Strategy can be a dirty, intimidating and expensive word. It often scares entrepreneurs and managers in businesses because by having a strategy, you’re nailing your colours to the mast and are setting sail on a specific course of action in a specific way. This delights consultants as it means they can pretty much write a blank cheque to help seemingly hapless clients develop a strategy.
Strategy is actually the backbone of successful businesses and put simply is the way you set out with available resource to achieve your business objectives. As a bonus, once you have selected a strategic marketing approach, you can apply some pretty clear marketing tactics to ensure it works.
Two recent blogs by Seth Godin (Choose Your Customers http://tinyurl.com/y9ubqgn) and (The Why Imperative http://tinyurl.com/yduc72j) demonstrate in different ways the fundamental importance of strategy.
The value this blog post aims to bring – as an instalment of my Principles of Marketing series – is to simplify strategy so everyone can develop one that works for them.
Aligning with overall business objectives is the goal. There are four clear marketing strategies – using the oft-cited Ansoff Matrix – which cover the marketing of existing or new products and services within existing and new markets.
1. Market penetration strategy (existing product to existing market). Where a market is of significant size and return can be achieved, it makes sense to make the most of your reach, existing customers, networks and contacts to drive referral. Amazon’s drive to become the world’s leading non-high street retailer by pioneering the review feature revolutionized online shopping.
2. Market development strategy (existing product to new market). Amazon could be cited again here too, but market development is about finding new segments of customers for your products. Leading gadget sites like Firebox and Boys Stuff have done this well by setting up gadget collections aimed at women, accessing a whole new untapped demographic.
3. Product development strategy (new product to existing market). Google are expert in developing new products, including their cloud based MS Office comparable products that are free and can be accessed from any computer anywhere in the world. Dyson pioneered a new type of bagless vacuum cleaner and more recently an energy saving, fast hand dryer that is being rolled out across UK washrooms.
4. Diversification strategy (new product to new market). Is Apple the master in this area? A niche design led computer designer into the 90’s, new products unquestionably opened up new markets . The launch of iTunes and the iPod and then more recently the iPhone have taken Apple mainstream. Promoted through early adopters, they were picked up as must haves by the mainstream. The boldest strategy, but then when you’re up against a competitors like Microsoft and Dell, you have to do something to differentiate.
In reality, it’s not so simple as most companies have a range of products and services that each require their own strategy, due to being at different points of the life cycle, being a different investment stage, and depending on the market and the needs of the customer they target.
But starting to stand for something, and being able to say no, will crystallise your thinking and stand your business in good shape for the future.