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What is Digital Marketing Strategy?

In this article, I decided to introduce the Digital Marketing Strategy and give a precise definition of the Strategy, Business strategy, Marketing and Digital Marketing Strategy. In the following, I will review the key points about the Digital Marketing Strategy and explain the issues related to the implementation of the Digital Marketing Strategy in the Digital business, also will explain the challenges related to it.

Introduction of Digital Marketing Strategy

A strategy indicates the most advantageous direction for an organisation to take over a defined period of time. It also outlines which tactics and means should be used to execute this direction. Originating as a military term, strategy is about using your strengths, as well as the context in which you are operating, to your advantage.

In marketing, strategy starts with understanding what the business wants to achieve, or what problem it wants to solve. It then considers the context in which the business and its competitors operates and outlines key ways in which the business and brand can gain advantage and add value. In the early days of TV, when the medium was new and not yet entirely understood, there were separate ‘TV planners’ who created a ‘TV strategy’ for the brand Over time, this was incorporated into the overall marketing strategy (as it should be).

The same has happened with digital. Digital thinking should be incorporated into marketing strategy from day one. This article considers digital strategy separately in order to highlight some ways in which digital has affected our strategic approach to reaching customers and solving marketing problems.

What is marketing?

A simple definition for marketing is that it is the creation and satisfaction of demand for your product, service or ideas. If all goes well, this demand should translate into sales and, ultimately, revenue. In 2012, Dr Philip Kotler defined marketing as

“The science and art of exploring, creating and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines, measures and quantifies the size of the identified market and the profit potential” (Kotler, 2012).

The American Marketing Association (AMA), defines marketing as

“The activity, set of institutions and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large” (AMA, 2017).

In order to motivate people to pay for your product or service, or to consider your organisation superior to your competitors, you need to create meaningful benefits and value for the consumer. The design of the product or service itself can arguably be a function of marketing. The value that a marketer should seek to create should be equal to or even greater than the cost of the product to the consumer. Doing this often and consistently will grow trust in and loyalty towards, the brand and create strong brand equity.

What is digital marketing?

How does digital marketing fit into this definition? There is, in fact, no difference between traditional marketing and digital marketing. They are one and the same, apart from digital being specific to a medium. Ultimately, the aim of any type of marketing is to keep and grow a customer base and stimulate sales in the future. Digital communication tools contribute towards connecting and building long-term relationships with customers.

What is digital?

Bud Caddell defines digital ‘as “A participatory layer of all media that allows users to self-select their own experiences and affords marketers the ability to bridge media, gain feedback, iterate their message and collect relationships” (Caddell, 2013).

In other words, digital is a way of exploring content and ideas (for users) and connecting with and understanding customers (for marketers). Digital marketing is powerful in two fundamental ways. First, the audience can be segmented very precisely, even down to factors like current location and recent brand interactions, which means that messages can (and must) be personalized and tailored specially for them. Second, the digital sphere is almost completely measurable. Every minute and every click by a customer can be accounted for.

In digital you can see exactly how various campaigns are performing, which channels bring the most benefit and where your efforts are best focused. Cumulatively, access to data that measures the whole customer experience should lead to data-driven decision making. The complete scope of marketing is practiced on the Internet. Products and services are positioned and promoted, purchased, distributed and serviced. The web provides consumers with more choice, more influence and more power. Brands constantly have new ways of selling, new products and services to sell and new markets to which they can sell.

Digital marketing helps to create consumer demand by using the power of the interconnected, interactive web. It enables the exchange of currency but more than that, it enables the exchange of attention for value.

An exchange of value.

If marketing creates and satisfies demand, digital marketing drives the creation of demand using the power of the Internet and satisfies this demand in new and innovative ways. A brand on the Internet can gain value in the form of time, attention and advocacy from the consumer. For the user value can be added in the form of entertainment, education and utility. Brands build loyalty among users who love their products or services and must align with users values and aspirations. Users fall in love with products and services when their experience is tailored to their needs and not the needs of the brand.

Understanding Digital marketing strategy

Business and brand strategy

Before you can delve into marketing strategy, take a step back and consider the business and brand with which you are working. The end goal of any business is to make money in one way or another. Business strategy asks the questions, “What is the business challenge we are facing that prevents us from making more revenue?” and, “What business objective should we strive for in order to increase the money in the bank?” The brand is the vessel of value in this equation.

