2 Strategy and Context

Introduction

A strategy indicates the most advantageous direction for an organisation to take over a defined period of time. It also outlines which tactics and means should be used to execute this direction. Originating as a military term, strategy is about using your strengths, as well as the context in which you are operating, to your advantage.

In marketing, strategy starts with understanding what the business wants to achieve, or what problem it wants to solve. It then considers the context in which the business and its competitors operates and outlines key ways in which the business and brand can gain advantage and add value.
In the early days of TV, when the medium was new and not yet entirely understood, there were separate ‘TV planners’ who created a ‘TV strategy’ for the brand. Over time, this was incorporated into the overall marketing strategy (as it should be). The same has happened with digital. Digital thinking should be incorporated into marketing strategy from day one. This chapter considers digital strategy separately in order to highlight some ways in which digital has affected our strategic approach to reaching customers and solving marketing problems.

Key Terms and Concepts

What is Marketing?

A simple definition for marketing is that it is the creation and satisfaction of demand for your product, service or ideas. If all goes well, this demand should translate into sales and, ultimately, revenue.

In 2012, Dr Philip Kotler defined marketing as “The science and art of exploring, creating and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines, measures and quantifies the size of the identified market and the profit potential”^[1]
The American Marketing Association (AMA), defines marketing as “The activity, set of institutions and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large”^[2]

In order to motivate people to pay for your product or service, or to consider your organisation superior to your competitors, you need to create meaningful benefits and value for the consumer. The design of the product or service itself can arguably be a function of marketing. The value that a marketer should seek to create should be equal to or even greater than the cost of the product to the consumer. Doing this often and consistently will grow trust in and loyalty towards, the brand and create strong brand equity.

What is Digital Marketing?

How does digital marketing fit into this definition? There is, in fact, no difference between ‘traditional’ marketing and digital marketing. They are one and the same, apart from digital being specific to a medium.
Ultimately, the aim of any type of marketing is to keep and grow a customer base and stimulate sales in the future.

Digital communication tools contribute towards connecting and building long-term relationships with customers.
What is digital? Bud Caddell defines ‘digital’ as “A participatory layer of all media that allows users to self-select their own experiences and affords marketers the ability to bridge media, gain feedback, iterate their message and collect relationships”.^[3] In other words, digital is a way of exploring content and ideas (for users) and connecting with and understanding customers (for marketers).

Digital marketing is powerful in two fundamental ways. First, the audience can be segmented very precisely, even down to factors like current location and recent brand interactions, which means that messages can (and must) be personalised and tailored specially for them.

Second, the digital sphere is almost completely measurable. Every minute and every click by a customer can be accounted for. In digital you can see exactly how various campaigns are performing, which channels bring the most benefit and where your efforts are best focused. Cumulatively, access to data that measures the whole customer experience should lead to data-driven decision making.

The complete scope of marketing is practised on the Internet. Products and services are positioned and promoted, purchased, distributed and serviced. The web provides consumers with more choice, more influence and more power. Brands constantly have new ways of selling, new products and services to sell and new markets to which they can sell Digital marketing helps to create consumer demand by using the power of the interconnected, interactive web. It enables the exchange of currency but more than that, it enables the exchange of attention for value.

An Exchange of Value

If marketing creates and satisfies demand, digital marketing drives the creation of demand using the power of the Internet and satisfies this demand in new and innovative ways.

A brand on the Internet can gain value in the form of time, attention and advocacy from the consumer. For the user value can be added in the form of entertainment, education and utility. Brands build loyalty among users who love their products or services and must align with users’ values and aspirations. Users fall in love with products and services when their experience is tailored to their needs and not the needs of the brand.

Understanding Marketing Strategy

Business and Brand Strategy

Before you can delve into marketing strategy, take a step back and consider the business and brand with which you are working.

