DIGITAL MARKETING STRATEGY GROUNDWORK

In this second chapter on Digital Marketing Strategy Development, we would apply the concepts learnt in the last chapter on Digital Market Assessment Phase to develop an understanding of how marketers can use the information collected in the first ASCOR Framework Phase to develop its digital marketing mix and program.

In the first part of this chapter, we will develop a basic background of the most applied strategy models historically and the way digital strategy is shaping up with the intrusion of new marketplace disruptors. We will then look at the way in which firms that plan to develop digital market strategies and create relevant Online Value Propositions (OVPs) should develop their core competencies online. The last section of this part mentions about the process of digital strategy creation by delving deeper into the concepts of customer development strategy and segmentation, targeting, and positioning (STP) elements.

Understanding Digital Business Strategy

Strategy and strategic thinking have been one of the most prominent and widely used terminologies in the management context, though their origins go back to war times and involve developing a high-level plan to achieve one or more goals under conditions of uncertainty.

By uncertainty in the business context, we mean the set of those conditions and factors which impact the company in its external environment and cause them to allocate and think through their overall plan of action in light of their internal resources and capabilities. This concept is even more applicable (as we shall see across this chapter) since the impacts of the digital medium on marketing strategy have been immense, varied, and not easy to map and attribute. For this reason, let us first understand the basics of business strategy as defined in the texts on strategic management to understand its digital nature, and finally, create a roadmap for digital marketing strategy.

Strategic management, by definition, involves the formulation and implementation of major goals and initiatives taken by a company’s top management on behalf of owners, based on consideration of resources and an assessment of the internal and external environments in which the organization competes. If we read through it carefully, we have actually covered most of the important stand-out elements of this definition in the last chapter. Let us understand some of the key concepts and frameworks which drive and define strategic management.

The concepts of strategy started to be applied to businesses around the 1960s when senior executives were experiencing increasing difficulty in coordinating decisions and maintaining control of companies that were growing in size and complexity. Before that period, strategy was looked upon more as corporate planning and financial budgeting rather than developing long-term strategies to ensure corporate survival and growth.

By the mid-1960s most large US and European companies had developed corporate planning departments. The 1970s saw an emphasis on diversification and portfolio planning. The 1980s and 1990s were characterized by a focus on core competencies and the development of less analytic, more people-oriented approaches to management. The biggest change though which happened was the shift from a product focus to marketing focus and how the customer became the driving force behind business decisions.

Although there is much literature available on strategy as a concept and how it can be applied, we would look at those concepts and frameworks which relate to digital more closely and would support a firm’s digital marketing strategies. Two of the most widely used strategy frameworks (which have also been covered in the earlier chapters) include the SWOT Model and Michael Porter’s Value Chain analysis. Porter who is considered to be the leading authority on competitive strategy has contributed to multiple strategy frameworks including:

1. Modern portfolio theory: Talks about corporation as a portfolio of business units, with each unit plotted graphically based on market share and industry growth rate.
2. Porter’s Five Force analysis: A framework for analyzing the profitability of industries and how those profits are divided among the participants. The framework involves the bargaining power of buyers and suppliers, threat of new entrants, availability of substitute products, and the competitive rivalry of firms in the industry.
3. Porter’s generic strategies: Porter shared that there are three generic strategies—cost leadership, differentiation, and focus—and a company must choose only one of these three or risk wasting precious resources.

Students of basic marketing texts would have gone through these concepts as they have been applied as standard marketing frameworks for years now. Though most of Porter’s aforementioned strategies still hold true and are relevant to this day, we believe that with the trends impacting a firm on the digital front, each of the major impact elements—stakeholder, market, customer, and competitor (discussed in the last chapter on Digital Presence Analysis)—is causing formulation of additional frameworks specific to digital marketing.

To develop some of these digital-specific frameworks, we would be using Porter’s key concepts of market share, market growth, and competitive differentiation to help firms map disruptive elements and track emerging digital business structures. For example, in developing the ‘Digital Presence Analysis Matrix’ in Chapter 4, we have already included the concept of market share to extend it to businesses moving towards the digital platform. The deeper we go into further sections, the more we would realize how in the digital world firms need to not only manage and map market leaders and challengers but also guard themselves against low-cost innovators who have been able to completely usurp the traditional business strategies of firms.