Tactics Follow Strategy

Volume 16 Letter 7

Tactics always follow strategy. That is to say that portfolio strategy, segmentation strategy and positioning strategy must be translated into something meaningful to the customer – these are the tactics (remember the four P’s?). Tactics must fit the target segment, not the other way around. In designing your tactics – Price, Product, Promotion, and Place (distribution) consider how they might add to the customer experience. Watch how African cell phone provider, Celtel, matched their tactics to meet the needs of their target segment in an area of the world where cell phone usage was low and the market, while large, was presumably unattractive.

Around the world cell phones are sold on a subscriptions basis. The subscription model works well if the customer has a steady source of income. However, in Sub-Saharan Africa where poverty is the norm the subscription model was such a poor fit that African governments were having difficulty finding buyers for their mobile licenses. Mobile phone providers were so locked into their subscription pricing model that no one could figure out how Sub-Sahara African customers could possibly pay their bills.

Where other cell phone providers saw risk, Celtel saw an opportunity. Rather than trying to shoehorn a subscription model into the impoverished region, Celtel changed the pricing model to meet the needs of their target segment. They started selling pre-paid phone cards for a few dollars each. Even people living on a few dollars a day could afford the phone cards and today Celtel serves over six million customers in thirteen African countries. What can we learn from Celtel?

  1. Tactics must follow strategy: Celtel knew their customer segment didn’t have a steady source of income so they devised pricing tactics to fit their customers’ ability to pay.
  2. Don’t lock yourself into one model: Strategy and tactics must be molded to meet the local customer needs. A strategy that works in one culture or for one economic class often won’t fit in other cultures or regions.
  3. Look for opportunity where others see none: It took some creative thinking but Celtel hit on an economic model that fit the needs of their target segment and now is reaping the benefits.

What about for your business? You may have a great set of marketing tactics that has worked in the past but over time your customers’ needs can change and so must your tactics! For example, today many high tech firms are moving from a product model – selling software – to a service model as their segment needs have changed. Have you noticed that Microsoft no longer sells MSOffice – instead it’s a yearly subscription. Also, who owns a server anymore? We gave up ours long ago. We now leave the maintenance and upgrades to the experts and rent space for our simulation operations from Amazon and Azure. Is it time to revamp your tactics?

Match your tactics to the needs of your segment as Celtel did and realize the rewards!

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