The brand justifies why the business matters, what the business’ purpose is and what value the business adds to people’s lives. The AMA defines a brand as, “A name, term, design, symbol or any other feature that identifies one seller’s good or service as distinct from those of other sellers. The usual expression of a brand is its trademark. A brand may identify one item, a family of items or all items of that seller” (N.A., 2011). To quote Cheryl Burgess, a brand presents, “a reason to choose” one product or service over another.

The value of the brand is measured in terms of its brand equity. How aware are people of the brand? Does it hold positive associations and perceived value? How loyal are people to the brand? When you have the answers to these questions, you can formulate a marketing strategy to address the challenge or objective you’ve discovered.

There are several levels of branding to investigate, as shown below.

Brand Pyramid Template

What is Digital Marketing Strategy?

The purpose of a marketing strategy is to determine what the business is about and to then address the business or brand challenge, or objective that has been revealed. An effective strategy involves making a series of well-informed decisions about how the brand, product or service should be promoted. The brand that attempts to be all things to all people risks becoming unfocused or losing the clarity of its value proposition.

For example, a new airline would need to think about how it is going to add value to the market and differentiate itself from competitors. It will need to consider whether their product is a domestic or international service; whether its target market is budget travellers or international and business travellers; and whether the channel is through primary airports or smaller, more cost-effective airports. Each of these choices will result in a vastly different strategic direction.

To make these decisions, a strategist must understand the context in which the brand operates, asking, “What are the factors that affect the business?” This means conducting a situational analysis that looks at the following four pillars:

  1. he environment
  2. The business
  3. The customers
  4. The competitors

Here are some considerations and tools for conducting your brand’s situational analysis.

Understanding the environment

The environment is the overall context or ‘outside world’ in which the business functions. It can involve anything from global economics (how well is the local currency performing these days?) to developments in your industry. Every brand will have a specific environment that it needs to consider, based on the type of product or service it produces. An analysis of the business and brand environment will typically consider political, economic, social, technological, legal and environmental (PESTLE) influences to identify a clear set of considerations or issues pertinent to the marketing strategy.

Understanding the business

There are several marketing models that can be used to understand the business and brand with which you are working. Since it’s essential for all marketing messages to encapsulate the brand’s identity and objectives, this is a very important step. A crucial consideration is the brand itself. What does it stand for? What does it mean? What associations, ideas, emotions and benefits do people associate with it? What makes it unique?  There are several levels of branding to investigate, as shown below.

The goal is to reach customers with the right marketing message at the right stage of their journey. For example, you may want to use aspirational messages for someone in the exploration phase, but focus on more direct features and benefits (such as a lower price) when they’re almost ready to buy.

Out of this, you can determine what the brand or product’s unique selling point (USP) is. A USP is the one characteristic that can make your product or service better than the competition’s. Ask yourself, “What unique value does it have? Does it solve a problem that no other product does?”

Understanding customers

To understand your customers, you need to conduct market research. Try not to make assumptions about why people like and transact with your brand. You may find their values and motives are quite different from what you thought. Ongoing research and a data-driven business will help you to build a picture of what particular benefit or feature your business provides to your customers, allowing you to capitalize on this in your marketing content. One important area on which to focus here is the consumer journey, which is the series of steps and decisions a customer takes before buying from your business (or not). Luckily, online data analytics allow you to get a good picture of how people behave on your website before converting to customers; other forms of market research will also help you establish this for your offline channels.

The customer journey is cyclical.

The customer journey is cyclical.

Understanding competitors

Finally, it’s important to know who else is marketing to your potential customers, what they offer and how you can challenge or learn from them. Many competitors target the same needs in a given customer, sometimes through very similar products. Positioning places your brand in a unique place in people’s minds. It is impossible to create a strong value proposition or USP without knowing your competitors’ positioning strategy.

On the Internet, your competitors are not just those who are aiming to earn your customers’ money; they are also those who are capturing your customers’ attention. With more digital content being created in a day than most people could consume in a year – for example, over 300 hours of video are uploaded to YouTube every minute (YouTube, 2017) – the scarcest resources these days are time, focus and attention.

