09.16.03
 By
Michael L. Perla
In many business settings, strategy is a word that has cachet. It
seems to have a little less today, with the word execution gaining
quickly, but it still carries some weight.
At its essence, strategy (the “how”) is a way to accomplish
an objective (the “what”). In terms of a marketing strategy,
if the objective of marketing is to select, serve and satisfy customers
in a profitable manner, then a marketing strategy is the way a company
accomplishes those objectives, which may include segmentation studies,
competitive analysis, and the tactical 4 Ps (Promotion, Place, Product,
Price).
A famous figure in the world of strategy was a general named Sun
Tzu. He lived in northeastern China about 2500 years ago and was
considered an expert in military strategy due to his many victories
on the battlefield. Many successful military leaders (like General
Patton) and business executives (like Jack Welch, the former GE
CEO) have attributed their victories to their application of Sun
Tzu’s principles (see The Art of War for Executives by D.G.
Krause and The Six Principles from Sun Tzu and the Art of Business:
Six Principles for Managers by Mark McNeilly). |
Sun Tzu wrote about four areas, among others, that we could apply
to the testing of marketing strategy: speed, strengths and weaknesses,
alliances, and successful market capture.
Speed
Market timing and speed are critical to many industries, such as technology,
pharmaceuticals, and some consumer goods. Although many writers have
challenged the first-mover advantage approach, it is still valuable
to have the capability to execute quickly and deliberately.
Depending on the current maturity of the market, being able to time
a market window and execute a fast launch may be the difference between
gaining substantial mind-and-market share or none at all. This scenario
has played itself out, writ large, in the chip business—as Intel,
AMD and others try to be the first-to-market and the first to capture
the “heavy using” innovators and early adopters.
In technology markets, for example, the top three competitors often
have market shares of 50%, 15%, and 5%, respectively, depending on
being first-to-market, having proprietary technology, and having overwhelming
superiority or functionality.
Like I said, time-to-market and speed are not crucial to all industries;
it often depends on the lifecycle stage and how dynamic the industry
is. But they are generally relevant to any new venture, product/service
or strategic direction. Speed does not mean to do things hastily,
but to prepare and develop the necessary structure to be opportunistic,
adaptable and agile.
A couple of questions to test the speed area:
- How important is speed to your industry, and how do the best
players exploit it?
- What actions can you execute to take advantage of speed components
and market windows (e.g., incentives based on speed, business
process redesign)?
Strengths and Weaknesses
Many people are familiar with the SWOT technique as a way to analyze
a company’s current situation, to brainstorm, and to develop new strategies
(you evaluate your internal Strengths and Weaknesses, and external
Opportunities and Threats). Sun Tzu’s key message in this area is
to avoid your competitor’s strengths and attack their weaknesses.
Many marketing strategies already implicitly include this understanding,
but it’s often not explicit or fully fleshed out. Many companies would
be better off flanking (versus going head-on against) their competitors
by differentiating their solution or altering, extending or re-shaping
their customers’ requirements.
A couple of questions to test the strengths and weaknesses area:
- Within the context of your strategy, how do your actions or
tactics attack a competitor’s weakness?
- What are your company’s vulnerabilities, and how might you prevent
or mitigate a competitive attack?
Alliances
Co-marketing and co-branding are popular today as ways to leverage
market relationships, product/service complements and others’ expertise
or experience. Sun Tzu wrote that building a strong web of alliances
is a way to decrease the number of attractive or effective moves of
your competitors. For example, IBM has partnerships/alliances with
over 30 application vendors and can effectively counter almost any
direct software vendor attack with its broad and comprehensive solution
set.
Alliances are easier to set up and break up than mergers and acquisitions;
that decreases your investment risk and provides for quicker competitive
and market responses. Any strategic marketing plan should involve
the identification, analysis and evaluation of potential alliances
and methods to control the competitive landscape.
A couple of questions to test the alliance area:
- What benefits (e.g., customer relationships, expertise, market
coverage, fulfillment) can your company offer/receive from other
companies in terms of developing and executing an alliance relationship?
(Or, what is your value proposition to alliance candidates?)
- How are your competitors executing alliances and what can you
learn from their successes and failures?
Successful Market Capture
Sun Tzu’s key message is to capture your market in such a way that
it is not destroyed in the process. This goal can be accomplished
in numerous ways, such as pursuing parts of the market that are underserved
or using indirect or veiled approaches that will not elicit a competitor’s
attention or response.
Early on, Southwest Airlines (which recently reported its 48th consecutive
profitable quarter) was dismissed as not having a robust business
model or a traditional hub-and-spoke strategy. It has been wildly
successful since its inception by serving the need for low-cost, reliable
air travel, and it has achieved this success in such a way as to not
engender a competitive response until it was too late to matter.
By using a strategy that is nontraditional and innovative or that
targets a market perceived as less attractive, you can potentially
avoid a costly price war, which often draws the most aggressive responses
from competitors and leaves a market depleted of profits.
The Elusive DMOZ . . .
I am not too familiar with DMOZ so I am hoping some of you who are more experienced with it could answer this one. I am trying to get my site listed in DMOZ, but the category I am submitting to does not have an editor. Does this mean that no one will add me unitl there is an editor?...
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A couple of questions to test the market capture area:
- What parts of your market are underserved, and how can you attack
them without eliciting a competitive response?
- How can you reconfigure your marketing strategy to be more deceptive,
agile and pre-emptive?
Conclusion
Many companies are finding out today that there is no perfect strategy.
Many business pundits will tell you that it’s “all about execution,”
which—for the most part—is true. Most companies’ objectives are implicit:
that is, increase revenues and decrease costs, or some permutation
of the two.
In reaching those objectives, it’s important to continually test your
marketing strategy in terms of the competition and its ability to
succeed, especially in dynamic or early lifecycle industries.
Many CEOs are talking about strategic adaptability and agility, partnerships
and alliances and how to exploit their strengths and mitigate their
weaknesses. For the most part, these foci are unlikely to change in
the future and are heightened by our current economic downturn.
When companies are struggling to hit their previous targets, they
often seek to penetrate smaller and less attractive markets, with
the large companies playing up their size (could be a strength or
weakness) and the smaller companies highlighting their responsiveness,
speed and agility.
In closing: Sun Tzu said (and this is quite applicable to the various
strategies and tactics of the marketer), “The best military strategy,
then, is to use superior positioning. After that, use diplomacy. After
that, use military force as a threat. Only after all else has failed,
attack your enemy.”
About the Author:
Michael has worked as a researcher and school psychologist in the
past, and is currently a senior consultant in the sales effectiveness/CRM
space. He regularly consults with Fortune 500 companies in helping
them to define, design, and align their sales and marketing processes,
resulting in better lead generation, higher bid-to-win rates, shorter
sales cycles, and greater forecast accuracy. He can be reached at
mperla@mindspring.com
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