Strategy Formulation

Market and product development strategies

The market and product development strategies are growth strategies, aiming for growing sales volume through varying what is sold (the product) and whom it is sold to (the market).

There are 4 potential strategies depending on how develop the product and/or the market aim to be:


Market penetration: use of digital channels to sell more existing products

How to implement this strategy?

  • Price penetration: The strategy is to drop the price of the product as much as possible to increase the attractiveness of the product and take on the challenge of competitors
  • Increase promotion: increase the pull strategy of the product

Market development: using online channels and taking advantage of the low cost of advertising internationally.
How to implement this strategy?

  • Attracting competitors’ customers: advertising effort, cutting prices
  • Increasing the size of the purchase: add new features or services

Product development: the web is used to add value or to extend existing product range.
How to implement this strategy?

  • Testing the concept through patent research
  • Developing new services

Diversification: high-risk strategy but lower costs.
How to implement this strategy?

  • Investing in R&D to get more product variety
  • Target large markets

Business and revenue model strategies

Companies have the will to test and experiment with new business models. A business model is about how a company will generate revenue, how it identifies its product offering, value-added services, revenue sources and target customers.

The strategy behind is to use digital tools to constantly innovate in order to defend market share from the competitors.

Examples of how to implement this strategy:

  • Pricing: use alternative pricing structure or policies: basic price, discounts, add-ons
  • Increase prince transparency: pricing online is now related to price elasticity of demand. A price discrimination would let customers object to it

Target Marketing Strategy

Target Marketing Strategy involves the four stages:

  1. Segmentation: In this step, the customers have to be identified to segment the market. This will be reached via defining the market segments and creating personas.
  1. Target Marketing: After the segmentation of the market, the target segments have to be evaluated. This means that segments are selected to target online. It can be distinguished between e.g. the most profitable customers or smaller companies or between B2B and B2C.

Positioning and differentiation strategy

  1. Positioning: There are four options to position a company online:
  • Product Performance: Providing online product customisation.
  • Price Performance: Offering favourable pricing to loyal customers or reducing prices when demand is low.
  • Transactional Excellence: Providing further information e.g. listing number in stock, number on order or when it is expected.
  • Relationship Excellence: Personalised tool that allows customers to review order history or to repeat an order.

Once a company has positioned itself it develops a differential advantage over competitors and so they create a difference between them and and the competitors. The next step is to communicate this positioning and the differential advantage to the relevant customers via an online value proposition (OVP).
Customers have to recognize the difference between a certain company and their competitors quickly and this can be reached if a uniquely OVP is communicated to them.


OVP that disrupted fashion e-commerce: Zalando free delivery and return policy

  1. Planning: In this last steps the resources are to be deployed to achieve a plan. This can be achieved by using an online marketing mix, restructuring or an automated online customer contact strategy.

Social Media Strategy

Realise that nowadays, social media interaction is more common and therefore the challenge of engagement increases. Developing a customer engagement strategy is a key part of digital marketing strategy.

Let us look at customer engagement through Social Media:

If you want to interact with social network users, you need to optimise your scope of social media including social features such as:

Status Updates

Sharing Widgets (into company websites)

Social Presence on Social Networks à Facebook, Google, LinkedIn, Twitter, Other specialist networks

To further assists you with designing your strategy, ask yourself these 12 questions:

  1. Who are our target audience?

It will differ for each social network in terms of demographics…

Develop typical audience and typical customer personas you are targeting


  1. What are the content preferences of our audiences?

 What content do they share or rate highly?

Facebook→ Videos

Twitter→ Info graphics

Linkedin→ Provocative statements

 You need to benchmark to establish the popularity of different types of messages !

  1. Strategic business goals for social network presences?

Which of these do you want to emphasize on?


 For example, Twitter is used for sales and service to reply to customers who might have questions and to post exclusive offers. However mostly you engage through speaking. So what type of content will help create people to share and start dialogues?

  1. Which content types should have priority?

Decide this through analysing your customer needs and performing competitor benchmarking. Through this you can pick topics that work best when covered in your content stream.

  1. How to differentiate the social channel from other communications channels?

Communicate clearly what your channel offers to encourage subscription or signing up. To do this you need to create powerful content with attractive offers even if there are other competitors.

→ Exclusive offers, tactics, competitions

  1. How to integrate social channels?

 This can be facilitated by APIs created by social networks to enable sharing such as the Facebook platform.

 Note: One thing that is becoming increasingly important: social sign-on 

  1. Content frequency and editorial calendar?

An audience requires regular content!

How often?
How long?

Status updates don’t take long. They are quick to create but other content requires more time, planning and resourcing. Figuring out the perfect mix for your Company is key!

  1. Sourcing Content?

 You can link short content to a more in-depth post or article that is linked to your blog or company website.

 You may need an agency to create this because it is important that this content encourages sharing and be of sufficient quality although it can also be created in-house.

  1. How to manage publication and interaction?

 Ask yourself if you want to manage interaction by yourself (in-house) or whether you would like to outsource to a third party. Simply updating statuses is not enough, interaction with online users prolongs your social media presence and enables sharing and creation of dialogues.

  1. Software for managing the publishing process?

Make your life easier through softwares that help you to streamline production of content. It will not do everything for you but it will save you more time and time is money.

