Category: University of Mumbai BMS Notes

Targeting strategy is a strategy for selection of potential customers the company/ organization can sell its products/services to. Targeting is done to a specific target group as there are various segments in any market. Most firms do not select all the segments in a market to operate and choose one or few of the identified segments through targeting. As mentioned earlier, targeting is this process of selection made on the basis of attractiveness of the segment.

STP marketing strategy is an important way of doing business, where its stands for market segmentation, targeting and positioning. Targeting is the processes of identifying the important target market and target audience which a company wants to sell its products to. Any product or service would not be of utility of every person. And hence companies must be focused on whom they want to target. A good targeting strategy helps a company have focused sales growth, enhanced promotional strategy, build strong customer loyalty etc. Hence, targeting strategy is the backbone for any marketing firm.

Target Attractiveness

Sales Criterion: Using this method, the business allocates its resources to target markets based on historical sales patterns. This method is especially useful when used in conjunction with sales conversion rates. This method is used in retail. A disadvantage of the method is that it assumes past sales will remain constant and fails to account for incremental market potential.

Distance Criterion: Under this approach, the business attempts to define the primary geographic catchment area for the business by identifying people who live within a predetermined distance of the business. For a retailer or service-provider the distance might be around 5 km; for domestic tourist destination, the distance might be 300km. This method is used extensively in retailing.

Interest Survey Methods: This method is used to identify new business potential. Primary research, typically in the form of surveys, identifies people who have not purchased a product or service, but have positive attitudes and exhibit some interest in making a purchase in the short-term. Although this method overcomes some of the disadvantages of other methods, it is expensive even when syndicated research is used.

Chain ratio and indexing methods: This method is used in marketing of branded goods and retail. It involves ranking alternative market segments based on current indices. Widely used indices are the Category Index and Brand Index. The Category Index measures overall patterns within the product category while the Brand Index calculates a given brand’s performance within the category. By dividing the Category Index by the Brand Index, a measure of market potential can be obtained.

Target Compatibility

Consumer compatibility is the overall metric that measures the value consumers place on your brand. It shows how effective your consumer-brand relationship is. This is not a new concept; for years loyalty programs have helped measure consumer compatibility.

Brand Loyalty

As you most likely know, brand loyalty is essential to measure. While you probably already measure the loyalty of consumers to your brand through loyalty programs, you might not know that you can use brand loyalty for competitive intelligence as well.

Through location data, you can measure how loyal consumers are to your competitive set versus your own brand. Then, you can identify the least loyal competitor consumers or the most likely to switch loyalties and target them for competitive conquesting.

Brand Affinity

Finally, it’s important to consider the complete offline consumer journey in your consumer compatibility analysis. In addition to understanding how consumers are interacting with your own brand, it can be helpful to know where else your consumers shop and what their offline interests are.

If you see that your consumers are avid Dunkin’ fans and often visit the Dunkin’ near your brand location, you could develop an ad campaign with messaging that plays on that shared interest. Brand affinity can reveal opportunities for co-marketing like this that you might not have considered before.

Visit Frequency and Time of Visit

In addition to dwell time, you need to evaluate how frequently consumers are visiting your stores. Are they one-time shoppers or are they returning to your stores time and time again?

You can gain insights like these through location data, which reveals not only how often consumers visit your stores but also which times are most popular for visits. This information can inform marketing activations and promotions for your brand, especially when you pair it with demographic attributes of your consumers.

Once target segments are identified, the marketing manager selects a targeting strategy that will be the best fit for reaching them. Targeted marketing enables the marketing and sales teams to customize their message to the targeted groups of consumers in a focused manner. The targeting strategy is where the marketing mix comes together to create the right offer and marketing approach for each target segment.

One for all strategy

Any one size fits all marketing strategies will not be able to make sure that all of these people belonging to different demography are targeted. Hence, the ideal marketing campaigns are those which are tailored to target specific groups of people.

One size fits all makes sense as a lean startup option because you can funnel limited resources toward a specific product or service instead of spreading them too thin. By not offering customization, you only need to have one manufacturing line set up, and fewer variables to customize means fewer opportunities to mess up an order. This allows you to feel comfortable with the process before you expand your offerings.

In terms of services, following a one-size-fits-all approach can help you create stable, flat-rate pricing and develop a service routine. For example, if you offer manicures, it’s easier to perform the same process for the same price on all nails rather than giving a custom quote for people with long nails, short nails, missing fingers, etc.

Cons of One-Size-Fits-All Products and Services

You may not want to offer a one-size-fits-all product or service if each customer in your industry has widely different expectations. People do not want to pay for what they don’t need, and you run the risk of making customers feel overcharged if you only offer one type of service package or an overly customized product.

In addition, a lack of customization can leave you at a competitive disadvantage if other businesses in your niche have moved away from the one-size-fits-all option. You’ll end up leaving customers on the table who know they can get what they want from someone else.

A one-size-fits-all approach does not allow you to use the “Good, better, best” pricing strategy to upsell more robust products and services. Diversifying your products and services also opens you up to additional revenue streams.

Customizing Your Services or Products

Startups usually follow a one-size-fits-all approach on a temporary basis until the business has enough financial stability to offer customization. For example, you can produce a limited run of products in different colors to discover which ones resonate best with your audience before scaling up production. In terms of services, consider developing upgraded add-on services that are optional but recommended for a full experience. Creating “bronze,” “silver” and “gold” service packages can also allow customers to choose what best fits their needs.

If you’re stumped about how to proceed, do a little competitor research to see how they have organized their services or customized their products. Read public reviews to find out if their customers are happy with those options or wishing for something different.

One for each strategy

One-to-one marketing (also sometimes written as 1:1 marketing) is a strategy that relies on getting to know the individual choices made by a customer, and then tailoring marketing outreach to each customer differently based on those choices. It’s an approach that is not used to get the customer’s attention, but to keep their attention and their business.

