Marketing Strategy: What's in the Black Box?

Terabytes of information have been written about marketing strategies. Let's add a bit from the practice of strategizing.

As taught in business schools, a marketing strategy is a functional strategy of an organization. At the same time, there are four levels of strategies – general (corporate), business units, functional, and operational. Following this standard logic, the marketing strategy starts only at the third level and should adapt and specify the provisions of the strategies of the entire business structure and its individual units within its specific – marketing – function. But is this really the case?

The Grey Cardinal of Functional Strategies

In theory, this might be so, but in practice – definitely not. More precisely, if you adhere to the view that "marketing = advertising" – that's an archaic notion from a century ago – then no.

To begin with, observing practicing managers who study in business education programs (conventionally, MBA), it's easy to notice how difficult it is for them (especially owners, general directors, executive directors, etc.) to separate the general strategy and the marketing strategy. Often, the teaching format of the program contributes to this, when the task of establishing this "dividing line" is not systematically set.

Graduate qualification works, which are defended on corporate strategy (usually for representatives of SMEs) or on business units (participants from large businesses), consist of 70–80 percent of marketing blocks and tools – analysis of the external environment (by levels), PEST, portfolio methods of market analysis, matrices of competitive groups, SWOT analysis, choice of market positioning, even P and C models (with the number of components from 4 to 10), etc. All this is perfectly familiar to marketers (not advertisers), isn't it? And only at the end, already at the tail end of the thought, a little bit about personnel strategy, production, and calculation of the investment program (if any). All the best parts lie in the field of marketing.

Hence the legitimate question – how much of the general strategy is marketing? Not 10-20%, not even 50... and it's just a functional strategy of the 3rd level in the hierarchy?

So why this false modesty in assigning the marketing strategy this place in the table of ranks? Let the general strategy be the red cardinal, and it listens to many (production, personnel, finances...), but its main support is marketing; without it, the general strategy will not be adequate to the market, which means it will not be viable. Yes, a qualified marketer is the "grey cardinal" in the enterprise; if the strongest marketer de facto is the head of the enterprise or the owner – then the marketer by entry in the work record book (head of the marketing department / division) will be responsible only for the tactical block (in a degenerate case – for advertising).

Then everything is simple and clear. The general strategy, in its main part, is the marketing strategy. And individual directions within the general line, for example, promotion, can have their own functional strategies. Let's call it a promotion strategy, why not.

Basic Sequence of Steps

All the diversity of strategic planning procedures can generally be reduced to three basic steps.

1. Analysis.

Any strategy, and marketing is no exception, must be based on a prepared analytical part. Both the external and internal environment of the organization or the object of strategizing in a broad sense are subject to research.

We will not consider in detail here all the diversity of analysis tools, as well as the objects to which they are applicable (macroenvironment, microenvironment, markets, etc.). Let's focus on only a few important practical aspects.

First, for developing a marketing strategy, the coverage of information is more important than its detail. In other words, given the existing resource constraints, one should try to obtain as much important data for decision-making from various sources as possible, which describe the course of key processes for developing strategic decisions. Delving into the study of each component should be done in a measured way, without losing sight of the overall picture. This is a very simple consideration, but in fact, it is difficult to implement in practice, and only a few managers are guided by it in life.

Second, if possible, various models and analysis tools that systematize the research process can be used, but only those that are most applicable and effective in each specific situation should be applied. A practitioner forming a marketing strategy does not have the task of trying all possible tools; they must make the right decisions.

For example, portfolio methods of market analysis are well-known. The classic – the Boston Consulting Group matrix – "stars," "cash cows," etc. A good and visual tool, nevertheless, does not always work. If we look at an unformed market with hundreds of small competitors, then the assessment using such a matrix will be very conditional. Another matter is an established oligopolistic market. Any model has limitations that need to be understood before applying it.

There are also more universal methods that are almost always effective – for example, SWOT. Concluding the analytical part of the strategy with it is very productive, regardless of the object.

Third, it is desirable to concentrate not on the past, but on the future.

Often, analysis gets very stuck on analyzing past situations, causes of failures and correct decisions, long retrospective series of company development indicators. All this is important, but it is not decisive for developing a marketing strategy. The proverb "generals are always preparing for the last war" is debatable, but also fair. As much effort as possible should be thrown into searching for weak external signals, studying only emerging trends. Finally, the forecasting block is extremely important. All thoroughly studied quantitative indicators should ideally be projected onto the horizon of the marketing strategy development.

Fourth – priority of external environment analysis over internal. This position largely follows from the previous one. You know more and better about your own company; internal analytics are always of higher quality than external ones. Unfortunately, the value of such information for the purposes of developing a marketing strategy is lower. Promising directions for enterprise development, as a rule, can only be seen in the external environment, even not in the immediate environment – competitors, partners, consumers, but in global processes. Such analysis is complex, but it deserves due attention.

