Marketing strategy is part of corporate business strategy. However, many companies either isolate the former from the latter, or confuse the two by only investing on the former. These are the two tendencies of most Chinese entrepreneurs, which, unfortunately misleads their businesses in many cases.

Since marketing strategy is a component of the business strategy, we have to understand what a business strategy is. In simple words, it is a way in which you leverage your competitive advantages to create the differentiation from your competitors both in products and services, and by doing so, bring maximum value to your customers.

The first and foremost point in this perception is to concentrate on customers. Customers have to become the focus of your business strategy. You might take this for granted, but in many companies, the business strategy centres on the shareholders, and people there just work to satisfy their boss. But for us in B&Q, there is a motto we believe in: Satisfying customers is the precondition of satisfying shareholders. Without meeting customers' needs in the first place, it is impossible to meet the shareholders' requirements.

Your business strategy will not be easily copied and plagiarised by others. It must be based on the company's relative advantage. What is this advantage expected to achieve? Differentiation. This is the key in making YOUR strategy. If it is similar with others', it fails to become YOUR strategy. You provide value to your customers by your relative advantage and differentiation. It means that what you offer to your customer contains value which he is not able to obtain in any other ways. So the first conclusion comes out here: Stop talking about what marketing actions you are to take today or tomorrow; take some time asking yourself whether or not you have YOUR marketing strategy.

WINNING STRATEGY: FOUR QUESTIONS

Where does your marketing strategy come from? Primarily, you need to find out the business strategy of your company.

How do we know what strategy our company needs? First of all, you have to ask yourself several questions. The first is: Did we win in a certain aspect? Or in what aspect can we win? Those of you in Shanghai might remember that when IKEA opened a new store after closing its previous one, they put out the slogan ? "Big IKEA, Small Price. What was it trying to say? It actually asked, "Did I win? Why did IKEA employ this catchy phrase? What did you feel in visiting the old IKEA store? Cramped space and premium price. So the new catchword showed that IKEA had won by opening this new store which was an impressive improvement compared with the old one. When B&Q opened its first store in 1999, the advert conveyed the messages as follows: The first was air-conditioned shopping; Secondly, unconditional refund is available within 30 days after purchase. No less and no more at that time. Did we win by them? Yes, we made it.

The second question you need to answer for yourself is how much you won. If the reply is "Yes, but not much, it means a genuine differentiation has not been produced. In the case of B&Q, air-conditioned shopping was something very rare in those days and we won a lot in this regard. What about 30-day unconditional refund? If there was ever a store offering the service of 28-day unconditional refund, do you think we would stick to the 30-day offer? We would not, for the winning would be minimal in that case.

Then ask yourself if the winning is sustainable. You might win by air-conditioning today, yet tomorrow all the newly-opened stores might have it. Then your winning situation cannot be maintained any longer. You'd better give it up right there.

The last and the most crucial question: Does your winning tools mean anything significant to the customers? For instance, was it important for them to enjoy air-conditioned shopping? Yes, indeed. Does 30-day unconditional refund count anything for them? Surely. So, you must identify those comparative competences that are of great importance to the customers. What was the comparative advantage B&Q beheld in those early days? None other than air-conditioned shopping. At least during the summer of 1999 in Shanghai, there were no other building material stores where shoppers could enjoy the air-conditioned environment. Therefore, the winning lasted throughout the summer that year.

Finishing all the above questions means you have successfully produced the business strategy, or the product strategy, or the entailed marketing strategy for your company. Hence, the fundamental job you have to do is to formulate a strategy for the whole business, or for the products and services you offer. Don't even think about promoting your products or services at this point. Without business competences clearly defined, how can you ever begin with marketing?

In the past 5 years, B&Q has successfully played several cards: The first is product quality and shopping environment; the second is price, i.e., B&Q offers reasonable price; now we play the card of soft decoration. Why is this sequence? For we want to meet the most important and fundamental needs of the customers ? quality and environment. Then follows the painful price war. Why didn't we bet on some other options? We could not find any other differentiation that was critical for the customers. But you still need to consider seriously your capability of engaging a price war: Is price differentiation important for the customers? Is your price much different from what others offer? How much can you win? If the difference is merely a few pennies, you'd better forget about it. Can you persist in playing this card? How long can you afford? Do you have any comparative advantages for it? Don't rush into the price war if the answers to the above questions are mostly negative.