When considering competition, it’s also worthwhile looking at potential replacements for your product. The Internet is disrupting and accelerating the pace of disintermediation in a number of industries, meaning that people can now go directly to the business instead of transacting through a middleman (look at the travel industry as an example). To stay ahead, you should be looking at potential disruptors of your industry as well as the existing players.

On the Internet, a consumer journey is not linear. Instead, consumers may engage with your brand in a variety of ways, (i.e. across devices or marketing channels) before making a purchase.

How to Choose the Right Digital Marketing Strategy

Once you have a clear sense of what the business challenge or objective is, you can define how your marketing strategy will leverage digital channels to fulfil it. As discussed in the introduction, digital should not be considered as separate from your core strategy. Digital marketing builds on and adapts the principles of traditional marketing using the opportunities and challenges offered by the digital medium.

A marketing strategy should be constantly iterating and evolving. Since the Internet allows for near-instantaneous feedback and data gathering, marketers should constantly be optimising and improving their online marketing efforts.
User-centric thinking, which involves placing the user at the core of all decisions, is vital when looking at building a successful marketing strategy. The marketing strategist of today is offered not only a plethora of tactical possibilities, but also unprecedented ways of measuring the effectiveness of chosen strategies and tactics. Digital allows greater opportunities for interaction and consumer engagement than were possible in the past, so it is important to consider the ways in which the brand can create interactive experiences for consumers, not just broadcast messages.

The fact that digital marketing is highly empirical is one of its key strengths. Almost everything can be measured: from behaviours, to actions and action paths, to results. Insight tools can even be used to track the sentiment of users towards certain elements online. This means that the digital marketing strategist should be constantly measuring and adapting to ensure the highest ROI. Built into any strategy should be a testing framework and the ability to remain flexible and dynamic in a medium that shifts and changes as user behaviours do.

If we defined strategy as ‘a plan of action’ designed to achieve a particular outcome’, the desired outcome of a digital marketing strategy would be aligned with your organisation’s overall business and brand-building objectives or challenges. For example, if one of the overall objectives was acquisition of new clients, a possible digital marketing objective might be building brand awareness online.

Key terms and concepts of Digital Marketing Strategy

Cluetrain Manifesto: A set of 95 theses organised as a call to action (CTA) for businesses operating within a newly connected marketplace, published in 1999. While some of the book’s claims have failed to materialise, it was an early source of guidelines for social media and obtained a cult like following

Market share: In strategic management and marketing, market share is the percentage or proportion of the total available market or market segment that is being serviced by a company.

Metric: A unit of measurement.

Pay per click (PPC): Pay per click is advertising where the advertiser pays only for each click on their advert, not for the opportunity for it to be seen or displayed.

Return on investment (ROI): The ratio of cost to profit.

Search engine optimisation (SEO): SEO is the practice that aims to improve a website’s ranking for specific keywords in the search engines.

Short Message Service (SMS): Electronic messages sent on a cellular network.

Strategy: A set of ideas that outline how a product or brand will be positioned and achieve its objectives. This guides decisions on how to create, distribute, promote and price the product or service. A specific action or method that contributes to achieving a goal.

Tactic: A specific action or method that contributes to achieving a goal.

 

I would greatly appreciate it if you kindly give me some feedback on this article about Digital Marketing Strategy; also you can read more article in my website.

Sincerely yours, Mohammad Farahi

what is SCORPIO model in Marketing Strategy

In this article, I decided to introduce the SCORPIO model in Marketing Strategy and give a precise definition of the SCORPIO model in Marketing Strategy. In the following, I will review the key points about the SCORPIO model in Marketing Strategy and explain the issues related to the implementation of the SCORPIO model in Marketing Strategy  in the business, also will explain the challenges related to it.

Introduction of SCORPIO model in Marketing Strategy

I have been working in the area of marketing and marketing strategy for many years now, sometimes teaching, sometimes (as little as possible) setting and marking examinations – but mostly working with organizations and helping them develop their market-based strategies for future growth and prosperity.

SCORPIO is more of a checklist than a model per se in that it is designed to help practitioners both remember and coordinate the various activities required to create an enduring and practical marketing) strategy for their organization. Unlike more academic models, SCORPIO does not attempt to introduce any ‘new’ thinking (who needs it?), nor does it attempt to theorize about what might be either good or bad market behavior.

