Revisiting Marketing Strategy
[big_title2]Why an organic and nimble marketing strategy is necessary. [/big_title2]
Contributed by Bob Donnelly.
We have witnessed the rise and fall of many brands, and now we have the latest example in Radio Shack. Since its inception in 1921, it has ridden the proverbial life cycle from an embryonic start-up, through its growth phase, and into maturity during the 80’s and into the early 2,000’s. However, since the introduction of more and more sophisticated electronics, smart phones, and the acceleration of the internet, the value concept of Radio Shack has become irrelevant.
When consumers can buy everything Radio Shack sells for less on the internet, or direct from manufacturers – what is left for the company to provide? Even the brand name is outdated. The death knell was sounded recently when the share value fell below $1 share.
Based upon the recent performance and results of a variety of companies it might make sense to review the four basic strategies of marketing, as companies ride the life cycles of their existence.
In every industry there are:
- Market leaders – on average own 40% of the customers
- Challengers – own about 30%
- Me-too’s – offer less expensive lower quality products than the leaders and challengers and own about 20%
- New entrants – entrepreneurial start-up’s/guerilla marketers, own the balance of 10%.
Market Leaders
Practice defensive strategies to protect their positions. Leaders are constantly innovating to try to perpetually delight their customers so they won’t “switch”. McDonald’s is a good example of this strategy.
Challengers
Always attacking the leader with promises of better quality, service, and value. Burger King has historically practiced this strategy.
Me-too’s
Constantly offering lower cost products with similar features and benefits for those customers who are satisfied with a product that works at a lower price. Rite Aid fits this profile in their struggle against Walgreen’s and CVS.
New Entrants
Promoting a faster, better, cheaper solution to what already exists. These entrepreneurial newcomers sprout up in every industry and always will. However, if the industry leaders don’t monitor these start-up’s they will displace them at some point in time.
Lessons
What is to be learned from this age old matrix of marketing strategies?
If you are a leader you can’t slack off and start to “market-by-assumption” and get lulled into the familiar complacency status. Many once great brands have gone to sleep at the wheel and went down the slippery slope to irrelevance. McDonald’s took their eyes off the fries not too long ago and had to reestablish their leadership position. This is happening again with a variety of new fast food competitors introducing new fast food offerings to compete with McD’s in almost all categories. As a result same store sales have been declining without comparable growth in its core markets for more than a decade now.
Likewise, the Challengers like Burger King and Wendy’s in this case, have been ramping up with new offerings and aggressive promotions. Even Taco Bell has come out with a breakfast menu adding to the already crowded breakfast segment, including Dunkin Donuts, Starbuck’s, and even Panera Bread.
The me-too’s also struggle to capture their share of every market. Many wonder how Sears/K-Mart, Radio Shack, Rite Aid, and others stay in business in the face of marketing juggernauts like Amazon, Walmart, and Target. Savvy me-too’s like Costco, Sam’s Club, and even Trader Joe’s have grown and are prospering offering less expensive comparable products under their brand names, with quirky store layouts, and “club” status promotions.
Lastly, the entrepreneurs will always be with us offering faster, better, and cheaper solutions. However, in an ever growing virtual global marketplace, their piece of the pie can rapidly grow in proportion to the demise of some of the more traditional market share holders.
Questions To Ask Yourself
- Where is your business in your respective markets?
- What are you doing to insure that your marketing strategy is working?
- Are you “defending” your position effectively as the market leader?
- Are you “attacking” the leader successfully as the challenger?
- Are your me-too strategies working with enough customers to insure you a continuing successful competitive advantage?
- If you are a new entrepreneurial business – do you have a plan to take your faster, better, cheaper solution to the next level?
It is easy to be lulled into a false sense of security at any step along the way with any one of these basic marketing strategies. Complacency has historically been the demise of many once great brands. Remember the old business maxim: “a desk is a dangerous place from which to view the world”. Get out into the marketplace and keep your eye on the changing strategies of your competitors and the evolving requirements of the customer.