What you’ll learn to do: evaluate how marketing strategies align with corporate strategies
Most of this course will focus on elements of the marketing strategy and the different tactics organizations use to execute the strategy. How do you know if you have the right marketing strategy?
Every organization has a mission. The mission describes the company’s reason for existing. In order to achieve the mission, the company creates broad strategies that define how it can best use its resources to achieve the mission. At the company level, executives create specific, measurable goals to determine whether the company is making progress in executing the strategy. These time-based goals are called objectives.
The marketing function also defines a strategy that supports the corporate-level objectives. Marketing must clearly understand the target customer and identify the right mix of product, promotion, pricing, and distribution strategies that will provide unique value to the customer. Marketing also creates measurable objectives that show whether it is executing the strategy well and hitting the targets that support the corporate-level objectives. Then marketing performs specific tasks (using tactics) to execute the strategy and achieve the objectives.
The specific things you’ll learn in this section include:
- Define strategy, tactics, and objectives
- Describe how to align mission, strategy, and objectives
- Explain the role of marketing strategy in corporate strategy
What is Strategy?
An interactive or media element has been excluded from this version of the text. You can view it online here: pb.libretexts.org/marketing1/?p=114
Strategy answers the following four questions:
- Where do we compete?
- What unique value do we bring to customers?
- How will we use our capabilities to provide unique value?
- How will we sustain our unique value and position?
Long before the word strategy had meaning in business, it was used in the context of war. In that context it came to mean the battle plan devised by one side in order to gain an advantage or victory over an opponent. The term tactics referred to the specific short-term actions taken by soldiers on the battlefield to support the strategy.
Military strategy and business strategy have many things in common. Both include uncertainty, making it more challenging to achieve desired results. Often there are many variables or factors that will interact in unpredictable ways. Finally, there is a combative or competitive aspect that drives both kinds of strategies: the participants keenly watch the events unfold and adjust their strategies and tactics along the way in order to win. Whether it’s a battle or an economic downturn, the complexity and unpredictability of events underscores the need for a broad strategy that factors in as many contingencies as possible.
A business strategy must take into account the changing environment and identify a plan that will use the company’s resources most effectively to achieve its mission and goals.
Differentiating Strategy and Tactics
Let’s look at some specific characteristics of business strategy and consider how strategy differs from tactics.
Strategy Identifies Where We Will Compete
The strategy determines which markets we will pursue, where we will sell our goods and services. It focuses efforts on a specific target market.
Tactics indicate specific actions that we will take in those markets.
Strategy Describes the Unique Value for Customers
When developing a strategy, the aim is to identify unique benefits in the products or services that customers value and that differ from what competitors offer. A strategy should define and clarify the unique value.
Tactics include the tasks of creating, delivering, and expanding the value.
Strategy Explains How the Company’s Assets Will Create Unique Value
How do the company’s activities interact and reinforce one another? For an organization to define a strategy that creates a unique and valuable position, it must bring together and align the various capabilities and resources of the business.
Tactics are planned to reinforce this unique value. Effective tactics, or specific actions, must support the strategy in order for the customer to have a consistent experience with the product or service that aligns with the unique value that the company is seeking to deliver.
Strategy Determines How the Company Will Sustain Unique Value
Over time, competitors will try to eliminate the company’s advantage or copy the areas where it is successful. How will the company continue to provide unique value and protect or expand the areas in which it has an advantage?
As the company refines its strategy retain or expand its advantage, the tactics must also be adjusted to execute the strategy effectively.
Strategy and Tactics in Practice
In each case, strategy defines the high-level plan. Tactics include the steps taken to execute that plan. The following examples show how strategies and tactics are employed by real businesses.
Strategy and Long-Term Planning: Southwest Airlines
In its early days, Southwest Airlines’ strategy focused on being the low-cost airline of choice for leisure travelers. Prior to 2008 the company recognized that without expanding its target market, it could not sustain growth. The company expanded its target market to include business travelers, without compromising the low cost and inviting brand that appealed to leisure travelers.
Two programs provided tactics to support this shift. The company began to offer a Business Select service, which includes perks such as early boarding, priority check-in, and a free alcoholic beverage for those purchasing a premium fare. Early Bird Check-in provides automatic check-in, which allows the customer to board early.
According to CEO Gary Kelly, Southwest does “Six percent or seven percent of our boardings by Business Select, [and] probably more than double that by Early Bird.” The combined direct revenues from the programs were nearly $295 million in 2013.