The end goal of any business is to make money in one way or another. Business strategy asks the questions, “What is the business challenge we are facing that prevents us from making more revenue?” and, “What business objective should we strive for in order to increase the money in the bank?”
The brand is the vessel of value in this equation. The brand justifies why the business matters, what the business’ purpose is and what value the business adds to people’s lives.
The AMA defines a brand as, “A name, term, design, symbol or any other feature that identifies one seller’s good or service as distinct from those of other sellers. The usual expression of a brand is its trademark. A brand may identify one item, a family of items or all items of that seller” (N.A., 2011). To quote Cheryl Burgess, a brand presents, “a reason to choose” one product or service over another.

The value of the brand is measured in terms of its brand equity. How aware are people of the brand? Does it hold positive associations and perceived value? How loyal are people to the brand?
When you have the answers to these questions, you can formulate a marketing strategy to address the challenge or objective you’ve discovered.

Marketing Strategy

The purpose of a marketing strategy is to determine what the business is about and to then address the business or brand challenge, or objective that has been revealed. An effective strategy involves making a series of well-informed decisions about how the brand, product or service should be promoted. The brand that attempts to be all things to all people risks becoming unfocused or losing the clarity of its value proposition.

For example, a new airline would need to think about how it is going to add value to the market and differentiate itself from competitors. It will need to consider whether their product is a domestic or international service; whether its target market is budget travellers or international and business travellers; and whether the channel is through primary airports or smaller, more cost-effective airports. Each of these choices will result in a vastly different strategic direction.

To make these decisions, a strategist must understand the context in which the brand operates, asking, “What are the factors that affect the business?” This means conducting a situational analysis that looks at the following four pillars:

1. The environment
2. The business
3. The customers
4. The competitors.

Here are some considerations and tools for conducting your brand’s situational analysis.

Understanding the Environment

The environment is the overall context or ‘outside world’ in which the business functions. It can involve anything from global economics (how well is the local currency performing these days?) to developments in your industry. Every brand will have a specific environment that it needs to consider, based on the type of product or service it produces. An analysis of the business and brand environment will typically consider political, economic, social, technological, legal and environmental (PESTLE) influences to identify a clear set of considerations or issues pertinent to the marketing strategy.

Understanding the Business

There are several marketing models that can be used to understand the business and brand with which you are working. Since it’s essential for all marketing messages to encapsulate the brand’s identity and objectives, this is a very important step. A crucial consideration is the brand itself. What does it stand for? What does it mean? What associations, ideas, emotions and benefits do people associate with it? What makes it unique?

There are several levels of branding to investigate, as shown below.

Out of this, you can determine what the brand or product’s unique selling point (USP) is. A USP is the one characteristic that can make your product or service better than the competition’s. Ask yourself, ”What unique value does it have? Does it solve a problem that no other product does?”

Understanding Customers

To understand your customers, you need to conduct market research. Try not to make assumptions about why people like and transact with your brand. You may find their values and motives are quite different from what you thought. Ongoing research and a data-driven business will help you to build a picture of what particular benefit or feature your business provides to your customers, allowing you to capitalise on this in your marketing content.

One important area on which to focus here is the consumer journey, which is the series of steps and decisions a customer takes before buying from your business (or not). Luckily, online data analytics allow you to get a good picture of how people behave on your website before converting to customers; other forms of market research will also help you establish this for your offline channels.

On the Internet, a consumer journey is not linear. Instead, consumers may engage with your brand in a variety of ways, (i.e. across devices or marketing channels) before making a purchase.

The goal is to reach customers with the right marketing message at the right stage of their journey. For example, you may want to use aspirational messages for someone in the exploration phase, but focus on more direct features and benefits (such as a lower price) when they’re almost ready to buy.

Understanding Competitors

Finally, it’s important to know who else is marketing to your potential customers, what they offer and how you can challenge or learn from them. Many competitors target the same needs in a given customer, sometimes through very similar products. Positioning places your brand in a unique place in people’s minds. It is impossible to create a strong value proposition or USP without knowing your competitors’ positioning strategy.

