A marketing strategy must be built on firm foundations of knowledge. In this white paper we present a checklist of questions (or an audit) that will help develop an effective marketing strategy.
There are five steps in the marketing audit that will lead to a well-developed strategy:
- Understand the Marketplace
- Understand the Customer Base
- Understand the 4Ps
- Understand the Strengths, Weaknesses, Threats & Opportunities
- Develop a Marketing Strategy
Step 1 – Understand the Marketplace
Every company operates within a market which it must define and understand in terms of its size, the competition, and the forces shaping the market. A checklist of questions to answer during this stage is as follows:
The market and its structure
How is the market defined in terms of the products and services sold?
Which substitutes compete with the products and services? How much of a threat are these?
How big is the market today in both monetary value and volume (number or weight of units sold)?
How big was the market five/ten years ago?
How fast is the market growing – how big will it be in five/ten years’ time?
What will drive growth in the future?
What are the barriers to growth and how could these be overcome?
What are the major geographical markets for the products and services around the world?
In which geographical markets does the company operate at present?
Which countries offer opportunities for expansion in the near future (the next five years)?
What are the key segments of the market (by product; by major application; and, if possible, by the size of customer and needs of customer)?
Who are the major direct competitors supplying similar products?
How does the performance of these different competitors compare on critical features?
What are their unique selling propositions (USPs)?
How big is the company within the market – what is its market share?
How big are the competitors – what are their market shares?
Which segments of the market are “owned” by different suppliers?
What changes have taken place in the market shares of these companies over, say, the last five years?
Who are the likely winners and losers in the market over the next five years?
What are the strengths and weaknesses of each competitor in terms of its:
channel to market
Who are the indirect competition in terms of products and companies?
How big a threat are the indirect competitors?
Forces shaping the market
What are the political and legislative forces affecting the market and how do these vary around the world?
What are the economic forces affecting the market?
What are the social forces (including demographic forces) affecting the market?
What are the technological forces affecting the market?
What are the environmental forces affecting the market?
What are the influences of your workforce on your company’s future?
What are the influences of your investors on your company’s future?
Step 2 – Understand the Customer Base
The next step is to fully understand the customer base (and potential customers). A checklist of questions during this stage of the audit is as follows:
The decision making unit and the buying decision
What is the structure of the decision making unit (DMU) in a typical customer?
What roles do each of these different people play in first of all deciding who should be given the business and secondly in dealing with the company on a day-to-day basis?
What is a profile of typical customer in terms of products purchased, quantity purchased, frequency of purchases – in other words what is typical behavior?
What are the “hygiene” factors influencing the selection of a supplier (price, product performance, delivery, etc.) and what is their weight of importance?
What are the “soft” factors that affect the choice of a supplier (branding, ease of doing business, sales service, etc.)?
What is the weight of importance of these “soft” factors in influencing the customers’ likelihood of recommending the supplier (in other words generating loyalty)?
Customer satisfaction and loyalty
What are customers’ satisfaction scores overall?
How do these compare to satisfaction scores given to competitors?
What are customers’ satisfaction scores on each and every part of the “offer”?
What is the weight of importance of all these components of the “offer” in driving customer loyalty?
How likely would customers be to recommend the company to a colleague? (Leading to the Net Promoter Score – NPS.)
What are the NPS scores for other suppliers to the market?
Segmentation and customer data
What customer relation management (CRM) system or other database exists that holds up-to-date customer information?
How comprehensive is the database in terms of both customers and potential customers with contact names, telephone numbers, email addresses and sales data?
How easy is it to extract data from the CRM system?
What use is made of the CRM system in communicating with customers?
How can customers be classified by their firmographics? How useful is this classification in meeting customers’ needs?
How can customers be classified by their behavior? How easy is this to recognize and how useful could it be in meeting their needs?
How can customers be classified according to their different needs? How practical could it be to have a needs-based segmentation?
Are customers assigned to different segments on the CRM system?
To what extent does the sales force use the segments to manage relationships with customers?
Step 3 – Understand the 4Ps
The next step is to fully understand the requirements of the marketplace in terms of product, price, promotion and place. The following questions should be answered at this stage of the audit:
Products/Services offered by the business
What are the products (or services) offered by the business and how do they match the needs of customers and potential customers?
What are critical product features and benefits (especially compared to the competition)?
What proportion of your revenue comes from services rather than products?
How do you capture value on your services and “augmented product”?
