Marketing Strategy Formulation:
A Do-It-Yourself Guide
by Jerry Nulton
Marketing Strategy Formulation
Introduction
This tool kit is designed for a wide audience. If it could be prepared specifically for each individual
company, fewer assumptions could be made. Including items that will interest a specific company runs
the risk of omitting information important to another. We recognize that some companies will have their
entire marketing strategy fully developed and documented, we applaud you. At best, this document can
only confirm what you already know - marketing is essential to success. However, this document is
really designed for the rest of us. As such it contains basic information. Please evaluate its value based
on the new insights you gain and its ability to help you look at old ideas in a new light.
You are faced with a variety of challenges. From new business development to human resources, credit
and collections to payroll, each of the companies we work with brings a different set of talents to address
these challenges.
Our goal is to help you deliver a strong value proposition. We focus our efforts on helping you grow your
business. When you grow, we grow.
This tool was developed to help our companies develop a strong marketing strategy. After working
through the chapters you will have covered the following1:








Articulating and reinforcing your company’s vision
Grounding your strategy to your environment
Segmenting your market by clearly identifying ideal prospects
Differentiating your company, products and services in a meaningful way
Positioning your company
Evaluating the implications of the market life cycle to your business
Communicating your message through the appropriate mix of marketing elements
Establishing a plan of action
Throughout, you will find sections marked with the following sign:
Ψ Discovery
In these sections you are encouraged to consider your answers to the questions posed. The intention is to
guide you through consideration of the topic with respect to your business. At the end of the document,
the combination of your answers serves as the framework for your marketing strategy.
Not every one will benefit from every section. Following the flow will provide the maximum benefit, but
feel free to pick-and-choose those that interest you most. For further information on any topic, consult
the reading list used to develop this tool which appears at the end of this document. Should you require
further assistance, please contact Jerry Nulton at nultonj@metrocast.net.
1
Minette E. Drumwright & Thomas J. Kosnik, “Marketing Strategy Formulation”, HBS No. 9-590-001
Copyright © 1998 by Jerry Nulton.
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Marketing Strategy Formulation
1
VISION ................................................................................................................................................................1
1.1 CORE IDEOLOGY ...............................................................................................................................................2
1.1.1 Core Values .............................................................................................................................................2
1.1.2 Core Purpose ...........................................................................................................................................3
1.2 ENVISIONED FUTURE.........................................................................................................................................4
2
COMPETITIVE STRATEGY ...........................................................................................................................5
2.1 UNDERSTANDING THE ENVIRONMENT...............................................................................................................5
2.1.1 Entry Barriers ..........................................................................................................................................5
2.1.2 Supplier Power ........................................................................................................................................5
2.1.3 Substitution Threats .................................................................................................................................5
2.1.4 Rivalry .....................................................................................................................................................6
2.1.5 Customer Power ......................................................................................................................................6
2.2 COMPETITIVE STRATEGY ..................................................................................................................................7
2.2.1 Cost Leadership .......................................................................................................................................7
2.2.2 Differentiation..........................................................................................................................................7
2.2.3 Focus .......................................................................................................................................................7
2.2.4 Strategy Selection ....................................................................................................................................7
3
MARKET SEGMENTATION...........................................................................................................................8
3.1 MARKET DIMENSIONS .......................................................................................................................................8
3.2 DEMOGRAPHIC SEGMENTATION ........................................................................................................................9
4
DIFFERENTIATION ....................................................................................................................................... 11
4.1
4.2
4.3
4.4
4.5
5
PRODUCT FRAMEWORK ................................................................................................................................... 11
CUSTOMER EXPERIENCE FRAMEWORK............................................................................................................ 12
MAPPING THE CONSUMPTION CHAIN .............................................................................................................. 13
NEW PRODUCT/SERVICE COMBINATIONS........................................................................................................ 14
FEATURES & BENEFITS ................................................................................................................................... 15
POSITIONING ................................................................................................................................................. 17
5.1 ASSESSING THE COMPANY POSITION............................................................................................................... 17
5.2 FUNDAMENTAL POSITION STATEMENTS .......................................................................................................... 18
5.3 POSITIONING TOOLS ........................................................................................................................................ 19
6
MARKET ENTRY/EXIT ................................................................................................................................. 22
6.1 MARKET STAGES............................................................................................................................................. 22
6.2 ENTRY/EXIT DECISIONS .................................................................................................................................. 23
7
HIERARCHY OF MARKETING ELEMENTS ............................................................................................ 24
APPENDIX A: READING LIST ............................................................................................................................. 25
Copyright © 1998 by Jerry Nulton.
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Marketing Strategy Formulation
1 Vision
A clear vision differentiates your company, characterizes it, ignites your employees’ and helps
you attract and retain talent. A vision defines the essence of your company and provides
guidelines for what should and should not change.