On the Internet, your competitors are not just those who are aiming to earn your customers’ money; they are also those who are capturing your customers’ attention. With more digital content being created in a day than most people could consume in a year – for example, over 300 hours of video are uploaded to YouTube every minute (YouTube, 2017) – the scarcest resources these days are time, focus and attention.When considering competition, it’s also worthwhile looking at potential replacements for your product. The Internet is disrupting and accelerating the pace of disintermediation in a number of industries, meaning that people can now go directly to the business instead of transacting through a middleman (look at the travel industry as an example). To stay ahead, you should be looking at potential disruptors of your industry as well as the existing players.

Digital Marketing Strategy

Once you have a clear sense of what the business challenge or objective is, you can define how your marketing strategy will leverage digital channels to fulfil it.

As discussed in the introduction, digital should not be considered as separate from your core strategy. Digital marketing builds on and adapts the principles of traditional marketing using the opportunities and challenges offered by the digital medium.

A marketing strategy should be constantly iterating and evolving. Since the Internet allows for near-instantaneous feedback and data gathering, marketers should constantly be optimizing and improving their online marketing efforts.

User-centric thinking, which involves placing the user at the core of all decisions, is vital when looking at building a successful marketing strategy. The marketing strategist of today is offered not only a plethora of tactical possibilities, but also unprecedented ways of measuring the effectiveness of chosen strategies and tactics. Digital allows greater opportunities for interaction and consumer engagement than were possible in the past, so it is important to consider the ways in which the brand can create interactive experiences for consumers, not just broadcast messages.

The fact that digital marketing is highly empirical is one of its key strengths. Almost everything can be measured: from behaviours, to actions and action paths, to results. Insight tools can even be used to track the sentiment of users towards certain elements online. This means that the digital marketing strategist should be constantly measuring and adapting to ensure the highest ROI. Built into any strategy should be a testing framework and the ability to remain flexible and dynamic in a medium that shifts and changes as user behaviours do.

If we defined strategy as ‘a plan of action designed to achieve a particular outcome’, the desired outcome of a digital marketing strategy would be aligned with your organisation’s overall business and brand-building objectives or challenges. For example, if one of the overall objectives was acquisition of new clients, a possible digital marketing objective might be building brand awareness online.

The building blocks of marketing strategy

The following building-block techniques will help you structure a marketing strategy, both online and offline, that addresses your core business challenges. These strategy models are just starting points and ways to help you think through problems. As you grow in experience and insight, you could find yourself relying on them less or adapting them.

Porter’s Five Forces analysis

Porter’s Five Forces analysis is a business tool that helps determine the competitive intensity and attractiveness of a market. The Internet’s low barrier to entry means that many new businesses are appearing online, providing countless choices for customers. This makes it important to consider new factors when devising a marketing strategy.

The Four Ps

The Four Ps of marketing help you structure the components that make up a brand’s offering, differentiators and marketing. They have been fundamentally changed by the Internet and need to be looked at in the context offered by digitally connected media and from the perspective of the consumer. How your brand is positioned in the mind of your consumer will ultimately determine your success.

1. Products (and Services)

Products and services are what a company sells. The Internet enables businesses to sell a huge range of products, from fast-moving consumer goods and digital products such as software, to services such as consultancy. In fact, the Internet has in some cases made it possible for a product or service to exist. Consider Uber and Airbnb. Online, the experience the user has in discovering and purchasing can be considered part of the product the brand provides, or be the product itself.

The Internet has enabled hyper-personalisation. For example, Nike and Converse allow customers to customise their own trainers. The Internet as a distribution medium also makes it possible for products, such as software and music, to be sold digitally.

2. Price

The prevalence of search engines and of shopping comparison websites, such as www.pricerunner.co.uk and www.nextag.com, makes it easy for customers to compare product prices across a number of retailers. This makes the Internet a market of near-perfect competition^[4]. The Internet allows for personalised and flexible pricing strategies to a level that traditional retailers would find almost impossible to achieve.

