What makes a great marketing strategy?
A marketing strategy sets a clear path for you to reach your business objectives
In the mid 2000s, Kmart Australia was struggling. The business turned over $4 billion annually, yet was ‘flirting with collapse’, making almost zero profit. Tellingly, 90% of sales were driven by discounting. To generate foot traffic and draw customers away from competitors, Kmart ran almost continuous sales with 50% mark-downs. Whilst discounts resulted in short-term spikes in sales, they did nothing to build brand equity or profitability. The broader retail environment was tough with intensifying competition from online shopping. In short, the brand lacked a comprehensive strategy and had lost its way. Continuous sales, confusing shop layouts, long queues and mind-boggling varieties of stock all combined to paint a not-very-pretty picture for incoming Managing Director Guy Russo in 2008. Fast forward to 2014 – Kmart had become the most profitable department store in Australia.
I find Russo’s stunning turnaround of Kmart’s fortunes fascinating because most analysts had written Kmart off as a basket case. And yet he managed to do it, because he took the time to develop a marketing strategy that put the customer at the heart of the business. Before I continue, let me attempt to define what I mean by marketing strategy.
A strategy is a clear articulation of how you will approach achieving your objectives.
It should describe those objectives in specific detail (make them SMART – specific, measurable, attainable, realistic and time-bound), but the guts of a strategy involves identifying what obstacles might exist to realising your objectives, and mapping out a plan to overcome them. This means carefully making choices about how your finite resources such as budgets, time and technology should be best deployed. Don’t make the mistake of confusing an objective with a strategy. For example, ‘our strategy is to grow by improving customer retention by 10% year on year.’ In this case, a 10% improvement in retention is an objective. The statement says nothing about how it will be achieved. A simplistic strategy to realise the objective of a 10% increase in customer retention might be to incentivise repeat purchases.
How you make it happen is your tactical plan.
A tactic is a specific action that needs to be taken to implement your strategy. In building terms, if a blueprint is the strategy guiding what the end result should look like, then a hammer and nails are one of the tactics that bring it to life. Marketing tactics can relate to the product, price, place, promotion, people (customer) or processes. So, if the strategy is to encourage repeat purchases, several tactics might be implemented such as retargeting customers a specific number of days after their most recent purchase, sending an email with a 20% off redemption code or introducing a loyalty points program.
Plan the tactics you will use to implement your marketing strategy
Think of tactics as the marketer’s tool kit. One trap that is easy to fall into is to think that more tactics equal better results. So, if the strategy is to encourage repeat purchases, several tactics might be implemented such as retargeting customers a specific number of days after their most recent purchase, sending an email with a 20% off redemption code or introducing a loyalty points program. Think of tactics as the marketer’s tool kit. One trap that is easy to fall into is to think that more tactics equal better results. Often this looks like a very over-worked marketing team, constantly churning out marketing activity whilst results plateau or go backwards.
To be strategic is to be explicit about the things you are choosing to do and not to do.
Take Kmart for example. Russo commenced his tenure by undertaking what he called a ‘discovery’ phase. He observed that Kmart was attempting to compete as both a discount store and a high-end retailer, and not really successfully serving either market. Russo understood that Kmart, at its core, was a discount retailer. As noted in Eloise Keating's article in Smart Company, he compared Kmart competing with mid-tier stores as McDonald’s selling T-bone steaks with knives and forks and introduced a brave new pricing strategy to reflect the ‘bottom-end’ positioning, cutting prices by an average of 30% across the board and eliminating discount sales. The result was an impressive 69% growth in earnings before tax between 2011-2013.
Great strategy puts the customer first.
We call this ‘human-centred marketing’ and it’s core to what we do. In the past, businesses could get away with developing a product or service and then figure out how to sell it to consumers. These days, thanks to technology and the internet, the power balance has firmly and permanently shifted to the customer. Businesses that design their offerings based on meaningful consumer insights and that communicate in a way that builds an emotional connection will have the competitive edge. How did a discount department store competing on price do that?
Critically, Russo and his team took the time to get a deep understanding of the Kmart customer and gained insights to inform decisions including refreshed store layouts and simplified product lines. Through their research, and as highlighted in "How Kmart beat the odds on everyday low prices," they discovered that shopping at a discount store evoked negative emotions, including the shame of trying to make ends meet. To overcome this, the ‘everyday low pricing’ strategy was launched to the consumer with a new ad campaign that celebrated the positive emotions consumers felt when finding a quality product at a bargain price. Featuring real mothers who were invited to a Kmart store and asked to guess the prices of items, the ad played on the pride felt when nabbing a bargain. Finding a great deal is satisfying and something most people like to brag about. The result? Not only did a ‘soft’ measure such as the association between Kmart and ‘pride’ score well, but store visitation went up by 20% over the next two years, and the number of items sold went up by 42%. By putting the customer at the centre of the business, Kmart won a new place in the hearts and minds of Australian consumers.
Why you should write down your marketing strategy.
Your business may not be in the dire straits that Kmart found itself all those years ago. But if you can’t confidently say you’re making the most of every opportunity, or if your results seem to be flat-lining, it might be time to document your marketing strategy. Perhaps you’ve been putting it off and that’s understandable because developing a good marketing strategy is hard. It requires deep, focused thought and collaboration across the business. When you’re focused on delivering results for the next quarter, it can feel counterintuitive to hit a pause button and question everything you’re doing. In the face of competitor intensity, it’s tempting to simply do more; run another promotion, produce another brochure, experiment with advertising on a new social media platform. In other words, it’s tempting to operate on a purely tactical basis.
Document your strategy to enable staff to have a clear picture of your business objectives and how to get there
Whilst it might be tempting to skip formally documenting your marketing strategy, documenting it has several benefits;
It forces clarity of thought as you interrogate which choices to make.
There’s less risk of distraction, misapplication and/or wastage of resources.
Your business is less likely to be reactive.
It creates a shared understanding within your business about how you intend to approach achieving your objectives.
It’s much easier to develop an action plan that can be measured, as you will have defined what ‘success’ looks like and know when you’re moving in the wrong direction.
And ultimately, this leads to a much greater likelihood of your business achieving its objectives quicker, and with less wastage.