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:
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.
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.
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.
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.
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:
- Where you are on each SCORPIO dimension;
- Where you need to be;
- 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.
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:
- The products and services sold, the technology that it will use to produce products and services or the industry the organization is in.
- 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