What actually is marketing? Surely marketing is just another name for selling, PR and advertising? Yes, marketing includes these three things. However, it involves much more, and if you do not co-ordinate the various parts of your marketing strategy, you could find that things pull in opposite directions.

This business guide assumes you have an established business, product line and some sort of marketing policy (even if you have not formally set it out as such). It explains how to develop a dynamic marketing strategy to build your business and refocus it. However, the concepts are just as valid if you are new to business.

What will a strategic marketing plan do for you?

A clear strategy is an essential tool for driving your business forward. This involves following a specified path, instead of reacting from day to day on a haphazard basis. You plan what sorts of product you want to sell, how, at what price, and to what sorts of customer.

You need to start by considering the amount of risk you are prepared to take. The least risky strategy is to stay within familiar fields of both markets and products; the most risky is to venture out into new markets and deal with new products. In between these two opposites are the possibilities of familiar markets but new products, or familiar products and new markets or new market segments.

Having a defined marketing strategy allows you then to select those customers which fit the profile of your ideal market – the ones who buy the sorts of product you have decided you want to concentrate on, at the level of price you require. Although it is not an excuse to neglect customers who do not fit this profile, it does allow you to decide how much of your resources you want to expend on them.

A strategic marketing plan is the essential bridge between:

• Your overall ambitions for your business.
  
• The implementation of a logical series of tactical actions that will take you down the road to success.

But first, you need to work out your main strategy so you know what you’re aiming for. Other words often used in this context are ‘policy’, ‘mission’ and ‘objectives’.

To work out your marketing objectives, you need to complete two things. First do a SWOT analysis (Strengths, Weaknesses, Opportunities and Threats). Another business guide, Improve your ability to see and grasp opportunities, goes into detail on how to do this. The second step is to consider your target markets.

What market should you be targeting?

Once you have a feel for what you are facing from your SWOT analysis, you can move on to deciding which market segment you want to be in.

First, are you selling to consumers or to other businesses, or to other businesses selling to consumers?

Consumer segmentation

If you sell to consumers, market segments can be defined in many ways. One well-known split is that of socio-economic status, where class A is defined as upper middle class, high managerial, administrative or professional, C1 is lower middle class supervisory, clerical or junior managerial and E is survival-level pensioners, casual workers and other low-income earners. These rough divisions can be broken down further; for instance, there are ‘ladies who shop and lunch’ and ‘busy working mums’.

Other ways of defining market segments include age, income, location (which can be broken down into 50 or more groups), lifestyle, hobbies and other interests.

And of course, any given person can come into several different segments. But there are some areas that tend to involve the same sort of person and thus the products they will buy. For instance, socio-economic class B retired people living in leafy suburbs and are quite likely to have sedentary or intellectual hobbies, such as playing bridge or going to the theatre.

Business-to-business segmentation

If you sell to other businesses, even if their end-buyer is a consumer, a different set of segments applies. These segments might be defined by location, size, type of business (professional, retailer, public-sector, non-profit making etc.), industry, main market (home or export) and any number of other orientations.

Using segmentation

The point of segmentation is that it allows you to:

• Identify and locate more easily the members of that target market.
  
• Define the tone of your marketing messages.
  
• Set your pricing and delivery strategies.

For retail customers, a key decision is where to locate your premises. You can personally investigate a small catchment area by driving around it; on a national or international scale, you can get some detailed demographic information by using one of the systems like ACORN (postcode-based research tool) to assess areas.

For business-to-business customers, you need other methods of locating customers such as directories, trade associations, trade magazines or lists of exhibitors at trade shows.

The four Ps

Armed with your SWOT analysis and having identified your target market, establish the four ‘Ps’ of the marketing mix – Product, Price, Promotion and Place (Distribution).

Product

Here you are looking to arrive at an overall policy on product mix. Should you:

• Expand or consolidate the line of products you offer?
  
• Change the mixture of products you offer? For instance, if you were a travel agent specialising in holidays for the elderly, you might think of offering holidays for disabled people, who have many of the same requirements as the elderly. Or you might add a range of holidays for the middle-aged, or even holidays where grandparents could take young children.
  
• Change the performance or quality of your products?
  
• Add more features to your products to offer more choice, or should you standardise the designs?

Price

What pricing policy do you need for your products for various market segments? Should you:

• Change your prices, terms or conditions, or continue as before?
  
• Change your pricing policy? For instance, you might adopt:
  
  • a ‘skimming’ price policy, which means introducing novelty products at high prices then reducing them as you exhaust each segment of customers who are prepared to pay the premium at each price level,
    
  • a ‘penetration’ pricing policy, which introduces the product at a low price in the hopes of achieving a massive take-up before, your competitors jump on the bandwagon.

