Product pricing is one of the biggest questions retailers face for a reason.

The relationship
between an item’s price and its quality — and perceived value to consumers — is oftentimes the
deciding factor in shaping whether or not a purchase ever takes place.

In such an increasingly crowded marketplace, the concept of cash cow marketing has been called
into question, leaving sellers in the eCommerce space and beyond to reevaluate how they
approach their respective businesses. Fortunately, the Price Quality Matrix presents a simple way
to leverage product value and address the pricing dilemma head-on.

What Is the Price Quality Matrix?

Designed by Philip Kotler, the Price Quality Matrix centers on the cross-section between the two
metrics that lend the model its name. By determining the position of your products or services
relative to the competition, retailers are able to use the price and quality of each item to identify
where they stand in the market. Of course, this knowledge can then be incorporated directly into
your decision-making process when it comes time to devise pricing strategy. Just think of it as
another way to assess your relevance in today’s fast-paced and ever-changing business
landscape.

How you price your products plays an integral role in how they’re perceived by consumers. So
it’s important to ensure that the quality of your offer complements your price point accordingly.
Based on Kotler’s nine-variable model, let’s take a closer look at the possibilities that result
depending on how price and quality interact with each product or service.
  Premium (high price/high quality): When a product’s high price is matched by its
quality, this creates an image of a premium item that consumers consider a worthwhile
investment, such as Apple products.

 Over charging (high price/medium quality): Even if a product’s quality is sound, it can
be tricky to elevate the price point beyond what the product offers. Tread carefully in this
scenario.

 Rip off (high price/low quality): In case the name of this category isn’t a dead
giveaway, steer clear of this one at all costs, as selling a subpar product for such a high
price point is a surefire way to stir bad word of mouth when consumers get wise.

 High value (medium price/high quality): Conventional wisdom says that your price
should surpass your product quality, since the implication is that your business will be
able to turn a profit more easily. Yet, it may be worth it to offer a high-quality product at a
slightly lower price upfront to build word of mouth.

 Average (medium price/medium quality): As its name implies, these products are the
very definition of “you get what you pay for.” Generally, consumers know that the value
they receive from a given product is in line with the price point. It’s always a good idea to
offer a lower priced alternative of premium products to encourage engagement.

 False economy (medium price/low quality): The aforementioned danger in overpricing

your products applies here as well, though to a lesser extent. You’re better off developing
a better product or dropping the price to fall more closely in line with your product
offering.

 Superb value (low price/high quality): The best-case scenario for consumers, a high-
quality product with a low price can be tricky to pull off and could end up getting into
your bottom line.

 Good value (low price/medium quality): Consumers are always on the lookout for an
affordable, quality product. To foster long-term customer loyalty, it might be worth it to
feature your medium-tier products at a slightly lower price point.

 Economy (low price/low quality): There’s something to be said of economy options. In

your business, this may simply be a free version of a product that offers fewer features.
However, it’s an easy gateway to establish more profitable customer relationships down
the line and well worth considering.

The Price Quality Matrix Revolution

In recent years, product pricing has become a bigger issue than ever before, thanks to the
dynamic created by increased automation and the expansion of online retailers. However, by
developing a better understanding of the connection between price and quality as described by
Kotler’s model, you can use the psychological aspects of product pricing to create a trust with
customers that will ultimately reap long-term rewards. Simply asking yourself where each of
your product offerings fits within the above categories can shape a clearer vision of where you fit
within the marketplace and the possibilities for growth that lie ahead of you.

For more details about how you can optimize your pricing and foster the success and reach of
your business, check out our eBook, “A Comprehensive Guide to Competitive Online Retail
Pricing Strategies.”

The Ansoff Matrix

Understanding the Risks of Different Options
(Also known as the Product/Market Expansion Grid)

© iStockphoto
IrochkaT

There are rewards and risks with growth strategies.

Successful leaders understand that if their organization is to grow in the long term, they can't
stick with a "business as usual" mindset, even when things are going well. They need to find new
ways to increase profits and reach new customers.

There are numerous options available, such as developing new products or opening up new
markets, but how do you know which one will work best for your organization?

This is where you can use an approach like the Ansoff Matrix to think about the potential risks of
each option, and to help you devise the most suitable plan for your situation.
Understanding the Tool
The Ansoff Matrix was developed by H. Igor Ansoff and first published in the Harvard Business
Review in 1957, in an article titled "Strategies for Diversification." It has given generations of
marketers and business leaders a quick and simple way to think about the risks of growth.

Sometimes called the Product/Market Expansion Grid, the Matrix (see Figure 1, below) shows
four strategies you can use to grow. It also helps you analyze the risks associated with each one.
The idea is that, each time you move into a new quadrant (horizontally or vertically), risk
increases.

Figure 1: The Ansoff Matrix

Tip:

You can also use the Ansoff Matrix as a personal career planning tool. It can help you weigh up
the risks of your career decisions, and choose the best option as a result. Learn more about this
with our article on the Personal Ansoff Matrix

The Corporate Ansoff Matrix

Let's examine each quadrant of the Matrix in more detail.

Market penetration, in the lower left quadrant, is the safest of the four options. Here, you focus
on expanding sales of your existing product in your existing market: you know the product
works, and the market holds few surprises for you.

Product development, in the lower right quadrant, is slightly more risky, because you're
introducing a new product into your existing market.

With market development, in the upper left quadrant, you're putting an existing product into an
entirely new market. You can do this by finding a new use for the product, or by adding new
features or benefits to it.

Diversification, in the upper right quadrant, is the riskiest of the four options, because you're
introducing a new, unproven product into an entirely new market that you may not fully
understand.

How to use the Tool

It's fairly straightforward to use the Ansoff Matrix to weigh up the risks associated with a number
of strategic options.

Step 1: Analyze Your Options

Download our free Corporate Ansoff Matrix Worksheet. Then plot the approaches you're
considering on the Matrix. The table below helps you think about how you might classify
different approaches.

Market Development Diversification

Here, you're targeting new markets, or new

areas of your existing market. You're trying to
sell more of the same things to different people.
Here you might:

 Target different geographical markets at

home or abroad. Conduct a PEST
Analysis

or use the CAGE Distance Framework

 to identify opportunities and threats in this different market.
 Use different sales channels, such as online or direct sales, if you are currently selling
through agents or intermediaries.
 Use Market Segmentation
 to target different groups of people, perhaps with different age, gender or demographic
profiles from your usual customers.
 Use the marketing mix

This strategy is risky: there's often little scope for using existing
expertise or for achieving economies of scale, because you are trying
 to understand how
to sell completely different products or services to different customers
to reposition your
product.
Beyond the opportunity to expand your business, the main advantage
of diversification

is that, should one business suffer from adverse circumstances, another may not be affected.