Strategy and Focus: Walgreens
In the book Good to Great, author Jim Collins identifies Walgreens as a company that demonstrates focus in its strategy. After inventing the malted milkshake at the soda counter in its pharmacies, the CEO made a strategic decision to divest all food operations over a five-year period and focus on being the most convenient drugstore. Today there are more than 8,200 Walgreens stores across all fifty states.
After dragging its feet for six months, the management team began a process of closing soda fountains in the stores and selling the Corky’s restaurant chain and other food holdings.
Strategy and Aligned Activities: Zappos
Zappos’ strategy centers on providing the best customer service in the world. The company was initially founded with three assumptions behind its vision:
- One day, 30 percent of all retail transactions in the U.S. will be online
- People will buy from the company with the best service and the best selection
- Zappos.com will be that online store
The emphasis on a strategy of exceptional service for every customer drives strategic decisions such as choosing to join forces with Amazon.
The strategy is also a point of alignment for every tactic in the organization including the process for interviewing and selecting new employees, decisions about warehousing, and decisions about which products are offered in the company’s online store.
A Mission Statement Explains Why an Organization Exists
The mission statement guides the corporate strategy, which, in turn, guides the marketing strategy and planning. All marketing activities should relate to and support the company’s mission.
In the marketing planning process diagram at the right, the planning begins with the mission statement. The mission statement doesn’t change. The strategy and tactics might shift—and, indeed, after an implementation and evaluation process, they often do—but the company’s mission remains fixed. For instance, if a company discovered that its product design were creating new opportunities in an adjacent market, that might spur development of a new corporate-level strategy to expand into the new market, but it wouldn’t change the fundamental mission of the company.
Google’s Mission Statement
Google’s mission is to organize the world’s information and make it universally accessible and useful.
The mission statement is clear and direct, and it gives the company enormous opportunity to make an impact.
How does Google’s mission statement drive the company’s strategies? Let’s look at it from several different angles.
Google’s Target Market
Google’s target market is the world. For most companies that would seem overly ambitious, right? In effect, the company has chosen not to target and not to segment. Why does such a decision make sense for Google? The company’s mission demands a comprehensive, global focus, and therefore so does its targeting.
Google has defined a set of strategies that support its mission, one of which is the product strategy. There are two core components of Google’s product strategy: its search engine and the advertising platform that is fed by the search engine. Both of these products are not only designed to serve the world but they become more and more powerful as they gain users. If Google were to narrow its focus to a segment of Internet users, it would hamper the company’s ability to achieve its mission—and, at the same time, make Google less successful and profitable.
Google uses a range of tactics to execute its strategy. One tactic is to create promotional videos, such as the one below, that convey the power of Google’s mission and align the mission with the specific benefits of the Google search engine.
Through the course of the ad, Google suggests that its search engine connects us to
- Hope more than fear
- Science more than fiction
- Things we love
In what ways does this promotional tactic align with the company mission and support the product strategy?
From this example you can begin to see that
- The mission statement functions as an important guide for all aspects of company strategy.
- When the strategy and tactics support the mission statement, they are more effective because they reinforce one another.
The Need for Objectives
As we discussed before, a business strategy must take into account the changing environment and identify a plan that will use the company’s resources most effectively to achieve its mission and goals. Businesses define and and communicate their goals using objectives.
Objectives specify measurable outcomes that will be achieved within a particular time frame. Objectives help individuals across the team to understand the goals and to determine whether the strategy is effective and the tactics are being well executed. Objectives are used to align expectations and plans, to coordinate efforts, to measure progress, and to hold teams accountable for achieving results.
Companies often have long-term strategies but create objectives based on a quarterly or annual plan. Clear, measurable objectives enable the company to track progress and adjust tactics (and, sometimes, strategies) to improve the chance of success.
Creating Effective Objectives
In general, effective objectives meet the following criteria:
- They are specific. They identify what must be accomplished in language that is clear and easy for the whole company to understand.
- They are measurable. They help managers ascertain whether the objectives have been achieved in very concrete terms.
- They have a time frame. The objectives specify when they are to be met so that others can count on the results being available at a certain time.
