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 (see Diffusion of Innovations).
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?
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.
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.”