What is your unique selling proposition? How strong is this USP?
What percentage of products in the portfolio account for only 20% of total sales?
What percentage of products in the portfolio are less than five years old?
What new products are in the pipeline for launch over the next five years?
What is the price elasticity of the products? What loss of sales would occur if prices were raised by 10%? What evidence is there to substantiate this?
What is the pricing strategy of the company? Who sets the pricing strategy?
How are prices set? To what extent are they based on costs, on perceived value, or ranged against competitors?
What margins are achieved and what emphasis is given to maintaining these margins?
What discounts are given and what structure exists to ensure that discounts are managed profitably?
What is the company’s policy for managing price increases? Who is responsible for this?
How do people rate the company’s price competitiveness for its products and services relative to those of the competition?
How do people rate the benefits they get from the company’s products and services relative to the benefits from the products and services of the competition?
How much is spent on promotion of all kinds each year – above-the-line and below-the-line?
Who sets the strategy on the promotional mix? To what extent has the promotional mix changed over the last five years?
What is the spend on, and role of, traditional promotions such as exhibitions, adverts in journals, sponsorship and PR?
What is the spend on, and role of, digital marketing?
What measures are in place to assess the effectiveness of different types of promotions?
How many field sales representatives are there?
How many calls per week are made by the field sales representatives and how does this break down between existing customers and new customers?
What is judged to be the effectiveness of the field sales representatives’ calls?
How many customer service representatives are there? What is judged to be the effectiveness of the customer service team?
How could the mix of face-to-face and telephone contact with customers be made more effective?
What other forms of promotion are, or could be, used (e.g. sponsorship, events)?
Place (value chain and route to market)
What supply channels are used for getting the products to market?
What proportion of sales is direct and what proportion goes through distributors?
What measures are there in place to determine the effectiveness of distributors?
Who sets the distributor strategy in terms of prices, margins, discounts, promotional support, etc.?
How are distributors supported and looked after by the company?
Step 4 – Understand the Strengths, Weaknesses, Threats and Opportunities
We now move to a SWOT analysis in which we consider the company’s understanding of its strengths and weaknesses and the opportunities and threats of the marketplace. Questions that should be answered in this part of the audit are as follows:
What are the external threats facing the company and how are these likely to change over the next five years? (Note that external threats usually come from economic changes and competitors.)
What are the external opportunities facing the company and how will these change over the next five years? (Note that external opportunities can arise in different geographies, in changing fortunes of competitors, and in changing behaviors of customers and potential customers.)
What are the weaknesses of the company especially in terms of the 4Ps?
What are the strengths of the company in terms of the 4Ps?
Step 5 – Develop a Marketing Strategy
Finally, we use the knowledge from the audit to develop a marketing strategy. This involves 12 steps:
1. Focus on what you do best. This could be cost leadership, a differentiated brand or a specialization in a niche.
2. Develop a unique selling proposition. A good strategy requires the company and its products to be seen to be different and, if possible, unique. Make sure that your USP is clear and simple.
3. Get buy-in from all stakeholders. Employees and investors must be behind the strategy. Their support is crucial.
4. Segment your customers. Not all customers are the same and their needs differ. Segment the market so that you can more efficiently engage with customers, especially those where you have a differential advantage.
5. Build relationships with customers. In business-to-business markets long-term success will be dependent on the strength of your customer relationships and these will be determined by the way you serve customers.
6. Don’t forget the “augmented product”. There is seldom such a thing as a commodity product in business-to-business markets. Customers require service, trust, guarantees and a host of “soft factors” which are highly valued within the market.
7. Develop a pricing strategy. Too often we leave money on the table because we don’t understand what customers value.
8. Develop an effective promotional mix. New promotional tools allow us to engage with customers and potential customers in more efficient ways. Digital marketing is becoming much more important and should be built into the strategy.
9. Develop a brand strategy. The name of a business-to-business company is one of its most valuable assets, and should build confidence, trust and hopefully command a premium.
10. Develop a channel strategy. Reaching customers and selling to them can be direct or through distribution. Choose a channel strategy which best meets your needs and those of the market.
11. Keep the product portfolio fresh. All products have a life cycle and need rejuvenating or replacing. Ensure that you have a strategy for innovation and new product launches.
12. Look for growth. Your strategy should consider where growth will come from next. This could be from existing products sold to current customers (or new customers) or new products sold to existing customers (or new customers).