Product
Market Penetration
Development

With this approach, you're trying to sell more of the same things to the same
market. Here you might:

 Develop a new marketing strategy

 to encourage more people to choose your product, or to use more of it.

 Introduce a loyalty scheme.
 Launch price or other special offer promotions.
 Increase your sales force's activities.
 Use the Boston Matrix

Here, you're selling different products to the

same people, so you might:
 to decide which products warrant further
 Extend your product by producing
investment, and which should be
different variants, or repackage existing
disregarded.
products.
 Buy a competitor company (particularly
 Develop related products or services.
in mature markets).
 In a service industry, shorten your time to
market, or improve customer service

 or quality.
Reprinted by permission of Harvard Business Review. From "Strategies for Diversification" by
H. Igor Ansoff, 1957. Copyright © 1957 by the Harvard Business School Publishing
Corporation; all rights reserved.

Step 2: Manage Risks

Conduct a Risk Analysis

to gain a better understanding of the dangers associated with each option. (If there are a lot of
these, prioritize them using a Risk Impact/Probability Chart.) Then, create a contingency plan

that addresses the ones you're most likely to face.

Step 3: Choose the Best Option

By now, you might have a sense of which option is right for you and your organization. You can
make sure it really is the best one with one last step: use Decision Matrix Analysis

to weigh up the different factors in each option, and make the best choice.

Using a Nine-Box Ansoff Matrix

Some marketers use a nine-box grid for a more sophisticated analysis. This puts "modified"
products between existing and new ones (for example, a different flavor of your existing pasta
sauce rather than launching a soup), and "expanded" markets between existing and new ones (for
example, opening another store in a nearby town, rather than expanding internationally).

This is useful as it shows the difference between product extension and true product
development, and also between market expansion and venturing into genuinely new markets (see
Figure 2, below).

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However, be careful of the three "options" in orange, as they involve trying to do two things at
once without the one benefit of a true diversification strategy: completely escaping a downturn in
a single-product market.

Figure 2: The Nine-Box Grid

Key Points
H. Igor Ansoff developed the Ansoff Matrix in 1957. It offers you a simple and useful way to
think about growth.

The Matrix outlines four possible avenues for growth, which vary in risk:

 Market penetration.

 Product development.

 Market development.

 Diversification.

To use the Matrix, plot your options into the appropriate quadrant. Next, look at the risks
associated with each one, and develop a contingency plan to address the most likely risks. This
will help you make the best choice for your organization.

Download Worksheet
This site teaches you the skills you need for a happy and successful career; and this is just one of
many tools and resources that you'll find here at Mind Tools. Subscribe to our free newsletter, or
join the Mind Tools Club and really supercharge your career!

The AIDA Model

Examples and Tips for using AIDA in the real world

The AIDA model is perhaps the best known marketing model amongst non-marketers of all
the classic marketing models we featured in our recent post and poll. The vote showed many
marketers find it useful too, perhaps since we apply it daily whether consciously or
subconsciously when we're thinking how to make our marketing communications effective.
What is the AIDA model?

The AIDA Model identifies cognitive stages an individual goes through during the buying
process for a product or service. It's a purchasing funnel where buyers go to and fro at each stage,
to support them in making the final purchase.

It's no longer a relationship purely between the buyer and the company, since social media has
extended it to achieving the different goals of AIDA via information added by other customers
via social networks and communities.

What does AIDA stand for?

 Awareness: creating brand awareness or affiliation with your product or service.

 Interest: generating interest in the benefits of your product or service, and sufficient interest to
encourage the buyer to start to research further.
  Desire: for your product or service through an 'emotional connection', showing your brand
personality. Move the consumer from 'liking' it to 'wanting it'.

 Action: CTA - Move the buyer to interacting with your company and taking the next step ie.
downloading a brochure, making the phone call, joining your newsletter, or engaging in live chat
etc.

 Retention: We all know that this is key to up sell, cross-sell, referrals, Advocacy and the list goes
on.. as companies are also focussing on LTV.

The additional "R" is sometimes added by some Marketers to show the importance of ongoing
relationship building to give the AIDAR model.

How to use the AIDA model

So how can this be applied to marketing planning? It could be referred to as a

communications model rather than a decision-making model, as it's identifying to companies,
how and when to communicate during each of the stages as consumers will be using different
platforms, engaging at different touchpoints and requiring different information throughout the
stages from various sources.

So using this to help plan your tailored and targeted communication campaign may be a start.

Ask yourself some key questions throughout the stages:

 Awareness: How do we make buyers aware of our products or services? What is our outreach
strategy? What is our brand awareness campaign? Which tools or platforms do we use? What
should the messages be?

 Interest: How will we gain their interest? What is our content strategy? Social proof available to
back up our reputation? How do we make this information available and where ? ie. on website,
via videos, customer ratings,

 Desire: What makes our product or service desirable? How do we interact personally to make an
emotional connection? Online chat? Immediate response to Twitter feed? Share tips and advice?

 Action: What are the call to actions and where do we place them? Is it easy for consumers to
connect and where would they expect to find it? Think about which marketing channel/platform
you are using and how to engage ie. across emails, website, landing pages, inbound phone calls
etc.

 Retention: What is the proposition to retain loyalty? At what stage do we encourage this on-line
and off-line, and how?

An example of the AIDA model

Here is a case study from our Marketing Models Guide showing how an award-winning
hairdressing company, Francesco Group used the model to launch their new salon.

 1. Awareness: Ran a PR campaign four months prior to launch, promoting award, stylists,
qualifications etc. and was reinforced through a DM campaign to targeted customer groups.

 2. Interest: Executed a direct mail campaign to offer a free consultation or hair cut and finish.
They used research to support that this would work, as females are loyal if the offer is
compelling.

 3. Desire: Close to the opening of the new salon, they ran exclusive local launch events which
was advertised through local press and social media. This created a local buzz for 'people
wanting an invite' and excited to see the new salon.

 4. Action: Clear CTAS were positioned on the Facebook site (call to reserve), the website (call to
book) and local advertising (call in to receive discount or the offer.