It is important to understand that a vision isn’t written, or selected or built. Instead, a vision is
revealed. It is what drove the founders to create the company instead of working for another
organization. It is what attracted the early employees and the venture capitalists.
“A well-conceived vision consists of two major components: core ideology and envisioned future.
Core ideology, the yin in our scheme, defines what we stand for and why we exist. Yin is
unchanging and complements yang, the envisioned future. The envisioned future is what we
aspire to become, to achieve, to create - something that will require significant change and
progress to attain.”2
Core Ideology reflects your company’s values and purpose. Envisioned Future is an overarching
goal you have established for your company that will take a generation or more to achieve.
The framework that follows is designed to reveal your vision; it is based on an article by Collins
and Porras that appeared in the Harvard Business Review September-October 1996, “Building
Your Company’s Vision”.
James C. Collins & Jerry I. Porras, “Building Your Company’s Vision,” Harvard Business
Review (September-October 1996): 66.
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Marketing Strategy Formulation
1.1
Core Ideology
Core ideology is the foundation of your company vision. It is not a mission statement. Although
several companies may claim similar elements within their core ideology, it is the authenticity
and conviction with which they hold and live that ideology that makes the difference. Core
ideology well articulated provides an excellent framework for focus, action and results.
As stated earlier, Core Ideology, is composed of two elements: Core Values and Envisioned
Future.
1.1.1 Core Values
Core values are guiding principles. In the research conducted by Collins and Porras, they found
that successful companies, in general, have identified between 3 and 5 core values. Be careful
that you don’t confuse values with operating practices, business strategies or cultural norms.
There is a significant difference, unlike these other things core values do not change.
Examples of Core Values include3:
Walt Disney
1. No cynicism
2. Nurturing and promulgation of “wholesome American Values”
3. Creativity, dreams, and imagination
4. Fanatical attention to consistency and detail
5. Preservation and control of the Disney magic
Nordstrom:
1. Service to the customer above all else
2. Hard work and individual productivity
3. Never being satisfied
4. Excellence in reputation; being part of something special
To identify your core values work through the following four questions:
Ψ Discovery
What core values do you personally bring to
work? What core values would you want your
children to take with them to the workplace?
Can you envision them being as valid for you
100 years from now as they are today?
Would you want to hold those core values,
even if at some point one or more of them
became a competitive disadvantage?
If you were to start a new organization
tomorrow in a different line of work, what core
values would you build into the new
organization regardless of its industry?
James C. Collins & Jerry I. Porras, “Building Your Company’s Vision,” Harvard Business
Review (September-October 1996): 68
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1.1.2 Core Purpose
Core Purpose is the second part of core ideology. A core purpose is not a goal, objective or
strategy. The core purpose is not something that can be accomplished over a period of time. In
this case, core purpose is the reason the company was formed and remains in business.
“Purpose (which should last at least 100 years) should not be confused with specific
goals or business strategies (which should change many times in 100 years). Whereas
you might achieve a goal or complete a strategy, you cannot fulfill a purpose; it is like a
guiding star on the horizon - forever pursued but never reached. Yet although purpose
itself does not change, it does inspire change. The very fact that purpose can never be
fully realized means that an organization can never stop stimulating change and
progress.
Imagine if Walt Disney had conceived of his company’s purpose as to make cartoons,
rather than to make people happy; we probably wouldn’t have Mickey Mouse,
Disneyland, EPCOT Center, or the Anaheim Mighty Ducks Hockey Team4
To work to your purpose, we suggest the “5 Whys”, a method developed by Collins and Porras.
Start with a statement of what your company does. Then ask why is that important to my
customers? Take the answer to the question and ask again, Why is that important to my
customers? Keep repeating this five times and you quickly reveal the core purpose of your
company.
Ψ Discovery
Describe what your company does:
Why is this important?
Why is this important?
Why is this important?
Why is this important?
Why is this important?
NOTE: This framework is also a great way to translate product and service features into benefits.
James C. Collins & Jerry I. Porras, “Building Your Company’s Vision,” Harvard Business
Review (September-October 1996): 69-70.
4
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Marketing Strategy Formulation
1.2
Envisioned Future
As with NASA in the 1960s or Henry Ford at the beginning of the century, an aggressive goal is
extremely motivating, especially when it isn’t clear that achieving the goal is a certainty. In most
companies, goals are either not aggressive enough or they are poorly defined. Often the goals are
important to shareholders, but don’t contain a significant challenge to the creativity and ingenuity
of the employees. In short, they don’t ignite the spirit of the organization.