Customization: the company doesn’t learn the preferences of each customer, but instead gives the individual customer the ability to customize the product to their own tastes. A good example of this strategy is a computer retailer that offers a basic platform of a laptop and then gives the customer the ability to tailor many of the laptop’s features (processor, memory storage, loaded programs) to their own tastes and needs. Many online news websites use the same strategy by allowing visitors to pick and choose the types of news stories (international, political, financial, etc.) they want shown most prominently on the site.

Personalization: the company learns the personal preferences and tastes of each consumer and customizes its marketing plan to them. Amazon.com is known for perhaps the most successful 1:1 personalization strategy, recommending products based on past purchases and interests.

Marketing Strategies

“Suggestions for You” Marketing: Online marketing companies like Amazon and Netflix have become masters at collecting, storing, and interpreting customers’ click history on their sites. They take that information and create a specialized marketing plan just for each customer, with recommendations on the next book to read or the next movie to watch.

The Personal Touch: Few things make a bigger impression on a consumer than personal attention and appreciation. The best coffee shop baristas know what Joe’s order is the minute he walks through the door, and that keeps him coming back. Investment bankers are expert 1:1 marketer. They get to know their clients’ personalities and investment preferences and priorities, as well as what level of risks they’re willing to take.

Preferred-Customer Marketing: Many retailers now offer a no-cost “Club membership” to consumers. Club membership gives the customer incentives in the form of lower prices or frequent-purchase rewards. In order to earn those incentives, the customer must check-in with their membership ID. This allows the company to track all items purchased during each visit. Once retailers know each customer’s shopping patterns and preferences that a particular club member buys a lot of cereal and prefers Cheerios, for example they can send out personalized coupon mailers to that member with savings on Cheerios and other preferred items.

While identifying your target groups, you must, first and foremost have a clear definition of what your product/service is and how you are planning to advertise it in the market. If its a product, understand its core value and why it makes a differentiation when compared to its competitors. If you are offering a service, identify how to touch-base with your audience groups and solve their pain points.

The people who you think is the most beneficial for your product/service Who are the decision makers for your product/service? Are you targeting VP’s, CMO’s, managers or individuals? Have a clear picture of who you want to reach out for your service.

How can you solve their pain-points Your product/service has to have an impact on these audience groups. Identify with a competitive analysis what issues these audiences might be facing and how you can provide a value proposition. 

Geographical locations Segment your audience groups based on their geographical locations. This helps you identify independent pain points and target a cost-effective solution to these groups.

Size of organization and industry and seniority levels of your ideal profile By identifying the ideal size of your target organization, you can make an informed decision that helps you reach out to the right person at the right time with a right value proposition.

What’s your differentiator All organizations, big or small look for something worthwhile partnering with you? This means, your differentiator should be strong, but not too overwhelming. By segmenting your audience groups according to their location, size and seniority levels of targets, you actually provide a stronger value proposition to these groups.

Factors To Help You Define Your Target Market

Determine what problem your company solves

People don’t buy products. They buy solutions to their problems. That’s why so many marketing professionals recommend highlighting the benefits of your product, not its features. Instead of emphasizing how good your product or service is, you should show your potential customers how you will make their lives (or their business profits) better.

Develop a profile of your most profitable current customers

Who are your current customers? Why do they buy from you?

Think about the characteristics and interests they have in common; which ones bring in the most business? Once you have a good idea of who buys your products now, you can expand upon it and figure out who else could benefit from what you’re offering.

Monitor and continuously learn from the competition

Check out who your competitors are targeting, and see if you can glean some insights from that.

Don’t go after the exact same market (the goal is to stand out, after all!), but see if what they are doing can give you some additional ideas about niche markets to target.

Analyze your product or service

We recommend making a list of features your product or service has and reframing them as benefits.

Who would be after these benefits? Whose problems are you really solving? Who really needs the solution or solutions your business offers?

Choose specific demographics to target

Demographics are used to identify population segments by specific characteristics, like:

• Age
• Location
• Gender
• Income level
• Education level
• Marital status
• Occupation
• Ethnic background, etc.

Using demographics can be a great starting point for small and large business alike. They can help you figure out who is likely to actually buy your product or service and can aid in putting together the building blocks of a great marketing plan.

Consider the Psycho-Graphics of your target market

Psychographics are some of the more personal characteristics of your target, including:

• Personality
• Attitudes
• Values
• Interests/hobbies
• Lifestyles
• Behavior

They will help you determine how your product fits into your target market’s lifestyle:

• How (and when) do they use your product?
• What features are the most appealing to them? Why?
• What types of media does your target turn for information and entertainment? Do they read newspapers, search for information online, attend particular events?

Considering these factors will allow you to build a more focused marketing plan that works with the specific behaviors, interests and lifestyle choices of your target market.

Evaluate your marketing investment over time

Sometimes we all need to take a step back and see if the market we have zeroed in on is actually the one that will bring us the ROI we are looking for.

Before you jump into creating Facebook ads and calling up trade shows, consider these questions:

• Are there enough people who fit my chosen criteria?
• Will my target audience see the need for my product or service?
• Can my target audience actually afford what I’m offering? How can I do anything to help them afford it (like offering payment plans)?
• Will I actually reach my target audience with my message? If it’s not as easy as launching a Facebook ad campaign, am I prepared to deal with the difficulties that arise?
• Do I really understand what drives my target audience to make decisions? What actually makes them press the “Buy” button?

1. Develop a true vision.

Vision is an abstract word that means different things to different people. Classically, a vision or vision statement is a snapshot into the future. It should include aspirations of what type of company you want to be, and, unlike a mission statement, articulates what success looks like in clear terms (customers, markets, volume, etc.).

2. Define Competitive advantage.

At the essence of strategy is identifying how a company can deliver unique value to its customers. In many sectors of the economy, companies are stuck in a sea of sameness. A well-thought-out business strategy should consider how a company can create space from competition in its service offering, pricing model, delivery system and more.

