Linking Strategies

5G3190 DMCMDavid Edmundson-Bird

Linking Strategies

• So what’s the problem?– You have to produce a digital marketing strategy

poster– You have to create an effective market segmentation

exercise– You have to evaluate digital market segment

attractiveness– You have to produce a positioning approach– You have to discuss the role of the digital marketing

mix in your digital marketing programme

Linking Strategies

• So what do you need to learn?– How we re-link business strategy and marketing

strategy– What traditional marketing strategy is all about– What the different digital marketing scenarios are– How one might consider a pure-play digital

marketing strategy– How one might consider a bricks-and-clicks digital

marketing strategy

RE-LINKING SBU STRATEGY & MARKETING STRATEGY

The Link between SBU Strategy & Marketing Strategy

• SBU Strategy gives you the context in which to make marketing strategy decisions

SBUStrategy

SBUStrategy

MarketingStrategy

MarketingStrategy

GUIDANCEBENCHMARKSDIRECTION

Ensuring Linkage between SBU & Marketing Strategies

• For marketing strategy to work, it must be aligned with SBU Strategies in 4 ways

“FIT” BETWEENTHE STRATEGIES

“FIT” BETWEENTHE STRATEGIES

IMPLEMENTATIONALIGNMENT

IMPLEMENTATIONALIGNMENT

RESOURCEALIGNMENT

RESOURCEALIGNMENT

ACTIVITYALIGNMENT

ACTIVITYALIGNMENT

GOALALIGNMENT

GOALALIGNMENT

Goal Alignment

• Strategic, financial & customer goals of SBU and marketing must be aligned

• What stops this?– Business strategy changes quickly– SMT and Marketing don’t communicate– No one checks to see they are aligned

Resource Alignment

• There have to be resources provided for marketing by the SBU

• What stops this?– SBU level constraints that underestimate

marketing resources required for far-reaching marketing objectives

– Inability to justify increase in marketing expenditure

Activity Alignment

• For marketing to work, other parts of the SBU must experience a consistent change in activities (recruitment, customer service, fulfilment)

• What stops this?– No coordination between functions and activities– Activities are not explicitly mapped onto

objectives

Implementation Alignment

• Poor implementation can undermine a good marketing strategy even if the other three are fine

• What stops implementation alignment?– Poor timing– Poor resources to implement

WHAT IS TRADITIONAL MARKETING STRATEGY ALL ABOUT?

Key Concepts

• Remember what the 3 key components of a marketing strategy are?

Marketing StrategyMarketing Strategy

SEGMENTINGSEGMENTING TARGETINGTARGETING POSITIONINGPOSITIONING

Marketing Strategy Decisions

• Marketing strategy = segmentation + targeting + positioning choices

• Taken to market through 4 elements of the Marketing Mix

Price

Product

Distribution

Promotion

Position& TargetMarket

Example: Positioning by Segment

THE CAR

FOR

PEOPLE

WHO

WANT

ADVENTURE

TH

E C

AR

TH

AT

’S S

AF

EF

OR

TH

EFA

MIL

Y

How do we Prioritize Segments?

SEGMENTATIONPRIORITISATION

Buyer ReadinessBuyer Readiness

Attitude of BuyerAttitude of Buyer

Current Trend/Mkt LeadersCurrent Trend/Mkt Leaders

Willingness to PayWillingness to Pay

WHAT ARE THE DIFFERENT DIGITAL MARKETING SCENARIOS?

Marketing Strategy Formulation

• 2 Obvious distinctions– Pure-play and Bricks-and-Clicks

• Similar path for marketing strategy development– But some subtle, important differences

Marketing Strategy Formulation

DIGITALSBU

STRATEGY

DIGITALSBU

STRATEGY

MARKETINGSTRATEGY FOR

DIGITALBUSINESS

MARKETINGSTRATEGY FOR

DIGITALBUSINESS

INTEGRATEDMARKETINGSTRATEGY

INTEGRATEDMARKETINGSTRATEGY

SBUSTRATEGY

- digital- real world

- overall

SBUSTRATEGY

- digital- real world

- overall

MARKETINGSTRATEGY FOR

DIGITALBUSINESS

MARKETINGSTRATEGY FOR

DIGITALBUSINESS

MARKETINGSTRATEGY FORREAL WORLD

BUSINESS

MARKETINGSTRATEGY FORREAL WORLD

BUSINESS

PURE PLAYBRICKSANDCLICKS

Choices:- Segmentation- Target market- Positioning

Choices:- Same or different segmentation- Same or different target market- Same or different positioning

PURE PLAY DIGITAL MARKETING STRATEGY

Bases for Segmentation in Pure Plays

• Segmentation divides the market into useful sub-units of similar consumers based on:– Demographics– Geography– Psychographics

• Personality characteristics/attitudes (values, emotional responses and ideological beliefs) affecting lifestyle and purchasing behaviour

– Cognitive & behavioural attributes

Effective Segmentation for Pure Plays

• If segmentation is going to be effective, it has to be:– Meaningful

• Needs to explain why customers act in a certain way

– Actionable• Can implement against the segment

– Financially Viable• Is a profitable segment

Selecting Target Markets for Pure Plays

• Targeting is about seeking the most attractive (sub) units:– Segment size/growth

• Size now and potential size in 1, 2, 5 years

– Structural attractiveness• Does the segment offer profitable entry to exploit?

