What Is Marketing Strategy? A Brief Introduction
"What
is the definition of marketing
strategy?" is a common question among
marketing professionals and others in the business world.
So let's cover some basic
ideas that separate marketing strategy from other aspects of marketing.
First, the focus of a
marketing strategy is broad—it takes a helicopter
view of the marketing landscape. As
such, it does not focus on tactics—such as lead generation, content
marketing, social
media, and the like. Strategy asks different, larger questions. And
although the mindset of strategy tends to be analytic, strategy escapes
analytic boundaries and ventures beyond.
Second, the perspective of
marketing strategy is long-term. That
clashes with the short-term attitudes that dominate marketing. You do need a
short-term viewpoint, but a strategy's long-term view is what sustains
organizations over time.
Third, marketing strategy
aims to provide a sustainable, differential
advantage over the competition.
Let's ground all that in
terms of the common ways we think about marketing: Strategy is not focused on
personas or specific people—say, a customer. Nor is a strategy focused on the
level of market descriptors, such as SIC codes or Industry verticals. Instead,
marketing strategy comes into play at the level of the entire market—and even
potential markets.
So, when we think about that
higher level, what questions arise that are the domain of marketing strategy?
- How
is the market changing over time?
- What
is the future of the market?
- Where
are future competitors coming from?
- What
types of growth strategies exist right now and might in future?
- How
does my company get a differential advantage over the competition now and
in the future?
What Is a Market?
Those questions about
marketing strategy bring into focus a central issue: You need a deep
understanding of your market.
But what is a market?
Now, that's a bit tricky to
answer because a market is not tangible: You can't touch, smell, taste, see, or
hear a market—it's a concept. So there are various ways to think about it,
including these two common, lower-level approaches:
1. The
simplest definition of a market is your
current and potential customers and the competitors vying for those customers.
2. A
more specific market definition is at the level of product category, industry, or
vertical.
Many companies focus on those
two narrow, limited ways to define a market. As a result, they get blindsided
by the competition.
Who Is Your Competition?
A
classic viewpoint on competition comes from Michael Porter, who wrote the
seminal book on the topic: Competitive
Strategy, in 1985. Porter says companies face competition from
five sources:
- At
the two levels of a market noted above: competitors vying for your
customers right now.
- But
competition could also evolve from suppliers to your industry and buyers in your industry. The
classic example of the first is a manufacturer who sells to retailers but
decides to go around and sell directly to end customers; and in the second
case, some buyers can integrate backward, such as buying a company that
supplies the brands or services needed for production.
- And
the two sources of competition perhaps most surprising (and terrifying)
for companies because of the threat they pose are new entrants and substitutes.
Higher-Level Strategic Thinking
Going
beyond the lower-level definitions of a market, let's see if we can think at a
higher-level approach to view potential new entrants and substitutes—sources of
competition that are particularly threatening.
A
higher-level view considers a market as "a group of customers who want or
need the benefits they derive from product/services"—and not the
products/services themselves.
Let's
provide an example.
Consider
the taxicab industry. Taxis can be traced back to 1640, when horse-drawn
vehicles were available for hire. The modern taxi business was critical to many
cities, such as New York, as they provided transportation around urban areas.
Under the medallion system, taxis operated with limited competition. Although
they competed with other modes of transport—buses, subways, private cars, shoe
leather—there was no other convenient way to get from one point to another in a
city except by taxi that could be hailed or called.
As
smartphones came out in the early 2000s, the taxi industry made no attempt to
provide more control and certainty to consumers who wanted rides. Eventually,
along came Uber (2010) and Lyft (2012).
Taxi
companies could not believe anyone would jump in a car with an unlicensed
stranger. But people valued the benefits of hailing and paying for rides from
their phones. Meanwhile, what had made taxis dominant—the centralized dispatch
systems, limits on the supply of medallions, industry regulations, and the
like—became liabilities.
Bottom
line: companies that regularly look to both understand the benefits customers
want and are willing to re-examine their business practices are less likely to
get blindsided by inevitable market evolution.
So
the point about marketing strategy is simple: Think at a
high-level view. At a strategic level. When you do, you will see competitors in
the market: You will see the threat of new entrants, you will see substitute
products, and much more.
You
can achieve that level of insight not by focusing on your company, the
competitors in your market right now, or your products and services. You
achieve it by focusing on the benefits that customers in the market want or
need.
That
focus will help you take a "helicopter view," a strategic long-term
viewpoint, which will lead to a differential advantage over the competition.
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