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ACR TODAY: Developing Marketing Strategy
Many companies in Air Conditioning and other industries, are faced with the need to develop marketing plans for their board of directors and for giving the business a sense of direction. The core element of the marketing plan is a marketing strategy, but what exactly is a marketing strategy, and how does it differ from marketing objectives? This is an important point to understand, setting marketing objectives is a key first step in marketing before one can develop the strategy.
Marketing objectives are about product and markets only, the matrix (diagram 1) below known as the Ansoff Matrix helps to clarify what the objectives mean in practice.
There are only really 4 possibilities in setting the marketing objectives these are; selling existing products to existing markets, extending existing products to new markets, develop new products for existing markets, developing new products for new markets.
In commenting on marketing objectives they must fulfil the following criteria, they must be; realistic, measurable (this is very important) with figures or percentages, ambitious, achievable within an agreed time span and above all you must know when you have reached it. In short, higher activity carried out in the marketing function must be linked to the over all marketing objectives of the organisation. It follows from this that marketing objectives can not be vague or ill defined.
Having described what marketing objectives are for Air Conditioning Companies, a marketing strategy is the means by which the marketing objectives will be achieved. The marketing strategy is about using the marketing mix, known as the 4 Ps
- Product, Price, Place and Promotion. It should be said here that marketing strategy should not be confused with marketing tactics, more on this later.
As I have said marketing strategies are the means by which marketing objectives will be achieved (see diagram 2), utilising the four major elements of the marketing mix. The following list of marketing strategies cover the majority of options under the headings of the
4 Ps
Product
- Expand the line
- Change performance (quality or features)
- Consolidate the line
- Standardise design
- Positioning
- Change the mix
- Branding
Price
- Change price (terms or conditions)
- Skimming policy
- Penetration policy
Promotion
- Change advertising or promotion
- Change selling
Place
- Change delivery or distribution
- Change service
- Change distribution channels
- Change the degree of forward integration
Formulating marketing strategies is one of the critical and most difficult parts of the entire marketing process, it sets the limits of success. Communicating to all management levels it indicates what strengths are to be developed, what weaknesses are to be remedied and in what manner.
A two year study of 35 top industrial companies by McKinsey Management Consultants revealed that product/market strategy was the key to the secret of keeping shareholders equity rising. Little more needs to be said about its importance. As I said earlier marketing strategies need to be separated from the tactics, which from my experience nearly everyone wants to get involved in. Tactics are the action steps to achieve the marketing strategy ie. They are the ´how´ not the ´why´. The tactical plan spells out the action and the timings, but it must be preceded by a clear statement of marketing objectives and the strategy. There is a strong similarity here between strategy in business and military strategy. One looks at the enemy, the terrain, the resources under command and then decides to attack, the whole front, an area of enemy weakness or to attempt an encirclement of the enemy position.
The policy and mix, the type of tactics to be used and the criteria of success, all come under the heading of strategy. The action steps themselves are the tactics.
It is critically important that a marketing strategist be able to stand back from the every day detail of product, place and pricing discussions, to take a truly strategic view of the marketing activity in the organisation. There is a real need to avoid being sucked into detailed discussion. In any business there are always more than enough people only too happy to get involved in the detailed questions of product design or lengthy discussions with the advertising and PR agencies. Discussion such as mail shot copy, short term pricing campaigns, etc. are tactical marketing. Those tactical discussions are interesting and challenging, but someone needs to stand back from this day to day street fighting
, and retain a vision of the wider picture of the market place and the organisations broader purpose. If someone does not stand back, tactical discussions become the major driver of the business, and a business can end up chasing its tail without ever creating a secure long term position in its market place. There are as we are all aware many examples of this in the HVAC market.
In conclusion I have endeavoured to indicate how a marketing strategy is differentiated from objectives and tactics. In addition I have emphasised how important it is to have someone in the business thinking about the strategy, and not being dragged into tactical discussions with colleagues who are involved in the implementation. It is a testament to its importance that companies I know who survive and prosper are the ones who follow this guidance.
