Marketing Strategy: What It Is and How to Create One

Marketing strategy

Marketing strategy

People often use the terms “marketing strategy” and “marketing plan” interchangeably, but, in reality, they are two different processes.

A marketing plan describes the concrete actions and marketing tactics undertaken to complete a marketing campaign. A marketing strategy, on the other hand, outlines the big picture of a marketing effort, such as the business’s target audience and its products’ value proposition for customers.

As a result, it is common to refer to an existing marketing strategy when developing a marketing plan. While the strategy describes what the marketing objectives are, the plan describes how those objectives are going to be achieved. Without a well-thought-out marketing strategy, marketing plans are in danger of missing the mark.

While the strategy describes what the marketing objectives are, the plan describes how those objectives are going to be achieved.

For example, imagine an e-commerce business that is trying to grow its customer base. It starts using marketing tactics like a referral programme to encourage positive word of mouth, but its efforts only have marginal success.

If it had created a marketing strategy, then the company may have realised that it actually needed to grow its customer base by appealing to an untapped target audience. As a result, its marketing plan would have instead outlined a digital marketing strategy focused on content creation through targeted blog posts and search engine optimisation.

A great strategy can lead to a great plan.

Types of marketing strategy

You can take many different approaches to marketing—such as social media marketing or content marketing—but the most elementary strategies for market growth are found in Ansoff’s matrix. These four strategies are:

 

  • Market penetration
  • Product development
  • Market development
  • Diversification

H. Igor Ansoff created his matrix to help businesses understand the different strategies required for market growth. Ansoff made two basic assumptions about how growth could be achieved: firstly, by varying what product is being sold and, secondly, by varying who the product is being sold to. As a result, each of the quadrants in his matrix features a mix of these two factors.

Ansoff-s_Matrix

Ansoff-s_Matrix

In outlining these four growth strategies, Ansoff’s matrix also emphasises the different marketing tactics businesses and marketers must consider when undertaking them. Each strategy requires a different consideration of the four Ps, also known as the “marketing mix,” which marketers should consider together to ensure an effective marketing strategy. The four Ps are:

 

  • Product: What is being sold
  • Place: Where it is being sold
  • Price: What the product costs
  • Promotion: How the product is marketed to the target audience

The exact way that a marketer defines the four Ps for their marketing efforts will depend on the growth strategy they are using and the political and economic outlook of their market.

Example : Let’s take a closer look at each strategy from Ansoff’s matrix for paper bag marketing

Marketing strategy for paper bag

Marketing strategy for paper bag

Market penetration strategy

Market penetration is a growth strategy involving selling existing products to existing markets. It is considered the least risky of all the strategies in Ansoff’s matrix. The strategy is typically considered most beneficial if the market is either growing, or the marketer alters its promotional efforts through existing marketing channels.

An example of a market penetration strategy can be found in Ariel’s #ShareTheLoad.

Ariel challenged stereotypes of women’s work with an ad that featured a dad recognising his daughter’s skills and promise, and her lack of time due to her lists of tasks and home life responsibilities. As a result, he takes on her laundry duties to ‘lighten the load’ [3].

Product development strategy

A product development strategy involves the development of a new product for an already existing market. Typically, it is considered riskier than a market penetration strategy because it requires the creation of a totally new product. In order to be successful, product development strategies typically require innovation and further research into the existing market, including the profiles and needs of the target audience.

An example of a successful (and surprisingly interesting) product development strategy can be seen in the Uni Kuru Toga mechanical pencil.

As odd as it may seem, in the mechanical pencil world, the Uni  Kuru Toga is something of a star. “Writing with the Kuru Toga for the first time was an illuminating experience,” said Steven Poole in his article published in The Guardian Books blog section [4]. Wired, meanwhile, called it “the ultimate geek tool” [5].

What makes the pencil so unique? A specially designed internal gear mechanism that rotates the lead so it stays sharp as you write and diamond-infused lead that doesn’t easily break under pressure. In effect, as a 2009 commercial for the pencil demonstrated, it was meant for people concerned with even handwriting and durable lead [6].

While the market for mechanical pencils was already well-established, the Uni Kuru Toga was able to find success through a product development strategy that offered consumers something new and useful.

Market development strategy

A market development strategy takes an existing product into new markets. Much like a product development strategy, a market development strategy is considered riskier than a market penetration strategy because it involves introducing a familiar product into an unfamiliar marketplace. While the product remains the same, the new place it is sold possibly requires new pricing and promotional efforts.

An example of a market development strategy is when Microsoft introduced its Hololens technology to an additional 29 markets in Europe in November of 2017 [7]. The augmented reality headset provides a unique user experience that allows professionals to work in a “mixed reality” environment. To promote their efforts, Microsoft released a YouTube video showcasing the unique use cases of the product in the workplace, such as through interactive employee training programmes in industrial environments [8].

Diversification strategy

A diversification strategy involves the development of a new product for a new market. The novelty required in a diversification strategy means that it is also the riskiest of the Ansoff matrix’s four strategies. Diversification strategies require full attention on all of the four Ps—product, price, place, and promotion—but the biggest risks can also lead to the biggest rewards.

An example of a diversification strategy is when Apple introduced the first iPhone in June 2007 at the MacWorld Expo, with an Indian release in August 2008. At the time, Apple was new to the mobile phone market, but they innovated in the space by adding a music player and web browser to their new touchscreen phone [9].

“Today Apple is going to reinvent the phone,” CEO Steve Jobs declared before an audience of reporters. Through much of the presentation, Jobs outlined the phone’s unique value proposition to customers.

It worked. As of June 2022, there were an estimated 1.8 billion active iPhone users worldwide [10].