Under the constant pressure of managing the finite resources of a company, it’s not always easy to make budgeting decisions on departments whose expertise may be far removed from your own.
Here’s a list of questions FDs can ask of their marketing teams for reassurance their allocated spend is justified.
Is our strategy based on robust market insight?
Flourishing marketing strategies are founded on true market insight, which is reliant on quality data input. Garbage in equals garbage out. Gaining market insight is not an exact science, but a combination of interpretation of fact-based data and people’s opinions.
This can come from primary market research, secondary research like market reports, competitor monitoring and formally-collected data from within the company, e.g. through interviews with directors and customer-facing staff.
The marketing team should be constantly finding ways to improve their market insight to stay ahead of the competition.
How have we segmented the market?
Failure to define real customer segments is very common. Good marketing strategies target need-based customer segments, while weaker strategies look at broad descriptor groups such as age, sex and geography.
Within these broad groups are many subgroups, some of whom are likely to buy what you offer. Pareto’s 80/20 Rule applied to business suggests that 80 per cent of sales will come from 20% of customers. That 20 per cent needs to be isolated and defined by what they have in common e.g. what needs and motivations they have and what lifestyle factors they share. The remaining 80 per cent shouldn’t be ignored as they may be viable segments to target with a more tailored offering.
How do our customer offerings differ for each customer group we target?
Defining customer groups is one side of the coin, the other is making them an offer tailored to their needs, often called the proposition. Weaker marketing strategies tend to tweak standardised offerings for each customer group. But good propositions are defined by three characteristics:
• They are consistent with the needs, wants and motivations of the target segment
• The actual product offering, the price charged, the places you sell through and promotions used are viewed as inter-related
• They are coherent without any contradictions between product, price, place and promotion. Contradictions confuse the customer and inhibit maximum profitable income.
What are the strategic options for growth and how do we prioritise them?
A brilliant marketing strategy will prioritise opportunities for growth, understand and leverage the company’ strengths in the external market, while negating its weaknesses.
A SWOT analysis evaluates strengths, weaknesses, opportunities and threats. Ask to see this and check the level of detail. All too often this is just a long list of good and bad points about the market with a few broad internally-perceived strengths and weaknesses. This happens because managers – in the thick of running the business and with passion for what they do – find it hard to be truly objective when defining their company’s strengths and weaknesses relative to their customers’ needs and relative to their competition.
Does the marketing strategy anticipate future changes in the market?
Weak marketing strategies will focus only on the here and now and either ignore relevant, future market changes. Your marketing team should have informed opinions on likely changes in the market, amongst your customers, about your competitors’ plans and within the channels you choose to sell and market through.
For example, it would appear video rental chain Blockbuster could have done a better job at anticipating competition from the likes of LoveFilm and adapted their strategy accordingly. If they had, perhaps they would still be with us today.
How would you compare our product or service to our competitors’?
Great marketing strategies target different customers and make them tailored offerings in accordance with what their competitors are offering, while weaker strategies offer the same thing to the same people.
Many strategies are based on copying an often-larger competitor – instead of being unique – in the belief there is enough of a market for everyone. But the need for marketing and selling expenditure is inversely proportional to how unique, desirable and essential your product or service is.
Marketing strategy uniqueness stems from product and service. In the absence of a USP, disproportionate amounts of money are spent trying to advertise more effectively than the competition or employing more sales representatives, instead of working out how to stand out from the crowd. It becomes a race with many losers.
What will our return on investment (ROI) be?
Great marketing strategies underpin the forecast for growth and show, or attempt to measure, a clear return on investment.
Some marketing tactics are easy to measure, but what if a national newspaper writes a great feature about your business? How are you going to measure its overall impact? The truth is you can’t always measure clear ROI, but you should at least be able to measure some indicators.
The solution is to monitor both financial targets and non-financial performance indicators such as customer satisfaction, repeat orders and new enquiries. These provide invaluable insight into customer satisfaction, and the success of the brand, alongside the hard measures.