3. Define your targets.

One of the most significant barriers to growth is poor targeting. Absent of very specific targets, companies suffer from unclear messaging and thus misalignment between sales and marketing. Defining niches and specialties allows companies to focus resources (of course, some companies are generalists by design).

Clear target markets give a company the ability to create an integrated sales and marketing approach, where marketing enables sales productivity. Sales and marketing plans are executed more effectively when targets are tight.

4. Focus on systematic growth.

As one of our Vistage member clients says, “A thriving company is a growing company.” It is only through growth that companies can afford to invest in things like technology, the best people and new equipment. The strategic plan should identify in which segments a company will grow and in what proportion, so that the product mix yields a specific net margin result.

Only after coming to such conclusions could a company know how much it can afford in terms of capex, overhead expenses and so on.

5. Make fact-based decisions.

Strategy is a garbage in, garbage out exercise. Executives often complain about a lack of good data, but we consistently find information that is useful in the formation of strategy.

We once worked with a Vistage member who was trying to quantify the value of various segments served. By accessing the public records of a nearby port, we were able to quantify actual shipments of merchandise by potential customers.

6. Think long term.

In the face of constant change, planning horizons are shorter than they used to be. However, only thinking quarter to quarter is a trap that may rob companies of their ability to see around the bend. Best-in-class companies create processes designed to treat strategy as an annual cycle rather than a one-time, static event.

7. But, be nimble.

Companies can think long term and still be nimble. For example, a critical component of strategy is an external forces analysis. Companies should be evaluating long-term external forces, and adapting based on new information (meeting regularly-perhaps quarterly) to pivot.

Jeff Bezos of Amazon holds a strategy meeting every Tuesday to keep it front and center with his management team.

8. Be inclusive.

To be nimble, companies are including different people in their strategy than in the past. At a time when companies are hiring more millennial employees, there is greater transparency. While I am never one to advocate that companies open their books (as that is a personal decision for the entrepreneur), there is certainly movement toward more inclusion and transparency.

Deciding who to include in strategy formation is a critical selection. We recommend business owners include people they can trust and that can think strategically.

9. Invest time in pre-work.

If you want your managers to take strategy seriously, make them conduct research and prepare relevant information in advance of your strategy meetings.

10. Measure your results and execute excellently.

Every strategy should be actionable. Companies that are best-in-class:

• Have a strategic action plan that they track often (usually monthly).
• Promote common ownership of the plan across executives and departments.
• Utilize key performance indicators (KPIs) that are predictive and align directly with the strategic plan.
• Have cascading goals that reach every department and resonate with employees so they understand how their role contributes to the greater good.
• Set up their corporate calendar to promote productive meetings, and establish a performance management cycle that supports cascading goals and objectives to every employee.
• Rinse and repeat their strategy cycle every year.

Top-down business model generation

During Business Process Management trainings, people often ask me about the best modeling technique: How to model a process model? Where do I begin? Top-down or bottom-up process? Questions that many of you have asked yourselves when beginning to design a process model. In this blog I would like to take you along with me to the world of top-down or bottom-up modeling. Let me start by clarifying some frequently used terms. Then, I will share several personal experiences and my preferred method of working.

Before elaborating on the complete process model in terms of work processes and process steps, I want to mention a couple of items the process designer should pay close attention to.

First, the designer should always determine what the aim of the process is, and which customer the process will be targeting. We determine the modeling goal and ask ourselves: Why are we making this process model? And Who is the customer?

Second, determine the process scope. Where does the process start and end? The start is the input of the process and is often called the ‘start trigger’. The end of the process is the output, or the result, and is referred to as the ‘end trigger’.

Next, the designer should determine which enablers the process has. The enablers are the actors that works with and in the process. For example roles or systems.

Finally, should any preconditions applicable to the process be taken into account? Keep in mind legislation or internal guidelines. The process model should adhere to each of these preconditions or guides.

How to start modeling

After having looked into the items above, the process model can be further worked out. We can distinguishes two modeling methods to design a model. The first modeling method is top-down, where we work from work process to process steps. The second modeling method is bottom-up, where we work from the process steps “upwards” by clustering the step in work processes. Both methods are describing how to design a process model.

Top-down process modeling

The top down method is often used by process designers who need a total and broad overview of the process model. In complex organizations this method will reduce the complexity of the process. The top-down modeling method we first defining the work process (number 2 in de figure top-down method) of the process model after having modeled the start and end-trigger (number 1 in the figure top-down method). As soon as we have modeled the highest level of the model, we can begin modeling a level below that. Each of the work processes in the different process steps is being modeled according to the related declaration and data carriers (number 3 in the figure top-down method). The other work processes will be developed in a similar manner. Next, we will determine which process steps need to be developed into a work instruction level. Finally, each process step will be assigned its role and possible system. As you can tell with this type of modeling, we start from the top with the work process and slowly work our way downwards towards the bottom level. To design with the top-down method we make a stratification within the model. In this way the process designer is able to structure the process model.

Strategy

Top-down organizations don’t involve subordinates in planning. Instead, the owner generates the company vision, mission, strategic goals and plans and then communicates these to the ranks below. The front line translates goals into daily action to achieve the desired results. It’s important for owners to remember that a strategic course cannot be chosen properly without a grounding in the company’s accumulated experience; mining the first-hand knowledge of subordinates helps ensure wise goals and plans. This bottom-up context in making a budget plan, for instance, helps an owner incorporate practical information that could have been overlooked.

Justification

The top-down approach unifies a company behind one purpose, direction, command and standard, dictated from above and spread throughout the organization. This offers several advantages. It allows a business to reliably give customers the same experience or product. Standardized products and services can be rolled out on a grand scale and more cheaply than non-standardized goods, and standardization facilitates quality control. Unity of command, meanwhile, allows a company to avoid confusion in a crisis. With its clear lines of authority, the top-down approach encourages obedience.