Below are some examples of good objectives:
- Implement a new customer loyalty plan in 20XX
- Increase market share for the product by 2 percent during 20XX
- Execute marketing campaigns that result in 2,000 qualified leads for a new product by June 1
Using Objectives to Align Company Activities
Companies do not have a single strategy. At any time they are executing a range of different strategies. A company might simultaneously execute on strategies to enter a new market, grow market share in an existing market, and improve organizational efficiency. Moreover, strategy at the corporate level will guide the development of strategies for each function, including marketing. Remember, a business strategy must identify a plan that will use the company’s resources most effectively to achieve its mission and goals. Likewise, the marketing strategy must identify a plan that will use the marketing function’s resources and expertise most effectively to achieve its mission and goals.
We will discuss the process for developing and executing the marketing strategy further, but first let’s focus on the alignment of the marketing strategy. How can the marketing function make sure that its strategy and tactics support the corporate-level objectives? How does it know if it is on track to achieve results? During the marketing planning process, the organization creates its own marketing objectives that support the company objectives. These marketing objectives must also specify measurable outcomes that will be achieved within a particular time frame.
Let’s take a look at some examples of typical corporate and marketing objectives. At the corporate level, objectives include profitability, cost savings, growth, market-share improvement, risk containment, reputation, and so on. All of these corporate objectives can imply specific marketing objectives. Below are two common corporate-level objectives and the marketing objectives that would support them effectively.
Example: Annual Objectives
- Company Objective: Increase profitability by 6% over prior year
- Marketing Objective: Increase the average selling price of the product from $186 to $198
- Marketing Objective: Complete end-of-life process for three products with profit margins below 3%
- Marketing Objective: Increase sales of start product by 30% over prior year
- Company Objective: Increase market share in one key market by 4%
- Marketing Objective: Implement a competitive-positioning campaign relative to a key competitor
- Marketing Objective: Introduce two new products to market
- Marketing Objective: Introduce major enhancements in two product lines
- Marketing Objective: Bring two new distribution partners on board to expand coverage to new major markets
As you can see, if the marketing organization achieves its objective to introduce new products to market, then it will support the company objective to grow market share. If the marketing organization does not introduce new products, then the other objectives will need to be adjusted or the company is unlikely to show the market share growth that is part of its strategy.
- Mintzberg, H. Ahlstrand, B. and Lampel, J. Strategy Safari : A Guided Tour Through the Wilds of Strategic Management, The Free Press, New York, 1998. ↵
- Mintzberg, H. Ahlstrand, B. and Lampel, J. Strategy Safari : A Guided Tour Through the Wilds of Strategic Management, The Free Press, New York, 1998. ↵
- Kryscynski, D. (2015, January 5). What is strategy↵
- "Good to Great: Why Some Companies Make the Leap... And Others Don't (Review)." September 3, 2001. Retrieved 2012-07-13. ↵
- Strategy and Tactics. Provided by: Lumen Learning. License: CC BY: Attribution
- Outcome: Evaluate Alignment of Marketing Strategies. Provided by: Lumen Learning. License: CC BY: Attribution
- The Mission Statement. Provided by: Lumen Learning. License: CC BY: Attribution
- Strategy and Objectives. Provided by: Lumen Learning. License: CC BY: Attribution
- Southwest Airlines Boeing 737. Authored by: Dylan Ashe. Located at: https://commons.wikimedia.org/wiki/File:Southwest_Airlines_Boeing_737-700_N231WN.jpg. License: CC BY-SA: Attribution-ShareAlike
- Sears Eastridge Mall Gastonia. Authored by: Mike Kalasnik. Located at: https://www.flickr.com/photos/10542402@N06/15268649330/. License: CC BY-SA: Attribution-ShareAlike
- Travel Sponsor: Zappos. Authored by: Nate and Tilly Ritter. Located at: https://www.flickr.com/photos/theritters/2435098651/. License: CC BY: Attribution
- Google Logo Search. Authored by: Global Panorama. Located at: https://www.flickr.com/photos/121483302@N02/14253849274/. License: CC BY-SA: Attribution-ShareAlike
- Climbing. Authored by: Marcus Hansson. Located at: https://www.flickr.com/photos/marcus_hansson/14659581920/. License: CC BY: Attribution
- What Is Strategy?. Authored by: David Kryscynski. Located at: https://youtu.be/TD7WSLeQtVw. License: All Rights Reserved. License Terms: Standard YouTube license
- Google - Year in Search 2014. Provided by: Google. Located at: https://youtu.be/DVwHCGAr_OE. License: All Rights Reserved. License Terms: Standard YouTube license
- Battle of Chantilly. Provided by: Wikimedia. Located at: https://commons.wikimedia.org/wiki/File:BattleOfChantillyMap.jpg. License: Public Domain: No Known Copyright