Example: Hootsuite, and Tweetburner lets you share status updates through multiple channels such as through Facebook, Linkedin and Twitter.
Tip: Make sure this goes through a personalised approach 

  1. Tracking the business impact of social network activity?

Analysing whether your actions are effective is important to make sure your strategy is working correctly. Here are some tools to review effectiveness on certain social networks.

 Facebook→ Facebook insight

Hootsuite→ shows which messages were popular based on sharing and clickthrough rate

  1. How to optimise the social presence?

Marketing requires to be ring-fenced to make changes and then review themCapture d’écran 2016-03-22 à 22.48.59.png

6: Multichannel Distribution Strategy

 The theory behind this strategy is to create a flow of products through effective distribution channels. You create value for customers at an acceptable cost.

 Let us look at Tesco..


 Tesco created competitive advantage through an effective multi channel strategy.

 Problem: How to select goods that will fulfil customer orders?

 They managed to become the No.1 Grocery Retailer in the world through effective highly efficient systems to support their online operations.

 How did they do this?

-Maximised benefits of national network of retail stores

-Trained staff well to establish selection for online shopping orders

-Logistical network linked to satellite technology enabling organisation to know precisely where all of its goods are at all times to fulfil availability of online orders

 They were better than their competitor Sainsbury’s who adopted centralised distribution network àlimiting growth and expansion.

 To replace your distribution strategy or not? Do you choose the internet?

 Another key issue here is that you need to decide whether you should fully implement and invest to distribute on the Web or to partially invest.

If you agree to all the following points below:

-Customer access to the Web is high

-The Web offers better value proposition than other media

-Product can be delivered over the Web

-Product can be standardised

Congratulations! You have resulted in a primarily replacement effect which means:

You should make significant investments in Internet and have your mission directed towards replacement.

The fewer you have agreed, you should take a complimentary effect which means that there still needs to be appropriate investment done towards the Web.

Note that as a company you should repeat this analysis for different product segments and markets and only then can you state your overall commitment to the Internet.

Multichannel communications strategy

This strategy will determine which communication channel, such as online or traditional. Is best fit for your company and your customers.

This strategy differentiates between inbound and outbound marketing communication, inbound marketing is directed towards a very specific audience outbound marketing is targeted towards as many people as possible.

For this strategy to work, there must be a balance between – customer channel preferences à some customers will prefer online channels whereas others will prefer traditional channels – organization channel preferences à traditional channels such as TV or phone are usually more expensive than online channels such as a website or an e-mail. So basically, there should be a balance between what the customer wants and what the organization has to pay for this type of communication

Online communications mix and budget

Deciding on which mix best fits your company, will require you to decide if you want to focus your communication on customer acquisition, retention or relationship building.

Once you have decided on which mix you want to use, it is important to make sure that your marketing objectives are met.

This can be done by keeping the score on these three focus targets accordingly: 1. Attraction- Size of the visitor base, visitor acquisition cost and visitor advert. revenue 2. Conversion- customer base, customer acquisition costs and revenue per customer 3. Retention- uses similar measure to the conversion customers

Keeping track of this will allow you to see if your costs are worth the revenue that they are creating.

Organizational capabilities strategy

Organizational capabilities are the ability and the capacity of an organization expressed in terms of human, financial, material & physical, and intellectual resources. The organizational capabilities strategy is the ability to turn these capacities into competitive advantages.

Traditional Sources of Competitive Advantage:

  • Economic / financial capability: able to produce good or service at lower cost than competitors
  • Strategic / marketing capability: products or goods that differentiate a firm from its competitors, typically by “adding-value” or “product-portfolio mix.”
  • Technological capability: products or services that customers receive are innovative, high-quality, state-of-the art, typically in how they are built or delivered.

Strategic planning typically focuses on resource allocation. Organizational capability focuses on achieving goals through employee commitment and competence.

Two criteria for competitive advantage:

1) Adding perceived value to the customer

2) Offering uniqueness that cannot be easily imitated by a competitor

Organizational Capability enhances perceived customer value in three ways:

1) Responsiveness: the ability of the business to understand and meet customer needs more quickly than competitors

2) Relationships: the ability of a business to develop enduring relationship between customer and employee

3) Service quality: the ability of business to design, develop and deliver service that meets or exceeds customer expectations.

Capture d’écran 2016-03-22 à 21.50.43

Organizational Capability enhances uniqueness because it is difficult to imitate:

  • Imitation requires changing the way people think, act, and interact.
  • Social engineering of complex social processes such as culture, teamwork, and leadership are neither well understood nor easily replicated.its-important-to-give-good-customer-service_1115_466168_1_14077936_500
  • Four critical elements of capable organizations:
  • Shared mindset
  • Management practices
  • Capacity for change through understanding and managing organizational systems
  • Leadership at all levels in the organization

These capabilities (the collective skills, abilities, and expertise of an organization) are the outcome of investments in staffing, training, compensation, communication, and other human resources areas.


As an example we can take Apple or Google that are two famous companies, well-known around the world. These two companies have one thing in common; competitive advantages. These competitive advantages we are talking about are generated by the way these companies are structured. The structure combined with the human resources, the intelligence and skills of the staff of these companies and the way they interact between each other represents their biggest

Ninjamedia hope that you've enjoyed this post and that you're ready for the next one ! 

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