The importantce of choosing the right strategic marketing direction

Not today. Wal-Mart is the low price leader, and Sears is struggling.

What happened to Sears?

During the past 30 years Sears tried several times to change from its successful low-price marketing strategy to an upscale strategy. Each time that Sears added expensive products and changed stores to a sophisticated look, they alienated loyal customer and failed to attract upscale shoppers.

Sears was the Wal-Mart of the '50s and '60s and the largest retailer in the country until the early 1980s. Then the company drifted upwards into the mushy middle. Sears wasn't cheap and it wasn't chic. (Today, Wal-Mart is more than seven times the size of Sears. Furthermore Wal-Mart's net profit margin last year was twice as much as Sears: 3.4% vs. 1.6%.)

At the same time Sam Walton pursued the "low cost leader" strategy that was so successful when Wal-Mart was starting out in rural northwest Arkansas.
 
Choosing a marketing strategy appropriate for your company starts by analyzing the information you've gathered on your industry, your customers, and your competition.

Identifying market segments and buying motivations

Then, you'll want to consider questions such as:

• Is your overall industry growing or shrinking?


• What is your market within that industry?


• How do you segment that market?


• What are the buying motivations for each segment?


• What are your strengths and opportunities in each segment?


• What is in your product development pipeline for the next several years?

Pricing products to match customer perceptions

Once you've chosen an overall market strategy you can decide on a pricing strategy that fits. You can't have a "high quality and service" market strategy and the lowest prices. You can't make a profit -- and it will confuse your customers. So, choose a pricing strategy that matches your market segments and competitive environment.

Once you have your market strategy and a pricing strategy, you can create a reasonable budget for revenue, expenses, and profit.

I like to capture these decisions in a marketing strategy mind map and link it to detailed documents and spreadsheets. This helps senior executives at a company easily see the big picture, then interactively drill down to the their detailed analysis and decisions.

Planning for marketing programs

Then, with a sound marketing strategy and budget, you can then develop detailed plans for each of your marketing programs -- from marketing communications to sales, distribution, and service.

The sales manager is likely to tell the marketing manager, "I found a new market we can sell to!"

Two questions about that market come to mind:

1. What is it?
2. How big is it?

It's great to find a new market, but it's important for new markets to be profitable. Knowing the size of a market gives you a clue to how successful you can be in that market.

So, when you're working on the marketing plan for a new product, budget resources for the market research that can help answer the questions that come after, "What is it?"

A high-tech community like this also has many bloggers and Web-based news outlets that cover our companies, venture capital, and events -- plus a number of advisers who help technologies entrepreneurial companies grow.

It's been difficult to keep up on all aspects of the technology sector in Southern California. There are several journalistic Web sites that do a great job of covering the news about SoCal companies. However, it's been hard to find the thoughtful bloggers who provide interesting commentary on what's happening and are advising high growth entrepreneurs.

The Technology Council of Southern California and TechEmpower have created Southern California Tech Central, a new Web site that makes it much easier to keep up with the whole technology sector in Southern California.

For example, here's a page on that site that summaries my recent blog posts:
http://cc.tcosc.org/&source=cliff-allen-on-marketing

One of the unique features of the site is that the links on that page refine the search deeper and deeper, without having to master any complex search language.

Check out the Southern California Tech Central -- and keep up with Southern California.

Gartner reports that through 2012 more than 35 percent of the top 5,000 global companies will fail to make insightful decisions about significant changes in their business markets due to under investment in the information infrastructure and business user tools.

And SAS, the statistics and analytics company, divides the market into eight levels of analytics. Take a look at the list to see where you are. Then, look down the list to see how to expand and improve your use of marketing analytics.

Here are slide presentations from representatives of three large brands on how they have used social media marketing:

• Yahoo
• Sony
• Sprint

In addition, here are slide presentations from two social media consultants who presented examples of clients they've helped:

• David Reis
• Rodney Rumford, co-producer of the event

These presentations show what's possible by using social media to raise awareness of brands.

I recently attended the one-day Gravity Summit seminar on social media marketing.

The speakers from Sony, Sprint, and Yahoo presented excellent examples on how major brands can generate attention for a product by using social media. And, representatives from social media marketing agencies described how they help clients plan, implement, and monitor a social media marketing campaign.

