Many small and medium sized enterprises (SMEs) do not have a marketing strategy. This means that companies that do have a clear direction for their marketing, with a strategy and plan, can get far ahead of their competitors. It’s all about having an approach based on long term thinking.
Too often business owners and CEOs work in the business, not on the business; daily operational work consumes them so they don’t spend enough time standing back and ensuring that the business is following a clear long term direction.
You need to have a good understanding of your perfect customers, key competitors and what their competitive advantage (or USP – unique selling proposition) is.
As Dr Chuck Bamford says:
“…Strategy is … probably more like 35 percent science and 65 percent art, but there is a science. There is a process that works. If done with some rigor, applying the science of strategy will separate your company from all your competitors and allow you to earn extraordinary returns.”
In practice, developing a marketing strategy can often be evolutionary and iterative. However, businesses should follow a rigorous process to develop a solid strategy.
The process should start with a deep understanding of your competitors and your customers.
As a business owner or CEO, you should get a real grasp of your competitive environment, enabling you to develop a meaningful strategy by gaining:
1) A deep understanding of your perfect customers.
2) A good knowledge of up to 5 key competitors which can be drawn or mapped out in graphs (or perceptual maps) by focusing on two key variables.
3) An understanding of the real and perceived switching costs from you and your competitors.
4) A map of the customer touchpoints (or customer journeys), ensuring that each touchpoint reinforces the strategy of the business.
Your perfect customers get your value proposition
A perfect customer is one that instantly understands your value proposition, and is willing to pay you for it. A successful strategy should be based on focusing on your perfect customers.
“It is the focus on the perfect customer that can provide the compass — but not a precise compass, as strategy is about nuance. I like to remind everyone that strategy is an “ish” approach.” (Dr Chuck Bamford)
What is your business’s competitive advantage?
Your competitive advantage should be at the heart of your strategy. Where possible, this should pass the test of being rare and durable. Your competitive advantage allows you to differentiate your business, to make it stand out in your customers’ minds.
In practice, too many businesses try to rely on having a ‘low cost’ strategy, but only one company in a sector can rely successfully on a low cost strategy. Low prices and discounting tend to be strategy-destroying and undermine profitability.
So, you should probably try to avoid excessive use of tactics such as:
- price reductions;
- permanent sales;
- special deals;
- cost savings measures that affect the customer experience;
- launching more and more new products that distract from the original value proposition and cause logistics nightmares;
- outsourcing business processes that negatively impact the customer experience.
Strategic analysis in summary
- Focus on 5 key competitors (using two-dimensional maps).
- Profile your perfect customers (to create realistic customer personas).
- Review your current marketing.
The process should also identify a mix of qualitative and quantitative metrics to measure the success of your marketing activities.
Excellent execution of your marketing plan is essential
However, it is much easier to work out your strategy and plan – what you should do – than it is to actually implement it. Good strategic execution of your plan is essential for success.
Creating effective, working marketing strategies and plans are important but high quality, thorough execution of the strategy and plan is even more important.