Structure

The company’s organizational structure assembles employees into departments to facilitate work and resource sharing. Choices lead to organizational characteristics such as ordered or creative. Owners usually establish a formal structure when employee ranks have grown enough to demand organization. Based on a strong management hierarchy, the structure that best matches the top-down approach is the functional organizational structure. It segregates employees by function all the accountants and their tools work in one department, for instance. In the functional structure, departments each have a manager who is supervised, all the way up the ladder to the owner.

Pitfalls

By emphasizing management, the top-down approach de-emphasizes employees, who become passive. Without control, they have little room to show initiative or creativity. Because approvals must climb the chain of command, top-down businesses respond slowly to market challenges. In an unstable or dynamic environment, the top-down approach cannot stay apace with nimble rivals based on teams and employee empowerment.

Bottom-up business model generation

The bottom-up method is used by process designers that design a process model throughout their substantive knowledge. A process model can also be modeled according to the bottom-up method, by first defining each of the process steps in the model. Beginning with the start-trigger (number 1 in the figure bottom-up method), the designer will develop each of the process steps until the end-trigger is reached (number 2 in the figure bottom-up method). The process steps are further developed in a declaration and are saved on the relevant data carriers. Once each of the process steps between start and end-trigger have been completely developed we can begin introducing a structure within the model. We begin by grouping the process steps, which will further along again be grouped in a work process (number 3 in the figure bottom-up method). This modeling method is working from the bottom to upwards, starting with the grouping of the process steps and only then introducing a particular structure (grouping of the process steps into work processes at the highest level).

The term business model refers to a company’s plan for making a profit. It identifies the products or services the business plans to sell, its identified target market, and any anticipated expenses. Business models are important for both new and established businesses. They help new, developing companies attract investment, recruit talent, and motivate management and staff. Established businesses should regularly update their business plans or they’ll fail to anticipate trends and challenges ahead. Business plans help investors evaluate companies that interest them.

A business model describes how an organization creates, delivers, and captures value, in economic, social, cultural or other contexts. The process of business model construction and modification is also called business model innovation and forms a part of business strategy.

In theory and practice, the term business model is used for a broad range of informal and formal descriptions to represent core aspects of an organization or business, including purpose, business process, target customers, offerings, strategies, infrastructure, organizational structures, sourcing, trading practices, and operational processes and policies including culture.

A business model is a high-level plan for profitably operating a business in a specific marketplace. A primary component of the business model is the value proposition. This is a description of the goods or services that a company offers and why they are desirable to customers or clients, ideally stated in a way that differentiates the product or service from its competitors.

A new enterprise’s business model should also cover projected startup costs and financing sources, the target customer base for the business, marketing strategy, a review of the competition, and projections of revenues and expenses. The plan may also define opportunities in which the business can partner with other established companies. For example, the business model for an advertising business may identify benefits from an arrangement for referrals to and from a printing company.

Successful businesses have business models that allow them to fulfill client needs at a competitive price and a sustainable cost. Over time, many businesses revise their business models from time to time to reflect changing business environments and market demands.

When evaluating a company as a possible investment, the investor should find out exactly how it makes its money. This means looking through the company’s business model. Admittedly, the business model may not tell you everything about a company’s prospects. But the investor who understands the business model can make better sense of the financial data.

Strategic Market Planning

Strategic Market Planning is an ongoing process through which the company creates marketing strategies and plans its implementations in the target market. The process taken into account the current position of the company, helps in identifying the promotional opportunities & then evaluating these opportunities. Target market is identified through comprehensive research.

Marketing is a complicated process and mostly cannot be planned in short period of time. The strategic market planning takes into account long term and short-term view of the market and considers various parameters to plan according to the target market.

Strategic Market Planning Stages

The strategic market planning has three stages:

1. Segmentation of the market and customers
2. Profiling of the market segments
3. Development of the actual marketing strategy

The Purpose of Strategic Planning

Strategic planning is designed to provide an organization, its divisions, departments or even individual players with a game plan or road map to achieve specific goals and objectives. Strategic planning identifies internal and external effects and opportunities to consider in the creation of strategies and tactics. From a marketing standpoint, strategic planning might help to identify new market opportunities as well as new competitive threats.

The Planning Process

A number of steps are involved in any strategic planning process, including a strategic marketing planning process. These steps include identifying the overall planning goal, selecting team participants and gathering data related to the internal and external environment.

They can include conducting a SWOT (strengths, weaknesses, opportunities and threats) analysis, developing specific objectives, creating strategies and tactics, and designing a measurement and reporting process. In many organizations, the overall strategic plan provides direction for the creation of sub-plans, including a strategic marketing plan.

A marketing plan includes:

• An introduction with in depth description of long term aims and objectives.

Introduce the business, brand and product with the objectives to be achieved in the long run

• Marketing summary

Sum the marketing strategies and overview into a summary.

• Market landscape

Describe the targeted market and industry

• SWOT Analysis

Explore your strengths, weaknesses, opportunities and threats and keep a record of analysis for future reference.

• Specific aims & objectives

Highlight specific and short term aims and objectives

• Brand policy & plan

Aims and objectives related to building brand identity and strategy

• Promotional plan

Aims and objectives for overall promotional campaigns

• Engagements, time limits and financial plans

Defined actions, deadlines to carry out actions to accomplish the objectives and the budget necessary for implementing the actions.

Goals, Objectives, Strategies and Tactics

The components of a strategic marketing plan include goals, objectives, strategies and tactics, according to Opportunity Marketing.com. Goals are broad and provide general direction in terms of what the marketing organization would like to achieve, for instance an increased market share.

Objectives are tied to goals and provide more specific, measurable outcomes; for example, increase market share in a specific geographic area for a specific product, by a certain amount or by a specific date. Strategies and tactics indicate how goals and objectives will be met.

Strategies are broad: for instance, implement a social media strategy. Tactics are more specific and indicate the individual tasks to achieve the strategies for instance, set up a Twitter account or establish a YouTube channel.