One of the challenges facing management when considering a social media campaign is the amount of time required either by the company's marketing team or an outsourced social media agency. In general, the social media marketing process typically used is to:

1. Create a Web site for the product or the promotional campaign.
2. Create social media profiles on sites such as Facebook, MySpace, Twitter, and others.
3. Contact individuals on those social media services and invite then to be friends, followers, contacts, etc.
4. Then, broadcast status updates that include a link to the product's or promotion's Web site.

There are other steps in the process, such as interacting with individuals, friends, followers, etc. And it’s important to create a fresh flow of new content for the social media team to promote.
 
So, how can management decide if a social media marketing campaign will be worthwhile? The best way is to estimate the ROI of the campaign the same way that other marketing campaigns are evaluated.
 
It can be hard to estimate the cost of a social media marketing campaign, but a speaker at the conference from a social media agency suggested a budget of at least $50 thousand.

If the gross profit on a product is 50%, then a company would need to sell $100 thousand to break even on a $50 thousand social media marketing campaign. Any revenue over $100 thousand would generate additional gross profit at the rate of about 50% that could be applied to G&A expenses.
 
By using a company's traditional traffic-to-revenue metrics, it would be easy to estimate the minimum amount of traffic to the product Web site needed to break even. It's the minimum amount of Web traffic needed because visitors from a social media marketing campaign are primarily looking for entertainment, and will secondarily be exposed to the brand.

This means that your traffic-to-revenue metrics for direct marketing campaigns, such as search engine marketing, will produce a minimum traffic figure that’s too low.
 
Instead, you'll need to use metrics on how well a branding campaign typically generates revenue to estimate how much traffic will actually be needed.
 
In other words, if your Web site normally serves 1,000 page views per sale from a direct marketing campaign, a social media branding campaign may need to generate 3-10 times that much traffic to generate a sale.

By using this approach to estimating the amount of Web traffic needed to break even, your social media marketing consultant can decide if they can generate sufficient traffic to make the project pay for itself.

Update: Here are the Gravity Summit slide presentations.

A lot has been written about using company blogs, Twitter, and Facebook, but It's hard to sift through all of that to develop a complete, consistent, and concise social media marketing strategy.

On February 25th the Gravity Summit at UCLA will give marketers a full day of guidance on social media marketing. Here is what the seminar organizers say:

Gravity Summit is designed to educate and inform the business community on how to use social media to foster customer engagement, provide internal productivity tools, and further online branding for small business owners and entrepreneurs.

The speakers at the Gravity Summit are from the Word of Mouth Marketing Association, Yahoo, Sony, Sprint, and others:

• David Reis, CEO DEI Worldwide and Founding Member of WOMMA (Word of Mouth Marketing Association)
• Justin Goldsborough, Social Media Manager, Sprint
• Ann Glenn, Senior Web Producer, Sony Pictures Imageworks Interactive
• Tony Adam, SEO Manager, Yahoo
• Ricardo Bueno, Blog Director, Real Estate Tomato
• Renée Barrett, Principal of Awareness, Action, Accountability
• Karl Kasca, CEO, Kasca & Associates

The descriptions of each speaker's presentation looks very good:

I'm looking forward to learning from each speaker at the seminar. If you're going to attend, let me know so we can chat face-to-face.

Political consultants have used survey statistics for a long time to help their candidate tailor campaign messages. However, small survey samples resulted in imprecise analysis, and messages that were not always on target.

Today, marketers can obtain access to comprehensive databases about what people have bought, which gives some insight into how they make decisions.

Stephen Baker's article What Data Crunchers Did for Obama highlights how the Obama campaign used a consulting firm that helps politicians understand the core values of individual voters.

Marketers have used similar differentiation and segmentation services services, such as PRIZM from Claritas, which creates 66 demographically and behaviorally distinct segments of consumers based on Census and other types of data.

However, the firm Obama's team used "grouped nearly every American of voting age—175 million of us—into 10 'values' tribes."

Obama's use of the market segmentation techniques at the voter level is key to successful one-to-one marketing. By grouping individual people by behavioral traits -- instead of relying just on demographics -- marketers can better understand what people in each group are feeling, thinking, and doing. And once you know that, it's easier to explain why they should buy your product (or candidate) in terms that they will understand.

