Strategic Marketing

Strategic Marketing

Marketing is a general term used to describe all the steps that lead to final sales. It is the process of planning and executing pricing, promotion and distribution to satisfy your individual and organizational needs, as well as those of your customers.

From this definition, it is easy to see that marketing is more than just selling a product or service. It is an essential part of business. Without marketing, even the best products and services fail.

Companies constantly go under because they don't know what is happening in the marketplace and, as a result, they aren't fully meeting their customers' needs. They mistakenly believe that with the proper amount of advertising, customers will buy whatever they are offered.

Marketing consists of the decisions you make strategically-behind the scenes-that affect how your customer perceives your product. Your marketing decisions need to include the four Ps:

• product;
• place/distribution;
• promotion; and
• pricing.

Pricing is discussed in detail in Part 9: Pricing Your Product, and distribution is examined in Part 10: Distributing Your Product.

Your strategic marketing plan is an important part of your business plan; if you have developed a detailed business plan you are well on your way to marketing strategically. You will have established:

• a mission statement;
• your overall company objectives, such as profitability, volume or stability;
• competitive strategies, such as overall cost leadership, differentiation or niche marketing; and your marketing objectives-
  • to achieve a viable level of sales or market share;
  • to increase market share;
  • to maintain market share;
  • to maximize cash flow; or
  • to sustain profitability.

The next step is to establish specific marketing strategies.

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Marketing Strategies

Your marketing strategy outlines exactly how you will achieve your marketing objectives. For example, if your objective is to increase market share, your strategy will state how this will occur.

A marketing strategy is a way to give marketing orientation to your business by deciding to position your product or service in terms of buyer needs and wants. Inexperienced business people often make decisions based on what they like or want, leaving the customer out of the picture. A marketing orientation brings the customer into the centre of the picture.

You can achieve the marketing objective for profits, cash flow and market share by:

• increasing the number of users by-
  • increasing their willingness to buy; or
  • increasing their ability to buy;
• increasing the rate of purchase by-
  • broadening the occasions they use the product;
  • increasing their level of consumption; or
  • increasing their rate of replacement;
• retaining current customers by-
  • maintaining their satisfaction;
  • meeting what the competition offers; or
  • developing or increasing relationship marketing;
• acquiring new customers by-
  • adding line extensions (variations of existing products designed for existing markets);
  • using leaders (lower prices on certain products to increase the sale of more expensive complements);
  • bundling (selling products together, usually at a lower price than if bought separately);
  • gaining head-to-head market dominance;
  • using head-to-head price/cost leadership;
  • differentiating the product;
  • serving a narrowly defined target market; or
  • adding "flankers" (new brands designed to serve new segments).

Marketing Programs

Marketing programs are strategic plans that include detailed approaches to the four Ps (product, place, promotion and pricing). Your approach to making decisions for each of the four Ps should closely follow your mission statement, company objectives, competitive strategies, marketing objectives and marketing strategies.

The Strategic Marketing Flow Chart

The chart that follows will give you an overview of the strategic marketing process. (A version of this chart is known as the "Stage-Gate Process for New Product Development.") If you would like to become more familiar with the theory behind marketing approaches, a number of organizations can teach it to you. Marketing courses are available at many Canadian post-secondary educational institutions.

Text description of above flow chart

Promotion

Promotion includes all the activities that are designed to inform, persuade and influence people when they are making the decision to buy. Promotion consists of:

• advertising: non-personal communication transmitted through the mass media;
• publicity: free promotion through news stories in newsletters, newspapers, magazines and television; and
• sales promotion: all forms of communication that aren't found in advertising and personal selling, including direct mail, coupons, volume discounts, sampling, rebates, demonstrations, exhibits, sweepstakes, trade allowances and point-of-purchase displays.

When you are designing a promotion plan, clearly spell out:

• which objectives to use. It's possible to have more than one objective, but you would be wise to target your audience, or you will run the risk of losing focus;
• what to say;
• who to say it to; and
• the criteria that you will use to measure success.

