Introduction
Too often, marketing is thought of being advertising and nothing more. However, already Levitt (1960) and Kotler (1970) established that marketing is a strategic priority. Many organizations, perhaps due to lack of marketers in their executive boards, have since forgotten this imperative.
Another reason for decreased importance of marketing is due to marketing scholars pushing the idea that “everything is marketing” which leads to decay of the marketing concept – if it is everything, it is nothing.
Nevertheless, if we reject the omni-marketing concept and return to the useful way of perceiving marketing, we observe the linkage between marketing and strategy.
Basic questions
Tania Fowler wrote a great piece on marketing, citing some ideas of Professor Roger Martin’s HBR article (2014). Drawing from that article, the basic strategic marketing questions are:
- Who are our customers? (segmentation)
- Why do they care about our product? (USPs/value propositions/benefits)
- How are their needs and desires evolving? (predictive insight)
- What potential customers exist and why aren’t we reaching them? (market potential)
This is a good start, but we need to expand the list of questions. Borrowing from Osterwalder (2009) and McCarthy (1960), let’s apply BMC (9 dimensions of a business model) and 4P marketing mix thinking (Product, Place, Promotion, Price).
Business Model Canvas approach
This leads to the following set of questions:
- What is the problem we are solving?
- What are our current revenue models? (monetization)
- How good are they from customer perspective? (consumer behavior)
- What is our current pricing strategy? (Kotler’s pricing strategies)
- How suitable is our pricing to customers? (compared to perceived value)
- How profitable is our current pricing?
- How competitive is our current pricing?
- How could our pricing be improved?
- Where are we distributing the product/solution?
- Is this where customers buy similar products/solutions?
- What are our potential revenue models?
- Who are our potential partners? Why? (nature of win-win)
Basically, each question can be presented as a question of “now” and “future”, whereupon we can identify strategic gaps. Strategy is a lot about seeing one step ahead — the thing is, foresight should be based on some kind of realism, or else fallacies take the place of rationality. Another point from marketing and startup literature is that people are not buying products, but solutions (solution-based selling, product-market fit, etc.) Someone said the same thing about brands, but I think solution is more accurate in the strategic context.
Adding competitors and positioning
The major downside of BMC and 4P thinking from strategic perspective is their oversight of competition. Therefore, borrowing from Ries and Trout (1972) and Porter (1980), we add these questions:
- Who are our direct competitors? (substitutes)
- Who are our indirect competitors? (cross-verticality, e.g. Google challenging media companies)
- How are we different from competitors? (value proposition matrix)
- Do our differentiating factors truly matter to the customers? (reality check)
- How do we communicate our main benefits to customers? (message)
- How is our brand positioned in the minds of the customers? (positioning)
- Are there other products customers need to solve their problem? What are they? (complements)
Defining the competitive advantage, or critical success factors (CSFs), leads into natural linkage to resources, as we need to ask what are the resources we need to execute, and how to acquire and commit those resources (often human capital).
Resource-based view
Therefore, I’m turning to resource-based thinking in asking:
- What are our current resources?
- What are the resources we need to be competitive? (VRIN framework)
- How to we acquire those resources? (recruiting, M&As)
- How do we commit those resources? (leadership, company culture)
Indeed, company culture is a strategic imperative which is often ignored in strategic decision making. Nowadays, perhaps more than ever, great companies are built on talent and competence. Related strategic management literature deals with dynamic capabilities (e.g., Teece, 2007) and resource-based view (RBV) (e.g., Wernerfelt, 1984). In practice, companies like Facebook and Google do everything possible to attract and retain the brightest minds.
Do not forget profitability
Finally, even the dreaded advertising questions have a strategic nature, relating to customer acquisition and loyalty, as well as ROI in regards to both as well as to our offering. Considering this, we add:
- How much does it cost to acquire a new customer?
- What are the best channels to acquire new customers?
- Given the customer acquisition cost (CAC) and customer lifetime value (CLV), are we profitable?