Deborah Kania and her team at Brightworks Interactive have just released results of their survey of marketing executives' plans for 2009. The survey covered both B-to-B and B-to-C companies, as well as a mix of large, medium, and small businesses, so the survey results represent a good cross-section of marketers.

Here are nine marketing trends you can expect during 2009:

• Marketing Trend #1: Increased use of digital media and a decrease in television, radio, and print media.


• Marketing Trend #2: Increased use of quality, targeted content (textual and video) that tells a company's story well and engages the prospective customer.


• Marketing Trend #3: Increased use of e-mail to reach out to prospects and customers more frequently at a very low cost.


• Marketing Trend #4: Increased use of blogs, social networking, and other social media to create dialog and relationships with prospects and customers.


• Marketing Trend #5: Increased use of analytics tools (e.g., Google Analytics) to spot ways to improve ROI.


• Marketing Trend #6: Increased focus on organic (i.e., free) search engine optimization (SEO) content targeting.


• Marketing Trend #7: Increased use of search engine marketing (SEM) techniques, such as pay-per-click and other trackable paid marketing techniques.


• Marketing Trend #8: Increased use of online webinars and decreased use of large trade shows.


• Marketing Trend #9: Increased use of outsourced marketing functions to experienced professionals.

You can get a complete copy of their marketing survey "Marketing 2009 and Marketing Resolutions To Keep In the New Year" at their Web site: www.brightworksinteractive.com/marketing-survey.html.

Answers to two questions can give some guidance on the best ways start-ups can use PR:

1. Does the business sell products (or services), or is it a free Web site?
2. Does the business provide a truly innovative product or service, or is it a "me too" product that depends on taking market share from existing companies?

In general, there are four broad ways these questions affect the PR plan:

• Innovative, free Web sites can benefit from start-up PR on high traffic blogs like TechCrunch and Mashable because those readers are likely to be early users of a free Web site.
• Innovative products sold into specialized target markets can benefit from pitching customer case studies to the media read by their target market.
• Free Web sites that have almost the same features as existing sites are frequently criticized by the big blogs, and usually do best by using less public marketing techniques.
• Products sold into an existing market should focus on being included in "roundup" articles, directories, and lists, as well as pitch high-profile customer case studies.

There's plenty of middle ground here, such as with products that add innovative features to traditional feature sets. So, it takes an experienced marketing team to figure out what's best for the company.

The question of whether to outsource to a PR firm or have the CEO do PR misses the bigger issue that it's a team effort. The PR person (staffer, freelancer, or agency), the marketing director, and the CEO need to each do what they can do best.

Whoever has the best relationship with an editor or reporter should pitch the story. If it's the CEO, that's great. If it's the PR person, that's fine -- they should just make sure to get the reporter and CEO interacting as quickly as possible.

Even the biggest and most personable CEOs have PR "handlers" with them when they work the media. This is to ensure that someone is watching the interaction and providing real-time clarifications. It's best to fix misperceptions during the interview instead of trying to get a correction after the story is published.

There's no one right way to get media attention -- even for direct competitors. But it is important for some type of public relations program to be included in every strategic marketing plan.

In the US, there is a big mismatch between time spent online and ad dollars. US Consumers are now estimated to be spending over 20% of their time online, while online ad spend ($20 billion in 2007) is only 7% of the overall ad budgets. This is seen as the big opportunity to dramatically grow the size of the online ad pie. As the US economy slows, there is a feeling that advertisers will move more money to where it can give better RoI. Print and TV are the two media which will feel the impact and pain of this shift.

His post has several strategic concepts, so bookmark it so you can refer to it during strategic planning.

This means that marketing teams need the best collaboration technologies available to speed interaction.

One of the best productivity tools, Microsoft OneNote, is also one of the best collaboration tools.

I use OneNote all day on a Motion Computing Tablet PC. The slate tablet is great for marketers because we like to scribble notes, draw 2x2 matrix diagrams, and tap into mounds of marketing data during the same meeting.

I'm not anti-keyboards -- I use two keyboards with my slate -- and I use OneNote on my desktop computer, too, so OneNote isn't just for tablet users.

But I was reminded of OneNote's collaboration features by Chris Pratley's post about how it's used by teams inside Microsoft.

Take a look at the videos he links to and you'll get several ideas on how to use OneNote to make your marketing team to be more productive.