Instead, it is based on the practical observations and experiences that I have gained in working for numerous organizations over the years and what I and my clients know needs to be assessed, included, sifted and implemented to create workable marketing) strategy in today’s competitive environments. In my experience, the last thing that hardpressed managers want is something ‘new’. Competition is hard and getting harder; markets are blurring and uncertainty is everywhere. The last thing today’s manager or market wants is more new, untried ideas – they haven’t used the ideas they have already, why look for new ones?

The other important note on SCORPIO is that it is, and will always remain, work in progress. Markets change, organizations change, priorities change and, of course, some new marketing ideas arise (some are new and lots are just old ideas repackaged – did I mention CRM?) and these ideas, concepts and approaches will need to be reflected in the different SCORPIO elements over time.

The version which I will describe below has already undergone a number of changes but is, I believe, going to remain stable for a while now. While the key elements of the SCORPIO model will remain largely unchanged, there are likely to be some modifications to the detail under each of the seven sections because, frankly, I learn more about markets and strategy every time I work it through with a different organization. Although books are still an extremely convenient way of packaging and communicating complex ideas, they tend to be fixed in time.

The origins of SCORPIO

The SCORPIO model wasn’t originally developed and designed to work as a theory or a business model or even a clever book, but rather as a personal checklist to enable me to assess the current state of market(ing) strategies (or lack of) in organizations. Anyone who has attempted to check out the academic literature under the heading of marketing strategy will soon find that they have a problem.

There is a very large amount written about business strategy with the big hitters such as Michael Porter and Henry Minzberg still taking centre stage. At the other end of the scale, the bookshelves and the reference libraries are full to bursting with books on marketing tactics and day-to-day problems such as writing marketing plans, developing product portfolios, new product development and, of course, marketing communications

The corporate strategist might ponder long and hard (at the very highest levels of the organization) and then pass down a missive to the operating divisions that from now on (or until someone has a better idea) the organization is going to be ‘differentiated’. Even when backed up by yards (or metres) of detailed analysis, the seasoned practitioner will still have major problems flexing the inevitable ‘marketing mix’ into something that might be considered ‘differentiated’.

Not only is there an uneasy relationship between these two quite different fields of endeavor, but there is also a very easily identified vacuum between the two. This vacuum can be spotted quite simply by identifying what is not included in the two more popular areas of work. Let us take but one example – the brand. Where is the brand in either of these two specialisms? If we look at the marketing tactics first, we will expect to find the brand somewhere but no (it doesn’t begin with P, so it’s at a disadvantage straight away) it just doesn’t seem to figure in the list.

If you look at the Marketing strategy books you will find elements of brand tucked away under the area of product; you’ll find some elements under pricing in the sort of vague hope that brand might generate a premium pricing; you will find something in the area of distribution and people in that the brand needs to guide both of these areas of work to achieve some form of synergy. And, of course, we will find elements of brand under anything to do with promotion – but everything seems to have been hammered into the promotion element at some point by somebody If we look for brand in the corporate strategy end, do we find it there? The answer (again) is a resounding no.

Does brand appear as a primary method of differentiation in Porter’s generic strategies? No. Is it picked up under the financials as probably the most successful method of acquiring wealth? No, but then the accountants have been working for over fifteen years to get brand onto the balance sheet – and (you are no doubt relieved to hear) are still working at it. The very best you can say about brand is that you might (if you are very lucky, and very, very good) be able to re-assemble all the various, dismembered components of brand to create something useful for your marketing strategy and organization.

The problem with this state of affairs is that (outside of the examination room) marketing plans and strategies just are not put together with this level of rigour; secondly, elements such as the brand are simply too important to be dealt with at the individual component level. The brand and other elements (as we shall see soon) need to be analyzed, assessed, presented and developed as a whole rather than as a component tucked away/hidden/compartmentalized/lost in four or five different elements of the marketing mix and the corporate strategy process.

Once you get to the point of realizing that there is something missing in the literature, it is a relatively easy step to identify exactly what it is that is missing.