The case study didn't highlight Retention, though there are many ways to increase loyalty around
sign up to mailing lists or social platforms which offer news about offers and events, discounts
on product ranges, discounts according to frequency of visit, etc.

The Original Reference Source

Some say that AIDA model which has been used for over three centuries. More details on
the AIDA model history are available on Wikipedia.

Lewis, E. St. Elmo. (1899) Side Talks about Advertising. The Western Druggist. (21 February).
p. 66. Lewis, E. St. Elmo.

(1903) Advertising Department. The Book-Keeper. (15 February).

p. 124. Lewis, E. St. Elmo. (1908) Financial Advertising, Indianapolis: Levey Bros. & Company.
Recommended Guide: Essential Marketing Models

In our free, illustrated guide to 15 classic planning models diagrams we explain what they are
and give examples of why and how to apply them in business.

Download our Essential Marketing Planning Models guide.

DRIP -The Marketing Communication

Model
Posted in Marketing & Strategy Articles, Total Reads: 17070 , Published on 09 February 2014
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Its early morning, the morning air is filled by a song related to festival holi starts (festival of colors)…

All young boys wake up, take colors from drawers, and make water balloons. A colorful scene of boys playing holi is seen
everywhere. Each guy trenched in colorful water with a soul aim of coloring the other. Gladness, laughter, dancing, rejoicing and
what not moments are depicted. An old man is seen silently enjoying the scene. The song continues… Each guy colors person or
thing he finds in his way. But suddenly the music stops. The radio also gets trenched with the colorful water. The celebrations are
done now. The old man starts cleaning long white canes. It takes no time to realize that the young boys were blind, yes blind
staying in an orphanage. The video ends with one of the boys asking the old man, “Warden Uncle, How many colors are there?”
The old man answers, ‘’a lot’’. But he is not able to answer what colour is green! The audience watching this get into ultimate
shock as this wasn’t expected.
image:freedigitalphotos.net

This was an ad by Eye Bank Association of India. The message was simple supporting the cause of eye donation and more simply
yet subtly communicated. The impact? 69 people donated their eyes after viewing this ad. This ad clears that communication is
an integral part of marketing. So what it takes to create such a delivery that it arouses interest with action? In an arena full of
competitiors, positive consumer action is hard to predict so we prepare a promotional program and communicate it to our target
audience. The aim of such program can be one or multi-dimensional, whether it be simply informing about your product or
reinforcement of your brand message or building customer relationship or any combination of the three.

One such marketing communication model was designed by Chris Fill called DRIP. DRIP is a way of modeling advertising
messages and is used when setting broad communication goals. The elements of the DRIP model are Differentiate, Reinforce,
Inform and Persuade.

We explain the model from consumer behavior perspective i.e. how the DRIP creates from unawareness of a product to liking, or
how it converts preference to purchasing action and later on to post purchase. The aims of the respective elements along with
suitable examples are explained as follows:

D- differentiate: Here we differentiate our product/services from others in the same domain. Though it is difficult but it can be
done by understanding how your product is positioned in the market. The aim here is to develop liking for the product among our
target group from the pool of other similar products. Commonly 7 P’s of marketing are used for this. For instance, in the
comparative ad between Pepsodent and Colgate Pepsodent differentiates itself by claiming to have 130% germ killing power
more than 100% that of Colgate. This differentiation on the grounds of effectiveness develops liking for Pepsodent.

Our next element is R i.e. reinforce. Here the aim can be as a reminder to consumers of the benefits of a product, or persuading
them to start a new transaction. We can describe our brand as an experience wrapped in a promise. Reinforce the brand’s
message. Reinforcement can be achieved via demonstrating experiences. Such demonstration should show why your product is
superior or why is it different from others. There may be cognitive dissonance in the minds of consumers so we remind about our
product. For instance, Amitabh Bachchan humbly narrates how family bond never breaks, reinforcing the brand message of
Binani Cement “Sadiyon ke liye”. Here we achieve our aim and move on from liking to preference and conviction.

Our third element is I-inform. As simple as its name, Inform about your offering or make the target group aware about it.
Communicate and educate about our offering to your prospects. This can include new features, benefits, availability, offers, value
etc. This will educate the consumer about our product. Fogg perfume gives 800 sprays, this more usage feature is well
communicated to the customers. Now your customer is well aware about your product and he has some knowledge about it. This
will also generate Top-of-the-mind-awareness. Ask anyone who has seen this ad he will very well recall it’s only Fogg with 800
sprays feature.

Finally we come to last element of DRIP, P-persuade: It means induce your prospect to behave in a certain way. Persuade your
audience to behave in a particular way, evoke certain attitude within customers. Here we’re building a relationship with our
customers, getting into emotional connect with them. Nowadays it is so easy to get in touch with our customers. Talk about the
product on social media websites, engage with customers on social media, offer for free trials to encourage positive customer
behavior. Hippo via its Save hunger campaign connects with its consumers on twitter. The consumer just need to tweet at hippo
twitter handle @Myhippo and hippo is made available at nearby shops. This element evokes action-oriented behavior such as
trial, purchase. Here we achieve the purchase behavior of consumer and that is what we expect from our communication model
that is purchase of our product.

Now we have a case example as how Nokia applied the DRIP in promoting its new Lumia Smartphone. Lumia was differentiated
from other smartphones with a zoomable Carl Zeiss camera lens, with 8.7 megapixels auto focus and digital zoom. Here the
objective was to secure 15% of market by November 2013.To reinforce the brand message, Nokia partnered with Carl Zeiss for
its camera lens. They explained about the camera’s features and promised ’blur-free photos every time’, reinforced by Pureview
technology and the branded lens. For informing people about the brand, Nokia encouraged social conversations by giving away
phones on two week trials. Those who blogged or tweeted about it were invited to take up the trial. The ultimate challenge for
Nokia was persuasion and for consumers to switch phones. They started a Twitter campaign to engage and demonstrate the
number of those switching. Set up a handle @Nokia_Connects and hash tag #SwitchToLumia. The theme was ‘life in colour’
with a twitter image from the colour run, but it’s weird as the girl is wearing a mask and can’t speak!

Overall we see that DRIP can be used as an alternative to AIDA. But overall we see that DRIP is a strategic model and a more
tactical approach is needed for this.