Collins and Porras recommend the use of a Big, Hairy, Audacious Goal (BHAG). A BHAG like
putting a man on the moon, as stated in the early ‘60s, was not a given and required significant
investment, innovation, perseverance and courage. A BHAG will require ten to thirty years to
complete and forces senior management to be visionary. Because the goal is so far out, subject to
market conditions and requires a variety of efforts and investments it will have only a 50% - 70%
chance of success. However, it is important that the organization believes that it is achievable
with extraordinary effort and a little luck. In short, individuals should be proud to contribute to
achieving the BHAG.
There is no easy framework for developing a BHAG. However, in their research, Collins and
Porras identified several basic types of BHAGs. The following categories and examples may
provide a starting point for your efforts:
Target BHAGs can be quantitative or qualitative
 Become a $125 billion company by the year 2000 (Wal-Mart 1990)
 Become the dominant player in commercial aircraft and bring the world into the jet
age (Boeing, 1950)
Common-enemy BHAGs involve David-versus-Goliath thinking
 Knock off RJR as the number one tobacco company in the world (Philip Morris,
1950s)
 Crush Adidas (Nike, 1960s)
Role Model BHAGs suit up-and-coming organizations
 Become the Nike of the cycling industry (Giro Sport Design, 1986)
 Become the Harvard of the West (Stanford University, 1940s)
Internal-transformation BHAGs suit large, established organizations
 Transform this company from a defense contractor into the best diversified hightechnology company in the world (Rockwell, 1995)5
Ψ Discovery
Describe your BHAG:
James C. Collins & Jerry I. Porras, “Building Your Company’s Vision,” Harvard Business
Review (September-October 1996): 72-74.
5
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Marketing Strategy Formulation
2 Competitive Strategy
2.1
Understanding the Environment
According to Michael E. Porter there are five forces that determine the nature of competition in
an industry.6 These include:
Porter indicates that the
profitability of an industry is
a function of relation of
these five items.





Entry Barriers
Supplier Power
Substitution Threat
Rivalry
Buyer Power
Lets consider the impact of
each in turn.
2.1.1 Entry Barriers
Economies of scale, proprietary product differences and brand identity provide an advantage over
new entrants. Managing the costs a customer incurs to switch to another supplier is another
mechanism for advantage. Capital requirements, access to distribution and learning curves are
other methods that can be used to discourage new entrants.
2.1.2 Supplier Power
Just as managing the cost for your customers to switch to another supplier is a mechanism for
managing new entrants, suppliers use this tactic to manage their channels. In addition, they work
to differentiate their products from other suppliers, work to create demand for their products and
manage their costs relative to consumer expectations. The degree to which the supplier can
manage these issues determines their power over your position in the value chain.
2.1.3 Substitution Threats
The entry of substitute offerings can swiftly overtake entire industries. Consider the impact of the
transistor on vacuum tube manufacturers, initially it was believed that it would take the lower
priced transistor twenty five years to change the industry. In fact it took less than five. The key
is to properly evaluate the threat of substitute offerings.
Michael E. Porter, “How competitive forces shape strategy”, Harvard Business Review (MarchApril 1979): 137-145
6
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Marketing Strategy Formulation
The best approach is to objectively consider the relative price performance of substitutes, the cost
incurred by the manufacturer or customer to switch and the propensity of the buyer to substitute.
Too often, a cognitive bias prevents us from rationally evaluating the impact of new technology.
As an example, consider the reaction of computer manufacturers to personal computers in the
early 1980’s.
2.1.4 Rivalry
Certainly within your industry and the geography you serve you face competition. Use the
following table to evaluate your competitiors.
Ψ Discovery
List each of your rivals (change the columns to reflect the factors important to your customers)
and rate each as a Strength “+”, Weakness “-“ or no advantage “=”.
Competitors
Your Company
Competitor #1
Competitor #2
Price
Service
HW/SW
Lines
Customer
Satisfaction
#/Quality
Personnel
Company
Size
Vendor
Relationships
2.1.5 Customer Power
The fifth determinant of profitability is the bargaining power of your customers. This is best
considered from the perspective of:

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
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





buyer leverage
buyer concentration (market saturation)
buyer volume (market opportunity)
buyer switching costs (ease of doing business vs. saturation of the competitive field)
buyer education (are they first generation users or has this become a commodity)
availability of substitute products
pull-through manufacturer marketing
price sensitivity (price impact on their final product vs. quality impact on their final
product)
purchase volume leverage on price
product/service differentation
brand identity
impact of quality on performance
customer’s profit expectations
incentives motivating the decision maker
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Marketing Strategy Formulation
2.2
Competitive Strategy
Given this analysis, Porter suggests that there are four basic strategies to select from. The
strategy you select is based on two choices. First, will you compete first on cost or on
differentiation? Second, will your industry or geographic focus be narrow or broad?
It is very important to note that selecting a “differentation” strategy does not excuse you from
reducing your costs. Nor does
a narrow industry focus
preclude you from exploring
growth strategies.