Suggestions for Inexpensive Promotion

As a new food processor, you can promote your product inexpensively and effectively by advertising through:

• food-related trade journals;
• product demonstrations;
• contests;
• flyers;
• the Yellow Pages;
• business cards;
• statement stuffers;
• window banners;
• personal selling;
• newsletters;
• greeting cards;
• sports team sponsorship;
• home parties;
• seminars;
• ethnic services; and
• direct mail.

Of course, one of the best free methods of promotion is good word of mouth.

Your Promotion Objectives

Your promotion objectives need to be clearly stated and measurable. They must be compatible with the objectives of your company as well as the competitive and marketing strategies.

Your objectives will vary for different products and situations. For example, you have to promote differently to brokers than to wholesalers. When you're promoting to a broker, you need to emphasis what you want the broker to present to the wholesaler. When you approach a wholesaler, you simply want the wholesaler to purchase the product.

You have five general promotional objectives to choose from:

• provide information;
• increase demand;
• differentiate the product;
• accentuate the value of the product; or
• stabilize sales.

Your Promotional Strategy

Once you have reviewed all the possible promotional tools, the next step is to devise a promotional strategy. It should address the following issues:

• What is the goal of the promotion?
• What types of promotion should be used?
• What effect should the promotion have on the customer?
• Which promotion is working?
• Which promotion isn't working?
• What are the costs of the promotion compared to the benefits?

Advertising

Advertising makes use of the mass media to get your message out.

Forms Of Advertising

You can choose from a number of different media. Each one has its advantages and its disadvantages. You may find that you'll want to use more than one medium to promote your product.

Newspapers

Advantages:

• flexibility;
• community prestige;
• intense coverage;
• reader control of exposure;
• coordination with national advertising; and
• merchandising services.

Disadvantags:

• short life span;
• too broad an audience/not targeted readership;
• hasty reading; and
• poor reproduction

Magazines

• selectivitry
• quality reproduction;
• long life;
• prestige associated with some;
• and extra services.

Disadvantages:

• lack of flexibility.

Television

Advantages:

• impact;
• mass coverage;
• repetition;
• flexibility; and
• prestige.

Disadvantages:

• temporary nature of message;
• high cost;
• high mortality rate for commercials;
• evidence of public distrust; and
• lack of selectivity.

Radio

Advantages:

• immediacy;
• low cost;
• practical audience selection; and
• mobility.

Disadvantages:

• fragmentation; and
• temporary nature of message.

Outdoor Advertising

Advantages:

• quick communication of simple ideas;
• repetition; and
• ability to promote products available for sale nearby.

Disadvantages:

• brevity of the message; and
• public concern over esthetics.

Media Rates

Promotional and media costs are the most difficult to allocate because their effectiveness is hard to measure in a concrete manner. Before looking at the dollar costs of different media, you should decide:

• which media are most likely to reach your target audience;
• which media suit the image of your product;
• whether any product-specific features make one medium more appropriate than another (for example, is a visual demonstration necessary); and
• what is your promotional budget?

Common errors to avoid are:

• trying to focus your efforts on too broad a market;
• allowing the quality of a promotional piece to lapse in order to afford more distribution, or lack of planning and coordination of promotional efforts;
• no measurement of effectiveness; and
• relying on one medium.

Advertising Associations and Publications

Two excellent resources in planning your advertising campaign are:

Canadian Advertising Rates & Data
(monthly publication-single issues available)
www.cardmedia.com
Rogers Media Publishing
One Mount Pleasant Road, 7th Floor
Toronto, Ontario M4Y 2Y5
Tel: 416-764-2000
Fax: 416-764-1705 or 416-764-1709 or 416-764-1721

The National List of Advertisers (annual publication)
www.cardmedia.com

You can get free information or fee-for-service material on advertising topics from:

Advertising Standards Canada
www.adstandards.com
175 Bloor Street East, South Tower, Suite 1801
Toronto, Ontario M4W 3R8
Tel: 416-961-6311
Fax: 416-961-7904

Periodicals for the advertising industry, including Marketing & Strategy magazine (weekly) and Ad Age (twice weekly), are available through your public library.

