How to Develop Your Market Strategy
Chapter 2: Principle 1—Growth comes by Capturing Situational Markets
Hello All, This post builds on Friday’s post regarding how to define a situational market. I include the links to Chapter 1 and Chapter 2 at the end of this post.
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How to Develop Your Market Strategy
Developing a situational market strategy involves three steps. The first step, Assess, entails fully evaluating your data and insights by asking questions such as “Do you have the tools to evaluate and prioritize different situations that people find themselves in?” Understanding the landscape is crucial before starting the next step. The second step, Discover, involves embarking on a journey to discover new ways to address the situations that are important to your customers. This journey involves engaging directly with customers to gain valuable perspectives. Finally, Define necessitates articulating a clear strategy that bridges the gap between your capabilities and your customer’s situational needs, as well as defining actionable steps and demonstrating how your offerings meet their needs. This step ensures that your market strategy is tailored to meet the specific demands of situational markets. The following paragraphs describe these steps in detail.
Step One: Assess
There are two activities to assessing your company’s abilities to understand situational markets. First, compile all available data and insights that may explain common customer situations. Second, evaluate your capacity to gather situational or contextual data.
At the end of the assessment, you should have a list of common situations that customers are likely to experience and potential data sources to pull from. For example, a situation of ‘I’m in a hurry and need to eat’ could occur as often as 1.5 billion times per month.
Step Two: Discover
Once you’ve assessed your ability to understand situational markets, the next step is to find the opportunities that matter most. This requires executing the following three activities:
Through a combination of observation, quantitative and data gathering, identify common situations that arise.
Determine the frequency of these situations. Employ techniques such as direct inquiry or seek to identify situations that resonate with a larger audience than you currently serve.
Identify a multitude of "jobs to be done" across various situations. Recognize that when a job-to-be-done transcends individual situations, these situations are often interconnected. Such interrelated scenarios are more easily addressed by your solutions.
Through the Discovery activities, you should have a map of the situations that offer the most opportunity (see table below for an example of a situations map that a restaurant group might use).
Step 3: Define
Step three has one primary activity: turning discovered insights and data into a strategy. To accomplish this, the strategist will review the data and develop recommendations on where the company should focus its efforts to capitalize on the identified opportunities.
An Example of a Situational Market Strategy
Let’s imagine that McDonald’s applied a situation-based approach to strategic growth. During step one, Assess, McDonald’s reviews its own market research for clues about common situations it should focus on. The company also reviews contextual data like daily volume numbers, menu item sales, and the use of drive-throughs to help it understand what can be learned about the situations people find themselves in.
During step two, Discover, McDonald’s then conducts primary research with customers to identify new situations that provide opportunities for new revenue. Using both field research and quantitative, the company studies the potential types of situations and jobs to be done that each opportunity presents. It discovers that people’s needs change based on time of day, amount of time to eat, number of people in their party, and weather temperatures. As Clayton always said, what people hire a milkshake to do in the morning is different than what they hire a milkshake to do in the afternoon. As a consequence, McDonald’s realizes that it can increase the number of its fast food purchases by focusing on common situations that most people experience.
During the third step, Define, McDonald’s devises a growth strategy that can be summarized as follows.
McDonald’s Situational Market Strategy (An Example)
McDonald’s helps families and individuals enjoy fast food that is designed to meet their needs when common food situations arise. Every day of the week, whether it’s morning, noon, or night, we provide consistent, quality food items that our customers can enjoy. We will build on our success by focusing on the following food-need situations:
When people are rushed for breakfast, lunch, or dinner
When people are traveling as families
When people are traveling as individuals
When people are training for high-performance races
When people are celebrating an accomplishment
From here, the organization is able to create a roadmap to success by matching their offerings to the situational needs.
Red Roof Inn’s Story
During the early years of data-driven mobile advertising, Red Roof Inn showed the value of the first two steps. Unable to match the search budgets of their bigger competitors, the hotelier learned to capture contextual data (Step 1) about a key situation that people often find themselves in - flight cancellations due to weather disruptions. Using search data, flight data, weather data, geodata, time of day, and other indicators (Step 2), Red Roof Inn was able to identify when these situations occurred and send mobile notifications to people who were likely affected. Because they were first, the results were incredible:
266 percent increase in non-brand mobile books, which led to a 115 percent increase in non-brand mobile investment
650 percent increase in share-of-voice for key travel search queries
375 percent increase in conversion rate; 60 percent books lift across non-brand campaigns
98 percent increase in CTR across non-brand campaigns
With far fewer resources, Red Roof Inn reached and converted customers who, by their own admission, “would otherwise be unattainable[i].”
This story reminds me of two things. First, companies have been able to target some situations for at least 10 years now. All they need is readily available contextual data provided through open sources. Red Roof Inn didn’t need ‘who’ data to execute the plan. There was no persona segmentation.
And second, Red Roof Inn saw the strategy as principally an acquisition strategy.
They targeted the situation that people were experiencing, but they in no way changed the experience for their new customers. And so, the strategy became a tactic. And quickly other travel companies were able to home in on the exact same situation with a better product.
[i] Red Roof Inn Turns Flight Cancellations into Customer. Case Study. 2014 MMA Smarties Gold Winner Mobile Search
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This post about Experience Strategy Certification is also helpful.