What is the The Diffusion of Innovation

model?
Using the Diffusion of Innovation (DOI) to engage with
different types of buyers when new products are launched
What is The Diffusion of Innovation?

This model helps a business to understand how a buyer adopts and engages with new products or
technologies over time. Companies will use it when launching a new product or service, adapting
it or introducing an existing product into a new market.

It shows how the product can be adopted by five different categories/customer types and how to
engage as a business with these types of people:
Of course, the emergence of new digital technologies and marketing techniques means that the
diffusion of innovation model is particularly relevant to digital marketers. Analysts Gartner have
a long standing report showing the stages of adoption of new technologies that is useful for
digital strategists to follow. See our post on the Latest Gartner Digital Technology Hype Cycle.

Returning to the DOI, what characterises each of the groups of adopters, in general they have
these characteristics, see the original work by Everett M. Rogers for more details.

 1. Innovator. They are a small group of people exploring new ideas and technologies. It includes
"gadget fetishists!" In an online marketing context there are a lot of specialist blogs and media
sites to engage them, Engadget and Gizmodo for examples.

 2. Early Adopters. Considered to be Opinion Leaders who may share positive testimonials about
new products and services, seeking improvements and efficiency. Engagement requires little
persuasion as they're receptive to change. Provide guides on how to use the product/service.

 3. Early Majority. These are Followers who will read reviews by earlier adopters about new
products before purchasing. They can be engaged with reviews and via YouTube, where they will
look for your products.

 4. Late Majority. To generalise, these are sceptics who are not keen on change and will only
adopt a new product or service if there is a strong feeling of being left behind or missing out.
They can be engaged with providing marketing material, evidence, reviews from Opinion Leaders
and case studies to show how it works.

 5. Laggards. The descriptor says it all! Typically they prefer traditional communications and will
adopt new products when there are no alternatives. Laggards will come on board when 'others'
 have written about your products/services, they have research evidence, statistics or felt
pressure from others.

How to use the Diffusion of Innovation?

If you are launching a new tech product, such as software, you can use this model which will
help with identifying the marketing materials needed for each group.

The Adoption theory is most useful when looking at new product launches, but it can be useful
when taking existing products or services into a new market.

Examples of how it can be applied to digital marketing strategies?

This is an example based on launching new software to the different groups.

 Innovator: Show the software on key software sites such as Techcrunch, or Mashable. Providing
marketing material on the website, with relevant information and lead to potential sales with
downloads.

 Early Adoptor: Create guides and add to the major software sites, providing marketing material
such as case studies, Guides and FAQs.

 Early Majority: Blogger outreach with guest blog posts and provide links to social media pages,
key facts and figures, and 'how to' YouTube videos.

 Late Majority: Encourage reviews, comparisons and share press commentary on your website.
Provide a press section and social proof with information and links to reviews, testimonials, third
party review sites etc

 Laggards: It's probably not worth trying to appeal to this group!

What to watch for?

The Adoption theory is mainly useful when developing new products. If you’re in FMCG and
launch many new products or lines a year, it may be less effective as it’s not practical to create
individuals strategies for hundreds of products.

Introduction to the the Product Life cycle

model
An introduction to the Product Lifecycle model
The Product Life Cycle (PLC) describes the stages of a product from launch to being
discontinued. As we will see in the example, the product lifecycle can be reviewed across an
entire category, or in the context of an individual companies product. It is a strategy tool that
helps companies plan for new product development and refine existing products

There are 4 stages shown in the table below to the lifecycle process, although decline can be
avoided by reinventing elements of the product. It is also recognised that some products never
move beyond the introduction phase whilst others move through the life cycle much faster
than others.

What do the PLC stages mean?

 Introduction
Introducing a new product where it's unknown and products are small. The price is often higher
as distribution is limited, and promotion is personalised.

 Growth

Here, the product is being bought and with volume, the price declines. Distribution increases and
promotion focuses on product benefits

 Maturity

Here, the product competes with alternatives and pricing drops. Distribution becomes intense
(it’s available everywhere) and promotion focuses on the differences to competitors’ products.

 Decline

The product is reaching the end of its life and faces fewer competitors. The price may rise and
distribution has become selective as some distributors have dropped the product. Promotion aims
to remind customers of its existence.

How can I use this model?

When reviewing your business you need to understand which stage your products or services
have reached across your portfolio of all products which can be assessed in terms of market share
and growth using the BCG Matrix model. Reviewing the product of portfolio enables marketers
to plan for new products, reinvent existing products or discontinue products that are in serious
decline.

Within digital marketing you can relate different digital marketing products and services to the
Hype cycle which is a form of Diffusion of innovation model. This post shows the latest digital
technology hype cycles.

An example of the Product Lifecycle model

This example shows how the yoghurt product category has moved through the product life cycle
by remixing elements of the marketing mix. examples of stages and how PLC evolved:

Introduction

 Yoghurt available in health food stores

 Functional and plain packaging.

 Promoted as a health food.

Growth
  Yoghurt available in supermarket chiller cabinets.

 Packaging gets a makeover.

 New flavours introduced; Strawberry and Vanilla.

Maturity

 Product re-invented with added fruit, added muesli, added chocolate!

 Packaging changes into different shapes and sizes.

 Promoted as a fun snack, luxury treat.

Decline

Not yet.

A tip is to review customer feedback continously, to ensure your products don’t reach the end of
their shelf life, carry out regular customer surveys. Get feedback and find out what works, what
doesn’t and why.

The Segmentation, Targeting and Positioning

model
How to use Segmentation, Targeting and Positioning (STP)
to develop marketing strategies
Today, Segmentation, Targeting and Positioning (STP) is a familiar strategic approach in Modern
Marketing. It is one of the most commonly applied marketing models in practice. In our poll
asking about the most popular marketing model it is the second most popular, only beaten by the
venerable SWOT / TOWs matrix. This popularity is relatively recent since previously, marketing
approaches were based more around products rather than customers. In the 1950s, for example,
the main marketing strategy was 'product differentiation'.

The STP model is useful when creating marketing communications plans since it helps marketers
to prioritise propositions and then develop and deliver personalised and relevant messages to
engage with different audiences.
This is an audience rather than product focused approach to communications which helps deliver
more relevant messages to commercially appealing audiences. The diagram below shows how
plans can have the flow from

Audience options > Audience selection > Production positioning

STP is relevant to digital marketing too, where applying marketing personas can help develop
more relevant digital communications as shown by these alternative tactical customer
segmentation approaches.