Setting Your Advertising Expenditures

How do you determine how much you're going to spend on advertising? The following information will help you:

• Market share: A company that has a higher market share generally has to spend more on advertising to maintain its share.
• Sales from new products: If a high percentage of your sales comes from new products, you have to spend more on advertising compared to companies with established products.
• Market growth: If you are competing in a fast-growing market, you should spend comparatively more on advertising.
• Plant capacity: If you have a lot of unused plant capacity, you should spend more on advertising to stimulate sales.
• Product price: Both very high-priced (or premium) products and very low-priced (or discount) products require higher ad expenditures. This is because, in both cases, price is an important factor in the buying decision. The consumer has to be convinced, through advertising, that the product is a good value.
• Product quality: A higher-quality product requires greater advertising effort because of the need to convince the consumer that the product is unique.
• Breadth of product line: If you have a broad line of products, you have to spend more on advertising compared to companies with specialized product lines.

Media Directories

For contacts as well as market reach, pricing and related information about media outlets, consult:

Bowdens Media Directory
Bowdens Media Monitoring Ltd.
2206 Eglinton Avenue East, Suite 190
Scarborough, Ontario M1L 4T5
Tel: 416-750-2220
Toll Free: 1-800-269-8145
Fax: 416-750-2233
E-mail: info@bowdens.com

Market Wire
48 Yonge Street, 8th Floor
Toronto, Ontario M5E 1G6
Tel: 416-362-0885
Fax: 416-362-6669

Publicity

Publicity gives you free advertising through stories in newsletters, newspapers, magazines and television. You can get publicity by sending a media release to the various media offices, cultivating friendships within the media or with those who are known as trend-setters. Positive word-of-mouth can also generate interest in your story. Or you can attempt to generate your own publicity by developing a publicity campaign, which could include a media release.

A media release is a one or two page letter identifying a newsworthy event and outlining the who, what, when, where and why of the story.

You can send out a media release to announce the start-up of your new business, introduce a new product or announce any other success story related to your company. The media will publish or announce the story as a news item, and there will be no expense for you.

Publicity is one of the most effective and least costly means of advertising.

Sales Promotion

A lot of options are available to you when it comes to sales promotion. You'll probably find that you'll want to use several of them to promote your product and your business.

Three of the most commonly used in the food industry are trade shows, in-store demonstrations and coupons. You can also use direct mail.

Trade Shows

When you budget for a trade show and include this venue in your overall marketing plan, you'll be giving yourself a highly focused way to:

• establish a presence in the marketplace;
• gain an overview of the current industry; and
• get a list of serious buyers more quickly than you could with a traditional sales approach.

Although trade shows are relatively expensive, they are widely used in the food industry. If you plan your participation properly and present your business well, trade shows offer the potential for a high return in sales and contacts.

You may need several months to a year to get a well-located booth and prepare the appropriate materials and displays.

Choosing the Right Trade Show

Your first step is to develop a list of several shows you feel would be suitable. Various directories are available that contain a complete index of trade shows, listed chronologically, geographically and by subject. As well, each listing has a phone number for the show's contact.

Trade Show Week contains listings of trade shows in the United States, Canada and Mexico in its domestic edition and other countries in its international edition.

Trade Show Week
5700 Wilshire Boulevard, Suite 120
Los Angeles, California 90036-5804
Tel: 323-965-5384
Fax: 323-965-2407

Ministry of Agriculture, Food and Rural Affairs
Katie Meagher, Communications Officer
Business Development Branch
E-mail: katie.meagher@ontario.ca

Why This Show?

Part of your show-planning process is setting the objectives for the show. First, be aware of which type of show it is-for the final consumer (consumer show) or for your food chain partners (trade show).

Examine your goals. Do you want to take orders on the spot, build your brand awareness, introduce a new product and gather leads?

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Vertical versus Horizontal Markets

Another thing to consider is whether your product or service should be presented at horizontal or vertical shows, or both.

Horizontal shows are those with vendors who are selling a broader variety of products or services, and the attendees usually come from a single market segment. They are looking for either very specific products or services or a broader variety.

Vertical shows are more narrowly focused to just one type of product and market. The advantage of vertical shows is that the attendees are all from a very specific market, and your objectives can be more focused. The disadvantage is that your product or service must fall exactly within the focus for the show or you won't get the results you want.

