6 Fundamentals of Marketing Strategy

  1. Creativity is an essential marketing skill, but it is not all you need to succeed

Marketing is a vast and dynamic field that requires creativity. But many professionals have come to believe that it is all about trial and error to see what works. The way they view it, their profession is not like engineering or economics, where hard and fast rules exist; it’s more about learning foundational concepts, like buyer psychology and the technicalities of sales channels, so that almost everything else they do would be hinged on experimentation.

But research has proven this to be an ill-founded belief.

Marketing is not an abstract field; it’s both a science and an art, and its laws are as predictable as the rules of math and physics. So, yes, creativity is involved, but you can also predict your results if you know and follow the laws.

This is all about showing you what those laws are and pointing out simple ways you can start applying them right away. We will cover strategies for:

  • Increasing sales.
  • Monitoring brand growth.
  • Performing competitor analyses and everything in between.

Building a competitive brand is majorly about creating both physical and mental availability in the marketing world. Brands that are easy to discover and buy usually have a higher market share than lesser-known brands. Consequently, marketers need to improve the branding and uniqueness of their products. This is also one of the things you will learn from this article.

 

  1. Innovative brands prioritize horizontal growth

Growing your brand’s market share can be challenging, primarily if you’re operating in highly saturated markets like software or consumer products.

Your first approach to growth and tackling the market-share issue should be trying to understand the dynamics of your market. Identify the key players and study how they rose to the top. Doing this will give you insight into how to drive your brand’s growth.

A brand’s sales volume depends on two things:

  • How many buyers does the brand has
  • How often the consumers buy the brand

In theory, if a brand has many buyers purchasing occasionally, it is equal to another brand with half the number of customers who buy twice as often. But this happens only on paper. The reality is different.

In reality, brands offering similar products have around the same purchase frequency. And this has been proven statistically.

For example, households might purchase body lotions 6-12 times a year. This figure will remain roughly the same for every lotion-producing brand, no matter their size.

The real difference in brand sales is penetration rate and market share. The more market share you have, the more sales you will make.

Let’s explain this mathematically.

Imagine the average purchase rate for body lotions in your region is 8.

If brand A has 1000 households purchasing their lotions per year, that will translate to 8000 sales per annum.

Brand Z, on the other hand, with a higher market share — 5000 households — will be selling 40,000 units annually.

So, you see, you can’t do much about purchase frequency because it’s driven by people’s individual needs. What you can influence is the number of people buying your brand. So, focus on getting better at it. Always be critical about getting your details right. Whenever you have identified your target market, conduct a proper survey, asking whether this is the frequency is right. We would recommend using Survey Sparrow a survey platform that could help easily with the marketing analysis to market segmentation. 

Did you know? Bloodletting is an ancient medical practice that involves cutting veins or arteries to withdraw blood from patients. The practice was used to cure ailments like smallpox, gout, epilepsy, and so on, and it was the best practice until blood transfusion was discovered, which proved to be safer for patients. This sort of change happens in all fields, and marketing is no exception. So, don’t hold on to old marketing beliefs that have been rendered ineffective by newer practices.

 

  1. Improving sales involves studying market share and buyers’ defection rate

Customer defection rate is another factor to consider in your attempt to improve sales. As the term implies, customer defection rate is the number of customers that leave your brand for a competitor. The rate is measured over specific periods, usually 12 months. Permanently reducing defection rates can be an expensive and often impossible task. It’s a known fact in marketing that a brand will lose customers annually. You could influence the percentage of lost customers, but effectively preventing the loss is not likely.

Defection obeys the double jeopardy law: the number of customers a brand loses annually depends on how many it has in the first place.

For example, you can’t lose a million customers if your customer count is not in the millions. All things equal, big brands tend to lose fewer customers than smaller brands. This also ties back to loyalty. For a brand to be big and well recognized, it means a considerable number of people love its products, so it becomes harder for many people to deflect.

When dealing with defection rate, you essentially have two options: increase your customer retention or double down on customer acquisition. The former means trying your best to ensure you make your existing customers happy so they don’t leave. The latter is all about putting strategies in place to get new customers.

Which approach works best?

For a very long while, marketing literature has been advising people to invest more in retention. You’ve probably heard the cliché: it costs five times more to acquire a new customer than to retain an existing one.

But how true?

Professor Byron Sharp discovered that this claim wasn’t founded on solid marketing experiments. He found out that people making such claims fail to factor in the cost of customer retention. It will cost you to go the extra mile in making existing customers stay with your brand.

He recommends that the best approach is to spread your budget equally between acquisition and retention programs.

 

  1. Brands are a necessary evil; every buyer must have a brand they’re committed to

Your marketing campaigns have the best chance of success when you target as much reach as possible. This means creating campaigns aimed at heavy buyers alone will shortchange you.

Marketing strategies like loyalty programs and price promotions target heavy buyers, and research has shown that they yield little results. On the contrary, marketing strategies that target light buyers and non-buyers tend to deliver better results because the reach is more expansive. What’s interesting is that creating campaigns for light or non-buyers also means those campaigns will reach your existing heavy buyers. So, there is nothing to lose.

