Adaptive Marketing as Opposed to Marketing Planning

One of our Strategy Trainers writes:

Gary a question for you on a business marketing plan. I have not written one I am thinking of using Sun Tzu’s five factors philosophy, climate, ground leadership and methods. My questions are do you think those in the business world reviewing it will get the picture by doing using this format and if so do you have a template of some kind you recommend for doing this? I am writing it myself because I know my business and do not want someone else writing it and I want it to stand out. I know what your thinking should already be done and you are correct. But like you say you must start where you are at. I appreciate any input you may have.

Let me end start by saying that all strategic analysis of your business should include an analysis of the five dimensions that make up your strategic position. You should constantly be thinking about the five factors, discussing them with others (Sun Tzu described the five key factors in terms of discussion), and play with them. If you want to put your ideas about your strategic position on paper to save as a snapshot to go back to later (to see how close you were to reality) and get feedback from others, that works well too.

However, I am not big on traditional marketing plans. They are especially inappropriate for small businesses who have not established themselves. Businesses are established when they get about 80% of their income from repeat business from existing customers. Marketing plans work better (but not as well as people think) for established businesses, especially larger ones, because of their market/customer momentum carries into the future, but for most small businesses who are growing and are not yet established, marketing plans are either fantasy and fiction.

My general marketing method is based totally on adaptive response to the environment. I try various forms of marketing and see what works. If it doesn’t work, I stop. If it does work, I consider if results are profitable or not. If they aren’t profitable, I stop. If they are profitable, I try more and see if it works better. Every marketing activity has a point of diminishing returns where doing more produces no better results. Sometimes what was working just stops, so you have to stop doing it as well.

The problem with “planning” this is that we never know what the result will be or will continue to be. When marketing “plans” don’t work, people have a tendency to want to invest more to make it work and to prove the plan correct. I prefer not to have the psychological baggage of a plan to prove.

Marketing and business planning in its traditional form is designed to prove to finance people (starting with banks) that your marketing and sales results are predictable, which they aren’t, unless you are established, and even not then in times of fundamental change like we are seeing today. The goal of finance people s to try to erase uncertainty and we see how well that is working in the current economic crisis. The idea is to allow you to create investment budgets where you spend based on your sales predictions.

In Sun Tzu's view, spending based on plans rather than real results is dangerous when you are exploring new territory. Both the costs and benefits of competitive exploration are unpredictable. Again, we are back to the difference between established businesses, who are producing from existing ground that they control (an existing customer base) versus growing businesses that are looking to generate most of their future income from new customers and markets.

Planning systems that work for production do not work in completitive areas, but most business education misses the critical difference. Adaptive strategy teaches us to do more of what works in the realm of competition, stop what doesn’t work, and, in all cases, spend as little money as possible.

However, in marketing, Sun Tzu's strategy teaches us another rule: you need to spend more time on it than most people want to. Having a guideline for marketing investment, such as reserving 10% of revenues for marketing, is a good idea, but more important is having a daily budget for time spent on reaching out to people in the marketplace. I personally try to do this daily, personally contacting people who visit the site and making contact with them, specifically finding out where they heard about us

Most small businesses tend to spend too much time on internal operations and controlled tasks such as planning rather than making market contact because contact means dealing with unpredictable and often disappointing response of other people. However, it is only by constant experimentation and contact that we learn what works and what doesn’t.

Another general rule is to only explore new market areas with a guide or a guiding model that you can copy. By reaching out to people, you can find these guides and they will bring you models that have worked for them. You then try to get their help and use these models and see if they will work for you. Once more, you go into the adaptive loop but with guidance.