2.2.1 Cost Leadership
A cost strategy must be bulit
on the foundation of a good
product that is acceptable in
quality and features. Instead
of being unique, the cost
strategy seeks advantage by
opening up a sustainable cost
gap over its competitors. You
can do so by managing the
areas in the business that are
critical to cost. This leads to
superior margins, provided prices are at or near the industry average.
2.2.2 Differentiation
The differentiator seeks to command a premium price which leads to superior performance
provided the premium exceeds the extra costs of being unique.
Section 4 of this document covers mechanisms for identifying and developing differentiation that
is important to your customer.
2.2.3 Focus
In terms of competition, focus can refer to industry, geographic or technical expertise. Your
focus should align with your resources, experience and interests.
2.2.4 Strategy Selection
The strategy you select should mesh with your abilities, experience and resources. You can win
with any one of the four basic strategies, providing you are focused and realistic.
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Marketing Strategy Formulation
3 Market Segmentation
The essence of market segmentation is market selection. By selecting a market, you can define
the target prospects you need to reach. Clear identification of prospects provides focus and
enhances the effectiveness of both your marketing and sales efforts.
Market segmentation is, in essence, the process of selecting your playing field. Problems can
arise from incorrect market segmentation, including:
Defining a Market Segment that is too broad:
 Exposure to a wider variety of competitors
 Trying to be all things to all people dilutes your differentiation, message and
credibility
 Increases the difficulty of crafting and delivering your value proposition
 Makes selling harder. This is counter intuitive, most sales people the field of
opportunity to be as broad as possible. A market that is too broad dilutes the
effectiveness of marketing, the result: sales people work harder because they are
working with less qualified prospects.
Defining a Market Segment that is too narrow:
 If the prospect field is too narrow, growth is difficult to achieve
 If the field is too narrow, long term sustainability and cash flow may be threatened
 Company can be pigeon holed by competition and the market
Defining the proper market segment based on the industry, geography, company requirements
and company needs improves the focus and effectiveness of marketing and by extension sales.
3.1
Market Dimensions
Derek Abell suggests that consideration of three critical market dimensions is essential to market
selection:



The industry or region that your firm will serve;
The customer function(s) you service;
The technology platform used for delivery.7
This framework categorizes your market segment along three dimensions. The first, what
industry or region will you serve. The second, what customer function will you support (e.g.,
sales and marketing by providing a sales force automation package, engineering through a CAD
package or MIS through consulting and integration services). The third dimension is technology,
what hardware, software and service expertise are you offering to the customer. Be as specific as
you can be on each of these:
Ψ Discovery
Industry
Function
Technology
7
Derek A. Abell, Defining the Business (Englewood Cliffs, N.J.: Prentice-Hall, Inc., 1980)
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Marketing Strategy Formulation
3.2
Demographic Segmentation
Further segmentation is necessary based on industry, geography and the benefits the customer
expects. The following grid will help8:
Ψ Discovery
DEMOGRAPHIC
Industry: Which industries buy these
products/services? Which should we
focus on? Using the appendix, identify
the appropriate SIC codes for the
appropriate industries.
Company Size: What size companies are
we most successful with? What size can
we profitably service? Where should we
focus?
Location: What geographical areas
will we focus on? Identify these in
terms of market areas such as
Metropolitan areas, zip codes, states
or area codes.
PURCHASING APPROACHES
Purchasing Function Organization:
Who makes the purchasing decision?
Who influences the purchasing
decision? Who must we reach,
influence and convince to make the
sale? What is important to each
individual (e.g., function, price,
timeframe, quality)? How does your
product or service impact the
individual (e.g., job, budget, power
base)?
Power Structure: How is the
purchasing decision made
(individual, committee, executive)?
What is the standard evaluation
process and timeframe?
General Purchase Policies: How do
these companies finance their
purchases (Cash, leasing, debt)?
What support can we provide to clear
this hurdle? Who in purchasing is
involved?
Purchasing Criteria: What factors
most influence our customer?
8
Thomas V. Bonoma and Benson P. Shapiro, Segmenting the Industrial Market (Lexington,
Mass.: Lexington Books, 1983)
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Marketing Strategy Formulation
Service, quality, cost of ownership,
price, financing, implementation?
Why are these factors important?
SITUATIONAL FACTORS
Urgency: Is the prospect under a
particular timeframe that provides an
advantage or disadvantage? How
does this impact margin potential?
How are you positioned relative to
the competition?
Sales Cycle: What is the typical
sales cycle? Length of sales cycle?
What are the steps? What are the
typical obstacles and hurdles? How
do you overcome these hurdles?
Specific Application: Should we
focus on certain applications of our
product rather than all applications?
Are there related applications that are
an easy add on sale?
Size of Order: What is the typical
size of your sale? Should we focus
on large or small orders?
