Some think that marketing strategy and marketing tactics are different words for the same thing. They are not. In simple terms, marketing strategy is what we are going to do to achieve a marketing objective. Marketing tactics are the actions we are going to take to implement that strategy.
Robert E. Wood , who was chief executive officer of Sears, Roebuck, and Company during its years of greatest growth and was also a retired army general stated, “Business is like war in one respect – if its grand strategy is correct, any number of tactical errors can be made, and yet the enterprise proves successful.” Unfortunately, the reverse is not true. If the tactics are correct, it can’t make an erroneous strategy successful.
The Mistaken Notion that Good Selling Can Overcome Poor Marketing
Selling is a tactic which supports most strategies. Because without sales there is no business the importance of selling is undeniable. Yet some have the notion that effective selling automatically, if good enough, can overcome a poor marketing strategy. I recall some years ago that a professor at one of our top universities wrote exactly that in a journal article. There is absolutely no way that this can happen. If the selling is good enough, it can result in high sales, even with a bad strategy. However, this is misleading and the high sales may conceal a major problem which could result in disaster, such as a defective battery in a smart phone which could explode or cause the marketer to misallocate resources to selling to the wrong market which should never have been targeted in the first place.
Strategy Must be Determined First
A marketer who does not understand that strategy and tactics are not the same is at great risk and he frequently soon finds himself in deep trouble. This is about what happened to the company which has become the poster child for wrong government investment in the U.S.
Solyndra was founded in 2005 and designed, manufactured and sold solar photovoltaic (PV) systems. In simple words, solar panels. However, they were not conventional flat solar panels. They were cylindrical in shape, and in their most efficient configurations, they were mounted horizontally and packed closely together. Solyndra claimed that in this way they covered significantly more of the typically available roof area and they produced more electricity per rooftop on an annual basis than a conventional panel installation. There were other technical advantages. Because of their shape they could capture more solar power than conventional panels, and they could do so without moving. The company was attractive at a number of other levels. First there was the “green” aspect of the electricity produced. Then there was the hiring of over 1000 employees eventually during a recession at a time when jobs were scarce and layoffs plentiful. The problem was that the strategy was a tactic --- low pricing due materials, design and technology. Indeed the price of Solyndra’s cylindrical solar panels was low compared to conventional solar panels when Solyndra was founded. However, as the years went by the price of conventional solar panels plummeted due to a combination of subsides to Chinese manufacturers by the Chinese government and economies of scale as more and more conventional solar panels were sold. In the end, Solyndra’s panels were not only far more expensive than the old flat panels, but even the total system was more expensive. Solyndra panels were still novel and technologically more sophisticated, but there was no important competitive advantage and the company could no longer compete.
Previously, even President Obama posed at the plant for photographs at Solyndra headquarters shortly after the government’s decision to guarantee loans to Solyndra to the tune of over a half billion dollars in 2009. This was against the advice of administration experts including both Lawrence Summers who was Director of the White House United States National Economic Council at the time and Treasury Secretary Timothy Geithner, both of whom recognized that Solyndra’s strategy was faulty and was unlikely to succeed.
In July, 2011, company executives were all smiles and announced that sales were doubling. Two months later Solyndra declared bankruptcy. The U.S. taxpayer was the biggest loser when the company filed for bankruptcy on August 31st, 2011. Company officers shrugged their collective shoulders and claimed market conditions: “It’s not our fault. It’s the market. Price of the old style solar panels went way down.”
The real problem was that Solyndra’s marketing was a tactic based on price. Even a cursory look would have shown Solyndra vulnerabity. If the price of the standard solar panel came down, a virtual certainty as worldwide sales increased even without Chinese subsides, it should have been obvious that Solyndra could not succeed despite its good intentions and potentially technologically superior product.
Strategy Determines Tactical Options
A marketer must first have his strategy firmly thought through. Then, he is in a position to develop tactics to support that strategy. During the Great Depression, Proctor and Gamble’s President Richard Deupree realized that consumers were still buying essential household products and competitors were cutting back on advertising. His strategy was to introduce a phalanx of new, innovative products and to significantly increase advertising as competitors reduced theirs.
This was a strategy he initiated against significant pressure from his own marketing team. At a time when his shareholders were demanding that he cut advertising budgets, and reduce other expenses, Deupree went the other way and increased acquisitions, research and development, and advertising. Moreover, just as President Obama took advantage of new technology in the 2008 election by using the cell phone and by being the first politician to use tweeting to get his messages out to millions of potential voters, P&G looked at the radio as the new vehicle of advertising choice. In addition, P&G capitalized on radio in a highly creative way. Each product sponsored specific programming. So in 1933, P&G began advertising Oxydol, a laundry soap it had acquired several years earlier. It did so by sponsoring the radio show “Ma Perkins.” The announcer’s introduction to each episode became a part of American the permanent American scene. ”Oxydol’s own Ma Perkins,” a booming voice would intone at the start of every show. This sponsorship was so successful that six years later P&G was sponsoring 21 radio shows like Ma Perkins, all associated with specific products. P&G not only significantly increased its sales, it doubled its radio advertising budget every two years during the Depression, and virtually built the daytime radio industry by itself. It even gave a new terminology to the English lexicon: “the soap opera.”
Good Tactics are Synergistic with Each Other
Marketing tactics should not only be complementary with each other, but synergistic as well. This means that the whole should be greater than the sum of the individual parts or tactics. During the Great Depression P&G emphasized product and advertising. Both worked together. Oxydol really was better than competitive products at the time. It really did make clothes come out 4 or 5 times whiter and saved the long suffering housewife of the day twenty five minutes of pounding wet clothes against washing boards assisted by suds from other brands in attempts to get clothes clean.
In a different generation with origins in a different part of the world, under different economic conditions, Swatch watches present another example as to how this synergism of tactics supporting a workable strategy should be applied to be effective. Swiss watches, once the gold standard in entry level watches had been under attack by Japanese companies like Citizen and Seiko for years. This became acute in the 1960s and 1970s as the Japanese launched the digital watch. The price advantage these watches represented were irresistible and it seemed that there was little the Swiss watchmakers could do.
Then in 1983, through a conglomerate which became the Swatch Group, the Swiss struck back. Through manufacturing improvements and design, the Swatch Group almost halved the number of working parts, brought the price down by 80%, and re-introduced the analog watch at the entry level for watch buyers. With other tactics, they did even more. They made it a fashion watch with bold new styling and design. In as much that fashion watches are usually highly jeweled and expensive; this was a very gutsy thing to do. They also did the right promotion to promote these innovations and distribution was limited to fashion outlets. Then they introduced the watch concentrating first on the home market where it became an instant success and sold 1,000,000 units the first year, and more than doubled sales the year after.
In summary, strategy is more important than tactics and must be determined first. Only then can good tactics be developed to support that strategy. Finally these tactics should not complement each other, they should be synergistic for maximum effect.
*Adapted from Drucker on Marketing (McGraw-Hill, 2012)
M&SB 14 - Q2, 2016
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