Business and Marketing Strategy

Digital Marketing - Study Notes:

A business strategy is a plan that a business implements in order to meet its objectives. It outlines the strategic direction the company should follow to be successful and achieve its goals.

New versus established organizations

New and established organizations will have different approaches and requirements when it comes to their business strategy.

•      The business goals of a new organization might be to launch its product, create a stable cash flow, and attract investors. 
•      The business goals of a more established organization might include entering a new market, extending its product range, or taking over a competitor.

Parent company considerations

An organization that operates under a parent company may have to adapt its strategy to fit with the goals and values of the parent company. For example, it might have to bid for investment against the demands of other businesses in the group. Similarly, it may be barred from developing new products that directly compete with products produced by companies in the group. In addition, it may be necessary for such companies to adopt new practices set out by the parent company. 

For example, if the parent company decides to have a zero-waste strategy or adopt a new financing system, all the companies within the group may have to comply with this plan. 

However, having a parent company also offers some benefits. You can avail of a potentially larger investment pot and have easy access to other individuals and skill sets with the group. You may also be able to achieve significant cost savings through bulk negotiation and buying practices. 

Constraints and freedoms

When you operate in an established industry, you may face certain constraints, whereas operating in a new industry can mean you enjoy greater freedom. 

Established industries include mining, newspaper publishing, dry cleaning, and office supplies. Companies in these industries may use old, outdated methods and systems and consequently attract low investment. They’re usually not at the forefront when it comes to using digital technology. In the digital era, this can result in them appearing less relevant.

New industries include companies that are involved in designing driverless cars, robots, smart buildings, and home technology. Freed from legacy systems, these types of companies are often more agile and quicker to adapt to change. They tend to have a flat hierarchical structure. Their workforce is usually globally dispersed and is more likely to operate remotely. They use modern methods and systems, embrace digital technology, and are often very attractive to investors.

Disruptive product strategies

A truly unique or disruptive product that doesn’t have any competitors is likely to require a unique strategy. 

Consider the example of Netflix. The company initially targeted a market that wasn’t interested in the chart-topping movies that Blockbuster offered. It focused on mailing a curated list of DVDs to more discerning consumers. After a few years, the company changed its strategy and moved from mailing DVDs to streaming movies online. The move was a great success. It eventually put video rental companies like Blockbuster out of business, even though that wasn’t the goal of the original strategy.

Challenger brands

Small, new entrants to a market often try to challenge the status quo of that market and try to punch above their budget. These businesses are often referred to as challenger brands. 

Greggs is a challenger brand in the food-on-the-go market. It competes against global brands like McDonald’s with its Cheeky Maverick personality and by focusing on what’s different about the brand. Greggs take more risks too: their vegan sausage roll appeared two years before the plant-based McDonald’s burger was launched.

Impact of size of product offering 

The size of your product offering may affect your business strategy and may even lead you to formulate smaller ‘sub-strategies’ for different products or product ranges.

For example, Unilever has a range of brands and products within its portfolio. The strategy for its food brands is likely different to the strategy for its cleaning products.

Importance of competitor analysis

It’s important to identify your competitors and their strengths and weaknesses before you formulate a strategy. When you analyze your competitors effectively and understand their goals and motivations, it’s easier to compete with them in the marketplace and gain a competitive advantage.

It’s important to understand that a marketing strategy is not the same as a business strategy. 

•      A marketing strategy essentially outlines the tactics you can use to promote and sell a product or service.
•      A business strategy has a wider focus and serves as the organization’s master plan. 

A marketing strategy supports the organization’s overall business strategy. In effect, both strategies complement each other. The organization implements the marketing strategy in order to help it meet its strategic goals and business objectives to achieve its vision and mission.