Can a marketing strategy take your business to the next level? Probably not. Unless you have a product with viral potential, you’re going to need a little more than a marketing plan. But first, let’s talk about how companies grow.
If you’re looking for a way to increase revenue, you have to either sell more stuff or reduce cost. Traditionally, companies sell more by finding new customers or creating new products. But to reduce cost, you have to find a way to deliver your products or services cheaper. This used to mean outsourcing to China or compromising on quality of product or service. Instead of focusing on short-term revenue, however, the most profitable companies concentrate or durability. So if you’re a new brand or you’re looking to expand, you may want to consider growing first and profiting later. Nevertheless, whether you need a quick way to increase revenue or expand your position in the marketplace, according to Eric Ries there are three ways to do it.
3 Ways to Grow
To grow virally, you need a product that is attractive, easy to use, and preferably free (e.g. Facebook, Gmail). Viral or exponential growth happens when new users attract more than one other user. Similar to exponents, when a number is multiplied by itself more than once, it rapidly increases in size, as does a business experiencing viral growth.
When using the sticky engine of growth, businesses increase revenue by locking customers in with contracts or subscriptions. This allows organizations to grow by maintaining a user base while continuing to add new customers. Gyms, cable companies, and mobile carriers are examples of companies that use the sticky engine of growth.
Starting out, it’s best to focus on one engine of growth at a time. However, many organizations use multiple engines to reach and retain customers. The paid engine of growth is probably the most common and is done by using advertising or salespeople to promote products or services.
Companies like PayPal and Facebook started by using the viral engine of growth. However, in order to create or increase momentum, they looked for other ways to grow. PayPal started giving users $10 to become customers, while also buying television ads. Facebook also used TV commercials to expedite growth.
The quickest way to get your product to the market is by using the paid engine of growth. Later, you can use another engine to supplement or even replace the paid engine. Just think of major cereal brands, they barely have to advertise anymore.
Marketing Strategy vs Distribution Strategy
To understand what a marketing strategy is, I think it’s important to understand what marketing is. Although some use it as a catchall phrase for everything promotion, marketing is actually how you identify, interpret and engage a market. Sales and advertising are considered part of the marketing mix, but when treated separately they are much more effective. Advertising is related to creative work while sales is more about building relationships and closing deals.
It’s always ideal to focus on a niche. For example, there are multiple forms of promotion including, sales, advertising, and PR. Each division will offer a plan with emphasis on their expertise since that’s where their strengths lie. But this isn’t good enough. While it’s great to have a comprehensive marketing plan, if your product requires sales, then you also need a sales strategy. If your product requires advertising, then you’ll need that too.
Most campaigns fail because they overemphasize one strategy over another. So a marketing strategy is never good enough without a diversified approach. That’s why I advocate distribution strategies.
When planning to grow your business, you never know what will work until you test it. All a strategy should be is a hypothesis on how to promote your product and what you expect the market to do in response. Marketing, advertising, and sales are not the same and should be treated as such. Marketing is how you identify, interpret and engage a market. Advertising is how you present yourself to that market. And sales is the direct exchange of goods and services within the market. All three as a whole is a distribution plan and can take your organization to the next level.