Shows for food only would be vertical. However, shows for services to the grocery industry or for gift basket marketers would most likely be horizontal because the attendees would be from all types of markets.

Narrowing the List

Unless you have unlimited budgets and resources, you'll need to find out which shows from your potential list are best. The key lies in finding the shows that pull in the most decision makers for your industry.

To find out who attends, ask the show management for a demographic profile of attendees. Typically, show literature will list only their numbers and general titles. Check the titles and purchasing responsibility if that information is available.

Another route is to contact past attendees. Have a list of questions ready that will tell you if they are indeed the decision makers and what value they placed on their time spent in the exhibit hall.

You can also ask non-competing exhibitors from the previous year what their impressions of the show were and whether they will be attending again. Or, if possible, go to the show as an attendee yourself so you'll know if you want to participate next year. You can get an exhibits-only pass for many shows, so you're not paying the entire fee.

You should also ask the show managers how they are promoting the show and what their strategy is for getting people to the exhibit hall. If it's a new show, promotion has to be very good to get the traffic you need to make it worthwhile.

Conference schedules are often set up so that luncheons and socials are held in the exhibit hall to ensure that attendees spend time with vendors. While it's nice to get them into the exhibits (and to your booth), food-related functions aren't always the best arenas for talking with prospects. It's difficult to handle a plate of food, a drink and your company's literature at the same time. Make sure the schedule allows for plenty of time around those events so attendees can eat and visit your booth.

Preparing for the Show

Get all the information you need to begin your preparations. The contact person for the show will provide you with basic information. Make sure you have:

• a floor plan (preferably with other exhibitors indicated), so you can choose a high-traffic area. Don't hesitate to pay extra for a good location-the whole point is exposure;
• booth specifications, including dimensions, lighting, tables, chairs, skirting and any display or sample restrictions; and
• information about all the services being offered-accommodations, equipment rental, assistance with setup, tear-down or packing storage.

Training Your Booth Staffers

One of the most important steps to take in order to have a truly successful exhibiting experience is the training of your booth staff. They account for 90 percent of the positive feelings that show attendees have about the show and your company.

Trade show attendees usually go to shows to get detailed information about products and services, so they expect your booth staff to be very knowledgeable. You want to send your most "people-oriented" representatives, as well as those who know the most about your company. Be sure that they understand exactly what your objectives are for the show.

Your staff should also be armed with information about your competition and the competitive advantage your product or service has. Finally, make sure they can emphasize the benefits of your product or service instead of simply regurgitating the product "features" list from your brochure.

A number of excellent resources can help with training trade-show staff. You can narrow down the ones in your region by conducting an Internet search on "trade-show training."

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Other Preparations

When you're setting your budget, allow for personnel, accommodations, booth, handouts, promotional activities, product transportation and travel. If the trade show is outside of Canada, allow for insurance costs and plan to spend an entire day before and after the show in the host country.

Contact existing and potential customers before the show. Invite them to drop by your booth and inform them about special promotions available only at the show or new products that you're launching.

Show programs and advertising inserts in the general media or industry publications give you the opportunity to advertise in specific vehicles aimed at promoting the show and sharing costs.

It's advisable to choose professional design and marketing consultants to help you prepare the materials for your booth. These will include:

• a high-impact display to attract the audience;
• professionally prepared information handouts (remember, attendees are there to gather knowledge); and
• samples of your product.

Company Literature and Giveaways

The number of brochures, giveaway items and other handouts you need to bring depends on how many people you expect to see.

Keep in mind that about 90 percent of all literature never makes it back to the attendees' offices. Perhaps it's best to train your staff to always offer to send the literature by mail to the attendee's office. Attendees often don't want to lug your marketing materials all over the exhibit hall and will jump at the chance to have you send the information to them the following week.

Follow-Up

Prepare a system for recording leads. Several options include:

• lead sheets for sales staff;
• a business-card exchange system;
• a sign-up sheet for more information; and
• a guest book.

Be sure to follow up your leads after the show. This should be done immediately, and it's best to let customers know in advance when and how they can expect to be re-contacted.

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In-Store Demonstrations

Demonstrations-sometimes referred to as "product samplings"-are an effective and inexpensive means of promoting a new or existing product.