A classic example is extending your brand to a new location. When you do that, you will be able to reach customers who were light or non-buyers because of geographical or other factors. They might even become heavy buyers over time. But if you had stuck to your existing marketing campaign that targeted heavy buyers, you would have lost those new customers to your competitors.

One of your go-to-market (GTM) strategy goals should be to increase brand loyalty.

Buyers restrict their purchases to a personal set of brands and return to them each time they need their products. Loyalty is a psychological effect that buyers create to simplify their lives and ensure they get consistent results. If a brand satisfies a consumer’s particular need, they will keep returning to it. Why change to a competitor when you risk feeling dissatisfied and wasting your money?

Brand loyalty doesn’t necessarily mean your customers are 100% exclusively loyal; in most cases, it just means they return to you more than the other brands. However, there is another set of people called brand fanatics. These are consumers who have become too committed and obsessed with a brand.

Brand fanatics provide free customer advocacy. Most brands have a mixture of loyal customers, fanatics, and a pool of buyers who don’t belong to either group — these people can neglect the brand at any point.

 

  1. Marketing will have a smooth sail when products meet the needs of buyers

Word of mouth is arguably the oldest form of marketing and still the most effective. You have a real superpower if you can make people tell others about your business. Some brand managers mistake word of mouth for customer loyalty. The general belief is that people love your brand if they are happy to tell others about it. While this is partly true, research has shown that word-of-mouth advertising declines with customer lifetime. Established customers are less likely than new customers to refer others to a brand because they have nothing new to say about it. But new customers who just started using your product get fascinated by it and feel the urge to share it with others. Put another way, the fact that people are spreading the word about your brand doesn’t necessarily mean they are loyalists. That being said, how can you create a brand that new and some of your existing customers will happily advocate for? There are many strategies to consider, but we will look at a fundamental one in this chapter — brand differentiation. You can be sure that people won’t care about referring others to your business if there is nothing different about you or your products.

Product differentiation is a marketing strategy designed to distinguish a company’s products or services from its competitors. Successful product differentiation usually involves identifying and communicating the unique qualities of a product or company while highlighting the distinct differences between that product, company, and its competitors. However, don’t put so much effort into product differentiation that you neglect the most important thing: branding.

Branding is reliable, and its effects last longer, but differentiation doesn’t. Although many professionals and marketing textbooks tell marketers to strive for differentiation, in the real world, competition is more about competitive matching than hiding from competitors by delivering differences. If brands were really differentiated in the minds of consumers, they would be able to attribute just one brand to a specific image that satisfies a need they have. But a thorough check and research by Gaillard & Romaniuk on 130 brands in 13 product and service categories showed that people rarely see a single brand as being exclusively associated with a particular image. Successful brands do not have proportionally more unique associations.

 

  1. Brands pass through several marketing stages before they become successful

The customer bases of brands in the same category are very alike because of their similarities. So, your attention should be caught when you see a competitor targeting a segment you aren’t selling to. Investigate to see if they are offering a different product, or they’ve simply found a gold mine that you could also invade; the latter is usually the case.

Brands usually make the mistake of locking themselves in a smaller niche than they should be. This is why regular competitor analysis is important. Seeing what your competitors are doing can help you identify whether you’ve boxed yourself into a smaller than necessary niche.

You basically have three options in marketing your brand and products:

  • Mass marketing. Here you produce in mass, distribute in mass, and promote one product to all buyers. The reason usually given for mass marketing is that it can lower costs and prices and create a large potential market.
  • Product-variety marketing. Here you produce two or more products with different constituents, features, styles, or quality, offering variety since consumers have different tastes that change over time.
  • Target marketing. In this case, you identify market segments, select one or more, and develop products to suit each.

Different companies have experimented with these marketing methods and settled on the one(s) that fit them the most. The form of marketing you choose generally depends on your brand mission and what you’re offering the market. Companies like Coca-Cola have succeeded in mass-producing just one product, but most other companies produce various products and sell them to different market segments. Do what works for you.

 

Conclusion

Brands are constantly competing for mental and physical availability. The former is about getting in the buyer’s mind and staying there, while the latter refers to being physically available for purchase. Consumers sometimes stumble on products and decide to try them. But more often than not, we humans buy from brands that already have a space in our heads.

Building this kind of mental availability requires distinctiveness and clear branding. For instance, if you want to get a new mobile phone, you’re not likely to start searching for new brands. You’ll do one of two things: either buy an upgraded version from the one you’ve been using or check out products from a different brand you’ve been hearing about. In any case, the brand you buy already has “real estate” in your mind. That’s the sort of thing you want to create in your target market too.

As a marketer or brand manager, realize that reaching all potential buyers is vital, even if they’re light, occasional buyers of the brand. As we’ve seen earlier on, targeting only heavy buyers often means leaving money behind. Find reasons why your light buyers behave the way they do, then craft campaigns to make them buy more.

Also, understand that competing brands sell to the same sort of people. When you find a competitor excelling in a market you haven’t entered, do some research to learn why. It may be that they have discovered an untapped niche that you can explore too.

Lastly, in all your marketing efforts, know that consumers usually have a lot going on in their minds. The ability to remain in the heart of people is what makes a brand truly successful.

Try this

Find time this week to research your competitors. Look at what they’re doing differently and see if you can twist it to create an original marketing campaign. Every master marketer knows that stealing is a vital part of the creative process.