By Cindy Kennaugh, On The Mark

A marketing strategy outlines the strategic directions and tactical plans that marketing teams must implement to support their company's overall business objectives, including:

• Increasing revenue
• Growing profits
• Reducing costs

A marketing strategy contains a number of important decisions about product offerings, pricing, communications, and distribution channels. Also included in the marketing strategy is a detailed plan and budget for implementing each marketing component.

A marketing strategy is loaded with make-or-break implications as it guides your company's entire marketing plan. The results of the strategy and its repercussions and rewards are felt every day for years.

Determining how much marketing strategy you need

The level of detail and the effort associated with your marketing strategy depends on several factors, including:

• The size of your company.
• Where your company is in its life cycle (for example, starting up, growing, maturing, declining).
• Whether you are making strategic decisions about the company's entire product portfolio, a particular product line, or just one product.
• How much marketing strategy formulation you have done in the past.

While formulating marketing strategies doesn't have to be an all-or-nothing process, don't look for reasons to economize on specific areas of your company because your company's success is at stake.

Use a structured process

Developing a marketing strategy is important, but it's difficult work. It takes time and commitment to create. A marketing strategy is often developed by a committee that is using incomplete information, and it is easy for the contributors to get sidetracked or delayed.

The key to creating a usable marketing strategy is to follow a clear, structured, well-thought-out process. Doing so helps you keep the team focused, ensures the consistent use of information, and streamlines decision-making. A more structured process also involves some front-end preparation, but this process ultimately saves you time and money.

Prepare to create a marketing strategy

Marketing strategy formulation is not the beginning of the process — it's the end. Before you begin generating strategies, you need to collect, study, and digest a lot of marketing information. In short, you should complete the following two important tasks:

• Draft an outline of your plan for building your marketing strategy.
• Collect comprehensive, accurate, and current information about your market/industry, customers, competitors, and partners.

For more information about collecting information for your marketing strategy, see the article "Collect data for your marketing strategy" in the More information section of this article.

Formulate a strategy

After you've digested all of the marketing information, it's time to start formulating your strategy. A marketing strategy typically begins with a summary and synthesis of key market information, including:

• Market size and growth
• Market share
• Market trends

This summary information is then followed by strategic recommendations, including the following:

• Product strategy
• Pricing strategy
• Communications strategy
• Channel strategy

Product strategy

Your product strategy establishes how your products are positioned (that is, how your products are understood by the market). Product positioning details include:

• Your product's benefits and features
• How your product features meet your customers' needs
• How your product features and pricing compare to your competitors'
• Product changes that might be required over a specified period of time to better position your product offering

Pricing strategy

Pricing strategies are typically dictated by the product-positioning strategies. If you are positioning your product as the low-cost leader or the high-quality leader, you will then set prices accordingly. The two corresponding approaches to pricing are:

• Cost-based pricing  This pricing reflects a calculation of your products cost, plus a profit margin. It's a complex financial exercise with multiple products. Some costs are easy to associate with a particular product (for example, material costs); other costs are not as easy to associate (for example, the CEO's salary).
• Value-based pricing  This pricing is based on an assessment of how much a customer is willing to pay for your product given its set of features and benefits. The main issue is: What will the market bear?

Both of these pricing strategies are subject to market and competitive realities.

Discounts and promotions are two important components of your overall pricing strategy. You can use discounts (for high-cost purchases or particular market segments) to establish a particular market position while maintaining some flexibility. You can also use promotions to achieve specific marketing goals by temporarily reducing your product's price.

Communications strategy

The communications strategy defines how you present information about your company and products. It is built on your product-positioning strategies and a thorough understanding of your target customers.

Communications strategies are crafted to:

• Establish high-level customer impressions of your company and products that are consistent with your product positioning.
• Create consistent, concise, benefits-based messages that build the desired net impressions.
• Determine which communications methods are appropriate for each customer segment.

For more information on profiling your audience, see the "Discover the importance of target audience profiles" article in the More information section of this article.

Channel strategy

The channel strategy identifies:

• The best channels for getting your products to the customer.
• The purchase process that your customers are most likely to use.

Your channel strategy needs to identify which channel partners you plan to work with and how you plan to work with them.

Tactical plan and budget

A marketing strategy finishes with a section on the tactical plan and budget. The tactical plan dictates the specific actions and schedules that must be accomplished to meet your strategic goals. A budget is prepared for each action.

Avoiding common mistakes

To avoid common marketing strategy mistakes:

• Collect ample marketing information before you begin formulating a strategy.
• Don't involve too many people in the process of formulating a strategy. Focus on decision-makers and knowledge experts.
• Refer to your completed marketing strategy often, and update it as necessary. It needs to be a living document.

You now have the information you need to develop an effective marketing strategy. Remember that a marketing strategy is a long-term proactive process that helps ensure that your products are released to the market in a timely and cost-effective manner and, most importantly, that helps to ensure your products address your customer's needs.

More information

• Collect data for your marketing strategy
• Discover the importance of target audience profiles

About the author   Cindy Kennaugh is President of On The Mark, a Silicon Valley–based consulting firm specializing in all aspects of business-to-business marketing in the high-technology industry.