The components of SCORPIO model

All the elements of what has to be marketing strategy are missing. So, for about the last ten years I have been trying to put these different elements into a simple structure and in some easy-to-deal-with format that would serve me as a day-to-day guide for assessing and developing real-life marketing strategy. We have already looked very briefly at brand but the list of ‘missing links‘ as it stands at the moment (this may be subject to minor change) is as follows:

SCORPIO marketing strategy framework model

Segmentation and targeting

This is another of the enormously important areas of modern marketing, which is just missed completely in the skirmishing between the corporate strategy specialists, large organizational marketers and business school academics. In today’s complex and rapidly changing markets, it has to be evident that the ‘mass market is an idea whose day has (definitely) gone. If the mass market is dead, then the segment must be the key to success. Issues such as:

  • What is the market?
  • What is a market segment?
  • Which segment(s) must we own?
  • Which segment(s) should we avoid?
  • Which segment(s) should we approach?

tend to be completely missing from most operational marketing plans. Market segmentation crops up in promotion (doesn’t everything?) where it tends to be treated as a promotional tactic that might help the organization determine the most appropriate message or medium for any given product – but it is strangely absent from any strategic consideration.

The closest we get is under Porter’s generic strategy of ‘focus’ but apart from hinting that a focus strategy might imply a segment or a niche he then leaves the difficult thinking to marketers who, once again, fail to pick up the challenge.

The customer

Now this is the really scary bit. The customer doesn’t formally appear anywhere in ‘takeaway‘ marketing theory. The corporate strategy people all (sort of) imply a customer-focused organization rather than a product- or production-focused one but then never go very far down the line to explain exactly what this means. They are obviously too concerned about treading on marketing’s toes.

The marketing mix, on the other hand, merrily proceeds to identify four or seven interacting elements of things that we should be doing to the customer. But who is the customer? Where in the marketing mix (or even in the corporate strategy) do we find any worthwhile discussion about who the customer is, what the customer wants, what the customer needs are and how we should be anticipating these needs for products and/or service development? There is rarely any concept of what constitutes ‘Customer Value’ – so little idea of how the organization should extract value from the market. There can be no compromise here, customers are much too important to deal with in component parts.

Organization

processes and culture: Don’t say this has no place in marketing or corporate strategy discussion but belongs in human resource management, this is exactly my point. Even if we are faced with a superb corporate strategy, brilliantly executed marketing tactics and an ingenious and customer-focused marketing strategy between the two, nothing will ever happen unless the people in the organization want to do it.

The people and the organization are the mortar, blood (I never was very good at metaphors) in the system. Different organization processes and different organization cultures will produce different market behaviors. The market (if we listen) will tell us what it wants and how it wants it delivered. It is then up to us to work out the most appropriate processes and culture to enable us to deliver the benefits that our customers require of us.

Retention (customer)

In the years since Reichheld’s book (Reichheld, F. F. and Teal, T., The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value, Harvard Business School Press, Boston, 2001) on customer retention, we now all know that it is far more profitable to retain an existing customer than go to all the expense of acquiring a new one (well, mostly, but more of that later). But apart from talking about it at length (with great wailing and gnashing of teeth) on conference platforms, and spending large amounts of money on CRM computer systems (more of this later), we have done very little to improve the level of customer retention in most businesses. This is because retention is a strategic issue rather than a tactical one and it needs to be developed and structured into the very psyche of the organization if it is to succeed. But again, this is another of the great missing links between corporate strategy and marketing tactics, it appears in bits all over the place but as a whole nowhere.

Positioning and branding

We have already spoken about branding and how it is one of the most important missing links between corporate strategy and marketing tactics but to this needs to be added the concept of positioning which is simply far too important to be left to the promotional element of the marketing mix. Blending positioning and branding together starts to identify routes and processes that enable us to look for unique positions in a market. This will create brands which have real market, customer and financial value.

Industry or market?

This question picks up the whole area of what business the organization is in (industry) and contrasts this with what business the organization ought to be in (markets), a question first posed by Theodore Levitt in his famous article ‘Marketing Myopia‘ (Harvard Business Review, 1960). This question (and the ensuing debate) is critical if an organization is successfully to break away from its productor production legacy and focus its efforts on supplying customer value. Again the question is over forty years old and the answer (and the debate) is nowhere to be found in either corporate strategy or marketing tactics.

Offerings

Not to be confused with the product under the 7Ps, the ‘offering’ forms the critical link between the discussion at corporate strategy level about value chains and the debate about product at the marketing) tactics stage. The core of the offering is the value proposition and this brings together the knowledge we have about current and future customer needs, the market we are in, the competition we face, brand, differentiation and pricing, in a cohesive way that the marketing mix can never achieve. Ultimately the organization will be as successful as its offering is perceived by its target market – no more.