The Important Role of Measurement

It is not enough to strategize a plan must include some form of measurement and a process for monitoring and reviewing results. An overall strategic plan might outline broad objectives for marketing; the marketing plan would detail more specific objectives for the marketing department to monitor and report on.

The results achieved whether they fall short or exceed expectations provide input used to consider changes or adjustments in the plan. Ongoing measurement and reporting can help to ensure the strategic plan continues to achieve measurable results.

Using digital analytical tools, such as those that come free with most websites, help businesses track where potential customers are coming from and what they’re searching for. Administering and analyzing sales reports and customer surveys also help manager learn what they are doing right and wrong.

Marketing Strategy

Sometimes the terms are used interchangeably, but they actually mean two different things.

Marketing Strategy: Shaped by your business strategy, your marketing strategy should explain the problem and how you will overcome it. It’s the offering you deliver, how you will deliver it, and why your marketing efforts will help you achieve your company’s mission and strategic goals. Once you have your strategy, only then will you be able to develop an effective marketing plan.

Marketing Plan: Driven by your marketing strategy, your marketing plan is the execution. It’s the roadmap of marketing efforts that help you achieve your marketing goals. Your plan should include detailed campaigns of what you will do, where you will do it, what they will cost, how and when you will implement them, and how you will track success.

If you have your marketing strategy, are your plans working to meet those goals? If not, this may be the reason why you’re not seeing your desired results.

The difference between marketing strategy and marketing plan comes down to purpose and application.

Marketing strategy is driven by your business strategy: What do you want? Where you will play? How you will win? A marketing plan includes goal-driven activities and tactics to help you achieve the strategy.

Value-creation and value-delivery is the main task of marketing. Marketing in its entirety is a value “Creating and Value-Delivering Process. The whole bunch of tasks involved in marketing, serve the purpose of value delivery. They actually form a sequence leading to value delivery.

Marketing planning, buyer analysis, market segmentation and targeting are concerned with value selection. Product development, manufacturing, service planning, pricing, distribution and servicing, are concerned with value creation & value delivery. Personal selling, advertising, publicity and sales promotion are concerned with value communication. Activities like market research and market control assess the effectiveness of the value delivery process, the level of satisfaction the customer has actually received and how it compares with the firm’s intention as well as with other competing offers for the purpose of enhancing value.

Ingraining an ‘Organizational Capability’ for innovation in creation of value is indispensable while competing in global markets. The basic questions underlying value creation are: who, which segments to serve (or not serve); what product or service to globalise; how to serve them through appropriate supply chains, channels and market-based assets, or organisational capabilities; and finally where (which geographical markets) to serve. Once firms are clear on the value proposition, they may delve on any of the below suitable strategies in isolation of other strategies or a combination thereof. These strategies are generic and not prescriptive. They are, however, routinely observed and often implemented by resource-endowed firms. Taking the automobile industry as an example, Henry Ford’s focus on productivity led to a business model where the competitive advantage of lower costs and prices resulted in greater market share and, subsequently, even greater economies of scale.

But, these advantages dissipated over time as other manufacturers adopted assembly lines and like Alfred Sloan, the founder of General Motors, the automotive market competition from cost/price minimisation to differentiation and branding. It was no longer enough to have any car as long as it was a black Model T Ford. Customers could start with a Chevrolet, get an Oldsmobile as families grew and income increased, migrate further to a stylish Buick, and finally to a Cadillac when one foot was in the grave. This use of differentiation and branding allowed GM to capture higher prices and margins as customers moved through their lifecycle but collapsed decades later when in the name of efficiency and cost management GM used the same chassis (platform) across Chevy, Olds and Buicks. In effect their new business model failed to understand what made GM great in the first place. European companies such as BMW and Daimler-Benz, not having the same scale as the US market, relied on product performance and premium pricing. The Japanese, who were late entrants in the global market, focused on longevity (reliability and quality) to deliver value and eventually solutions such as service guarantees and extended warranties to enhance customer switching costs and loyalty. These business model innovations evolved over decades in the automotive market. But they now occur over but a few months in consumer electronics sectors such as the smartphone market. Failure to innovate to do things better is a free gate pass to exit.

In any marketing situation, one can discern four distinct steps in the value providing process:

• Value selection.
• Value creation/Value Delivery
• Value communication.
• Value enhancement.

Value Selection

It is obvious that selecting the value to be offered is the first step in the value delivering process. Everything else follows. Only after selecting the value to be offered, can the firm proceed with production, sales and promotion. What needs to be specifically understood here is that the firm finds out what constitutes value in the estimation of the customer and accepts it as the value to be offered. Value selection is thus not only the first step in the sequence but also the most crucial one.

Value Creation / Value Delivery

This constitutes the bulk of the marketing job. What the firm has promised to provide the customer has to be actually provided. The product offering must actually carry the benefits the firm has promised and it must be reached to the customer in the most satisfying manner. Value creation/value delivery signifies the successful execution of the firms promise. Most firms fumble here because they promise to provide all sorts of things, but they fail deliver; their products fail to carry the value they were supposed to carry. The entire firm with all the functions and activities is involved in this step. In creating and delivering the product with all the associated benefits, which the firm has decided to offer, there is a role for technology, design and engineering finance management and the organizational set-up

On Marketing Concept, in this article we outlined up on the idea of integrated management action. What is required in value creation and delivery is integrated management action with marketing taking center stage.

Value Communication

After selecting the value to be offered and deciding how the value has to be created /delivered, the firm tries to communicate the value to the customer. In this step, there are actually two components. The firm works out a value proposition and then communicates it to the customer.

Making a Value Proposition

In a marketing endeavor, what the firm offers to the customer is not a mere physical product; it offers a value proposition. The product offer consisting of the best possible benefits/value is put forward as a value proposition, explaining how the offer matches the customers requirement s and how it works out to be the best among all the competing offers.

