Why is marketing understanding important in strategy formulation?

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Value in a business is what the customer is willing to pay for. Business strategy is about creating and communicating value to the customer. What is value for the customer? How do you create and communicate value? This is what makes marketing understanding important in strategy formulation.

Marketing is a two way communication. It lets you reach out to your target audience and tell your story. At the same time, it lets you complete your research to truly understand your customer. Marketing is successful when you can discover the needs and goals of your customer.

As you discover the customer needs and goals, you get to know what is “value” for your customer. This becomes the core of your business strategy formulation.

The importance of marketing in strategy formulation

Marketing understanding helps uncover and communicate value to customers
  • Define value – this is what the customer is willing to pay for. Features and benefits. Higher the value, higher the price
  • Create value – how could you incorporate those features in your product or service? R&D, engineering and manufacturing teams need insights from sales and marketing to develop the best product. “Best” is defined by the buyer, not the seller
  • Sell value – how do you communicate, educate and convince your customer that you have what they need or want?

“Always provide value. Value builds trust. Once you have that trust, you have the ability to do some selling.” — Mike Volpe

How does marketing understanding influence strategy formulation in each stage of the business life-cycle?

marketing understanding important in strategy formulation is all stages of the business life cycle
The business life cycle

The Launch Phase

There is a lot of planning and execution a business has to accomplish even before launch. Information from many sources is combined to introduce a new product or service to the customers.

Let us use an example to illustrate what makes marketing understanding important in strategy formulation in each stage of the business life cycle.

The plan is to launch a web and mobile app that uses artificial intelligence for logo design. The app would allow users to answer a few questions – about the industry, business and their preferences. Based on the inputs, the AI algorithm of the app will give design recommendations to the user. The user can download the preferred logo design.

What inputs can the app startup get from marketing during the launch phase?

The startup team can launch a beta version of the app and promote a free trial to early adopters. As part of the free trial, early users of the logo app can be asked to respond to a questionnaire once they download their free logo design.

The questionnaire can ask questions to understand:

  • The ease of using the app
  • How are the design options in comparison to other companies offering similar solutions
  • What is the price early adopters would be willing to pay for the service?
  • Does the AI algorithm meet the needs? Do we need to have some integration with human designers?

The beta testing also determines user adoption across age group, industries etc.

These inputs from the marketing team will help in determining the pricing strategy for the logo app startup. It also narrows down the target user group – how and where to promote?

The Growth Phase

The beta testing of the app would have provided relevant inputs to answer the “value” question for the logo app startup.

When the app is ready for a larger rollout to onboard paying customers, marketing needs to communicate what it has learned during the launch phase.

What do prospective users of the app want to know? What messaging would help get more customers to use AI powered logo design?

The team needs to understand what marketing strategies would work best for their product segment and target customer group. In the growth stage of the business lifecycle, the startup has to sell “value” as determined to more and more customers.

Marketing understanding will help in unlocking opportunities for business growth. While the product itself stands the test and meets customer specifications, successful marketing can take the app from the first 100 to the first 100 thousand users and then beyond.

“Sometimes you have to experiment with a lot of ideas and see which one sticks. If you’re unsure, let the market decide.” — Dorie Clark

The Maturity Phase

After the growth stage, the logo app startup like all other businesses needs to keep customers hooked on to the product for sustaining revenues. The app needs to keep adding new customers and has to bring back old customers for repeat orders.

Customer retention and engagement becomes a top priority in the maturity stage. This is when you face off with old and new competitors. Your competitors can now study your business and information would be easily available – product strategy, history, customer demography, marketing channels etc.

This is also a phase when as a business you may need to pivot to a new strategy. Again, marketing is what helps you in getting insights from existing customers on what other problems can you solve for them.

Once you pivot or add new products, marketing understanding will determine how you promote and sell to your customers.

What products can the logo app add for its customers after 3 years of launch? A complete brand kit solution powered by the same AI algorithm? Or some other product?

Answers from these questions can be uncovered by marketing. Marketing can help make business pivot and innovation decisions.

Not just new development, keeping competitors at bay will be the hottest agenda in business strategy meetings during this phase of the business. Marketing again will play a big role in communicating the companies strategic advantages to the target customers.


Communication with customers at all stages of the business life cycle provides actionable insights to a business. These influence the firm’s overall business strategy.

Marketing has a dual role in accomplishing this. It helps gather insights that shape up the business strategy. It then communicates back to the customers on how the business serves their needs and why this is the best solution for them.

“A brand is no longer what we tell the consumer it is — it is what consumers tell each other it is.”

Scott Cook

Marketing is how a company influences what and how customers talk about your brand. Understanding how marketing works helps business capture what customers think, say and need.

Once that information is combined to create the product, marketing understanding lets the business go back to the customers with the solution they asked for.

“Business has only two functions—marketing and innovation.” — Milan Kundera

How does competitive marketing help businesses improve customer satisfaction?

Learn from competitive marketing
Use competitive marketing and research for customer satisfaction and marker share

Did you know that competitive marketing helps enhance customer satisfaction? It helps you eliminate guess work. Guess estimates can burn through your marketing budget. And we now see an extremely competitive landscape. You need to play offense for stealing market share and retaining customers.

By Nitesh Verma

Founder - Business Management Blog. I am an independent business strategy consultant, helping companies take data driven business decisions. My mission is to find and implement simple solutions for complex business problems.

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