James Farmer, Publisher, B2B Marketing.
Direct Marketing has become increasingly key for companies within the B2B sector as a cost effective tool to communicate with prospects and current clients. As well as the obvious cost savings, direct marketing is a lot 'smarter', with the ability to test, analyse and hone. And with the obvious budgetary restraints in B2B, this form of marketing now plays a huge part in the marketing strategy.
Before I go into too much depth relating to targeting, positioning, product life cycles and marketing mix, I think I should first define what 'strategy' really is. This is not meant to patronise - just to make it very clear what we are talking about. It is one of the greatest mistakes made by business professionals today - mixing up tactics with strategies. Too often professionals talk about strategies when they really mean tactics. Blurring the two together heavily confuses marketing plans.
A definition
Marketing strategy: An overview of the aims sets out by the marketer, which he/she wishes to achieve.
Marketing tactics: The detailed way in which the marketer endeavours to realise those strategies, by use of the marketing mix.
Tactics are covered throughout this handbook. Delivering the right strategy, so that tactics can be set, will be covered now.
Overview of 'strategy'
A few key areas ultimately define direct marketing strategy: the organisation size and budget, the corporate objectives, previous levels of success, the competition, and the overall product and market. The influences of these macro determinates make creating a perfect theory of direct marketing strategies difficult to deliver. In order for this area to be treated in full, it would need an entire book rather than a chapter. Hence, what shall be covered in this chapter is a simple method to bring all macros together, and to rationalise options.
Most strategies are based around sales and revenue - e.g. to drive more sales, protect current revenue, sell into a new vertical market, and grow sales to existing clients. The driving force of all marketing strategy is taken from the corporate and marketing objectives. The strategy then looks at the best method to take this objective to market, by use of the marketing mix.
Once the objective has been fixed, then the opportunity to identify all potential strategies can be exploited. Each strategy will be based on establishing a relationship between the company and the prospect or current customer, thus motivating a sale. All marketing strategies are related to pure marketing communications. With the need to make all communications unique to each group, there is a definite need for segmentation. One can only segment with a fully populated database (see chapter XX).
Multiple marketing strategies
With so many determinants and independent factors affecting a marketing plan, from the macro (government policy, interests rates, the performance of the economy, etc.) to the micro (the price of paper, increase in postage, etc.), it is difficult to offer up a conclusive thesis on deciding your direct marketing strategy.
However, there is one table, which simplifies this process. It is based on the familiar product life cycle (figure 1).
Figure 1 - the product life cycle
The sales axis shows the relative shift in the volume of sales. Volume varies depending on product and market. 'Introduction' is the period when the product launches and the levels of sales are defined by the uptake of early adopters. The time line travels right through to the 'decline', when the product (in its current form) has hit maximum sales and demand has slowed up.
Marketing mix strategies
The table below illustrates different strategic models, which are dependant on where the product is in the 'product life cycle'. It lays out different strategic goals across the main areas of Direct Marketing.
For many years the backbone of marketing has been the 4 'Ps' - Product, Place, Price and Promotion. The table below lists out those 4 Ps, but in a practical form. These are the areas which a marketer should be focusing on, when defining their Direct Marketing strategies. Horizontally, the product life cycle is overlaid. A product's time in the market will impact the type of Direct Marketing used in order to achieve objectives set.
| Introduction | Growth | Maturity | Decline | |
| Product | Basic product, limited range. | Develop product extensions and service levels. | Modify and differentiate. Develop next generation. | Phase out weak brands. Consider leaving market. |
| Price | Low price strategy, to capture widest initial audience. | Penetration strategy - price against own model. | Price to meet or beat competition. | Reduce price. |
| Distribution | Selective. Build dealer relations. | Intensive. Limited trade discounts. | Intensive. Heavy trade discounts. | Selective. Phase out weak outlets. |
| Direct Marketing and Advertising | Heavy spending to build awareness and encourage trial among early adopters and distributors. | Moderate advertising to build awareness and interest in the mass market. Greater word of mouth and DM. | Emphasise brand and differentiate possible with special offers. More DM and very little advertising. | Reduce to a level that maintains hard-core loyalty. Emphasise low prices and reduce stock. |
| Sales Promotion | Extensive, to encourage trials. | Reduce to a moderate level. | Increase to encourage brand switching. | Reduce to stop completely. |
| Planning time frame | Short to medium. | Long range. | Medium range. | Short. |
Figure 2 - marketing mix strategies (adapted from Wilson and Gilligan, Strategic Marketing Management, CIM Workbook).
What Direct Marketing strategies to use, and when?
The table above clearly illustrates different types of overview strategies to implement, against a number of different variants. This table can be used as the backbone of your future marketing planning. The table is not a catch-all, as it does not take into account the actual market position or the attributes of the product and service. However, it does steer the marketer towards making solid strategic decisions based on a tested formula. Direct Marketing approaches will most likely focus heavily on price (and the offer), Advertising (including Direct Mail) and Sales Promotion, with the use of branding. As a marketer your planning time frame is crucial - especially in light of the timing against measurement and evaluation.
Other determinates affecting marketing strategy
- Speed to market
- Budgetary restraints
- Size of market
- Brand recognition
- Positioning strategies
- Corporate and marketing objectives
- Sales or retention
The overview of the marketing strategy will be impacted on by a variety of determinants. The use of the marketing mix will vary on those above. When compiling your strategy, these areas must be taken into account.
Marketing activity - Advertising vs Direct Marketing
Direct marketing strategies must be developed in conjunction with the more traditional, above-the-line marketing, i.e. Advertising. There is a general rule of thumb, which must be applied to strategies. The diagram below illustrates the general usage relationship between DM and Advertising, focusing on the variable amounts one should use them at different stages of the product life cycle.
Launching or re-launching a product (introduction):
Driving new sales (growth):
Stabilising sales (maturity):
Product coming to the end of shelf life (declining):
Key:
Conclusion
Direct Marketing strategies cannot be examined alone. They must be formulated with Advertising and above-the-line in mind, to create a comprehensive, integrated marketing strategy. All strategies must mirror the demands of the objectives. DM strategies are an overview of the use of Direct Marketing, not the actual details of how and when they will be used.
Strategy is the guiding light, and is the basis of all marketing plans. It must summarise activity going forward, and take into account the unique conditions of the market and the product or service.
Following a specialised matrix of when and how much Direct Marketing should be used, will be invaluable when defining one's strategy.
This chapter is an overall look at marketing strategy as a whole, and does not aim to go into depth against vertical markets, products and services. It is not intended to overwhelm the reader with information, or bombard with the usual technical jargon associated with strategy. The aim is to simplify the area of strategy, differentiate it from tactics, and start to introduce the idea of integrated marketing communications. Greater insight into strategy against unique vertical markets, products and services can be found in B2B Marketing magazine, or at www.b2bm.biz.
