all touchpoints, across all devices. Hybrid marketing merges both approaches to develop a holistic marketing strategy that provides continuous and relevant customer engagement through multiple platforms, channels and devices to deepen bonds and earn loyalty.
From a strategic perspective, the overall marketing communication strategy must be a hybrid one. This simply means thinking both traditionally and digitally as you develop your strategy.
While getting into a hybrid marketing mindset is something you will have to do consciously when you first start, developing a hybrid marketing strategy will come more naturally to you over time; especially if you are more familiar with one form of marketing over the other.
And remember, it is always strategy before tactics.
Here are some simple examples of hybrid marketing tactics used in communication and building brand equity:
- Outdoor media large format displays that have a website link or QR code to direct prospects to a landing page.
- Sending a direct mailer to prospects and following up with an email that directs them to a landing page with video content.
- Digital Search and Display Ads that lead to a landing page with a call-to-action of making an appointment with a sales representative.
- Participating in a trade show or exhibition to encourage online sign-ups for a digital service at the show and following up with an email for those who do not.
- A personalized email marketing campaign that is followed up by a telephone call from a sales representative the next day.
- Influencer marketing, where a limited number of digital discount coupons are given out to followers that can only be spent in a brick-and-mortar store or restaurant.
- Offering brick-and-mortar customers a chance to be part of a “cyber club” that entitles them to exclusive discounts and a catalogue of online-only products.
- Offering online purchasers to attend a customer-only live event if they buy a product above a certain amount within the next 7 days.
- Collecting customer information at a brick-and-mortar store and emailing them an invite to participate in a live webinar.
Here is a useful graphical representation of hybrid marketing touchpoints that shows how physical and digital touchpoints engage, connect, communicate, and sell to prospects and customers at each stage of the customer journey:
Step 3 – Plan How to Build Brand Equity Through Positioning
The key to building and maintaining brand value and equity is consistency. Branding requires consistency and time. You cannot build brand equity overnight. There is a simple psychological reason why consistency is needed in building brand equity.
First and foremost, brand consistency is about trust. Establishing trust is about getting people to feel they know you. For them to feel like they know you, they must be aware of you, recognize you, and remember you. For people to recognize and remember you, you must show up consistently. It takes time and repetition for customers to go from becoming aware of you to remembering, trusting, and considering you.
Think of all the most trusted brands in the world; McDonald’s for fast food, Nike for sports shoes, Google for search, Kelloggs for cereal, Harley Davidson for motorcycles, Starbucks for coffee, Singapore Airlines for air travel and Mercedes Benz for luxury cars, just to name a few. These brands become trusted because their brand equity building process is consistent, across products and locations all over the world.
Brand consistency is the delivery of brand messaging in line with the brand identity, values, and strategy over time. Customers are exposed to a company’s visual branding, content and other brand elements repeatedly, which can help to solidify brand recognition.
One of the most effective ways to build brand equity is through creating a strong positioning strategy. Positioning deals with creating a ‘position’ for your business in the minds of the consumers. It has got to do with communicating a ‘position’ that comprises of your brand values and perceptions that you want consumers to have about your business. Jack Trout and Al Ries introduced the concept of positioning in the late seventies/ early eighties10. Although the approaches to the concept have been refined over the years, the basic idea remains the same.
Successful positioning means making your brand synonymous with a particular product category. When you think of android smartphones, you think of Samsung. When you think of fried chicken, you think of KFC. When you think of mixed martial arts, you think of the UFC.
In a way, positioning can be considered a powerful form of branding, but it is actually the step before branding. Positioning is the strategy that determines the brand values that form the foundation of brand equity. And branding is the execution and communication of those brand values to the market. Positioning is a battle for perception, not products.
“The basic approach of positioning is not to create something new and different but to manipulate what’s already up there in the mind, to retie the connections that already exist.”
~ Ries & Trout
Imagine that the consumers’ minds are made up of different ladders for different industries, and each rung represents the position of a business in that industry. The top rung will be occupied by the business that owns the position of the market leader in that industry.
Knowing what you want your position to be and owning that position are two completely different things. Firstly, you cannot go about creating your position and expect the market to accept it. Just like value, your position is determined by the consumers, not by you. The position you own must be given or accepted by the marketplace. All you can do is to do your best to make a strong case of why you should own a particular position.
Marketing is often common sense. Your position must be truthful and credible to be accepted by your consumers. Positioning is a logical marketing communication strategy. Your desired position must make sense to your consumers; otherwise, they will challenge it and reject your proclaimed position. If you position yourself as ‘The Only Mobile Game Developer in the World’, it is unlikely that anyone will accept that since they know, that is not true. A better strategy is to use undisputable facts and develop a position like “The First Mobile Game Developer to Use VR Nano Tech”, if it is a factual position you can back up with the technology.
The position of being the “first” in any product category is exceptionally powerful. If you can craft and own a position that establishes yourself as the “first” and the market accepts it, you will be in an excellent position (pun intended).
All decisions pertaining to your brand equity building and communication efforts, and to some extent, even the value you bring to the market, are governed by your position. By crafting a position that you hope to occupy in the consumers’ minds, you are hoping that they will identify you with a particular image or impression.
Positioning can seem abstract so to help you better understand how to craft a positioning strategy, here are five primary characteristics that you can use as a foundation to build on.
- A Position Must be Based on a Unique Difference
- A Position Must Have Value
- A Position Must be Crafted with the Competition in Mind
- Positioning Entails Focus and Sacrifice
- A Position Must Have an Over-Simplified Message
Go through the above checklist and see how you can position your brand to fulfil each of the five characteristics.
Once you understand the Marketing Inverted PyramidTM, you can use it to craft the strategy for your business. Go through each side of the pyramid and list down all relevant information pertaining to that aspect of marketing. Once you have mapped out the Marketing Inverted PyramidTM, plan your strategy based on the marketing goal that you determined at the start of the exercise.
As important as it is to craft a strategy for your business, it is equally important to implement the strategy to achieve meaningful results. The Economist Intelligence Report noted that 61% of respondents acknowledge that their firms often struggle to bridge the gap between strategy formulation and its day-to-day implementation.
The implementation of strategy requires a well-crafted strategic marketing plan. This plan maps out short-term objectives, workflows and processes that will help an organization execute the strategy. When creating your plan, be sure to create S.M.A.R.T. goals. These are goals that are:
One way to ensure strategic implementation is followed through is to engage a strategic marketing consultant who specialises in such work. For example, Evolve & Adapt is a strategy & implementation consultancy firm that works with businesses to grow their brand & revenue through strategy. As developers of the Marketing Inverted PyramidTM, the firm can guide companies through the strategy and implementation process of the framework.
Regardless of whether your strategy planning and execution are conducted in-house or with a third-party consultant, it is essential to have a strategy in place for your business. In a digitally evolving world where the customer journey and behaviour have entirely changed due to the emergence of digital platforms and communication channels, strategic marketing with relevant tactics is needed more than ever to have a fighting chance at evolving and adapting. Companies that decide that marketing budget and effort should be reduced as cost management measures will almost certainly collapse. To paraphrase Henry Ford, “the man who stops marketing to save money is like the man who stops the clock to save time”.
6–Tze, Sun, “The Art of War”, (Nov 2007). Filiquarian; First Thus edition.
8–Perreault, W. D., & McCarthy, E. J. (2002). Basic marketing: A global managerial approach. McGraw-Hill/Irwin.
10–Trout, J., & Ries, A. (1986). Positioning: The battle for your mind. New York, NY: McGraw-Hill.