Communicating the Value Proposition

The firm then, communicates the value proposition to the customer. It explains the uniqueness of its offer through a well-formulated marketing communication mix. The customers exercise of assessing the value of the offer actually starts from this stage.

Value Enhancement

The firm also continuously and proactively enhances the value. It collects feedback from the consumer about his level of satisfaction with the product and upgrades the value. It actually is a non-stop job for the firm to search for the customers satisfaction level and augment the offer. Competing products, including substitute products, keep attacking the value proposition of the firm.

Expectations of customers too keep changing. The firm has to search for the new expectations of the customers, locate product gaps/ benefits gaps and keep making new and better offers to the customer to stay ahead of the competition in value rankings.

Sales promotion gimmicks do not normally serve the purpose of sustained value addition. Sales promotion measures like consumer deals and trade deals result in just a temporary shift in the value-cost equation in favor of the consumer. When the deals are withdrawn, consumers turn away from the product.

What is needed is a sustained and ongoing effort, not short-lived big bangs. The effort must be lasting value addition, which normally accrues only though factors like enhancement of the functional utility/ convenience of the product.

Strategic Planning

Strategic planning is a buzz word that is thrown around a lot, but unless you know how to develop and implement a strategic plan, the term is useless. It’s important to understand that strategic plans will differ greatly among practices and therefore, a “Cookie cutter” approach will not be beneficial. In this post, I would like to offer a few tips to driving successful strategic planning and implementation. 

1. Involve your entire staff

It is important that everyone in the practice be included in the process in some way. By collecting the insight of the people on the front lines, the plan will likely be more accurate, practical, and actionable. Also, by being inclusive, everyone will feel that they are an important part of a team and they will be more inclined to drive the implementation.

2. Conduct a situation analysis

Begin by looking at internal and external factors. Internally, explore your operations, human resources, and finances budget, profits, revenues, and debt. Externally, look at your competitors, market condition, and the economy. Lastly, conduct a thorough SWOT analysis; Strengths, Weaknesses (internally), and Opportunities and Threats (externally). This assessment will be the basis for your strategic plan. Figure out what you do well and what needs to be improved to build your practice and create a sustainable competitive advantage.

3. Develop business objectives

These goals should be SMART: Specific, Measurable, Actionable, Realistic, and Time-driven.  Potential goals can be focused on sales, profits, growth, or image and positioning.  

4. Develop an overall strategy

Your strategy should support your objectives. These will drive your tactics and determine how you will execute. During this phase, you should examine the variables that may affect your strategy and determine if they are controllable or uncontrollable. Typically, the internal variables will be controllable and the external variables will be uncontrollable.

5. Create control measures

Lastly, you will create key control measures that will measure the success of the initiative. It may help to think of this step in terms of who does what… when… and how. Implementing control measures will help keep strategic planning a process instead of simply a document.

The G-STIC Framework

Designing the Tactics

Tactics are the set of activities that are used to execute a specific strategy. These tactics are defined by seven elements, commonly referred to as the marketing mix. These are the key decisions that build on the marketing strategy.

• Product: It’s key functional characteristics. Implies transfer of ownership.
• Service: Also reflects functional characteristics, but does not transfer ownership. Services are inseparable from service providers.
• Brand: Create a unique set of associations that enhances the product/service value beyond simply the functional benefits.
• Price: The amount of money the business charges for the product/service
• Incentives: Tools used to enhance the value for customers, collaborators, and/or employees. Can be monetary or non-monetary.
• Communication: Informs current and potential clients about the offering. Can include elements from the other six marketing mix variables.
• Distribution: The channels by which the client receives the offering.

I: Defining the Implementation Plan

Implementation is the logistics of executing the offerings strategy and tactics. There are three main components.

Business Infrastructure: Refers to the organizational structure. Involves identifying the business unit in charge of the offering, and identifying key personnel and collaborators.

Business Processes: Depict the activities involved in designing and managing the offering (flow of information, goods, and money).

Implementation Schedule: Identifies the sequence and time frame for tasks to be performed.

C: Identifying Controls

Controls serve two functions: to evaluate a business’s progress toward its goals and to analyze the changes in the business’s environment.

• Performance Evaluation: Monitors the business’s progress toward reaching goals and maximizing performance.
• Environmental Analysis: Monitors the environment to be sure that the action plan remains optimal.

G: Setting a Goal

This is a pivotal part of the strategic planning process. Without a clearly defined goal, the other elements of the value creation process, and the overall success of the business, are doomed for failure.

There are two decisions involved with goal setting: identifying the focus of the businesses actions and setting specific benchmarks for measuring the business’s performance. The focus determines the key element of a business’s success and often includes elements such as net income, sales revenues, and market share. Benchmarking looks at the goal and defines its temporal and quantitative aspects.

S: Developing a Strategy

A strategy outlines the activities that are needed to accomplish the business’s goals. This element is characterized by two key decisions: Identifying target customers and developing a value proposition.

The markets in which a business’s offerings compete can be best illustrated by the 5-C framework.

• Customers: Potential buyers who have needs that the business’s offerings aim to fulfill
• Company: The business managing the offering
• Collaborators: Entities that work with the business to create value for target customers
• Competitors: Business’s whose offerings target the same customers
• Context: Relative aspects of the environment in which the business operates

Target Market

Identifying your target market involves two key decisions: Selecting which clients to serve and identifying actionable methods for reaching these clients. Selecting which clients to serve, also known as strategic targeting, is done based on the businesses ability to fulfill a client’s needs in a way that is beneficial to the client, business, and collaborators. Often, a client’s needs are not easy to see, so a business will need to identify observable characteristics that can be used to reach the client, also known as tactical targeting. These characteristics may include demographic, psychographic, geographic, and behavioral factors.