PERSONAL CHARACTERISTICS
Attitudes toward Risk: Do your
offerings appeal to risk takers or
those who are risk adverse?
Loyalty: Should we focus on
companies that show high loyalty to
their suppliers?
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Marketing Strategy Formulation
4 Differentiation
Companies that consistently win and command higher margins generally have a high degree of
differentiation. In assessing your differentiation, there are two relevant frameworks to consider:
Differentiation of the product and differentiation of the customer’s experience.
4.1
Product Framework
Theodore Levitt identifies four aspects of a product9:




The Generic Product is the physical hardware, intellectual property, associated with
software, or the labor associated with service.
The Expected Product represents the customer’s minimum expectations surrounding
the purchase of the product.
The Augmented Product includes products and services you add to enhance your
offering that are not necessarily expected.
The Potential Product includes everything that may be done or offered to secure or
retain a customer relative to the product.
Different market segments and customers can place product features and offerings in different
categories. For example, one customer may consider forty-five day terms “Expected Product”
while another sees them as “Augmented Product”.
Evaluating your products, services and their related features (e.g., terms, business process
consulting) relative to the four categories is helpful. The following grid helps you evaluate your
products, services and related features (modify the grid as needed to reflect your offerings):
Ψ Discovery
ITEM
Hardware Product
Software Product
Implementation
Networking Services
Business Consulting
Financial Terms
Pre-Sales Consulting
Post Sales Support
Maintenance
Value to Customer (1-5)
Generic
Expected
Augmented
Potential
Theodore Levitt, “Marketing Success Through Differentiation - of Anything,” Harvard Business
Review (January-February 1980): 4-7
9
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Marketing Strategy Formulation
4.2
Customer Experience Framework
The second dimension of differentiation is based on an understanding your product or service
offering from the perspective of your customer. More specifically, how do customers feel about
the use of your product or service at different points in the product life cycle? Viewed
strategically, their experience can shape the dynamics of competition.10
Ψ Discovery
How do people become aware of their
need for your product or service?
How do customers find your offering?
How do customers make their final
selection?
How do customers order and purchase
your product or service?
How is your product or service
delivered?
What happens when your product or
service is delivered?
How is your product installed?
How is your product or service paid
for?
How is your product shared?
What is the customer really using
your product for?
What do customers need help with
when they use your product?
What about returns, exchanges and/or
adjustments?
How is your product repaired or
serviced?
How does the use of your product or
service affect their business?
How does it impact their end user?
How does the use of your product or
service improve their end-users
satisfaction?
Ian C. MacMillian and Rita Gunterh McGrath, “Discovering New Points of Differentiation”
Harvard Business Review, (July-August 1997): 4-11
10
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Marketing Strategy Formulation
4.3
Mapping the Consumption Chain
The objective of this exercise is to gain insight into the customer by considering the context of
each step in the consumption chain. Essentially, you need to consider how a series of simple
questions (what, where, who, when and how) apply at each link in the consumption chain. The
goal is to assemble an inventory of possible points of differentiation. For example:
Ψ Discovery
What are customers doing at each
point in the consumption chain?
What else would they like to be
doing?
What problems could they be
experiencing?
Is there anything you can do to
enhance their experience at this stage
in the chain?
Where are your customers when they
are at this point in the consumption
chain?
Where would they like to be?
Who else is with the customer at any
given link in the chain?
Do they have any influence over the
customer?
Are their thoughts or concerns
important?
When, at what time of the year or
business cycle, are your customers at
any given link?
Does this timing cause any problems?
If you could arrange it, when would
they be at this link?
How are your customers’ needs being
addressed?
Do they have any concerns about the
way in which your company is meting
their needs?
How else might you attend to their
needs and concerns?
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Marketing Strategy Formulation
4.4
New Product/Service Combinations
The objective of evaluating the customer’s experience is to gain insight into their experience. A
review of the process can often reveal opportunities for differentiation. The next framework
assists in this, it referred to as a Morpho Box11. Considering the how customers evaluate,
consider and select your products and services is the first step.
Using the Morpho Box, you can combine this information with free thinking to identify potential
new product and service combinations. Fill in as many rows under each column, as you can. The
ideas in each ROW are not meant to be associated, this is a free thought exercise. Once you have
filled in as many rows as you can, try combining different cells to come up with a new value
chain.
