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Marketing tactics
Step 1 to 3 assisted you in defining your general business strategy. Now it is time to think about what you are going to offer in practical terms. How can you translate the value proposition in tangible actions? Again, in the previous steps you probably already developed some ideas regarding the practicalities of your offering (e.g. price setting). Once again in this step you double-check and fine-tune your assumptions.
In practical terms the value proposition considers different tactical aspects of the marketing mix. Below we discuss several considerations you need to take into account when designing the original marketing mix, the 4 P’s: product, promotion, place (distribution) and price.
Product
The value of a product encompasses both functional and emotional value (e.g. status, convenience) and entails three levels: tangible product features, service features and experience features (i.e. the brand experience). In order to properly serve each target market customer, what would be the ‘ingredients’ you serve at each of those levels? You can visualize this exercise by designing a table with “specs” like you would encounter on a webshop for laptops. Such an approach will also let your define better how your value proposition differs for each target market.
| Target market 1 | Target market 2 | |
| Product features | ||
| Feature 1 | Yes | Yes |
| Feature 2 | No | Yes |
| Service features | ||
| Service desk | Yes | Yes |
| Dedicated account manager | No | Yes |
| Brand features | ||
| Experience feature 1 | Regular | Premium |
| Experience feature 2 | No membership | Membership |
Promotion
Here it becomes important to consider what marketing communications you will apply to each target customer, at what time and at what location. Building upon your value proposition:
- What message would you like to get across?
- How would you design that message? For example, make use of a famous influencer to give the message more credibility.
- Where will you communicate? Do you rely on traditional offline media outings or online social media, or a combination of both?
- When would the customer be ‘open’ to your message? Find out what time period the customer will be receptive of your message. What hours, days, weeks or months? Preferably, when promotions from competitive brands are not present. Here it could help to map out the customer journey for each target customer and identify opportunities for promotion in different phases (Awareness, Consider, Evaluate, Buy, Loyalty).
Place
Here you decide how the customer can get access to your product, via which distribution channels. Based on the competitor analysis in step 2 you should already have an idea of potential distribution channels. As an entrepreneur entering the market you will have to decide which of those distribution channels (e.g. physical owned shop, webshop, or shop-in-shop) will most likely be profitable. Each channel will result in a certain amount of sales, but also involves costs related to warehousing, transportation and real estate. Taking into account these sales and costs, as well as target customer preferences for certain channels, you decide upon your distribution strategy.
For this aspect of the value proposition it will help to go through the following exercises:
- How can your general distribution strategy be categorized? Exclusive, intensive or selective? Is distribution exclusive to certain channels in order to evoke a luxury experience (e.g. Rolex stores)? Or, the opposite, is distribution intensive and widely available to all kinds of customers (e.g. Coca-Cola). In between is the option for selective distribution where you make arrangements with a selection of distribution partners to ensure a particular customer experience in line with your value proposition at a strategic level. For example, selecting only environmentally conscious stores that are compatible with your value proposition of being the most sustainable option in the market.
- Visualize your distribution channels in a simple picture for each customer target market to have a clear idea how similar or different your approach is given distribution preferences specific to each of them.
- This visualization helps you to start identifying potential horizontal or vertical channel conflicts. Vertical conflicts entail frictions between b2b sellers and buyers downstream. Horizontal conflicts occur when there is friction between b2c sellers, e.g. an online travel website versus a brick-and-mortar travel agent of the same tour operator.
- Based on the previous exercises you can identify and detail specific distribution challenges related to each target customer and how to overcome them.
Price
In general, price setting is based on three intertwining perspectives, often called the 3 C’s:
- Competitor based price setting: does the price make sense in the context of similar competitive products?
- Cost based: taking into account production- and overhead costs, does your price setting result in a profitable margin, within an acceptable timeframe (break-even analysis)?
- Customer perceived value: Preferably, you set the highest price possible that your target group is willing to pay. In theory this price would be higher than informed by either the cost- or competitor based perspective. In order to understand the value of the product to the target customer you need to get a better picture of the psychology and motivations of the customer. A higher price value could result from an exclusivity- or convenience (reduce consumer stress) frame.
Additional pricing tactics could be related to the stage in the product life cycle (price skimming or price penetration) or promotional pricing (e.g. bundle discount)
Go to step 5