7 Rules of Marketing Strategy

“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”

– Sun Tzu, Chinese general B.C 500

Following are the 7 rules of success in formulating marketing strategy.

Rule 1: Don’t flirt beyond adolescence; get serious if you want to be taken seriously!

Every market is home to various segments, and in the initial stages there are few brands and thus they cater to multiple segments and latitude of needs. In this stage it is advisable to position brands at multiple segments as products haven’t reached the sophistication levels to cater to different needs exclusively and neither are the consumers mature enough to know what they want. But as markets develop, products developments becomes more comprehensive and consumers more sophisticated, we start seeing single segments brands providing superior and relevant value to the targeted segment. At this stage, if a brand still continues to flirt with segments it is bound to fail, as it differs from desired value of either segment it caters too, and competition is catering to the evolved needs of segments in a focused manner.

Rule 2: Always celebrate success by asking the question “What Next”?

This rule has been highlighted by many management books including the prescribed book of Jadish Seth. When a company strikes gold, it should need just sit and uncork the champagne but should be staring at the results and asking “What Next”. In other words, the competitive advantage build in one period can be copied in the next one and thus one should always keep building on newer competitive positions rather than resting on laurels of one already achieved. Also, situations change and once dominant strategy might become a redundant one in the new situation and therefore the critical question “What Next?”

Rule 3: Produce value for consumer, but also shout it aloud and make it available in plenty.

Just matching consumers ideal point isn’t enough, you have to communicate this to as many people in your target segment and do it loudly than your competitors to be heard by these targeted people. We learnt this the hard way, as we thought producing superior value is enough to drive sales, but what we figured out is that it just isn’t about producing but providing. And providing includes communicating and making it available.

Rule 4: Don’t fall in love with your brands, leave that to your consumers.

When analyzing your brand portfolio, look at your brands with a dispassionate view. Look at their net contribution, future growth opportunities etc. and decide if they should be divested or continued. Ask questions like “Is it giving me a high enough RoI?” or “Can this money be better utilized for any other brand?” etc. Too often we have brand managers or marketing executives fall in love with their brands and keep continuing them even after realizing that they are performing unsatisfactorily.

Rule 5: Imitating is an art competition will master, innovation is an art you should master.

This is one of the most unfortunate facts of life, that our competition copies your successful strategy very fast and very well. If we reduce price for a certain segment, next period everyone does so. If you lunch a new brand and your SPI goes up, people follow suit fast. This applies to almost every strategy that you adopt, sooner or later it will be copied. Thus, innovation i.e. new ideas of executing same strategy, coming up with superior products etc. have to happening on a continuous basis to maintain competitive advantage.

Rule 6: Competition is your best teacher, and the same holds true for consumer.

Monitoring your competition’s activities as is tracking the consumer. They are your best teacher in terms of showing you what works in the market and what doesn’t. Don’t do all mistakes yourself, learn from the ones competition did and build on successful strategies adopted by them. This is a must as it makes no sense for anyone to repeat those mistakes and one has to be a fool to not learn from something working successfully for someone. Also, competition plays the most crucial role in shaping consumer expectations and this also makes it imperative to learn from you competition, as your customers are.

Rule No. 7: Remember all of above.

Remember all of the above, as it is not one learning alone which can guide as but the coherence force we develop when we adopt the learning’s mentioned above.

Mass Premium or Mastige

Will a SEC A+ guy feel lowly about using AXE? Is AXE a non-stylish product ? Is AXE considered to be a product for people with less money ? The answer simply is NO. "No" to all the three questions, yet the pricing of Rs.120-150 is well within reach of SEC A, B and probably higher levels SEC C and of course R1. When you compare this with the price point of local "lowly" competition which are priced between Rs. 80 to 120, you find it marginally higher. Thus, Pricing of AXE is marginally higher than competition but it's perception or the mental image is far more premium, far more. In fact to a user from SEC A, using a AXE deo is the same gratification when he uses the Rs. 1000 for 50 ml Davidoff perfume.

What I am establising here is there are slew of products, services and brands which do not have the typical "cheap" feeling attahed to mass brands but are at mass price points or marginally higher. This phenomenon is not one off but is seen in many a cases. Indian Examples of Titan Watches is another case in point, international brands like Nike and Adidas are some more highlights. (If you disagree with me in footwear pricing from these sporting giants, just compare the price tags of t-shirts (Rs. 199, 225, 349 etc.) with unbranded t-shirts selling next doors). Stores such as McDonalds, Westside are similar examples.

This tweaking of price-performance equation leads to succesful brands which some marketers describe as "Masstige" (Mass Prestige) brands, though I prefer to choose the term Mass Premium. The reason for my nomenclature being that though their price point is Mass or closer to a Mass price point, their performance perception or their usage perception or their badge value (pick the term you comfortable with) is that of a premium brand. Thus, the affordability of these brands greatly increases and thus the penetration but what also goes for these brands is the fact that thier users do not get a feeling of making a compromise or not buying the best and thus reduce the chances of them migrating to higher priced bands even when they gain more economic power. Thus, you have a mass premium winner in your hand.

These brands have a great badge value which is affordable by the middle class. What you garner is the numbers of or the sheer volume of a mass brand but at the same time you can charge a slight premium giving you higher margins and in effect making you a high value player. The consumers love these brands as for once they get the feeling that the "Best is within reach". For once, they consumers do not have to read glossy lifestyle magazines to read what is premium but can rather consume the experience of these brands themselves. This psychological satisfaction makes them strong incumbents within their industires.

To competition, it acts as an entry barrier as you are sitting at a near optimum price-performance equation and for competition to move to a better price-performance equation needs a lot of efforts (monetary and non-monetary) and a lot of investment. Mass Premium brands also run a nightmare for mass brands as whatever market share the other mass brands have is because of their low price and hence any increase in price would reduce their market share (in effect, an upper sealing is put). For premium brands, a Mass Premium brand robs it off some or a lot of high earning individuals which would have bought a premium brand. Let me elaborate, we know their are price seekers, value seekers, and premium seekers. Now price seekers may go off to mass brands or mass premium brands depending upon the difference between a mass and a mass premium brand. Value seekers (Majority) would go for mass premium, and a good share of premium seekers would come to Mass Premium brands.

Are you asking yourself, that if Mass Premium is such a perfect scenrio then why is it not more common place? well, becuase it is high brand investment propisition which requires one to walk on a very thing rope of cost cutting without sacrificing quality. It requires very strong internal processes and systems as well as a highly enriched communication platform which is not easy to build. It is a winning formula if either you are disciplined to put in great effort (Nike, Levis, Titan, McDonalds) or you are an existing player with deep pockets ready to invest heavily (Westside, Axe, Fastrack, Pepsi). Also, it is a high risk and high gain formula, as even after discipline and investments walking a thin rope always has its perils. Another problem of being a Mass Premium is a sense of no competiton and hence complacency (Levis) but thats a matter of another debate and another day.