2. Goal Setting.

Based on the conducted analysis, a picture of business prospects is formed. Their brief but complete formalization is the essence of goal setting.

Target benchmarks, like strategies, form a certain hierarchy. At the top level is the vision – as a kind of global goal of strategy implementation. The organization strives for it as a certain ideal of the future but is not obliged to achieve it fully. Usually, vision formulations are related to market positioning, company shares, positions relative to competitors, and so on.

Then the general goal is formulated, which, unlike the vision, is more quantitative in content and should ideally be 100% fulfilled. The general goal is decomposed into sub-goals of several levels, depending on the horizon of marketing strategy development and the scale of the business or market.

Such a target benchmark as the mission is considered separately. Essentially, this is not a goal as such – but a kind of "purpose" of the company, which determines its place in the market in a narrow sense and in society as a whole in a broad sense. The mission is formulated not as an image of the future – it is the present that underlies the new future of the company.

There are quite a few examples of missions; as a rule, they do not directly include a commercial component but indicate a certain position of the company from the perspective of an external observer. More often, missions are formed in connection with the needs that the enterprise satisfies in the process of its activities through products or services. They can be specific or formulated broadly in the style – "changing life for the better." For large businesses, socially responsible missions or those focused on certain dominant social attitudes, for example, greening and energy saving, are possible.

Goal setting is a very creative process, but it must be based on numbers and facts. That is why effective goal setting is impossible without a competently conducted analysis. There always remains room for some "foresight" of the owner or top manager, but their sources of inspiration are experience and knowledge of the market, giving rise to promising business ideas and development goals.

3. Formation of the actual marketing strategy as a consolidated action / measures plan.

Having determined the direction of movement and control points in the form of 2nd and lower-order goals, it is necessary to move on to selecting tools for achieving them.

Such work can be carried out in various ways, but in any case, the action plan within the marketing strategy does not mean that all actions inside belong to the areas of professional competence of the marketer or, moreover, should only be performed by them. Here, production measures will necessarily appear, as well as financial, personnel, those lying in the areas of procurement, and so on.

To structure the action plan, common marketing models can be used, for example, the already mentioned marketing mix: product, price, place, promotion, and so on. Or one should take a more formalized and standard path, immediately linking measures and tools with the set goals and objectives, that is, form a "roadmap" for strategy implementation.

For small enterprises, especially those at early stages of the life cycle, it is quite advisable, under conditions of limited resources, to simply rank possible actions according to the criteria of achieving the set goals and costs incurred, thereby selecting several priority steps that need to be implemented first.

It is very important in the process of forming the marketing strategy implementation plan not to go into particulars that will not allow focusing on the overall picture. In this work, it is necessary to see the model of actions as a whole and coordinate it among the process participants. Tactical issues of implementing individual measures can be discussed later, especially since new inputs will appear during the work that constantly change the content of local tasks. At the same time, one must not lose the overall path.

Is it Possible to Do Without a Marketing Strategy at All?

In theory – certainly not. But in practice – sometimes it's even necessary, although it depends on what we understand by strategy, again.

A marketing strategy is not a document. That is, it can be formalized as a document and even have all employees of the enterprise sign off on it, but the title on the cover page and the official status do not make the text a strategy. Essentially – what's inside and how it aligns with current activities. There are enterprises, and for state management in terms of socio-economic strategies, this is a common practice, where the document formally exists, but no one uses it for work.

One can also recall reverse situations, where even the words "marketing strategy" are not uttered by top management, but they act clearly with a common understanding of the market, goals of working on it, and in the necessary sequence of steps. That is, the strategy is first and foremost in the heads, and only then on paper and on the official website.

If we remove the formal side and focus only on the essence of the matter, then again, a marketing strategy is not a mandatory condition for life in the market. A business idea exists one way or another from the birth of the enterprise, and the marketing strategy appears later. It is necessary to accumulate a certain amount of work experience, an understanding of the market, catch a period of stability or predictable changes when it makes sense to build a strategy. After all, the main danger of strategic decisions lies in the fact that their erroneousness carries catastrophic consequences. If there is no understanding of the situation, it is better to engage in tactics – there is less risk of breaking the existing business mechanism.

Therefore, it is better when a marketing strategy exists, even better – if it is developed on a scientific basis, ideally – also approved as a document and communicated to everyone. But its value is determined predominantly by the quality of the content; the process of creation, the form of existence – is a secondary matter.

Understanding that the business, due to the growth of the company's scale or changes in the market situation, has matured to the development of a marketing strategy, it is necessary to weigh all the pros and cons of starting this work right now. It is necessary to understand – to what extent all process participants – from the owner to ordinary executors are ready to create a strategy and, which is even more important, subsequent work within its framework. If the decision is positive, then it is necessary to start. One can rely only on one's own strength or involve a professional consultant. Only the result will determine everything.