Strategic Marketing

Whether large or small, the business marketer is faced with a plethora of ways to market the organization’s goods and services. Although one could, in theory, stand on the street corner and hawk one’s business products, a more solid marketing strategy is necessary. Strategic marketing is a subfunction of marketing that examines the marketplace to determine the needs of potential customers, the strategy of the competitors in the market, and attempts to develop a strategy that will enable the organization to gain or maintain a competitive advantage in the marketplace. Marketing departments can choose from a number of ways to market their company’s products or services including advertising, direct response, sales promotions, and publicity. However, no matter how well an advertisement or a marketing campaign is designed, unless one understands the customer’s needs, the market, and the industry as well as the strengths and weaknesses of the competition, these approaches are unlikely to be successful. Strategic marketing is an approach to marketing that helps an organization sharpen its focus and successfully compete in the marketplace.

Strategic marketing is concerned with two primary components: the target market and the best way to communicate the value of one’s product or service to that market. To develop a viable marketing strategy, one must take into account several key dimensions. First, as with any other strategy within the organization, a marketing strategy needs to be endorsed by top management. Marketing strategy is also political in nature: Powerful units within the organization may disagree on the best marketing strategy and an agreement or compromise may need to be negotiated. Marketing strategies can also be affected by organizational culture and the assumptions that it engenders. For example, if the organization has always marketed its widgets to business executives, it may fail to see the potential for marketing to lower-level personnel within the organization or even for personal use to adults or teenagers, with an important segment of the marketplace not being considered as a result.

Marketing/Promotional Policies

Before one can develop a marketing strategy, determine the appropriate marketing mix, develop and implement a plan that will bring the business a sufficient return on investment for their marketing dollars, or design an advertisement, one must first determine what the parameters within which one must design one’s marketing strategy are. Although one could take one’s marketing budget and spread it across as many categories of the marketing mix as possible in an attempt to increase coverage of one’s product or service, strategic marketing demands a more considered, systematic approach that takes into account not only the product but also the internal and external factors that affect how the product or service might best be marketed. Typically, successful marketing campaigns start with a marketing or promotional policy. This is a set of principles and guidelines based on an analysis of the organization’s goals, objectives, resources, and plans. Typically, policies are set by the organization’s governing body (e.g., board of directors) and are used to develop strategy and guide decision making in support of meeting the organization’s goals and objectives.

Factors to Consider

As shown in Figure 1, promotional policies need to consider at least four factors affecting the best way to market or promote a product or service:

The characteristics of the products or services being marketed by the organization have an obvious impact on the way that marketing is done. Not all products and services are best promoted in the same way. For example, a television spot advertising a high-end business consulting service would probably yield more results if placed on an all-news channel rather than an all-cartoon channel. In addition, the nature of the target market also influences the way that goods and services are most appropriately marketed. For example, a few years ago, a business bought air time on two local radio stations: one a classical station and the other a rock station. The narrative of the ads was the same, but the background music was different to reflect the musical tastes of the audiences of the respective stations. Unfortunately, somewhere in the process, the ads were switched so that the classical station received the ad with the rock music and the rock station received the ad with the classical music. Soon thereafter, the stations started playing an apology from the business that had sponsored the ads: Numerous regular listeners of both stations had called in to complain about the appropriateness of the ads. Although the business had attempted to segment the target market into categories and tailor its advertising to appeal to the tastes of the segments, the execution fell short, ending in a lower return on investment than expected.

The characteristics of the product or service and of the target market or market segment are important aspects of marketing, particularly when designing a marketing campaign that will maximize one’s return on investment. In addition, an organization must consider what place it wishes to occupy within its industry. Corporate image is the perception of an organization -- generally held by the public. To cultivate its corporate image, a business needs to participate in activities that support that image and avoid activities that might tarnish it. Certainly, consulting firms and investment companies that have made the headlines over the past few years have learned this fact the hard way. However, even such decisions as where the organization advertises and how its ads are designed can reflect back on the organization. This is one reason that from time to time organizations change their corporate logo or branding: to realign public perceptions about them or to change their image to reflect new goals and objectives. In addition to activities directly focused on marketing specific products or services for the organization, businesses also typically engage in public relations activities as part of their marketing strategies. A corporate image may change over time depending on the organization’s circumstances, publicity, and other publicly known information. Public relations activities help the organization to create and manage its public image or reputation with outside agencies and groups. This marketing function is responsible for developing positive messages about the organization and reducing the impact of negative events and information on the organization’s reputation. In addition to considerations of corporate image, businesses also need to be concerned with ethical considerations in marketing and take these into account in the development of their promotional policy and eventual marketing strategy. For example, given the link between smoking and lung cancer, one can no longer view advertisements for cigarettes on television.