An example will hopefully make this more clear, it is based on the use of ATM machines, and
appears in Terry Richey’s book, The Marketer’s Visual Tool Kit (page 22):
What
Withdraw
Where
Bank Lobby
Why
Speed
Deposit
Drive-Up
Privacy
Get Balance
Remote
Locations
Retail Stores
Shopping
Centers
Airports/
Hotels
Computer
Modem
Transfer
Make Payment
Apply for Loan
Invest
When
At Night
After Hours
Who
Current
Customers
NonCustomers
Travelers
Save
Students
Business Hours
Leave Message
At Wok
Get Info
BusinessPeople
Children
Apply
Retirees
On Vacation
Weekends
Out of Town
In Car
How
With ATM
Card
With Password
With Credit
Card
With Debit
Card
With PIN
Linked
Accounts
Open Accounts
By linking the random thoughts in this exercise together, the bank found a new service to offer its
customers.
Ψ Discovery
What
Where
Why
Who
When
How
See Terry Richey, The Marketer’s Visual Tool Kit (New York: Timberline Strategies, Inc.,
1994)
11
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Marketing Strategy Formulation
4.5
Features & Benefits
List all of the features and benefits of the products and services that you offer.
Ψ Discovery
Feature
Advantage
Benefit
By plotting each feature on the Feature Spectrum12 grid, you can begin to decide which to focus
on with your prospects:
LOW
Uniqueness to our Company
High
Ψ Discovery
Low
Benefit to our Client
High
See Terry Richey, The Marketer’s Visual Tool Kit (New York: Timberline Strategies, Inc.,
1994)
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Marketing Strategy Formulation
Taking the top ten features, use the following grid to determine which are important to each of
your influencers:
Ψ Discovery
Influencers
Features
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Marketing Strategy Formulation
5 Positioning
Undiscovered
Unparalleled
Unknown
Undesirable
Low
Low
Low
Credibility
High
Positioning is a combination of visibility and credibility. Visibility is the measure of how widely
known the company is among a variety of companies and within the various functions within
these companies. Credibility is a measure of the respect others have for your company’s work.
The following grid illustrates the various positions:
Low
5.1
Visibility
High
Assessing the Company Position
The key to company positioning is to foster a specific image of your company in the minds of
your prospects and those who influence them. Research suggests that there are several issues that
must be considered in developing tactics for positioning your organization13, these include:
Ψ Discovery
Whose minds really matter? (Whose opinions will
influence our reputation?) Vendors, distributors,
customers, prospects, trade-press, local business
press, consultants, trade groups…
How visible and credible are we relative to the
competition?
What factors within our control offer the greatest
potential for shaping our company positioning?
How does our company offer meaningful,
believable, unique advantages over other firms?
Are our product, product line and company
positioning activities mutually reinforcing?
What combination of communications tactics
should we use to enhance the visibility and
credibility of our organization?
Thomas J. Kosnik, “Corporate Positioning: How to Assess - and Build - A Company’s
Reputation”, HBS No. 9-589-087
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Marketing Strategy Formulation
Above and beyond the marketing programs that communicate your positioning, there are a
number of other factors that affect your company’s reputation. These include:





The personality of senior management
Values & Vision
Human Resources Practices
Non Work activities of personnel - community reinvestment
Partnerships - their reputation (positive or negative) reflect on you
To effectively enhance your reputation, your position must be based on meaningful, believable,
unique advantages relative to your competitors. The most common problems encountered with
positioning include14:
1. Basing your position on Irrelevant Differences - make certain that the position you
stake out is important to your prospects and customers.
2. Making Unbelievable Claims will undermine your entire message; you cannot be all
things to all people - focus your message and your resources.
3. Usage of Me-Too Positioning even if its relevant, who will care if it is the same
position as your competition.
5.2
Fundamental Position Statements
The following grid lists a variety of positions and their benefits. Identify which you believe you
can claim, which are claimed by your competition and which are important to your customers.
Consider if there are other points of differentiation not on the list that should be added because
they are critical to your prospects. Select the top one or two positions that most clearly
differentiates your business, meshes with your vision and goals and are important to your
prospects.
Ψ Discovery
Company Position
Market share
Leader
Quality Leader
Benefit
The biggest (most secure)
Importance
to
Prospects
Held by
your
Company
Held by
your
Competitor
The best/most reliable products &
services
Service Leader
The most responsive when
customers have problems
Technology Leader The first to develop new technology
Innovation Leader
The most creative in applying it
Flexibility Leader
The most adaptable
Relationship Leader The most committed to the
customer’s success
Prestige Leader
The most exclusive
Thomas J. Kosnik, “Corporate Positioning: How to Assess - and Build - a Company’s
Reputation,” HBS No. 9-589-087.
14
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Marketing Strategy Formulation
Knowledge Leader
Global Leader
Bargain Leader
Value Leader
Variety Leader
Integrity Leader
Social
Responsibility
Leader
The best functional, industry or
technical expertise
The best positioned to serve world
markets
The lowest price
The best price performance
The largest assortment of products
and services
The most ethical/trustworthy
The most positive force in
communities it serves
The results of this framework help you determine what you should focus on when formulating
your positioning message. During this process, make sure to refer back to your vision to ensure
alignment. Pick the top two or three unique positions and focus on these in your communication
with the public.