Value Proposition

As you have probably noticed, mutually beneficial value is a major theme in almost all discussions about marketing. True business success is achieved if a business creates a product offering that provides a client with more value than the competition’s offering in a way that creates value for the business and the collaborators. The value proposition is simply a definition of the value that the offering creates. This value proposition includes all of the benefits and costs associated with the offering. The next step is to define the positing strategy, which highlights the most important benefit of the offering. The most important benefit should be poignant and serve to differentiate the product in the mind of the client.

Implementation & Control

Implementation control is aimed at assessing whether the plans, progammes and policies are actually guiding the organization towards its predetermined objectives or not.

If the resources that are committed to a project at any point of time would not benefit an organization as envisaged, corrective steps should be undertaken immediately.

Implementation control is designed to assess whether the overall strategy should be changed in light of unfolding events and results associated with incremental steps and actions that implement the overall strategy.”

Strategic implementation control does not replace operational control. Unlike operations control, strategic implementation control continuously questions the basic direction of the strategy.

Types of Implementation Control

The two basis types of implementation control are:

1. Monitoring strategic thrusts (new or key strategic programs)

Two approaches are useful in enacting implementation controls focused on monitoring strategic thrusts:

• One way is to agree early in the planning process on which thrusts are critical factors in the success of the strategy or of that thrust
• The second approach is to use stop/go assessments linked to a series of meaningful thresholds (time, costs, research and development, success, etc.) associated with particular thrusts.

2. Milestone Reviews

Milestones are significant points in the development of a programme, such as points where large commitments of resources must be made. A milestone review usually involves a full-scale reassessment of the strategy and the advisability of continuing or refocusing the direction of the company. In order to control the current strategy, must be provided in strategic plans.

Implementation Control Measures

As you begin to implement a business strategy, you must use implementation control measures to assess whether or not your plan needs adjustment. Common types of implementation control include setting performance standards, measuring actual performance, analyzing the reasons your staff failed to meet specific performance standards, and developing a plan to correct performance deviations. Implementation control also includes things such as budgets, schedules, and milestones that the company is trying to achieve.

The process of the implementation of the marketing plan

During the process of the implementation of the marketing plan managers must ensure efficient use of capital, human and marketing resources of the company. Selection of the strategy has a significant impact on the subsequent functioning of the company, because its organizational structure must be adapted to strategy. Strategic marketing effectiveness largely depends on the level of involvement of executive leadership in the implementation of marketing tasks. In the implementation of the marketing plan very important factor are the skills, attitudes and behaviours of the staff.

Quality of management depends on:

• Leadership: Top management involvement in the planning process,
• Coordination: To ensure harmonious cooperation between the organizational units,
• Communication: Vertical and horizontal information flows,
• Human resources: Personnel selection, training and evaluation,
• Organizational resources:  IT systems, buildings, management methods,
• Motivating: The creation of incentive climate in which staff undertake actions to achieve the purpose of the company,
• Organizational structure: Relations between organizational units, processes, and formalization,
• Organizational culture: Market focus, values, customer orientation of personnel,

Marketing plan control process

Marketing plan control process includes the following phases:

• Setting the values of indicators, which are the subject of observation and measurement (e.g. sales volume, market share, stock rotation, etc.)
• Determining the tolerance ranges from planned values,
• Measurement of the values of indicators,
• Comparison of planned values to actual values, to determine deviations and give explanation of their causes,
• Formulation of proposals to eliminate the detected deviations or change of values of indicators.

Types of controls in marketing plan implementation

The essential types of marketing control are:

• Control of the annual plan: Performed by mid-level management (method: analysis of sales, market share, financial indicators, etc.)
• Control of profitability: Performed by marketing controller (method: the profitability of the product, area, customer segment, etc.)
• Control of efficiency: Performed by marketing executives, line managers and HR departments (method: the effectiveness of the sales staff, advertising, sales, promotion, distribution)
• Strategic control: Performed by top management or marketing auditor (method: ranking of the effectiveness of marketing, marketing audit, evaluation of marketing excellence, an overview of the ethical and social responsibility of the enterprise)

Problems with implementation and evaluation of effective control systems are often caused by:

• High cost of implementation (IT software and hardware, data acquisition, human costs),
• Strict control may reduce motivation, decrease creativity and innovation.

A business model is a framework for how a company will create value. Ultimately, it distills the potential of a business down to its essence. It answers fundamental questions about the problem you are going to solve, how you will solve it, and the growth opportunity within a given market.

Creating a business model is essential, whether you are starting a new venture, expanding into a new market, or changing your go-to-market strategy. You can use a business model to capture fundamental assumptions and decisions about the opportunity in one place, setting the direction for success.

There are many types of business models. Each one varies considerably based on the type of organization and offering. For example, a manufacturing company will have a very different model than an advertising agency. Even within a specific industry, business models vary. Here are a few common business models used by technology companies:

• Subscription
• Transactional
• Freemium
• Affiliate
• Retail sales

Most businesses end up using a combination of business models to reach their customers and grow over time.

Business model Importance

You need a clear path to build something meaningful. The process of building a business model establishes a plan for how you will realize your vision. It lays out the strategy behind a new undertaking or investment and provides a framework for tracking progress.

Creating a business model requires deep thought and analysis. Company and product builders must think from the outside in, focusing on market needs and what matters most to customers. Once built, sharing your business model across the organization encourages alignment. This keeps everyone accountable for what they are working on and why, as well as guiding investments of time and resources.

Uses of business models

Companies across every industry and at all stages of maturity use business models. Some rely on lengthy processes and build complicated models, while others move quickly to articulate the basics. Having the discipline to work through this planning tool forces internal alignment.

For established enterprises, a business model is often a living framework that is reviewed and adapted every year based on changes with customers, employees, and the market. For companies launching new products or entering new markets, a business model can help get them off to the right start and ensure that early product and marketing decisions are tied back to the strategy.

Role of Business models in Marketing Management

A business model plays a vital role in the success of any company, as it explains how that business will earn revenue. For entrepreneurs, a business model aids in acquiring investors and establishing partnerships.

