Posted in Marketing & Strategy Articles, Total Reads: 2531
, Published on 01 November 2014
“The biggest risk is not taking any risk... In a world that changing really quickly, the only strategy that is guaranteed to fail is not taking risks.”
– Mark Zuckerberg, CEO, Facebook
The term Strategy is defined as a process through which the management creates a strategy or a plan to achieve a positive result. Management, in general, means organization of functions and processes based on specific policies to achieve stated goals within a business unit. Hence, in strategic management, a process will be created for analyzing internal (strengths and weaknesses) and external (opportunities and threats) factors which affect an organization, and a method will be devised for execution of strategies with a goal of maximizing profitable outcomes based upon stated objectives. Some internal / external factors include competitions, management functions, socio-economic factors, laws, government policies and technologies. Depending upon the enterprise, a “Values” analysis or a “SWOT” analysis is required to conduct strategic analysis.
Strategic management is a holistic process in which the top management implements a strategy or a plan that will maximize the utilization of resources for the overall benefit of the organization. It is the systematic process of analyzing, designing, coordinating and implementing desired action plans to achieve sustainable competitive advantage. Generally, companies make and implement plans but fail to execute process which will measure the status and performance of these plans to achieve desired goals.
A global strategic management activity allows business to exploit and capitalize on competitive opportunities on a global scale. Effective and efficient managers keep an eye on the tools and techniques which are changing the world and keep on evaluating the business environment. This focus helps them to appreciate and analyze the complexities of national bodies, diverse stakeholders and volatile demands to make better decisions to allocate resources to scale and sustain their businesses. Influences like technology, politics, domestic rules and regulations, economics and social trends deeply affect business strategies. Because of globalization, these influences have wide global impacts which are usually difficult to assess, handle or predict.
Let us now understand the impact of these influences on strategic management. Technological innovation occurs at lightening pace. Companies need to launch their products faster than their competitors’ along with providing “value” to the customers, failing which companies may face a higher risk of becoming obsolete and unprofitable. Political factors such as stability of the government, tax policies, trade regulations etc. influence an organization’s strategic plans globally. Similarly economic factors like high unemployment rates, rising interest rates etc. makes the business tedious for some companies at certain locations. Social trends should also be kept in mind and should be accurately assessed. For example, even though physical fitness and health consciousness among the old people is on the rise, targeting sports accessories to the old demographic market may not be fruitful because of their fitness and limiting physical capabilities. Hence, targeting children and youth may be the best market for such products.
Having formed a background on strategic marketing, let us now try to analyze the trends which have been the deciding criteria of companies for making decisions.
Experience or Storytelling
“If you do build a great experience, customers tell each other about that. Word of mouth is very powerful.”
– Jeff Bezos, founder, Amazon
People are easily captivated by stories as they relate to it and hence the story of customer experience has become an essential component for social media marketing. Because of this, content writers focus on writing content to which people can relate to while marketing a brand. But in today’s world, storytelling is just a small part of the big picture. The social media and the digital world provide management team a channel to create experiences for the audience to engage with. In this way, marketers allow audience to share their own stories about the memorable experiences with the brand. This form of marketing is sometimes associated with rewarding the best experiences of the customers with goodies. This creates a positive experience for both the parties as it creates brand engagement and growth.
Specialist or Convenience
“Make everything as simple as possible, but not simpler.”
– Albert Einstein, scientist
There has been a major shift from using the service of multiple specialist agencies to a single agency which can provide custom solution to meet the needs of client. But not all have made this shift; some advertisers still prefer using the services of multiple specialist agencies. This decision generally lies in the hands of the strategic management team which decides the most effective and optimal solution for their business.
Value or Price
“The heart of marketing is behavior modification, and this will remain our focus.”
– Jennifer S Nelson, Global Director/Global Strategy and Insights, Johnson & Johnson
Because of the ever increasing competition between providers, price in today’s world is not a determinant of the best deals. Providers who are smart, flexible, fast are the ones who get the majority of the deals. It is also observed that the providers who are more agile have higher costs associated with their service. Hence, the most economic deals may not be the ones which provide the best values. The values which come as part of the deals are today’s differentiating factors. The decision to choose a deal rests with the strategic management team.
Social or Traditional Media
“The traditional model we all grew up with is obsolete.”
– Jim Stengel, global marketing officer, P&G
Management teams are shifting their brand strategies to match the demands in the media channels. In today’s world, social media has caught the imagination of the strategic management team. There has been a continuously increasing shift towards consumer engagement with content creation, content sharing via social media. This has led to the development of new strategies surrounding the brand. Of course, the fruitful results of the shift from traditional media to social media has to be studied more to generalize the statement that social media has overtaken the traditional media channels, but it has been observed that full commitment to the content strategy and social media is attracting more attention of strategic management team. Management team should push the trial run to use social media to see its effect in the marketing of their product.
Outsourced or In-House
"Think globally, act locally"
This is again a decision which has experienced major shift with the growth of technology. With recovery in global markets, companies now feel free to outsource their functions to more economical locations. But, with advancement is technology, functions such as SEO, Content Production, Social Media, Data and Analytics are becoming easier to integrate into the in-house network, also because of their ability to be accessed from anywhere in the organization. Therefore, it is very important decision which the strategic management team has to make regarding what works best for their business.
Local or Global
“Your company does not belong in the markets where it cannot be the best.”
– Philip Kotler
The boundaries and the demarcations for the target segment of most brands are increasing. Even though the difficulties to ship a product from one location to another has decreased, the need to customize a product from one location to another is on the rise. Strategic management team in most companies pay attention to position their products as per the cultural and environmental needs of the society. Yet with today’s ease of creating and disseminating content, there is more opportunity to make the most out of the global market. With the help of social media and content strategy, companies now have the advantage of transcending borders and extend their products to global market. To extend this idea, it can be easily inferred that different boundaries are no longer applicable. Great content has the ability to engage people from multiple regions and cultures. So, how to position their product is a very difficult decision which strategic marketing team has to make keeping in mind both the local and global factors. But above all factors, quality of the product is the most important and distinguishing factor which will surely engage customers in the long run.
Insights or Data
“Content is King!”
– Bill Gates
We all know that most of the focus has been on data in the past, but in today’s world, it is imperative to identify where the real value lies. Technology enables us to extract patterns and insights about customer behavior and then leverage these insights so that organizations can enhance customer engagement and hence sales. Strategic management team should always use these insights to discover new customers and markets. But with the growing volume of data, it is more beneficial to use trained and skilled resources that can extract real meaning from insights and provide it to the strategic management team.
This article has been authored by Vipul Gupta from IIM Kozhikode