With price differentiation becoming a challenge, especially for smaller players in the market, businesses need to consider differentiating on value. Value is a combination of service, perceived benefits and price, where customers may be willing to pay a higher price for a better experience or if they feel they are getting something more than just the product.

3. Placement (or Distribution)

Product distribution and markets no longer have to be dictated by location. By simply making their products visible online (for example, on a website or Facebook page), brands can reach a global market. The key is to reach and engage customers on the channels they are using. This is why choosing your digital tactics is vital. You want to engage customers on their terms, not yours.

4. Promotion

The Internet, as an information and entertainment medium, naturally lends itself to promoting products. The online promotional mix is an extension of the offline, but with some significant differences. For one, online promotion can be tracked, measured and targeted in a far more sophisticated way.

Promotion doesn’t just mean advertising and talking at customers. On the Internet, it’s crucial to engage, collaborate and join conversations, too. Interacting with customers helps build relationships and the web makes this sort of communication easy. That’s why a good portion of this book is devoted to engagement tactics and tools.

SWOT Analysis

A SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis is an ideal way to understand your business and your market.

Always have a purpose in mind when conducting a SWOT analysis. For example, study the external threats to your business and see how learning from these can help you overcome internal weaknesses. This should tie back in to how your business and marketing objectives and strengths should be promoted, opportunities should be sought out, while threats and weaknesses should be minimised as much as possible. A SWOT analysis is part of a situational analysis and identifies the key issues that direct the marketing strategy. Be mindful of the fact that weaknesses can be opportunities and strengths can be threats, especially in the world of digital disruption.

Crafting a Digital Marketing Strategy

Any activity with an end goal (whether it’s winning a war, building a city or selling a product) should have a blueprint in place for every person in the organisation to follow. In digital marketing, there is no single definitive approach so each business must create its own roadmap. However, there are questions you can use to guide this process.

1. Context

A strategy needs to cover the questions of who you are and who you are not. It should also include what you are offering and to whom, as well as why and how you are doing so. The steps and questions below cover what an organisation should be aware of when creating and implementing a strategy that will meet its marketing objectives and solve its challenges.

The first step in crafting a successful strategy is to examine the context of the organisation and the various stakeholders. We covered this under marketing strategy earlier in this chapter, but it bears repeating:

• What is the context in which you are operating (PESTLE factors) and how is this likely to change in the future?
• Who are you, why does your brand matter and what makes your brand useful and valuable?
• Who are your customers and what needs, wants and desires do they have?
• Who are your competitors? These may extend beyond organisations that compete with you on the basis of price and product and could also be competition in the form of abstracts, such as time and mindshare. Thorough market research will reveal the answers to these questions.

2. Value Exchange

Once you have examined the market situation, the second step is an examination of your value proposition or promise: what unique value your organisation can add to that market. It is important to identify the supporting value-adds to the brand promise that are unique to the digital landscape. What extras, beyond the basic product or service, do you offer to customers?

The Internet offers many channels for value creation. However, the definition of what is ‘valuable’ depends largely on the target audience, so it is crucial to research your users and gather insights into what they want and need. Gathering the right data can help you evolve this value exchange over time.

3. Objectives

When setting your digital marketing goals, there are four key aspects to consider: objectives, tactics, key performance indicators (KPIs) and targets. Let’s look at each one in turn.

Objectives

Objectives are essential to any marketing endeavour; without them your strategy would have no direction and no end goal or win conditions. It’s important to be able to take a step back and ask:

• Why are we doing any of this?
• What goal, purpose or outcome are we looking for?”
• What are you trying to achieve?
• How will you know if you are successful?

Sometimes, words like ’objective’ can be used in different situations with slightly different meanings. Remember, the objective of a website or online campaign is aligned with the strategic outcomes of the business. The objective of a campaign may be to create awareness for a new business or increase sales of a product. The objective answers the question, “What do we want to achieve with this marketing campaign?” For example, an objective might be to increase the sales of a product, grow brand awareness or increase website traffic. A business objective (something that your business will either do or not do) and a marketing objective (a change in customer behaviour that your business wants to achieve) are not the same thing!