Significance

For aspiring entrepreneurs, developing a business model forces you to thoroughly think about the overall business plan. According to an article written for Bloomberg Business Weekly by business professional Gwen C. Edwards, topics an effective business model should address include the type of product or service being offered, how to draw revenue from the product or service, and what advantages and disadvantages the company has compared to others in the same industry.

Types

Many types of business models exist, from the basic pay-for-product model to advertising and e-business methods. Various business models can be blended together in a business plan. For instance, in addition to traditional practices, a retail store might sell advertising on the store website in order to accumulate extra revenue.

Considerations

Chris Brogan, the president of the media marketing agency New Marketing Labs, advises on his website to be on the lookout for new elements that you can implement into your business model. Methods Brogan recommends for doing this include reading business books and discussing industry-related ideas with other professionals.

Most businesses prepare a blueprint for how the company will conduct its operations. Such blueprints are typically referred to as a model. These templates serve many purposes and come in a variety of forms, including business and a revenue models. Despite the similarities between a business and revenue model, the two outlines serve different functions and outline distinct aspects of the business.

Business Model Identification

The “Harvard Business Review on Business Model Innovation” charts four basic tenets of a business model: how the company creates and delivers value to its customers, the ways in which the company will earn a profit, which key components will be utilized and which key processes the company will incorporate. Key components include staff and human resources, machinery and technology as well as branding efforts. Business operations such as manufacturing and training make up the business’s key processes. Each business model differs depending on the organization’s size, industry and expectations.

Revenue Model Identification

A revenue model is a subset component of a business model. The revenue model focuses on answering the question of how the business will generate revenue and, ultimately, how the company will be profitable. The revenue model depends on the industry. For example, a website might employ a contextual advertising model, which means the business generates money by users clicking on third-party ads within the page content. A baseball stadium, on the other hand, may have a revenue model that includes raising money from ancillary goods such as team apparel and dining outlets.

Differences

Michael Hitt, author of “Creating Value” states that a revenue model and business model are similar but separate outlines. Hitt explains that a business model’s goal is to outline how the business generates value, whereas a revenue model specifies how the business allocates the created value. Thus, a business model explains the company’s strategy, operations and management tactics. The revenue model draws from these explanations to outline how the company will earn money.

The choice of model depends on circumstance. Companies draft a business model and present it to financial institutions in order to get a loan. Venture capitalists typically view a business model in order to make decisions to invest in the company. On the other hand, corporations review their revenue model to make financial forecasts. Companies also inspect their revenue model to see if it’s relevant in lieu of any changes in operations. For instance, the revenue model could need modification if the cost of production rises or wages change.

Market for product is big and diverse making it difficult for companies to be able to satisfy every customer. Companies need to identify a certain set of customer within a market and work towards satisfying them. This set of identification is market segment. Companies further need to understand the intricacy of how this segment behaves and operates. An approach known as target marketing is gaining prominence where companies identify the market segment on similar needs and wants, select one of the market segments and then focus in developing products and marketing program.

Earlier business operation was in the form of mass marketing. In mass marketing companies produce a product in large quantities and serve this product to as many consumers as possible. This made sense as markets were developing and not much variety was on offering. Now product offerings have under gone radical change thanks to advertising and communication reach. Therefore, companies look forward to marketing at segment, niches, local and individual level.

In segment marketing companies identify consumer with similar needs and wants. For example, an airline is looking forward to providing no frills’ connectivity between metro cities on US east coast compare. This segment is within airline industry but needs of customer is different. T target audience is low budget travelers. However, customers within the segment look for different attributes, for example, lunch or beverages as part of travel. Here companies can offer this by charging the customer.

In niche marketing, companies target limited customer set. A niche market is worth exploring where customers are willing to pay a premium for product, entry barriers are high and market has growth potential. In local marketing, customers are local neighborhood, trading stores, etc. For example, many banks prefer local marketing for better understanding of client and provide them right type of service. In individual marketing, companies look forward to satisfying needs and wants of individual customer. Internet is facilitating the process of individual marketing, where in customer log on to the site and creates products from available options. This process is not feasible for high technology products like automobiles.

The Five C Framework

1. Customers

Company customers are the key focus areas of the business. To make the customer happy you should really understand your target market and customers’ needs and wants. Try to find out information through market research i.e.

• Market segmentation
• Market size and growth
• What are you selling
• Do u really selling what they need?
• Consumers decision making process
• Preference where they shop
• Quantity and frequency for their purchase
• Consumer preferences, attitude and trends

2. Competitors

It is a very important analysis and determine the future of the business.

• Who are your primary competitors?
• Any substitute available for your products?
• Segmentation, Targeting and Positioning?
• Competitors activities and market share
• What are competitors strengths and weaknesses?

3. Company or Corporation

• Company culture
• Goals and objectives
• Product Line and Brand Image
• Your Strengths and Weaknesses
• Level of technological advancement

4. Collaboratives

All those parties have outside but have shared interest in the company. your business operation can affect them both positively and negatively.

• Suppliers
• Distribution channels
• Key opinion leaders
• Third parties

5. Climate

Company climate means macro environmental factors. PESTLE analysis tool is a good way to analyze this company environment.

• Political factors. Government rules and regulations that affect your business environment
• Economic factors. It is the interest rate, economic crisis, inflation, trade cycle all these economic factors affect the business operations.
• Socio-Cultural factors. social beliefs customs, attitudes and preferences are the social factors of a business.
• Technological factors. How you are technologically advanced and fulfilling your customer needs and want through automatic processes and communication infrastructure etc.
• Legal factors. corporations must comply with law and regulation if not will affect your business operation.
• Environmental factors. How your business is affecting the surrounding environment whether your business fulfilling the environmental regulations or not.

While performing 5 C’s of marketing analysis company can gather information from websites, annual reports, different industries reports. Government websites are also a good source of information. By this way, a company can identify opportunities to provide value to target customers.