In addition, STP focuses on commercial effectiveness, selecting the most valuable segments for a
business and then developing a marketing mix and product positioning strategy for each
segment.

How to use STP?

Through segmentation,you can identify niches with specific needs, mature markets to find new
customers, deliver more focused and effective marketing messages.

The needs of each segment are the same, so marketing messages should be designed for each
segment to emphasise relevant benefits and features required rather than one size fits all for all
customer types. This approach is more efficient, delivering the right mix to the same group of
people, rather than a scattergun approach.

You can segment your existing markets based on nearly any variable, as long as it’s effective as
the examples below show:

Well known ways to segment your audience include:

 1. Demographics

Breakdown by any combination: age, gender, income, education, ethnicity, marital status,
education, household (or business), size, length of residence, type of residence or even
profession/Occupation.

An example is Firefox who sell 'coolest things', aimed at younger male audience. Though, Moshi
Monsters, however, is targeted to parents with fun, safe and educational space for younger
audience.

 2. Psychographics

This refers to 'personality and emotions' based on behaviour, linked to purchase choices,
including attitudes, lifestyle, hobbies, risk aversion, personality and leadership traits. magazines
read and TV. While demographics explain 'who' your buyer is, psychographics inform you 'why'
your customer buys.

There are a few different ways you can gather data to help form psychographic profiles for your
typical customers.

1. Interviews: Talk to a few people that are broadly representative of your target audience. In-
depth interviews let you gather useful qualitative data to really understand what makes your
 customers tick. The problem is they can be expensive and difficult to conduct, and the small
sample size means they may not always be representative of the people you are trying to target.

2. Surveys: Surveys let you reach more people than interviews, but it can be harder to get as
insightful answers.

3. Customer data: You may have data on what your customers tend to purchase from you, such as
data coming from loyalty cards if an FMCG brand or from online purchase history if you are an
ecommerce business. You can use this data to generate insights into what kind of products your
customers are interested in and what is likely to make them purchase. For example, does
discounting vastly increase their propensity to purchase? In which case they might be quite
spontaneous.

An example is Virgin Holidays who segment holidays into 6 groups.

 3. Lifestyle

This refers to Hobbies, recreational pursuits, entertainment, vacations, and other non-work time
pursuits.

Companies such as on and off-line magazine will target those with specific hobbies i.e.
FourFourTwo for football fans.

Some hobbies are large and well established, and thus relatively easy to target, such as the
football fan example. However, some businesses have found great success targeting very small
niches very effectively. A great example is the explosion in 'prepping' related businesses, which
has gone from a little heard of fringe activity to a billion dollar industry in recent years.
Apparently now 3.7 million American's think of themselves as preppers or survivalists. A great
way to start researchign and targeting these kind of niches is Reddit, where people create
subReddits to share information about a given interest or hobby.
  4. Belief and Values

Refers to Religious, political, nationalistic and cultural beliefs and values.

The Islamic Bank of Britain offers Sharia-compliant banking which meets specific religious
requirements.

A strange but interesting example of religious demographics influencing marketing that you
might not have guessed is that Mormons are really into 'multi-level marketing'. They're far more
likely to be engaged in the practice than any other US group. Going the extra mile with
demographic research can lead to discovering new marketing opportunities and thinking outside
the box. For example, did you know 55-64-year-olds are the most likely age group to buy a new
car? But you don't tend to see them in the car ads. An opportunity waiting to be seized!

 5. Life Stages

Life Stages is the Chronological benchmarking of people’s lives at different stages.

An example is Saga holidays which are only available for people aged 50+. They claim a large
enough segment to focus on this life stage.

 6. Geography

Drill down by Country, region, area, metropolitan or rural location, population density or even
climate.

An example is Neiman Marcus, the upmarket department store chain in the USA now delivers to
the UK.

 7. Behaviour

Refers to the nature of the purchase, brand loyalty, usage level, benefits sought, distribution
channels used, reaction to marketing factors.

In a B2B environment, the benefits sought are often about ‘how soon can it be delivered?’ which
includes the ‘last minute’ segment - the planning in advance segment.

An example is Parcelmonkey.co.uk who offer same day, next day and international parcel
deliveries.

 8. Benefit

Benefit is the use and satisfaction gained by the consumer.

Smythson Stationary offer similar products to other stationery companies, but their clients want
the benefit of their signature packaging: tissue-lined Nile Blue boxes and tied with navy ribbon!
Market targeting

The list below refers to what’s needed to evaluate the potential and commercial attractiveness of
each segment.

 Criteria Size: The market must be large enough to justify segmenting. If the market is small, it
may make it smaller.

 Difference: Measurable differences must exist between segments.

 Money: Anticipated profits must exceed the costs of additional marketing plans and other
changes.

 Accessible: Each segment must be accessible to your team and the segment must be able to
receive your marketing messages

 Focus on different benefits: Different segments must need different benefits.

Product positioning

Positioning maps are the last element of the STP process. For this to work, you need two
variables to illustrate the market overview.

In the example here, I’ve taken some cars available in the UK. This isn’t a detailed product
position map, more of an illustration. If there were no cars in one segment it could indicate a
market opportunity.
Expanding on the extremely basic example above, you can unpack the market by mapping your
competitors onto a matrix based on key factors that determine purchase.
This chart is not meant to be any kind of accurate representation of the car market, but rather just
illustrate how you could use a product positioning map to analyze your own businesses current
position in the market, and identify opportunities. For example, as you can see in the gap below,
we've identified in a possible opportunity in the market for low-priced family cars.
We're not saying this gap actually exists, I'm sure you could think of cars that fit this category, as
the car market is an extremely developed and competitive market. However, it does show how
you can use the tool to identify gaps in your own market.

An example of a company using STP?

Any time you suspect there are significant, measurable differences in your market, you should
consider STP. Especially if you have to create a range of different messages for different groups.
A good example of segmentation is BT Plc, the UK’s largest telecoms company. BT has adopted
STP for its varied customer groups; ranging from individual consumers to B2B services for its
competitors:

What to watch for

Make sure the market is large enough to matter and customers can be easily contacted.