Objectives need to be SMART:

• Specific – the objective must be clear and detailed, rather than vague and general.
• Measurable – the objective must be measurable so that you can gauge whether you are attaining the desired outcome.
• Attainable – the objective must be something that is possible for your brand to achieve, based on available resources.
• Realistic – the objective must also be sensible and based on data and trends; don’t exaggerate or overestimate what can be achieved.
• Time-bound – finally, the objective must be linked to a specific timeframe.

Goals

The goal of a website or campaign in web analytics refers to an action that a user takes on a website or a type of user behaviour. This action could be making a purchase, signing up for a newsletter, or viewing a certain number of pages in a visit. A completed goal is called a conversion. Goals are derived from objectives and answer the question, “What do we need users to do in order to achieve our objective?”

Tactics

Objectives are not the same as tactics. Tactics are the specific tools or approaches you will use to meet your objectives, for example, a retention-based email newsletter, a Facebook page, or a CRM implementation. As a strategy becomes more complex, you may have multiple tactics working together to try to achieve the same objective. Tactics may change (and often should), but the objective should remain your focus.

Key performance indicators (KPIs)

Key performance indicators or KPIs are metrics that are used to indicate whether tactics are performing well and meeting your objectives. There are many metrics to be analysed and determining which are important will help to focus on what really matters to a particular campaign. KPIs relate closely to goals and answer the question, “What data do we need to look at to see if goals are being completed?” For example, if your objective is to increase website traffic, you may look at the number of website visitors, the percentage of new visitors and how long users stay on the site.

KPIs are determined per tactic, with an eye on the overall objective. The diagram below shows how a number of KPIs can feed into one goal and a number of goals can in turn feed into one objective. A single objective can have a number of goals, each with their own number of KPIs, to ensure it is achieved.

Targets

Finally, targets are the specific values that are set for your KPIs to reach within a specific time period. That is, they are the actual target values that KPIs need to meet in order for the campaign to be declared a success. For example, sportspeople need to reach targets to advance their careers: come in the top ten to qualify for the final or run ten km in under 27 minutes. If you meet or exceed a target, you are succeeding; if you don’t reach it, you’re falling behind on your objectives and you need to reconsider your approach (or your target). If one KPI is ‘newsletter subscriptions’, then a target might be ‘100 subscriptions every month’ so if one month falls short at 70, this will quickly reveal that a fix is required.

When setting objectives and targets for any campaign, remember to think about overlaps in customer behaviour that might impact how you measure your success. People might click on an ad and visit your website to buy something, but they could also browse and then go and buy something in the brick-and-mortar store. The total economic value of online activities needs to account for this so that you can get an idea of the true contribution digital is making.

4. Tactics and evaluation

Many digital tools and tactics are available once you have defined your digital marketing objectives. Each tactic has its strengths – for example, acquisition (gaining new customers) may best be driven by search advertising, while email is one of the most effective tools for selling more products to existing customers. The table below expands on some of the most popular tactics available to digital marketers and their possible outcomes. These will be covered in far more detail in the Engage section of this book.

Once the objectives and tactics have been set, these should be cross-checked and re-evaluated against the needs and resources of your organisation to make sure your strategy is on the right track and no opportunities are being overlooked.

5. Ongoing optimisation

It is increasingly important for brands to be dynamic, flexible and agile when marketing online. New tactics and platforms emerge every week, customer behaviours change over time and people’s needs and wants from brands evolve as their relationship grows.

This process of constant change should be considered in the early stages of strategy formulation, allowing tactics and strategies to be modified and optimised as you go. After all, digital marketing strategy should be iterative, innovative and open to evolution.

Understanding user experience and the user journey is vital to building successful brands. Budget should be set aside upfront for analysing user data and optimising conversion paths.