Quality, price, and service. These are some significant cards you have to include in your business strategy. You've got to have all of them before you start to play the game, that is, an appropriate marketing strategy to put them out.

THE EARS OF MARKETING: HOW DO YOU LISTEN?

What is marketing? First of all, it is communication with the customers. Communication does not mean endless talks. I mentioned earlier that in our Chinese business world, there are quite a few misleading perceptions. One of them is marketing operations without a marketing strategy, or even a marketing strategy not underpinned by a business strategy. Now, I am going to tell you the second erroneous view, which equals marketing with never-ending rambling to the customers. People who hold this view tend to forget that marketing serves as a company's ears and mouth. But first of all, it should be ears, for you have to listen before talking.

Many marketing cards have been played by B&Q in China up till now. But essentially, how did we know for sure that they count for much to the customers? We "ask our customers! Every card we played is what our customers told us to do! Take for example our "unconventional way of setting up a decoration design centre in the store. In the UK, B&Q is an advocator of customer DIY, whereas in China instead of calling for DIY, we give a hand to our customers in designing and decorating, which is indeed "rebellious to B&Q tradition. But why is it? Whether in the UK or in China, B&Q obeys the same God, i.e., the customers. Whatever they want is right. We listen to them and take it in. B&Q promotes "all-in-one shopping, facilitating the customer to get all he wants in one store. But the decorating company he found failed to deliver the best result. The decorating company shuffled the burden to B&Q, while the latter found out the technology incapability of the former. Then the customer stepped out and said "why can't B&Q help me to DO the decoration? Once hearing this complaint, we took prompt actions by offering the service. Another example is our service of household appliances. A customer bought the cupboard from B&Q and took the measurements with him to Gome to get a fridge there. But eventually, he realised that the fridge could not be fit into the cupboard. So he asked why B&Q could not offer good quality white goods. Later, someone raised another point: "You've done the initial decoration, but I still have to sort out curtains, furniture and the like in IKEA. Why can't you get for me the best matching colours and cohering designs? We also accepted the proposal and offered the related service.

How do you listen to the customers? Some companies in China attach much importance to marketing research or client research. They appear hugely complicated, involving numerous methods, questionnaires running for pages and a large sum of money paid to college students to do street surveys. What are all these up to? To listen to the customers. But is it as complex as it looks? I personally do not think so. The followings are some listening tools my colleagues and I draw from our experiences. Simple and short as they are, they might not be able to stand for all types of marketing research.

First, regarding the marketing questionnaire, I suggest we mostly use "Yes or "No format instead of quantitative one. The scoring method is very subjective. In learning about the customer's view of B&Q, we only need to ask several "Yes or "No questions before grasping the problems of the company and perceiving the customers' basic requirements:

"Have you ever heard about B&Q? You have only two options: "Yes or "No. If a hundred customers all reply "No, it is easy to conclude that the marketing efforts are far from enough to raise the brand awareness. An easy solution is to put out more adverts to boost it. The other possible answer is "Yes, following which we may inquire about our products using the same format.

"Have you ever visited B&Q? One of the two options is "Yes, I have heard about it but never been there. The question arises here: why do you not visit it after hearing about it? Most of you might argue that the store is too far away from home. Thus, we decide to open more stores and find the best locations to get closer to the customers. All of you might remember that the advert slogan for the opening of our second store was "One More B&Q, One More Step Closer to You. Apart from distance, other reasons might include high price, lack of characteristics and even your reluctance. The list goes on for further exploration.

"Have you ever bought anything from B&Q? might be the third question, given that the customer heard about the store and paid it a visit. Again two choices: "No or "Yes. We may ask "Why to the one who answered "No. One probable reply is that "You don't have what I want, which shows the incomplete product range in our store. We are also likely to hear that the stuff is too expensive or the service is very poor. So we will be able to identify more problems. Marketing is not to blame if those who have heard about B&Q and paid it a visit end up with no purchase. Through marketing the customers turned up in the store, but they might not buy anything due to problems in our procurement and operation.

