Altyrian View

Recently, a client said something that I just haven’t been able to get out of my head. We were in the middle of a budget discussion (lots of those going on these days) when she said “You know, we can’t outspend the competition, so we just have to outsmart them.” Our conversation went back to the budget and that was that.

Well, no, I guess that wasn’t entirely that, because the more I think about what she said, the more fundamental truth I see in it. Especially for us marketing strategists who understand that the number of dollars we spend on marketing and advertising isn’t nearly as important as how we actually spend those dollars.

Of course, this doesn’t mean that a company should spend nothing on marketing – that would be stupid as well as ineffective. Instead, it means that it’s better to spend smarter, to get more for every dollar of the marketing budget and to do those things that will generate the highest results. It means to focus our targeting, to sharpen our message, to explore and utilize new approaches for delivering our message. At times, it might also mean rethinking and changing our brand image to bring it more in line with our market. And it certainly always means to keep our focus on constantly improving the customer’s experience with the company and the product.

It also points to a big reason for strategy in the first place - the competition. They’re out there spending money to take away your customers and sometimes they have more money to spend. Regardless of budget constraints, you can – and you should – do whatever it takes to outsmart them at every turn.

I’m not prone to generalizing, but this one is a lock: the company with the best strategy always wins. Forget luck and everything else, the better strategy gives a company what it needs to crush its competition. Every time.

Try to name one company that beat its competition without having the better strategy. Can’t do it, eh? Think you have one where luck made it happen? What about spending – maybe you found one where the strategy was weak but the company succeeded because their spending was strong? Not a chance. Dig deeper into the reason any company beats its competition and you’ll find a superior strategy working for them.

One of my favorite examples is the video format war between Sony and JVC (The Observer Online has a good article on this). Sony’s Betamax had better quality, was first out and virtually owned the home video market. JVC, however, had a clearly superior marketing strategy – whereas Beta tapes were just one hour, JVC’s VHS tapes were two full hours (feature-length film anyone?). Beyond that, VHS tapes and equipment were less expensive and JVC happily licensed VHS to movie studios (not so for Beta). Result? VHS crushed Betamax in the marketplace.

Okay, this is just one example, but it represents the universal truth. If you think you have a case where superior strategy lost to something else, I’d love to hear it. I’m betting one doesn’t exist.

Every morning on my way to the agency I drive by a storage business – you know, one of those painted cement block places with a long line of metal garage doors down both sides of each building. I never paid much attention to the place until they posted a simply brilliant – and brilliantly simple – message on their sign:

“Boxes! Tape! Truck!”

It doesn’t get more simple and clear than those three words. The owner of that place has obviously figured out that the storage business isn’t so much about the space, it’s about the stuff. And helping people get their stuff into storage is the best way to build his company’s profits. What do people need to move their stuff? What else – boxes to pack it into, tape to seal the boxes and a truck to do the moving. If you’re a storage business, get people those things and you’ll get their business.

It’s clear and it’s effective – and that makes it good strategy.

In the middle of the past year’s economic mess, General Mills was able to increase their second quarter earnings by a whopping 49% through – you guessed it – strategic marketing. You can read the details in  AdAge and  The Wall Street Journal (you’ll need to log in to read them, it’s worth the effort if you have access).

Did you notice more Pilsbury ads last year? How about Cheerios or Yoplait? Odds are, you did.

With the lousy economy, more and more of us have been eating meals at home. Sucks for  restaurants, but a great opportunity for General Mills (SWOT anyone?). To capitalize on this and other opportunities, the company boosted last year’s second quarter ad spend by $40 million – a 37% increase – focusing the spend on “high ROI ideas”. The result of this and other strategic moves was a very surprised Wall Street when the Big G announced their 49% increase in second quarter earnings.

General Mills’ strategy involved:

- Identifying the existing marketing opportunities
- Pinpointing and dumping their non-performing products
- Increasing their marketing spend on performing products
- Targeting ads to reach high-return market segments
- Balancing their media spend for highest return
- Investing in international growth
- Prepping new products to launch in 2010 (Chocolate Cheerios anyone?)

Marketing strategy – yes! Kudos to General Mills for taking the right steps and reaping the rewards. Think I’ll go have a bowl of Wheaties now.