Market Planning—Getting It Right!

   Part 3

In Part 2, we covered the steps necessary to build the foundation for your market planning. We're now ready to dig into what many call the heart of the marketing plan—your marketing strategy.

by Kevin Beauchamp [June 15, 1999]

The Marketing Strategy
As with any well-built building, a good foundation or market analysis will allow you to construct solid marketing strategies and strengthen your position in the market. A poorly constructed foundation—built with questionable numbers, erroneous data, and other misinformation—can lead to dysfunctional strategies, a cascade of crumbling ad campaigns and ultimate defeat in the marketplace. A well-constructed war campaign is built on good intelligence reports—it is no less important with developing your marketing intelligence.

Marketing strategies go far beyond which media you will use to advertise your products. In fact, advertising is only a single small element in the overall marketing strategy. A solid marketing strategy looks at everything within your company from a marketing perspective—not just the products and services you sell. For instance, defining how your service people interact with customers is part of your marketing strategy. Below are a few of the basic building blocks of marketing strategies. Regrettably, there isn't enough room here to make a full examination of what can go into a solid marketing strategy, but the details we've included here shoud point you in the right direction in building up your ideas.

Positioning Strategy
There are many ways an ISP can position its services within specific demographics to compete more effectively with non-positioned competitors. Consumer customers and business customers are an example of typical product positioning. When was the last time you were able to buy a T1 from AOL? That's right, you can't. AOL has positioned itself strictly as a consumer-focused service. So how does this help a company like AOL succeed, when it eliminates a very profitable segment of the ISP services industry? Simple, they don't have to waste resources on building and defending market share in areas that are not of a primary focus.

Positioning allows you to focus on certain areas within an industry—certain customers or demographics—and intensify your resources and expertise in these areas. If your ISP is like most, you compete in many areas without a strategic position or focus. Doing business without positioning is the military equivalent of dividing your forces among multiple fronts, weakening your ability to take on your enemy with full force in the marketplace. A way many ISPs overcome this shortfall is to create alliances with—or outright buy—companies that have focused themselves and have become well positioned leaders in specific business and demographic areas.

Before you take on a competitor in an arena where they are well entrenched, take the time to analyze their positioning strategy (if one exists) and look for weaknesses that you may be able to exploit. ISPs, by default, will all position themselves geographically, which generally leads to the "buy local" type marketing campaign. A good strategist will be able to parry such psycographical positioning or at least render such positioning moot using other strategies.

Pricing Strategy
As you'd expect, pricing is a strategy used by many companies to compete with one another. Your pricing strategy should not be based on your costs plus profit but rather on your perceived value to the consumer. Assuming you position your services to high-end consumers with top-notch "Nordstrom" service, a price that commands a 30 percent premium over the industry average is a way to effectively deal with low-end providers. Low-end providers wouldn't dare raise their prices for fear of losing their value-minded customers; but without the price increase, they cannot afford of offer the level of service you can. On the flip side, the low-end provider has cut services to the bone in order to survive with value pricing. Both ISPs will still acquire a good many customers because they don't always compete for the exact same customer.

Use caution when developing your pricing strategy. With low end price points like we have in the ISP services business, differences of $5 to $10 are easily overcome with other marketing strategies. I have always maintained that price cutting is a lazy way to compete. There are much more effective ways to bring in new business without mortally wounding your bottom line.

Sales Strategy
Also called the distribution strategy, this can be an extremely important issue for an ISP. Sales and distribution options are much less complex for a small ISP operating within a single city or town than they are for a regional or national ISP; the broader the territory, the more complex the sales strategy equation becomes. A key question is: How do we disseminate our sales literature and message to the consumer? Below is a basic outline of typical sales strategies:

•  Direct Sales
  •  Persons to person sales (your inside or hired sales force)
  •  Direct mail
  •  Customer referrals
•  Indirect Sales
  •  "Extensive" distribution (putting your sign-up CDs in every mass market retailer you can find or running ads on mass media)
  •  "Selective" distribution (putting your CDs in just Circuit City or other electronics retailers or running ads in specific target media)
  •  "Exclusive" distribution (working only with specific retailers, VAR's, dealers and groups or using very specific media)

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