Key Points of SCORPIO model

We will spend the rest of the section of this article looking at these seven key elements of marketing strategy that make all of these processes work. In the meantime, there are just one or two rules to the game:

  • All of the seven elements are interrelated: That is to say that you cannot make decisions or progress in one of the seven element areas without affecting decisions in the other. Therefore,
  • You will need to work on all of the seven elements at the same time: Rather than work on one element and attempt to complete it before starting on the others.
  • Not all of the seven elements will carry equal importance: For your business. The nature, structure, size and competitive situation of the organization will deter mine which of the elements have most importance at any point in time. However,
  • None of the elements can be omitted from the strategy: Every time I work with SCORPIO, I find that the balance between the elements is different. On the two occasions when I thought I’d found a situation where one or more of the elements was not relevant, I actually found that I had missed something important in the analysis.
  • There is no preordained order to the process: I tend to use the sequence that I have used in this book, starting with industry and market and finishing with offerings, but you need not necessarily follow this process order. Feel empowered to move as you feel most comfortable.
  • The process is ‘iterative’: You will need to move from one section of the figure to another as you build (or even craft) a marketing strategy that makes sense. As you grow your understanding of one area, you will inevitably affect decisions made in another.
  • The process grows and develops over time: Like the famous marketing mix. Don’t expect to arrive at a ‘SCORPIO moment where everything falls into place and the answer’ is revealed. The right answer (if such a thing exists) depends on the market and there, we know, rules change daily.
  • Apart from these rules there are no rules! In the rest of this section, I intend to look through each of the seven elements of the SCORPIO model in more detail and show how exactly they work and link together.

Effectively, SCORPIO becomes the template for your organization’s strategic marketing plans; ultimately you should be able to plot:

  1. Where you are on each SCORPIO dimension;
  2. Where you need to be;
  3. How to get there by actions on each SCORPIO dimension.

Every organization and every market and brand position is unique. It follows then that no two organizations will need to approach SCORPIO in exactly the same way. Depending on a number of factors, your own blend of SCORPIO will constitute your marketing strategy for the future. Consequently, it will be extremely unlikely that you will need to go into the full depth on all of the seven elements, but on those one or two that you really need to dig quite deeply I hope I will have allowed you the data to carry out your search. For the other areas where you do not need to dig so deeply, you need only skim the information to assess how well you are doing versus the competition.

SCORPIO Marketing plan strategy for manager

Industry or market?

How many things apparently impossible have nevertheless been performed by resolute men who had no alternative but death. The whole question of what business you are in and what business you ought to be in or want to be in has been a great debate since Theodore Levitt first raised the issue in his seminal article ‘Marketing Myopia’ (Harvard Business Review, 1960). Traditionally, there are two ways in which ‘the business’ might be described and defined by the organization:

  1. The products and services sold, the technology that it will use to produce products and services or the industry the organization is in.
  2. The customer needs that the organization will satisfy.

We could take, for example, a medium-sized organization operating internationally, which makes fire hose. This company could define the business that it is in differently and it would seek different opportunities, for example:

Industry or technology thinking: If the organization defines its business as hose technology this would then naturally send the organization seeking opportunities in a variety of markets where there was a need for this type of Technology. This might include garden hoses or using the hose technology to reline gas and oil pipelines as an alternative to pipe replacement.

Market or customer thinking: Depending on how the organization defines its customers and their needs, it could define itself as being in the ‘fire business’ and meeting the needs of people in that group. In this case, if the organization wishes to expand it might start looking at alternative products and services to deliver to the fire industry as a whole, such as extinguishers and fire blankets.

Alternatively the organization could define itself as being in the ‘electronic fire detection and safety business’ which might lead it to investigate sprinkler systems or escape products. Another alternative could be the ‘fluid transfer business’. It would then, should it wish to expand, be seeking opportunities in which perhaps the fire industry would remain a large but just one segment within a market needing to transfer various fluids from one point to another. Examples here might include entering the pipeline business or managing a fleet of tankers for flight refueling.