SOSTAC® marketing planning model guide

What is PR Smith's SOSTAC® marketing planning model

and how do you use it?
If you don't know PR Smith's SOSTAC® model, it's worth getting to know if you're involved
with planning marketing strategies or campaigns. SOSTAC® was voted the third most popular
model in the CIM poll on marketing models because it's easy to remember and it makes it easy to
structure plans for different planning activities. Whether you're creating an overall marketing or
digital marketing strategy or improving individual channel tactics like SEO or email marketing
SOSTAC®, is your friend.

March 2016 update: If you're an Expert member of Smart Insights, you can read Paul Smith's
brand new and updated 160 page guide explaining How to create the Perfect Digital Plan using
SOSTAC®.
Recommended Guide:

SOSTAC® Digital Marketing Plan guide by its creator PR Smith.

Learn how to structure an effective online marketing plan. Version 2 is updated for 2016

Download our SOSTAC® guide.

What is SOSTAC®?

SOSTAC® is a planning model, originally developed in the 1990s to help with marketing
planning by PR Smith, who is my co-author on Emarketing Excellence.

SOSTAC® stands for:

 Situation – where are we now?

 Objectives – where do we want to be?

 Strategy – how do we get there?

 Tactics – how exactly do we get there?

 Action – what is our plan?

 Control – did we get there?

We've referenced this approach in creating our Internet marketing planning template and I've also
used it in my books applying it to the core aspects of digital marketing. You can see it gives a
logical order for tackling your plan (with iterations) and you should also use it to critically assess
your processes. Ask, for example, what you may be weak at? Ask... Do we fail to complete
situation analysis? Are our goals unclear? Do we have a strategy? Do we control performance
using analytics?

An infographic applying SOSTAC® to digital marketing

In 2012 I worked with Paul and the designers at First 10 on a new SOSTAC® infographic which
summarises the key issues to consider at each stage when developing digital marketing plans.
We hope this is useful as an aide-memoire you can print and use for your planning.

How to use SOSTAC®

I think SOSTAC® has become popular since it's simple, easy to remember and covers all the
main issues which you need in a marketing plan or business plan. In this video Paul explains how
it can be used.

You can find out more about the SOSTAC® approach for marketing planning in this ebook
available on Amazon for Kindle, iPad and other ebook readers: The SOSTAC® Guide - to
writing the perfect plan by PR Smith.

More tips for using SOSTAC®

Here are some tips on how to use SOSTAC® based on my experience of applying it in
companies and seeing how students apply it in assignments.

We also have an example SOSTAC® plan for Expert members available in Word for members to
update for their plans.

1. Use SOSTAC® to review your process

Before looking at how you apply SOSTAC® at each step to create a marketing plan, my first tip
is to use it to review your planning process and how you manage your marketing.

Ask yourself critically about the activities you personally and your organisation are good at.
Maybe you spend too much or too little time reviewing the situation. Perhaps you're not so good
at setting SMART objectives, or developing strategies to support them or the control stage of
assessing how effective your strategies and tactics are and adjusting them?

2. Get the balance right across SOSTAC®

Oftentimes, there is too much time spent on analysis within a plan and not enough on setting the
strategies. I'd also say that for a student assignment, it's best to make reference to AC relatively
brief, incorporating them into other sections.

So as a rule of thumb, this is how your balance of content could look:

S (20%) O (5%) S (45%) T (30%) = 100%

3. Summarise your Situation in a TOWs matrix form of SWOT

To give focus to your situation analysis I recommend the so-called fTOWs form of SWOT
analysis. This helps integrate SWOT with strategy.

4. Make your goals SMART and link them to your analytics/control process
Since digital marketing is so measurable, it makes sense to be specific as possible about your
goals by developing a funnel conversion model. You should also setup specific goals in Google
Analytics.

But it's worth thinking about the full range of goals indicated by the 5Ss.

5. Integrate the different elements of your SWOT

Often there isn't good flow relating sections in a plan. To help this I recommend summarising
your entire SOSTAC® plan within a table which integrates strategies, situation, objectives and
tactics.

Do let us know if you have any other tips on the best way to apply SOSTAC®.

Reference:

PR Smith (2011) The SOSTAC ® Guide - to writing the perfect plan by PR Smith (2011),
published by www.prsmith.org and available at Amazon.

By Dave Chaffey

Digital strategist Dr Dave Chaffey is co-founder and Content Director of Smart Insights. Dave is
editor of the 100+ templates, ebooks and courses in the digital marketing resource library created
by our team of 25+ Digital Marketing experts. Our resources are used by our Premium members
in more than 100 countries to Plan, Manage and Optimize their digital marketing. Free members
can access our sample templates here.

Please connect on LinkedIn to receive updates or ask me a question. For my full profile and other
social networks, see the Dave Chaffey profile page on Smart Insights.

Dave is a keynote speaker, trainer and consultant who is author of 5 bestselling books on digital
marketing including Digital Marketing Excellence and Digital Marketing: Strategy,
Implementation and Practice. In 2004 he was recognised by the Chartered Institute of Marketing
as one of 50 marketing ‘gurus’ worldwide who have helped shape the future of marketing.
Introducing RACE: a practical framework to
improve your digital marketing
The RACE Digital Marketing Planning Framework
We created RACE to help digital marketers plan and manage their activities in a more structured
way since we found that many don't have a well-formed digital marketing strategy. In this post,
first published in July 2010 and since updated with a new summary of digital marketing KPIs
you should track, we show how you can simplify your measurement and reporting through
RACE Planning.

You can find more details about applying RACE for Digital Marketing Planning in our
FREE RACE digital marketing planning template download.

Download free digital plan template

This template gives you an outline structure and recommendations on the essential features of a
digital marketing plan structured using RACE.

Access the Free digital marketing plan template

To explain and fully define 'What Is Digital Marketing?' we created this popular infographic
structured around RACE in 2012 and updated in 2015 as shown below. It shows the Key
measures to set targets for and evaluate at each stage of the funnel.
Within our Digital marketing E-learning course and Digital marketing strategy toolkit for
premium members we break each part of RACE down into 5 essential activities to give 5X5 = 25
activities that must be managed for successfully managing continuous always-on integrated
marketing across the customer lifecycle.

What does RACE Planning stand for?

The RACE mnemonic summarises the key online marketing activities that need to be managed
as part of digital marketing. RACE covers the full customer lifecycle or marketing funnel from:

(Plan) > Reach > Act > Convert > Engage

There is also an initial phase of PLAN, which involves creating the overall digital strategy,
objective setting and plan, so sometimes members call it PRACE, but we prefer RACE Planning
for simplicity. There's more detail at the end of the post in the infographic and the planning
process is explained in detail in our RACE Digital Marketing Planning Elearning.