Even if the customer did buy something, we have to follow up by asking "Did you get all you wanted? How much have you gotten? Then comes the double choices to which one group might answer "Yes, I bought a lot, nearly everything I needed, and the other group "Yes, but only a small part of what I wanted. Again we might press further by asking "What did you fail to get in B&Q? In this way, we can detect more problems: Do we lack anything our customers need? Are many products too expensive? Are the services good enough? Are non-delivery or non-installation policies having negative effects?

The next question is: "Will you come again after this purchase? After getting "Yes or "No, we have to add one more question: "Will you recommend others to come? Again, we will get a positive or negative reply. Who is your "diamond-level customer? He who gives you positive replies to all the above questions is the very one: "I have heard about B&Q; I came to visit the store; I bought a pile of stuff; I will come next time; I will recommend my friends to come. No company in the world has ever got "Yes to all these questions from each individual customer. This remains the dream of every company that no matter what they provide, may it be products or services, every customer will give positive answers to all those questions.

Should you take prompt actions on hearing what the customers say? The fact that these voices reach you indicate their critical importance to the customers, therefore your corresponding actions will have great chance of creating added values. Will you take the risk of doing it? Do you have the comparative competences to do it? Four years ago, we already heard the complaints that air-conditioners were not available in our store, neither were fridges nor curtains. But we didn't venture to do anything, for we were lacking the comparative advantages then. Without them, we would not succeed in any actions, or maintain our success for long. Hence, you need to pen down whatever you hear from the customers and only take actions when you are fully prepared.

THE MOUTH OF MARKETING: TO WHOM SHALL WE SPEAK?

How do you speak after listening? A key point is the recipients of our speech. The customers are whom we talk to. But we tend to forget it while talking. Sometimes, you shout to your rivals to protest against their newly-created catchword. Sometimes, you intend to get the attention from your boss, the shareholders or the vendors. Even when you consciously speak to your customers, are you aware who they are? This is not as simple as you might assume. You may hope that everyone is your customer, including all 1.3 billion Chinese and 6 billion global citizens. But anyone who holds this ambition is bound to fail. You've got to have a target consumer group. For example, B&Q is positioned in the middle-class consumers, serving the blue and white-collars with medium or high income. Supposedly, Coca-Cola and Pepsi embrace the whole world by what they sell. But in fact, they focus on different segmentation markets: Pepsi's consumer group is younger than that of Coca-cola's. Whoever desires to win over the entire globe is destined for defeat. You can't possibly have an illusion like this. Actually, you don't have to: 100 million people from among Chinese population will surely make you rich if they all consume your products; Even 10 million consumers will be sufficient to boost your business.

Some of you mentioned REEB Beer, whose advert catchword says "REEB is Why I Fancy Shanghai. Obviously, REEB has no ambition of invading the Beijing market. Rather, they choose to excel in Shanghai. With the population of 15-16 million, Shanghai's market is almost as big as the whole Europe. REEB can be proud of its brilliant performance to secure the market in Shanghai, including the surrounding areas.

Another example is some CCTV adverts. They could serve as the best examples of how you offer yourself as a negative marketing case. How many adverts played there are proved correct? True indeed, not many adverts are currently suitable to be put on CCTV. P&G now champions in the CCTV advert bidding wars, which is a recent phenomenon. But during their earlier stage of entering China market, P&G focused on the white-collars in major and medium-sized cities. In those days, they reckoned that it was of little avail to reach the large population of farmers and peasants by playing adverts on CCTV. Instead, P&G did promotion in individual cities one after another before they launched adverts in CCTV to cover the whole country.

THE BRAIN OF MARKETING: WHAT DO YOU THINK ABOUT?

Customer identification is followed by the efforts of locating appropriate marketing channels. What should you take into consideration in this stage? Coverage is critical. When your distribution network is not covering the nation, there is no point doing nationwide advert campaign.

Speed is of great importance. Various media conveys message with different speed, may it be radio, TV, newspaper, magazine or advert signs. The speed is inversely proportional to the volume of conveyed message. In other words, the faster you communicate, the less you can pass onto the recipient. TV is quick in the job, yet how much could you make within 15 seconds? Magazine seems plodding along, but it could deliver much more. If you bundle your products into a book, the reaching process is even slower, with even more contents included.