Just as there is no such thing as the “ideal” marketing strategy that is appropriate for all organizations, there is also no such thing as the “ideal” promotional policy for all organizations. Different types of organizations and even different industries will market their products and services in different ways. For example, a fast food chain may want to be associated with the concept of “quick and easy” whereas a high-end restaurant would be more likely to want to be associated with a fine dining experience.

Marketing to Children

One area of promotional policy that has been a topic of much debate, particularly within the food industry, is the issue of whether or not one should market directly to children. Obviously, some products are designed specifically for children, including clothes, toys, and certain food products. The question, however, is the degree to which it is ethically appropriate to market these items directly to the children. For the most part, children do not have a great deal of discretionary cash, so marketing directly to children would appear to be a wasted effort. However, the wants of children can have a great effect on the buying behavior of their parents and other adults. In some cases, this is nothing more than the type of influence that is attempted by other marketing efforts and there is little to say when marketing efforts encourage drinking milk or buying comfortable shoes. However, both children and their parents know that milk and shoes are necessary, so little marketing effort is needed.

The ethical dilemma arises, however, when the item being marketed to children is something that may go against the parents’ a priori philosophy of what is good or not good for a child to own, eat, or wear (e.g., revealing clothes or high-sugar snacks). The questionability of marketing to children in ethically ambiguous situations has caused companies such as Coca-Cola and the International Council of Beverages Associations (ICBA) to institute guidelines regarding marketing to children. Based on concerns over the rising obesity epidemic, particularly among children, these organizations have issued a statement saying that they take “special care” when deploying advertising practices to children under the age of 12 as children under that age “may lack the necessary skills and judgements [sic] to properly understand the purpose behind the persuasive techniques commercial advertising represent” (Coca-Cola, 2008). For this reason, they do not market their products directly to children and only show children drinking their products in the company of adult caregivers.

Not only may children not be able to make reasoned judgments about the appropriateness and value of products, but marketing may also change their beliefs and behavior, particularly regarding the marketed product. Bridges and Briesch (2006) developed a model to test the “nag factor” in marketing children’s categories. They define the term “nag factor” as an indirect marketing path that begins with promotional activities aimed at influencing the preferences of children who, in turn, request that their parent(s) purchase the product. The promotional activities that are likely to be successful with children tend to be different from those that are successful with adults. Although adults, for example, tend to develop brand loyalty and repeatedly purchase preferred brands, children tend not to focus on brands but make buying decisions (or at least acquisition decisions) based on the characteristics of the product. This is why many products that are aimed at children reflect the latest popular theme or character. In addition, purchasing decisions among children are made differently based on age. Younger children, for example, tend to look for products featuring the latest character, bonus offers, tie-ins with movies, and so forth. Because younger children do not necessarily understand that the general purpose of promotional activities is to sell products, they can, therefore, infer that unhealthy products are good for them because of the “endorsement” of the character. Young children, however, do not remain loyal to a particular brand once they make a purchasing decision, but change brands when a product with a more current character comes out. Teenagers, on the other hand, tend to be more like adults in their buying behaviors, particularly when it comes to brand loyalty, although they continue to respond to image-focused messages.

Given the fact that most children do not have the necessary funds to purchase items even if they form purchasing decisions, one might wonder at the effectiveness of promotional activities that are targeted toward children. However, Bridges and Briesch’s review of the literature on marketing to children found that the nag factor has a definite influence on the purchasing behavior of adults with such items as clothing, shoes, fast food and other food items, snacks, and beverages. For example, one study found that the nag factor accounted for one-third of the trips to a fast food restaurant in 2011, up from only one-tenth in 1977. In 2006, 44 food and beverage companies spent $2.1 billion to market food to youth (Federal Trade Commission, 2012). Total advertising expenditures by fast food restaurants totaled $4.6 billion in 2012 (Yale Rudd Center for Food Policy and Obesity, 2013). In 2012, children under the age of 11 viewed half the number of fast food advertisements as adults; McDonald’s was the only fast food chain that directed more advertising to children than adults in 2012 (Yale Rudd Center for Food Policy and Obesity, 2013). Research has shown that children tend to be influenced by marketing in categories that are considered unhealthy due to an increase in calorie intake or a decrease in nutrition.

Based on their research, the authors found that the nag factor is a real phenomenon as evidenced by the fact that households with children tend to have more variety in their purchases for such items as soft drinks and cereal than do households without children. Such variety-seeking behavior tends to increase over time as children become more sensitive to the influence of promotional tie-ins with dynamic characters and other popular themes. These findings have ethical implications for the way that organizations market to children so that marketing efforts support their promotional policies.