We have defined four steps of engagement across the customer lifecycle, since in online
marketing there is a major challenge in gaining interaction, participation with prospects and
creating those all-important Leads after the initial customer touchpoint.

These interactions, covered in the Act step can take place over several channels and touchpoints
such as web, mobile, social media and email contacts, so these leads need separate management
from final conversion to online or offline sale through techniques like retargeting and assisted
selling.

RACE consists of these four steps or online marketing activities designed to help brands engage
their customers throughout the customer lifecycle.

 1. REACH. Reach involves building awareness of a brand, its products, and services on other
websites and in offline media in order to build traffic by driving visits to different web presences
like your main site, microsites or social media pages. It involves maximising reach over time to
create multiple interactions using different paid, owned and earned media touchpoints.

 2 ACT. Act is short for Interact. It's a separate stage since encouraging interactions on websites
and in social media to generate leads is a big challenge for online marketers. It's about
persuading site visitors or prospects take the next step, the next Action on their journey when
they initially reach your site or social network presence. For many types of businesses, especially,
Business-to-Business, this means generating leads, but it may mean finding out more about a
company or its products, searching to find a product or reading a blog post. You should define
these actions as top-level goals of the funnel in analytics. Google Analytics Goals can include
"Viewed product", "Added to Basket", "Registered as a member" or "Signed up for an
enewsletter. Act is also about encouraging participation. This can be sharing of content via social
media or customer reviews (strictly, part of Engage). The specific goals and dashboards need to
be defined for each business as explained in our Delivering results from digital marketing guide.
It's about engaging the audience through relevant, compelling content and clear navigation
pathways so that they don't hit the back button. The bounce rates on many sites is greater than
50%, so getting the audience to act or participate is a major challenge which is why we have
identified it separately.
  3. CONVERT. This is conversion to sale. It involves getting your audience to take that vital next
step which turns them into paying customers whether the payment is taken through online
Ecommerce transactions or offline channels.

 4. ENGAGE. This is long-term engagement that is, developing a long-term relationship with first-
time buyers to build customer loyalty as repeat purchases using communications on your site,
social presence, email and direct interactions to boost customer lifetime value. It can be
measured by repeat actions such as repeat sale and sharing content through social media. We
also need to measure the percentage of active customers (or email subscribers) and customer
satisfaction and recommendation using other systems.

Why RACE Planning?

We created the RACE Planning system to help give a simple framework to help small and large
businesses alike take the best advantage of the opportunities available from digital marketing.

In our research, we have found that, shockingly, many businesses don't have a digital marketing
strategy. When creating a digital marketing strategy, knowing how to structure it and where to
start is sometimes the biggest challenge!

There are so many tools and tactics available that it's difficult to know where to start. We hope
RACE gives a structure to help you review and prioritize when there are so many options, but
some options work better than others.

RACE is a practical framework to help manage and improve results from your digital marketing.
Ultimately it's about using best practice web analytics techniques to get more commercial value
from investments in digital marketing. We hope it will help simplify your approach to reviewing
the performance of your online marketing and taking actions to improve its effectiveness.

Using KPIs to manage RACE

In our 2011 Marketing manifesto we explained that we believe growing business through digital
marketing should be based on a sound evaluation and optimization process using digital analytics
showing which marketing activities are effective and which aren't. This diagram shows relevant
key performance indicators (KPIs) that should be used at each stage.
Here's an example of our recommended measures in a simpler summary of RACE KPIs which
could form a dashboard - the best dashboards show not only volume and how they change
through time, but also the quality of visits and the value generated.
Many of these KPIs be created from Google Analytics although it needs to be customized for
each business to record goal value or revenue per visit. For some other measures such as social
mentions, you need to pull in from other tools.

For premium members, we offer an interactive monthly reporting dashboard based on

RACE using the Google Analytics API to rapidly create monthly reports using Google Docs
Sheets.

Download Member resource – RACE Digital Marketing Dashboard

Use our practical reporting dashboard built in a Google Docs Spreadsheet using your Google
Analytics data to report on the performance of your digital marketing.

Access the RACE Digital Marketing Dashboard

The dashboard makes it easy to compare digital marketing performance through time with
a focus on the key digital marketing measures across the customer lifecycle or marketing funnel
defined across the Smart Insights RACE planning framework. For example, you can compare
year-on-year or compared to the previous reporting period both overall and for each of the digital
marketing channels such as organic, paid search, email and social media marketing.
Marketing activities to manage within RACE

All of our guidance on Smart Insights from our blog posts to detailed guides and templates are
structured according to RACE. This is a summary of some of the main activities which our
guides, templates and free blog guidance cover.
Of course, there are many more online marketing activities which are covered in our full sitemap
of hub pages.

RACE KPIs
Google Analytics has over 60 reports displaying many more metrics and that's before you start
segmenting your audience... Other web analytics tools have more... This makes it difficult to
know what to report; you have to identify your "critical few" Key Performance Indicators which
you report on regularly to review performance and identify problems. Here we have suggested
just 3 KPIs for each area which applies to a retail site. We'll have more on these and related
performance drive measures in later posts.

RACE is Social! Digital marketing is not just about your website

Digital marketing today is not just about your website, and in fact it never has been, partnering
with other sites and "swimming with the fishes" has always been important.

But today, the popularity of participation in social media with web users means that how to
reach, interact, convert and maintain ongoing engagement of customers through social networks
is vital to the success of a brand. At each step in RACE you need to think how social media can
help achieve your goals and how you can measure the effectiveness of social media.

RACE is integrated

Digital channels always work best when they're integrated with other channels, so remember that
where appropriate, digital channels should be combined with the traditional offline media and
channels. The most important aspects of integration are first using traditional media to raise
awareness of the value of the online presences and drive visitors to the website(s) at the Reach
and Engage stages. Second, at the Convert and Engage steps stage customers may prefer to
interact with customer representatives as part of the buying or customer service process.

So that's an introduction to the Smart Insight RACE framework. We hope you find it useful when
you're planning and managing digital marketing!

Credits

RACE is an evolution of the REAN (Reach > Engage > Activate > Nurture) framework for web
analysts originally developed by Xavier Blanc and popularised by Steve Jackson in his book Cult
of Analytics of which I'm a big fan.

