The ONLY Three Marketing Strategies
By: Gerald G. Smith, BS, MBA
SCORE Central Oregon
If you are a good marketer of your products or services, you spent a lot of time developing a brand positioning. Other consultants and I have written about positioning in past issues of this publication because we all think it is very important to step back and work on this before going into an advertising and promotion program. Basically, your brand positioning is the first thought that you hope will come to a person’s mind when they hear your brand name.
If you have developed a good positioning, you are ahead of most of your competitors. However, simultaneously with developing a positioning, we have to determine what marketing strategy will be best. The two concepts go hand in hand. There are only three strategies – price, product, or advertising.
The more purely you pursue one of these strategies, the better the chances of success. Pursuing more than one reduces effectiveness and increases costs. For instance, trying to be the lowest priced product and the best product technically leaves no room for profits in the long run. Being a technology leader cost more in research, development, product introductions, raw material cost, and other costs associated with staying ahead technologically in the marketplace. Trying to be the low priced item is impossible with all those extra costs.
Let me now define what these three strategies are, ideally. You will probably feel that you do just fine trying to be “somewhat” in two or three. You do have to pay attention to all three as you focus on one. The trick is to spend just the right amount in two of the three and as much as you can on the one. Think how much better you could do if you refined your strategy more.
Price Strategy --- If you want to follow the strategy of being the lowest price, you MUST have the lowest cost of production. If someone else has the lowest cost of production, they can beat you on price. Usually, you need to sell a great deal more than competitors do if you want good profits. Your margins will be lower, so you must sell more. You put a lot of effort into keeping costs low. You might pay employees less, have less employee benefits, use older equipment, place your manufacturing facility in a low cost area, etc. You spend only when it is absolutely necessary. Using this strategy to its extreme can be bad for your reputation, though. It takes great skill to walk the line between low cost and cheap. Examples of products with price strategies are store-brand products and commodities.
Product Strategy --- Spending most of your available cash on developing new products or providing superior service allows you to ask more for your products if the superior qualities are noticeable and appreciated by the consumer. You build a reputation that you must maintain. If a competitor comes up with a better product, your reputation suffers. If you stay ahead, your profits are great. An example of a technology/service strategy brand is Apple.
Advertising Strategy --- When all else fails, advertise, advertise, advertise. I just made that up, but somebody may have said it once. Budweiser, Miller, and Coors come to mind. Let’s face it, none of these beers are all that great, yet they have fierce followers that swear by their beer. Why? One word – advertising. Spending enough in the right way with the right message, can build business. This is tricky on a local level. Finding the right combination is difficult. While just spending a lot of money can be good, without the right media, the right message, and good ad production work, the spending can be wasteful.
There is not enough room to give you a comprehensive guide to marketing strategies, but, hopefully, this will get you thinking about it. It does work. As proof, let me tell you a short story.
Ten years ago, I was in Kosovo under a contract with our USAID, helping about 100 businesses get back on their feet after the war and introducing them to capitalism. Three of our clients made the same product. It was a popular snack in Kosovo that I found disgusting. Picture cheese puffs without the cheese. Instead the corn puff was tumbled in ground-up (shell and all) peanuts.
In their first years of making products in a free market, they had done okay, but not really well. They sold product primarily through personal relationships and price competition. Grocery outlets usually carried only one brand.
After investigation, we came up with three different positionings based on two different marketing strategies. One was obviously the low cost manufacturer. They became our low priced brand to their delight. They could not be happier to achieve this positioning. Another had a technical advantage because they would get more peanut powder on their puffs. They viewed this as a cost problem until we came up with the selling point that they were the “Peanutiest” snack. They needed to put this claim on their packaging and promote it. The third began offering something that they did successfully in a promotion a few months back. They offered a prize (a very low cost item) in every bag. This too would be considered a technology based strategy because it offers a better product.
So, how did it go? First, most outlets started carrying more than one brand, initially two, but eventually some carried all three. The two technology types raised their prices modestly after much arm wrestling with us. Overall total sales of the snack increased. All brands grew. The technology companies had big increases in profits. The price company, modestly so. Everybody was happy. It pays to collude.
Take a look at your situation and adjust your efforts in these three areas so you can out-do your competitors in one of them. You will be glad you did.
To learn more about marketing and other matters for your small business, contact SCORE, America’s free and confidential source of small business mentoring and coaching. SCORE is a nonprofit association of more than 13,000 business experts who volunteer as mentors. SCORE offers free mentoring and low-cost workshops nationwide. Call Gerald Smith at 541-508-1648 or sign up for a free consultation at www.SCORECentralOregon.org