“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:
- The simplest definition of a market is your current and potential customers and the competitors vying for those customers.
- 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 I’m trying to make 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.
Interested in some advice on how to position your company to gain a differential advantage? Contact MarketingProfs.