5.3
Positioning Tools
After selecting your position statement(s), evaluate what communication approach will best
deliver your message. The following grid reviews a few of the alternatives and their effectiveness
in delivering the message to a variety of audiences15:
Builds Visibility for:
How effective is it as
Large &
Small &
Traditional Marketing/ Sales
a way to Build
Anonymous
Identifiable
Activities
Credibility?
Groups
Groups
Advertising
Excellent
Fair
Poor
Conferences & Trade Shows
Good
Excellent
Fair
Customer User Group
Good
Good
Excellent
Demonstrations
Poor
Excellent
Excellent
Direct Mail Communications
Fair
Good
Poor
Field Service
Poor
Fair
Excellent
Personal Selling
Poor
Fair
Fair
Newsletters
Fair
Good
Fair
Seminars for customers and opinion
Poor
Good
Good
leaders
Telemarketing
Good
Good
Fair
Technical Support
Poor
Good
Excellent
Thomas J. Kosnik, “Corporate Positioning: How to Assess - and Build - a Company’s
Reputation,” HBS No. 9-589-087.
15
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Marketing Strategy Formulation
Public Relations activities
Articles in Technical or Trade
Journals
Memberships in clubs and civic
organizations
Professional and trade association
activities
Speeches
Special Events
Company Image Building
Activities by Functions
Other than Marketing
Philanthropic Activities:
 Jobs, housing, training,
treatment for the
underprivileged
 Academic research
 Scholarships for students
 The arts
 Public health
 Nature and wildlife
 Community activities or real
estate projects
 Internships
Employee Training/Education
Programs
Investor Relations
Builds Visibility for:
Large &
Small &
Anonymous
Identifiable
Groups
Groups
Fair
Good
Good
Fair
Fair
Good
Fair
Good
Fair
Good
Builds Visibility for:
Large &
Small &
Anonymous
Identifiable
Groups
Groups
Excellent if
Excellent if
used to
the cause is of
generate
positive
coverage by
interest to
the news
your target
media
market
Good
Excellent
Excellent
Excellent
Lobbying/Government Affairs
Fair
Excellent
Strategic Alliances (where partners
“share” reputations)
Fair
Excellent
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How effective is it as
a way to Build
Credibility?
Depends on the article
and the journal
Depends on the
organization
Depends on the
association
Depends on the
speech
Depends on the event
How effective is it as
a way to Build
Credibility?
Mixed results
depending on the
views of the customer
about philanthropy
Excellent in the long
run
A critical factor for
corporate reputation
Can be very risky if
mishandled
Depends on the
quality of the
partner’s reputation
Marketing Strategy Formulation
Technological Approaches:
 WEB
Acceptable
Good
Depends on the value
of the content and
how you drive visits.

EMAIL
Poor
Excellent
Increases depth of
communication and
breadth of access.

FAX
Poor
Excellent
Cuts response time but can hurt quality of
the response.

Voice Mail
Excellent
Excellent
Cuts response time,
but irritates some
customers.
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Marketing Strategy Formulation
6 Market Entry/Exit
Markets develop in response to solutions to fundamental business problems (e.g., year 2000,
Enterprise Resource Planning, Computer Aided Design). It is generally accepted that markets
have approximately five stages: market development, rapid sales growth, competitive turbulence,
saturated maturity and decline.
Typical Product Life Cycle
Market
Development
Rapid
Sales
Growth
Competitive
Turbulence
Saturated Maturity
Decline
At each stage there are opportunities for entry into the market and reasons to exit the market. The
key to success is to understand what stage a market is in, what the resource requirements are to
capture market share profitably and what behavior the market will exhibit.
6.1
Market Stages
The market development phase requires that you educate your customer about the problem, your
solution, product benefits and service attributes. Companies particularly affected by the problem
and the early-adopters are the primary prospects. Differentiation takes a back seat to education.
Marketing programs must be aimed at informing the prospects that a solution to their problem
exists. Competition is often welcomed since market saturation is low and competitors share the
cost of education.
During the Rapid Sales Growth phase, year-to-year growth rates of 30% to 50% are not
uncommon. As the early adopters improve their competitive position, their success illustrates the
value of the solution. The rest of the market suspends their caution and rush to take advantage of
the solution. As new suppliers enter the market, the need for innovation results in product
improvements. The goal in this phase is to offer an attractive product in sufficient quantities to
meet demand at a price that is competitive enough to hold or increase market share during the
sales ramp up period.
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Marketing Strategy Formulation
Competitive Turbulence results as the rate of growth declines. The decline is a direct result of
fewer first time buyers. Sales growth in this phase is primarily focused on the early adopters who
are ready to upgrade their initial solution. Product differentiation becomes the key to mastering
competition. Fierce competition and reduced prices eliminates the weaker suppliers.