Now, the importance that the way we define the business we are in has on how the organization sees itself should be apparent; it will affect the way the organization sees its markets and, most importantly, the way in which the organization sees its future. The art in the process should also be evident – there is more than one way that the organization can define its business, even in the market area. For example, we can see the advantage for Kellogg of not being obsessed with ‘cereals’ because it would lose business to non-cereal competition, but where should it see its future? Business definitions such as “breakfasť, cereals’, ‘breakfasť’, ‘morning goods’,’first meal of the day’, ‘snacks’, ‘nutrition’,’children’s health’ will all offer very different competitors, opportunities and threats to the organization. Which is the best way?

In my experience, the questions of what business we are currently in and what business we want or, maybe better put, we need to be in are separate questions and need to be asked separately.

What business are we in (now)?

The first question, what business are we currently in, needs to be answered with some honesty. If you truly believe that your organization is market oriented and that its primary concerns are with identifying and satisfying customer needs, then you need not worry about answering this first section. If (and I must say that this relates to practically every company I have ever worked with) you feel that you have market aspirations but your organization is primarily dominated by production/technical and industry factors, then you should ask yourself what business you are really in at the moment – this drives the whole culture and thinking in the business.

Before you pile in and make yourself unpopular, take a moment to look at things in a slightly more analytical way. We need to ponder the question of ‘Value Migration’. We will look at this phenomenon more than once as we consider marketing strategy but here it helps to understand how the organization thinks and sees its world. You can’t hope to change things unless you understand why things are as they are.

Value migrates in a market

The value in a market is a function of what customers perceive to be valuable to them (solutions to problems they believe they have) and so, what they will be willing to pay. Unfortunately for organizations (who would like stability), customer value changes over time. To some extent, this change is driven by organizations and product/service improvements and to some degree driven by customer needs, taste and fashion, etc.

One easy way to understand this is through an example; let us take the case of the motorcar over the past fifty years. As soon as Henry Ford had managed to bring the car within the reach of the common person, having a car was all that mattered and any colour was fine. The value in the market then shifted away (migrated) from just having a car to get around, towards design, fashion and styling.

The 1950s saw an explosion of different designs, styling, colouring and annual developments in fashion. In the 1960s, perceived value migrated again and customers were willing to pay more for reliability and economy with the arrival of the Japanese cars in many world markets.

The 1980s and 1990s saw a gradual shift away from reliability per se (all cars were now seen as reliable and so this was no longer a differentiator) and the value migrated (back) to style as well as fuel economy and environmental issues. Similar migrations of customer value will have happened in your markets and business as well. Remember, it is likely that the organization was well positioned against customer value in the past; it was successful after all. But things move on and value migrates in a market – if you don’t keep up, you lose out.

Louis Vuitton doesn’t sell “luggage’, it offers solutions in ‘The Art of Travelling’

A final word of warning: organizations are collections of people – people sometimes act in irrational ways (or, the seemingly irrational person is being totally logical – at least from their perspective; maybe we just don’t understand the mindset?).

Researching and identifying new business definitions

People generally seem to dislike change; not only do people not like change, but they also resist change. Sometimes they are right to resist change and sometimes they will kill the organization by resisting. We need people in organizations to get things done and to deliver customer benefits and so make profits. With change as fundamental as the definition of what business we are in can, if it is carried out effectively, it can change the entire stance of the organization including which parts of the organization are seen as the most valuable for the future.

But let us be quite clear: there is in the nature of people such a strong tendency to keep with the past, to keep with what is known (even if that is proved to have no future customer value), that some (especially senior) managers would rather see their organization die than make the (necessary) changes. Here I speak from experience; having worked with two organizations (both of which happened to be in the UK financial services sector), we succeeded in researching and identifying new business definitions which were both understood by and welcomed by their respective existing and future customer bases – but which required both organizations to start moving away from their (previous) technological strengths.

In both cases, the solution was placed in front of the operating board and although they could see the logic and the value in the change (as well as the inevitable cost of not changing) both boards decided not to proceed along the well-researched and finely mapped change route. Both companies were taken over by larger organizations as their financial situations deteriorated, both boards were replaced and in both instances significant redundancies took place when change was forced on them by their new owners. This is probably rational if the board really wants to retire as soon as possible – misguided maybe but still rational.

I would greatly appreciate it if you kindly give me some feedback on this article about SCORPIO model in Marketing Strategy; also you can read more article in my website.

Sincerely yours Mohammad Farahi