Social thinking and socially informed innovation are also valuable and uniquely suited to the online space. Socially powered insight can be used to inform strategic decisions in the organisation, from product roadmaps to service plans. Brands have moved away from being merely present in social media towards actively using it, aligning it with actionable objectives and their corresponding metrics. This is critical in demonstrating ROI and understating the opportunities and threats in the market.

Managing the learning loop (the knowledge gained from reviewing the performance of your tactics, which can then be fed back into the strategy) can be difficult. This is because brand cycles often move more slowly than the real-time results you will see online. It is therefore important to find a way to work agility into the strategy, allowing you to be quick, creative and proactive, as opposed to slow, predictable and reactive. The data collected around the success of your marketing strategy should feed into a larger pool of information used to drive business decisions.

The Bigger Picture

All of the chapters in this book are linked to digital marketing strategy in one way or another.

A solid business and brand strategy should be the starting point of any marketing venture and you should always keep one eye on it as you develop specific campaigns, platforms and approaches. After all, you should always remember that you are trying to reach your chosen audience by communicating to them in the most effective way, to build rewarding and lucrative long-term relationships.

While strategy helps you understand the questions you should ask, data collected across your business, including market research, provides the information you need to answer them.

Summary

Strategy is the essential first step in positioning your brand within the market and creating a roadmap for achieving your business goals. While there are many different paths one can take, there is a clear process for understanding where you are, where you need to be and how you will get there. It all starts with understanding the business challenges that your brand faces. From there, an effective marketing strategy looks at the market context, weighs the available options and makes important choices, based on solid research and data. Digital adds a layer of technology, engagement and iterative optimisation into the strategic process. The wide variety of tools and tactics offered by the digital medium should inform your strategic choices.

Digital can make marketing strategy highly empirical and your strategic thinking should be mindful of ROI and how it can be measured. This will allow you to optimise your tactics and performance in order to create a valuable brand story, an excellent user experience, the most optimised conversion funnels and the highest ROI.

References

AMA, 2017. About AMA. [Online] Available at: www.ama.org/AboutAMA/Pages/Definition-of-Marketing.aspx [Accessed on 27 October 2017]

Brilliant Noise, 2012. Brilliant Model: the Loyalty Loop. [Online] Available at: brilliantnoise.com/brilliant-model-the-loyalty-loop/#more-3873 [Accessed 20 October 2017].

Caddell, B. 2013. Digital strategy 101. [Online] Available at: www.slideshare.net/bud_caddell/digital-strategy-101-24081694 [Accessed 27 October 2017]

Kaushnik, Kotler, P., 2012. What is marketing? [Online] Available at: www.kotlermarketing.com/phil_questions.shtml#answer3 [Accessed 30 October 2017].

Noesis Marketing Society, 2017. Star Awards. [Online] Available at: starawards.marketingsociety.com/results [Accessed 27 October 2017]

Porter, M., 2008. The Five Competitive Forces That Shape Strategy in Harvard Business Review, January 2008, p.86–104.

Stokes, R. 2013. eMarketing: The essential guide to marketing in a digital world. Cape Town, Quirk Education (Pty) Ltd

YouTube, 2017. Statistics. [Online]Available at: www.youtube.com/yt/press/statistics.html [Accessed 30 October 2017].

Figure acknowledgments                                                                       

Figure 1. Adapted from Noesis Marketing, 2011. www.noesismarketing.com/building-a-brand-pyramid

Figure 2. Adapted from Brilliant Noise, 2012. brilliantnoise.com/blog/brilliant-model-the-loyalty- loop/#more-3873

Figure 3. Adapted from Porter, 2008.

Figure 4. Stokes, 2013.

Figure 5. Adapted from Kaushik, 2010. www.kaushik.net/avinash/digital-marketing-and-measurement- model

Figure 6. Vet’s now Logo. www.vets-now.com

Figure 7. goo.gl/EtfeS4