In the Saturated Maturity phase sales generally remain level or even decline. Second and third
time buyers comprise the marketplace. Price competition is fierce and differentiation is often
based on packaging and deliver rather than features and benefits.
Decline occurs as a result of a change in the customer’s needs or the introduction of a substitute
technology that better meets the need, in any case the existing offering is rendered obsolete for all
but the most risk adverse. Marketing is all but eliminated in this phase because it can no longer
stimulate significant demand.
Evaluating where a product or market is in its lifecycle forces management to consider the future
strategically. Understanding the phase will help to identify what resources are necessary and how
to deploy them. For example, early in the Computer Aided Design & Computer Aided
Manufacturing market much effort was required to educate designers and manufacturers. Only
through this education was product acceptance achieved. Companies entering this market early
hired engineers and delivered product demonstrations and customer training. Today, these
products are readily purchased as commodities with little consideration for value add from the
supplier.
6.2
Entry/Exit Decisions
The decision to enter or abandon a market is never easy and is often arrived at subjectively. The
decision to enter or exit a market should be based on potential reward, competitive environment,
prospect requirements and the skills of the firm.
Consider the markets that you are in, what phase are they in? What is the next phase? How can
you best position yourself to take advantage of the change? Are your resources properly aligned
with the phase you are in to extract the maximum margin? Are your sales strategies and tactics
aligned with the phase you are in? Do you have the proper resources to service the market in its
current phase? What about the approaching phase?
Don’t overlook re-entry strategies. Consider the case of the printer and terminal markets, many
companies executed their exit strategies. The resulting vacuum allows the remaining companies
to demand margins not seen in this market since before the competitive turbulence period.
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Marketing Strategy Formulation
7 Hierarchy of Marketing Elements
Psychologist Abraham Maslow proposed a hierarchy of needs consisting of:





physiological needs (food, shelter, clothing)
safety needs
social (belongingness) needs
esteem needs
self-actualization needs.
I propose the following Marketing hierarchy of needs:




Elementary
 Company Vision, Market Segmentation & Differentation
 Company Capabilities Overview
 Biographies of key personnel (senior management, consultants and technical
staff)
 Case Studies of recent successes
 Audience Definition: Don’t forget - Vendor Sales & Marketing, Distributor
Sales & Marketing, Investors, Consultants, Local Business Press, Trade Press,
Customers, Prospects, Trade Groups, and business groups
Necessary
 Folder with Company Logo
 Company overview presentation
 Customer/Prospect/Vendor/Investor Contact Database
 Press Database - local business & technology press identified for quick launch of
press releases
 Targeted Direct Mail Campaigns
 Web Site
 Regular press releases
Very Helpful
 Defined process to handle lead fulfillment
 Defined process to handle, track & measure lead flow
 How-to White Papers on key technology or industry focus areas
 Newspaper/Business Journal Advertising
 Telemarketing
 Running focused meaningful seminars (in person or web based)
 Writing articles for geographic business or trade press
 Speaking engagements to industry/geographic business groups
Somewhat Helpful
 Newsletter to Customers/Key Prospects/Vendors
 Tradeshow presence
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Marketing Strategy Formulation
Appendix A: Reading List
This document was created to help you review, assess and develop your marketing strategy. It is
based on our experience and articles from top writers and educators in the field of business to
business marketing. We gratefully acknowledge the contribution of several specific articles. We
encourage you to order and review them, as they will enhance the effectiveness of this process.
Reprints can be obtained from the Harvard Business School Press web site at
www.hbsp.harvard.edu or by calling 800-988-0886.
Title
Author(s)
Date
Publication #
Marketing Strategy Formulation
Minette E. Drumwright 11/16/92
9590001
& Thomas J. Kosnik
Building Your Company’s Vision
James C. Collins &
Sep/Oct 1996 96501
Jerry I. Porras
How Competitive forces shape
Michael E. Porter
Mar/Apr
79208
strategy
1979
Corporate Positioning: How to
Thomas J. Kosnik
9589087
Assess - and Build - A Company’s
Reputation
Marketing Success Through the
Theodore Levitt
Jan/Feb 1980 80107
Differentiation of Anything
Discovering New Points of
Ian C. MacMillan &
Jul/Aug 1997 97408
Differentiation
Rita Gunther McGrath
Making Money Through Marketing
Benson P. Shapiro
Jul/Aug 1979 79410
Note on Competitive Positioning
Anita M. McGahan
9/15/94
9794108
In addition, the following book is available from the American Marketing Association by calling
1-800-AMA-1150.
Title
Author(s)
Date
Published By
The Marketer’s Visual Tool Kit
Terry Richey
1994
Timberline Strategies, Inc.
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