As a business leader, you know there are many important to-dos’ that you must accomplish each year:
- Budgeting across the organization
- Conducting performance reviews
- Key Performance Indicator (KPI) planning
- Planning business performance evaluation
- Developing the business operational plan
- Marketing and sales campaign planning
Strategic planning should not be something a business does because it’s 4th quarter, springtime, or because “that’s what we’ve always done.” This type of reactive planning leads to that feeling of always planning but, never executing. Does this sound familiar to you too?
Michael Porter’s work in strategy has rippled across every industry and every leader. Organizations like yours likely know the importance of developing a strategy and a real, unique value proposition. However, has the pendulum swung from not having a strategy, to going through the strategic planning process too much?
Has the pendulum swung from not having a strategy to going through the strategic planning too much?
By definition, your organization’s strategy is the long-term choices everyone will make to differentiate your brand from competitors. The keywords being “long-term” and “differentiate”.
Living an organization’s strategic direction takes time; it cannot be executed within 6 months or even a year. The strategy is not the mission or vision of the organization and is not specific actions such as, “expand our footprint internationally”.
The strategy is about doing something different than competitors. If you are not distinguishing your organization from competitors, then you don’t have a strategy.
Porter summarizes by stating you have two options: low cost or differentiation. I would argue that you have three options; win at price (low cost), win at the customer experience (satisfaction) or win at innovation (product differentiation). At the heart of it, the strategy is your value proposition to the organization’s clearly defined customers or the people your organization serves. Strategy is not marketing. Marketing is the vehicle that helps to deliver your uniqueness to your customer. Many times, we have companies contact us for a marketing plan. However, the strategic planning must come first – everything your marketing team does should directly connect back to the strategic plan.
So, what is a marketing plan then?
A marketing plan should include your marketing (digital and traditional) and advertising plans for the upcoming year. In 2013, Forbes published a marketing plan that has exceeded four million views. This plan includes 15 key sections of a brand’s marketing plan, which include:
- Executive Summary
- Target Customers
- Unique Selling Proposition
- Pricing & Positioning Strategy
- Distribution Plan
- Your Offers
- Marketing Materials
- Promotions Strategy
- Online Marketing Strategy
- Conversion Strategy
- Joint Ventures and Partnerships
- Referral Strategy
- Strategy for Increasing Transaction Prices
- Retention Strategy
- Financial Projections
Connecting Marketing to Strategic Planning
Strategy is not about competitors. Let’s shout this louder for the people in the back: strategy is not about competitors. We saw that when large airlines tried to compete with Southwest’s pricing and suddenly realized that a price war is not a strategy, it is a race to the bottom. There’s a difference between leading as a low-cost model and playing catch up by engaging in a low-cost war.
One of my favorite companies to highlight when it comes to a clearly defined strategy that is lived throughout the organization and felt by its customers is IKEA. IKEA’s value proposition is to focus on customers with:
1. smaller living spaces, but are style and design-conscious
2. limited budget
IKEA strives to provide wide functional furniture that needs to be accessible (clearly defined product) at a low price (clearly a low-cost competitor).
My mom and I shopped in IKEA a few months ago. As we are walking through IKEA’s endless aisles of stuff, most of which if we buy, we will have to build ourselves.
My mom said, “I do not like this store. It’s stupid that I must build this stuff myself and I can’t do that. So, to make sure I understand this store, we must lift heavy boxes on to these bulky carts only to go home and build it. That’s ridiculous!”
Then, of course, I had to bore her to death on our drive home about strategy and why Ikea doesn’t want to serve everyone. I provided her endless examples, facts, and a bunch of uninteresting stuff that I love. I’m pretty sure she fell asleep while I was talking about corporate strategy! Not everyone loves IKEA, but that’s the point! A great strategy doesn’t please every customer. Clearly, my mom is NOT IKEA’s ideal customer and that is OK.
Your turn to share: Does your company have a marketing plan supported by a strategic plan? What have you learned when developing a new strategy for your brand? Check out our other article on the 6 common factors that drive a new strategic plan.