What about the cost? You fancy TV adverts with its amazing speed and decide to do three-minute TV advert to convey more message. Well then, you are heading for bankruptcy. Not a single Chinese company would survive, should it insists on three-minute advert for each product. Talking about the cost here means to calculate how much you have to invest in reaching every potential customer.

Now comes the issue of matching. Do the marketing media you employ match your product? You put on the lamp-post an advert of your high-end product? You are scratching its image. Never put it there. Put it in some glamorous magazine. The product of this kind is not born for street sales. The similar cases are all over the places in reality. Quite a few foreign banks launched personal financing services recently and their advert flags are overwhelming the streets. Is this the appropriate image of a premium service? Take for another example the insurance companies. The adverts for both high and low-end insurance products are all handed out along the sidewalks. Is it OK? Does it work? Nobody seems to give it a second thought.

The department of marketing is structured along the lines of "listening, "speaking, and one more function of "thinking mind. "Listening is the market research. Every marketing body must have a member in charge of "listening, which should be placed on the top of the pyramid. The budget for this function has to be met as a priority, for "listening is a must. Any speech without preceding listening is no better than a non-sense talk.

The marketing consulting companies over the world will not fall beyond two categories: one is to help you with "listening, and the other is advising you to talk wisely. It is up to you what advice to take. Without good ears, you may turn to others for help; having no talent in talking, you may resort to others. A marketing consulting company is a qualified counsellor to help you listen and talk, but the only thing it cannot do is to think for you. Many consulting firms claim that they are able to offer the strategy-making package and think for you throughout. Impossible! Why? Nobody knows better than yourself about your business. Any company outsourcing "thinking to the consulting firm is hopeless. Only when you thoroughly understand your business and go on to employ a consulting firm to facilitate your "listening and "speaking, will you find a way out by producing a right marketing strategy. Don't worry if you have no good ears or a sharp tongue. I say that the fatal defect is a lousy mind.

Let's talk about marketing budget. Sometimes, other departments begrudge the marketing team its astronomical budget. But at other times, the maketing budget is often the first to be cut when the company's revenue is tightened. The budget for marketing appears incalculable and can only rely on your intuition: you may lift it or cut it as you like. In my view, the marketing budget may be divided into two parts. One of them is for branding and is not directly connected with the sales performance. Ideally, you may analyse your company's balance sheet, for a better-known brand will produce better performance reflected in the balance sheet. But a boss might be most reluctant to set aside this part of the budget. Why is it? Because no direct outcome in sales can be detected. Yet, this part of investment can never be spared. Coca-cola has been persisting in this job and it proved fruitful. I asked you to mention some advert slogans you are most impressed with at the beginning of this forum. You came up with mostly branding adverts. Take for another example of KFC's advert. During the current bird-flu epidemic, KFC kicked off a new advert, promoting its image as "the guard of the health. It might be hard to measure how much sales the investment in this advert might produce, but one thing is sure: the brand is kept intact. Therefore, both branding and product adverts are necessary. In the case of product promoting adverts, you have to follow them up with metrics of sales performance. To evaluate these adverts, you need to know how much sales is directly produced by every penny cost. As to adverts of brand building, you may investigate the consumer awareness of the brand. If 151 people hear about your brand this year, compared with 150 last year, the advert is undoubtedly a failure. But remember to assign a third party to do the job, for only the outsider who helps you to listen can remain genuinely independent, which is good for you. Marketing budget has to earn profit margins in sales. Marketing is a science: any costs and investments are able to be measured statistically.

One of my favourite mottos is "No measuring, no managing. True indeed. It is widely recognised that marketing is the most difficult to be measured. Still, you have to make strenuous efforts to measure it. If you fail to measure marketing budget or the input and output, you won't be capable of managing the marketing department. I have to say this is a daunting task, but toughness is the real testing tool.

The author is CEO of B&Q (China). The article is a revised version, based on his speech entitled "The Science and Art of Marketing at the CEIBS Executive Forum on March 16, 2006. It has been reviewed and approved by Mr. Wei Zhe.