What is the most valuable marketing model of all time?
In this series of Smart Insights Best Practice Advice, Dave Chaffey of SmartInsights.com shares tips on best practice to get better results from digital marketing. This week, Dave looks at 12 of the most relevant marketing models and assesses their value to the modern marketer.
I’m a fan of using practical models for marketing since I think a good simple model gives us a framework to assess how we’re doing things now compared to our competitors and planning marketing strategies for the future.
Simple frameworks are also great to help learn a new area – that’s why we developed our RACE planning model for digital marketing to help structure content on our site.
The best marketing model?
I’m talking models since I recently saw a great poll created by CIM London to celebrate 100 years of marketing from the Chartered Institute of Marketing.
As a CIM Member/Fellow I thought it would be good to spread the word, so please take the CIM London marketing model poll.
I’m sure you have a favourite you’ve come across in your career. If you vote, you will see there is is a clear winner which I think is the right winner!
I’d also like to hear what you think about the relevance of these model in 2011. Have they had their day, do you find them useful, do you have better alternatives? Please tell us what you think in the comments below.
Since I’m a digital marketer, I have my own views on the relevance of these, indeed in my books I have often applied them. In fact thinking of it, most are included in my Internet Marketing: Strategy, Implementation and Practice. So I thought it would be nice to share the relevant ones here for anyone passing this way who isn’t familiar with them.
So this is what I think about their value to today’s marketer…
1. 7 Ps – marketing mix
Product, Price, Place, Promotion, People, Process and Physical evidence – these elements of the marketing mix form core tactical components of a marketing plan.
It’s right this is at the start of the list since it’s still widely used and I think is a great way to think through what a company offers. But it suffers from a push mentality completely out-of-keeping with modern digital marketing approaches of listening to and engaging customers in participation through social median marketing.
Unique Selling Proposition is the concept that brands should make it clear to potential buyers why they are different and better than the competition.
A great concept and an essential message to communicate online since the core brand message often isn’t clear.
3. Boston Consulting Group Matrix
This model categorises products in a portfolio as Stars, Cash Cows, Dogs and Question Marks, by looking at market growth and market share.
I find this isn’t so applicable in the online marketing world of small and medium businesses – it’s more of a corporate strategy model.
Within web analytics though, the same thinking can be used to review which products are performing/under-performing.
4. Brand positioning map
This model allows marketers to visualise a brand’s relative position in the market place by plotting consumer perceptions of the brand and competitor brands against the attributes that drive purchase.
This is a great concept for understanding how customers see a brand. I can’t recall many descriptions of this being applied online. I have seen it used as part of user-testing though in comparing different websites?
The creation of an engaging online brand is so important to success in digital marketing, it’s a pity there aren’t more effective branding models.
5. Customer lifetime value models
Customer Lifetime Value is the concept used to assess what a customer is worth, based on the present value of future revenue attributed to a customer’s relationship with a product.
A different class of models to others, this is more of calculation model – covered in Chapter 6 of my Internet Marketing Book. CLV is mainly important online for transactional sites and certainly investment decisions like allowable cost per acquisition (CPA) must be taken with future customer purchases and attrition rates considered.
6. Growth strategy matrix
Ansoff’s matrix identifies alternative growth strategies by looking at present and potential products in current and future markets. The four growth strategies are market penetration, market development, product development and diversification.
Ansoff’s model dates back to the 1960s, but I still cover it in the books to show how companies should “think out of the box” with their digital strategies by considering new opportunities for market and product development rather than simply market penetration which misses the opportunities of digital marketing for me.
7. Loyalty ladder
This model shows the steps a person takes before becoming loyal to a brand as they move through the stages of prospect, customer, client, supporter and advocate.
Loyalty models are useful as a way of thinking through the opportunities to generate lifetime value.
As an extension of the traditional PEST model, this analysis framework is used to assess the impact of macro-environmental factors on a product or brand – political, economical, social, technological, legal and economic.
PESTLE/PEST/DEEPLIST make me groan – to me they’re a text book approach which is far removed from improving results. The results of the poll seem to suggest others agree.
9. Porter’s five forces
The five forces are Rivalry, Supplier power, Threat of substitutes, Buyer power and Barriers to entry and are used to analyse the industry context in which the organisation operates.
Yes this one features in my books and I reference a classic 2001 paper by Porter on applying the five forces to the internet. I personally think it has limited practical value – yes we know customers have more bargaining power online. So what?! I also think it under-represents the power of intermediaries like comparison sites and publishers in the online world.
10. Product life cycle
This model plots the natural path of a product as it moves through the stages of Introduction, Growth, Maturity, Saturation and Decline.
11. Segmentation, targeting and positioning
This three stage process involves analysing which distinct customer groups exist and which segment the product best suits before implementing the communications strategy tailored for the chosen target group.
As a model which is focused on delivering relevant products, services and communications to the customer and so generating value for an organisation, this is essential for every marketer to understand.
This acronym stands for Situation, Objectives, Strategy, Tactics, Actions, Control and is a framework used when creating marketing plans.
I’m a big fan of using SOSTAC as a way of implementing strategies. It features in all my books and I know PR Smith its original well – he’s my co-author on Emarketing Excellence.