– Organisational resources• Does/could the organisation have the capability to

meet the segment requirements?

Positioning for Pure Plays• Positioning describes benefits to the target in their language –

maybe just about one aspect of the product– Feature Positioning

• “Our product does this”

– Benefit Positioning• “Ours is the cleanest product in the world”

– Usage Occasion Positioning• “We deliver products for birthdays”

– User Category Positioning• “Our product is good for families with young children”

– Competitive Product Positioning• “Our product works faster than product x from company y”

– Product-class Positioning• “Our products are precision-built products”

Positioning Plan for Pure Plays

• How a positioning strategy becomes a positioning plan

Compare newactual position

withideal position

Select andimplement themost promising

choice

Develop alternatestrategies

for achievingideal product

position

Determine idealproduct position

Identify actualproduct positioning

Use a perceptualmap to identifyvariables thatmatter tobuyerswhen they makepurchases

Identify the mostfavorable placementon the perceptualmap that theproduct shouldoccupy

Generatealternatives foreitherrepositioning toreach ideal stateor the introductionof a new product

Choose plan thatis mostconsistent withthe organization'sobjectives,resources andstrengths

Evaluates outcomeof positioningefforts

Perceptual Maps: CarsPRICE

LEVEL OFDESIGN

Low High

Low

High

i

ed

ca

b

f

h

j

g

Perceptual Maps: Preference and Opportunity Segments

PRICE

LEVEL OFDESIGN

Low High

Low

High

i

ed

ca

b

f

h

j

g

UNMETNEED

UNMETNEED

UNMETNEEDUNMET

NEED

UNMETNEED

BRICKS-AND-CLICKS DIGITAL MARKETING STRATEGY

Segmentation ScenariosCHANGE IN SEGMENTATION CHARACTERISTICS

due to emerged Digital marketplace

CHANGE IN SIZEof marketsegments

YES

YES

NO

NO

No changeMarket getsreclassified

Marketexpansion

Marketexpansion &reclassification

Segmentation for Bricks-and-Clicks

• Segmenting digital customers will have one of 4 results– No change

• The customers are already digital customers– Market expansion

• Digital opportunity expands organisation’s reach beyond real-world constraints

– Market gets reclassified• Digital customers needs differ from real-world customers

– Reclassified expansion• Characteristics and size of digital customer base differ from real-

world customer base

Targeting for Bricks-and-Clicks• Strategies for targeting can be broken into 4 types

– Carpet Bombing• Digital capability is a product/service enhancement that will

appeal to all target customers– Beachhead Targeting

• Digital capability is a product/service enhancement that will only appeal to a subset of target customers

– Bleed-over Targeting• Digital capability appeals to a new customer segment as well as

the existing real-world customer base– New Opportunity Targeting

• Digital capability only appeals to a new customer segment

Bricks-and-Clicks Targeting Scenarios

SAME CUSTOMERS DIFFERENT CUSTOMERSENTIRE CURRENTSEGMENT

PORTION OF CURRENTSEGMENT

Carpet bombing

Beachhead targeting

New opportunity

Bleed-over targeting

Serve new segmentdigitally

Serve new segmentand some of existingreal-world segmentdigitally

Serve sameexisting real-world

segment digitally

Serve portion ofexisting real-world

segment digitally

CUSTOMER HOMOGENEITY

FO

CU

S O

F E

FF

OR

T

Bricks-and-Clicks Positioning Scenario Guidelines

SAME CUSTOMERS DIFFERENT CUSTOMERSENTIRE CURRENTSEGMENT

PORTION OF CURRENTSEGMENT

Carpet bombing New opportunity

CUSTOMER HOMOGENEITY

FO

CU

S O

F E

FF

OR

T

Beachhead targeting Bleed-over targeting

Borrow heavily fromexisting real-worldpositioningTout advantages of Digitale.g. convenience andaccessibility

Completely repositionPosition differentiationsthat cater to the newsegment

Borrow from existingreal-world positioningFocus more on needs ofthe smaller groupStress value-add of theDigital Proposition

Use dual positioningLeverage existingpositioningPosition added benefits,such as augmentedofferings via digitalpropositione.g. increased productcustomizability

Summary

• We’ve looked at how we re-link business strategy and marketing strategy

• We’ve considered what traditional marketing strategy is all about

• We’ve explored the different digital marketing scenarios

• We’ve looked at how one might consider a pure-play digital marketing strategy

• We’ve looked at how one might consider a bricks-and-clicks digital marketing strategy