We devised RACE since we wanted to develop our own approach for improving digital
marketing and we feel Step 2 is more about initial interactions with a brand and in step 4,
customer engagement is a longer-term process.

.
By Dave Chaffey

Digital strategist Dr Dave Chaffey is co-founder and Content Director of Smart Insights. Dave is
editor of the 100+ templates, ebooks and courses in the digital marketing resource library created
by our team of 25+ Digital Marketing experts. Our resources are used by our Premium members
in more than 100 countries to Plan, Manage and Optimize their digital marketing. Free members
can access our sample templates here.

Please connect on LinkedIn to receive updates or ask me a question. For my full profile and other
social networks, see the Dave Chaffey profile page on Smart Insights.

Dave is a keynote speaker, trainer and consultant who is author of 5 bestselling books on digital
marketing including Digital Marketing Excellence and Digital Marketing: Strategy,
Implementation and Practice. In 2004 he was recognised by the Chartered Institute of Marketing
as one of 50 marketing ‘gurus’ worldwide who have helped shape the future of marketing.

What do you think is the best, i.e. most useful marketing

model? Download our two free guides on marketing models
to learn how to apply them
You may have noticed we're fans of using practical models as tools to support marketing strategy
development? We believe a clear, simple model gives us a framework to assess how we're doing
things now compared to our competitors and plan growth strategies for the future. They're also
great for communicating the purpose and reason behind a strategy you are pursuing.

I think most would agree that models are useful "Mind Tools" to structure thinking and
communicate a strategy, but there's a problem. Over the years, many models have been
developed and some are academic rather than of practical application in the "real world". So
many marketing models have been developed over the years, that it can be overwhelming to
know what to use and when... A few years ago now, I was talking to marketing consultant and
trainer, Annmarie Hanlon about the power and challenge of using planning models and we
decided it would be good to collaborate to create a free guide where we picked and explained the
most useful, practical models for students and professionals alike to share. This guide was
published in 2013 and has been updated since:
Recommended Guide: Essential Marketing Models

In our free, illustrated guide to 15 classic planning models diagrams we explain what they are
and give examples of why and how to apply them in business.

Download our Essential Marketing Planning Models guide.

Which are the most popular marketing models?

In the Essential Models guide we have selected what we see as the classic,most popular models
that have stood the test of time and we think are still relevant in today’s era of omnichannel
marketing. But which are the most useful - do take our poll to share which you think are of the
most practical use and are valuable in understanding opportunities to grow a business.

Please select which you find most useful of the 15 models covered in our guide - you can select
more than one or suggest others. When you answer you will see the overall results.

Please select the most useful marketing planning model(s) for you

1. McKinsey 7S model 2. The 7Ps of the Marketing Mix 3. AIDA 4. The Ansoff Matrix

5. The BCG Matrix 6. Diffusion of Innovation 7. DRIP 8. Porter's Five Forces 9. Price-

Quality-Strategy Model 10. Push and Pull Marketing 11. Product Lifecycle 12. RACE Planning

13. Segmentation, Targeting and Positioning (STP) 14. SOSTAC(R) 15. SWOT (TOWS)

matrixOther:

VoteView Results

We would also like to hear what you think about the relevance of these model in 2016. 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.

Some marketing models are digital focused while others apply equally to digital and traditional
forms of communication. For example, our own RACE model is designed specifically for digital
marketing. Because of this, we've just produced a new guide free for all members on digital
marketing models specifically. It gives details on the 10 key digital marketing models, so you get
the most relevant marketing models for your business.

Download free, Basic member resource – Digital Marketing Models Guide

This new guide, published in 2016 lists 10 models that can be used by marketing professionals
and students for digital audits, planning and strategy.

Access the Digital Marketing Models Guide

A quick review of the most popular marketing models

Since I'm a digital marketer, I have my own views on the relevance of these, indeed in my books
I have often included them. In fact, most are included in my Digital Marketing: Strategy,
Implementation and Practice book.

So before we wrote the guide I thought it would be nice to share an overview of the relevant
models here for anyone passing this way who isn't familiar with them. A more detailed
explanation is available in the free guide!

1. 7 Ps of The marketing mix

The 7P's of the Marketing mix model are Product, Price, Place, Promotion, People, Process and
Physical evidence - these elements of the marketing mix form the core tactical components of a
marketing plan.
I think it's right this is at the start of the list since it's still widely used and I think is a simple way
to think through how a company markets its products. A good model to explain marketing
strategy to someone who isn't a marketer. 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.

2. USP

Unique Selling Proposition is the concept that brands should make it clear to potential buyers
why they are different and better than the competition.

This is a simple concept and an essential message to communicate online since the core brand
message often isn't clear. Here are some examples of websites that communicate their online
value proposition well. It's not really a model, so although it was included in the CIM centenary
vote it's not included in our guide.

3. Boston Consulting Group Matrix

This well known, essential MBA model categorises products offered by a business in a portfolio
based on their performance rating them as Stars, Cash Cows, Dogs and Question Marks as
below.
  1. Dogs: These are products with low growth or market share.

 2. Question marks or Problem Child: Products in high growth markets with low market share.

 3. Stars: Products in high growth markets with high market share.

 4. Cash cows: Products in low growth markets with high market share

I find this isn't so applicable in the online marketing world for small and medium businesses -
it's more of a Big Business corporate strategy model.

See Annmarie's post on the BCG Matrix model for more details.

4. Brand positioning map

This model allows marketers to visualise a brand’s relative position to competitors 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. We've included an
example in the guide. 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

The Ansoff’s model is a matrix that can be used to identify 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 new opportunities for 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.

8. PESTLE
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.

TBH PESTLE/PEST/DEEPLIST make me groan - to me they're a text book approach which is far
removed from improving results. I find students tend to review these in-depth at the expense of
creating innovative strategies. The results of the poll seem to suggest others agree.

However, PESTLE is still widely taught and Annmarie Hanlon is a fan so to explain it's value to
me and others she has this in-depth post on how to use the PEST or PESTLE model.

9. Porter’s Five Forces

The Five forces in Porter's model 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. But, 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 diffusion innovation 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 STP 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 and apply in practice.

12. PR Smith's SOSTAC® model

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 PR Smith's SOSTAC® model as a way of planning and implementing
strategies. It features in all my books and I know Paul Smith, who created it well - he's my co-
author on Emarketing Excellence.