Promotion

This relates to how you want to bring your product to the customers’ attention. Should you:

• Alter your advertising and/or PR methods?
  
• Alter your selling method? Perhaps you could use a direct salesforce, or sell by direct mail, via email, at exhibitions or through your website.

Place

This means the logistics of providing the product to the customer. Here you are thinking about:

• Changing methods of distribution and delivery. The three main categories to consider are: direct from you to the customers, from you to retailers, or from you to wholesalers.
  
• Changing levels of service.

Some basic strategies

At the core of your marketing strategy is your attitude to risk. In general, the riskier options also offer the greater opportunities for spectacular success… or failure. There are four main marketing strategies, each with a varying degree of risk attached.

Market penetration

This is the least risky option, and consists of staying within the confines of what you know best, but achieving growth by selling more. This means:

• Selling more to your existing customers.
  
• Finding new customers in the same market segment to whom the product is new.
  
• Taking customers from your competitors (while at the same time preventing your competitors taking customers from you).

Common strategies for market penetration include building strong customer relationships, offering bulk discounts or adding value.

Market development

This involves selling more of the same products to completely new markets. A good example of this is the company that persuaded women that its baby-care skin products were also good for adult women’s skins. Alternatively, you might consider exporting for the first time.

Product development

This involves introducing new products to your existing markets. One way to approach this is to widen first your own, then your customers’, perception of what you offer. One luxury jam producer achieved success by concentrating on the fruit element of their jams, then offering other products containing fruit such as yoghurts, fruit drinks and then fruit tartlets, and finally moving on from the tartlets to other baked products.

Diversification

This involves taking new products into new markets and it is the most risky strategy. It is, however, possible to reduce some of the risk by employing expertise in the new products or new markets (or both), or by entering licensing or franchising agreements with a business that already has the necessary expertise.

Analysing your target segment

Before you can direct your promotional efforts, you need to be sure you understand your prospective customers: their perception of what they need and what they are entitled to have, and how they think and reach decisions on what they buy.

This analysis needs to be quite detailed, and it might be cheapest to brief a specialist market expert to do it for you. You need to find out what people buy from all possible suppliers and how they use these products (if applicable), how they buy them and how often. Therefore, you might find that working mums buy one bottle of unbranded toilet cleaner once a month from a discount store, school janitors buy the same stuff from the same store but a dozen bottles a week, while class A householders don’t buy it at all – they expect their cleaner to do that.

Why members of segments buy is also important. When TQM (Total Quality Management) was introduced a few years ago, many small business bought TQM consultancy services and training courses, not because they necessarily believed in the concept, but because they thought being accredited would help them get business from local and national government departments. That is a very different sort of buying decision from the ones made by parents just before Christmas, or the ones made every week by moneyed followers of high fashion.

Once you have completed this analysis, you will be better able to aim your promotional efforts at your target customers.

Analyse your competitors

Finally, you need to check out your competitors because, to succeed, you have to differentiate yourself from them, so customers will decide they prefer to buy from you.

You might think an ideal world would be one where you have no competition at all, but to a large extent, competition is a good thing – it demonstrates that there really is a market for your product. And even if you were the only supplier, customers can still decide they don’t want to buy from you at all but would rather spend the money on something totally different. For example, a cinema might compete with a restaurant, a new car with a holiday, a freelance book-keeper with an in-house accounts package.

Armed with this information, you can work out how you are different from the competition, or how you should aim to become different to gain the share you want of the available market. In other words, you are defining what is, or could be, your USP (Unique Selling Point).

Putting it all together into a tactical marketing plan

The basis of your plan rests on two things: what you want to sell and who you want to sell it to… or does it? This is the mistake many businesses fall into. We’re back to that monopoly situation again, and the fact that the customer always has the choice of not buying. So those two things should be expressed in a different way:

• What you would like to sell and realistically can sell.
  
• Who you would like to sell it to – who is likely to buy it.

Armed with those realistic objectives, you can work out the steps needed to achieve success cost-effectively. This is when you get down to the nitty-gritty of implementing your set of ideas. You might need to consider a number of linked elements:

• The promotional campaign, including advertising, direct mail, PR and developing your website and email database.
  
• Staff training.
  
• The delivery system.
  
• A reliable set of suppliers.
  
• The necessary funding to carry out the whole plan.

Like any plan, this one must include dated milestones, so you can check progress. It should also be split into time zones – where you aim to be at the end of one year, two years, five years. You should monitor progress as well as revisit the whole concept at least once a year, modifying your goals and strategy in the light of your experience and current information.

Useful contacts

CACI

For information about geodemographic profiling using ACORN.

T: 020 7602 6000
W. www.caci.co.uk

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