- How profitable are each products/product categories? (BCG matrix)
- How can we make customers repeat purchases? (cross-selling, upselling)
- What are the best channels to encourage repeat purchase?
- How do we encourage customer loyalty?
As you can see, these questions are of strategic nature, too, because they are directly linked to revenue and customer. After all, business is about creating customers, as stated by Peter Drucker. However, Drucker also maintained that a business with no repeat customers is no business at all. Thus, marketing often focuses on customer acquisition and loyalty.
The full list of strategic marketing questions
Here are the questions in one list:
- Who are our customers? (segmentation)
- Why do they care about our product? (USPs/value propositions/benefits)
- How are their needs and desires evolving? (predictive insight)
- What potential customers exist and why aren’t we reaching them? (market potential)
- What is the problem we are solving?
- What are our current revenue models? (monetization)
- How good are they from customer perspective? (consumer behavior)
- What is our current pricing strategy? (Kotler’s pricing strategies)
- How suitable is our pricing to customers? (compared to perceived value)
- How profitable is our current pricing?
- How competitive is our current pricing?
- How could our pricing be improved?
- Where are we distributing the product/solution?
- Is this where customers buy similar products/solutions?
- What are our potential revenue models?
- Who are our potential partners? Why? (nature of win-win)
- Who are our direct competitors? (substitutes)
- Who are our indirect competitors? (cross-verticality, e.g. Google challenging media companies)
- How are we different from competitors? (value proposition matrix)
- Do our differentiating factors truly matter to the customers? (reality check)
- How do we communicate our main benefits to customers? (message)
- How is our brand positioned in the minds of the customers? (positioning)
- Are there other products customers need to solve their problem? What are they? (complements)
- What are our current resources?
- What are the resources we need to be competitive? (VRIN framework)
- How to we acquire those resources? (recruiting, M&As)
- How do we commit those resources? (leadership, company culture)
- How much does it cost to acquire a new customer?
- What are the best channels to acquire new customers?
- Given the customer acquisition cost (CAC) and customer lifetime value (CLV), are we profitable?
- How profitable are each products/product categories? (BCG matrix)
- How can we make customers repeat purchases? (cross-selling, upselling)
- What are the best channels to encourage repeat purchase?
- How do we encourage customer loyalty?
The list should be universally applicable to all companies. But filling in the list is not “oh, let me guess” type of exercise. As you can see, answering to many questions requires customer and competitor insight that, as the startup guru Steve Blank says, needs to be retrieved by getting out of the building. Those activities are time-consuming and costly. But only if the base information is accurate, strategic planning serves a purpose. So don’t fall prey to guesswork fallacy.
Implementing the list
One of the most important things in strategic planning is iteration — it’s not “set and forget”, but “rinse and repeat”. So, asking these questions should be repeated from time to time. However, people tend to forget repetition. That’s why corporations often use consultants — they need fresh eyes to spot opportunities they’re missing due to organizational myopia.
Moreover, communicating the answers across the organization is crucial. Having a shared vision ensures each atomic decision maker is able to act in the best possible way, enabling adaptive or emergent strategy as opposed to planned strategy (Mintzberg, 1978). For this to truly work, customer insight needs to be internalized by everyone in the organization. In other words, strategic information needs to be made transparent (which it is not, in most organizations).
And for the information to translate into action, the organization should be built to be nimble; empowering people, distributing power and reducing unnecessary hierarchy. People are not stupid: give them a vision and your trust, and they will work for a common cause. Keep them in silos and treat them as sub-ordinates, and they become passive employees instead of psychological owners.
Concluding remarks
We can say that marketing is a strategic priority, or that strategic planning depends on the marketing function. Either way, marketing questions are strategic questions. In fact, strategic management and strategic marketing are highly overlapping concepts. Considering both research and practice, their division can be seen artificial and even counter-productive. For example, strategic management scholars and marketing scholars may speak of the same things with different names. The same applies to the relationship between CEOs and marketing executives. Joining forces reduces redundancy and leads to a better future of strategic decision-making.