There are three types of in-store demonstrations - live, mobile and static.

Live Demonstrations

At a live demonstration, a member of your staff does simple food preparation. This is best for a new product that requires information or answers to questions, or for a product that needs special preparation.

One advantage of a live demonstration is that you can encourage the customer to buy the product. A disadvantage is that a great deal of time is required for the demonstration, so costs can be high.

Mobile Demonstrations

These are a form of live demonstration, where a demonstrator walks through the store offering samples. The demonstrator usually has a base operation near the product sales display. Not all stores allow this type of demonstration.

Static Display

This is an area displaying the product and offering unattended samples. One advantage is that this type of display is very cost effective. A disadvantage is that there's no control over purchasing decisions or how much sample is used. This type of demonstration needs to have the consumer familiar with your product.

Steps in Planning Demonstrations

1. Determine what type of demonstration you are going to use.
2. Decide which stores you are going to target. Choose one that stocks your product.
3. Find out the store policy on how to set up in-store demonstrations. Every store has different policies.
4. During the demonstration, hand out simple information about the product as well as any coupons.
5. Be unique and try new ideas; you must stand out from the competition.
6. Know the competition, but don't downgrade them during the demonstration.
7. Talk to the store managers. The better the relationship you have with them and the better they know your product, the more cooperative they will be. Talk to them about two weeks before the demonstration, so that they will have product on hand and on the shelves.
8. Be prepared to work the whole weekend, not just peak hours. The normal run of a demonstration is Thursday, Friday and Saturday.
9. The store may want incentives from you, such as cost cuts on product. If possible, get the store to special your product during the demonstration. However, be prepared to pay for this opportunity.

You can hire a demonstration company, if you wish. Consider time, energy, ease of demonstration and your budget when you make this decision. One firm that specializes in in-store demonstrations is:

In-Store Focus Inc.
2250 Argentia Road
Mississauga, Ontario L5N 6A5
Tel: 905-817-0119

Remember that demonstrations normally don't give you access to a very wide market, so they probably should be only one segment of your marketing and promotional package.

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Coupons

Coupons can be an effective way to increase your sales and profits. However, you should be aware of certain costs:

• costs of physical distribution, mailing coupons, placing advertisements and paying the retailer a handling charge for redeeming the coupons;
• reduced contribution margins because coupons are price reductions; and
• the use of coupons not only by new customers but by existing customers, who would have paid the regular price.

Most printers in Ontario can print coupons.

You need to estimate various rates to determine the effectiveness of a coupon promotion. The estimations could be based on past performance or on experiments that run coupons in one city or one part of a city. Rates include:

• redemption rates;
• displacement rates;
• acquisition rates;
• stock-up rates; and
• conversion rates.

You can have coupons distributed in a variety of ways. Three organizations - redemption agents, clearing houses and billing agents - can help with handling coupons.

You can get detailed information about coupons in An Industry Guide to Couponing Practices. This is available from:

Food and Consumer Products of Canada
885 Don Mills Road, Suite 301
Toronto, Ontario M3C 1V9
Tel: 416-510-8024
Fax: 416-510-8043

Food and Consumer Products of Canada also negotiates coupon rates with retailers on behalf of food companies.

If you would like to start a coupon program, contact:

Resolve Corporation
455 Horner Avenue
Toronto, Ontario M8W 4W9
Tel: 416-252-7741
Fax: 416-252-0037

This company is Canada's largest provider of coupon clearing services to retailers. It offers sorting, invoicing and accounts receivable services relating to coupon redemption.

You can also contact:

A.C. Nielsen
160 McNabb Street
Markham, Ontario L3R 4B8
Tel: 905-475-3344
Fax: 905-475-8357

A.C. Nielsen provides market research, information analysis and insights to consumer products and services industries.

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Direct Mail

One way of reaching a targeted market is through direct mail. Its advantages are:

• selectivity and speed;
• intense coverage;
• flexibility of format;
• complete information; and
• personalization.

However, direct mail also has some disadvantages:

• high cost per person;
• dependency on quality of the mailing list; and
• consumer resistance.

Your next step in strategic marketing is pricing.

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