Marketing Myopia: Expand Your Vision and Strategy

Even if your company has a successful product with very little competition, it’s important to stay on the defense. Getting too comfortable can leave you vulnerable to competitors – or, even worse, leave you unprotected if your product becomes obsolete. This process starts by shifting from a sales based approach to a marketing based approach, allowing you to focus more heavily on the customers’ current and future needs.

Defining your Business
When defining your business, it’s important to have an open mind. For example, a car manufacturer may choose to expand their business from automobiles to transportation – looking at new ways to address customers’ needs. Having a vague or outdated definition of your business can negatively impact the future of your company and severely limit growth opportunities.

Reshaping your Focus
Companies need to think about customers in a new way. Often times, companies are focused on sales efforts which directly impact revenue. However, understanding the customers’ unique needs, and addressing them through marketing efforts, will do a better job of driving results.

Piggybacking on New Innovation
New technology that makes a company’s core products irrelevant or obsolete often feels devastating. However, this should be a welcomed opportunity for businesses, allowing them to tap into new customer needs, or even serve an untapped market segment. This can also reduce the amount of time a company spends at the drawing board coming up with new products designed to sustain and grow a company.

Watching for Signals of a Changing Industry
According to the Harvard Business Review’s article “Marketing Myopia,” there are four factors that can indicate that turbulent conditions may be ahead. Here’s a quick breakdown:

1. There isn’t any competition for your product. Once your product gains popularity, competitors will quickly swoop in to cash in on the new “needs” created by the product.
2. Your product serves an affluent client base. This gives businesses a false illusion that their product is safe from the highs and lows of market conditions.
3. Having too much confidence in pricing the product lower, and selling more volume. This creates a disproportionate focus on sales instead of marketing efforts. These two components need to be carefully balanced.
4. Your product is reliant on scientific experimentation and improvement to continue to grow.

Focusing on Improving Efficiency
Many companies focus on improving efficiency in hopes that larger profits and growth will follow. However, this can be a mistake for companies if it results in neglecting other important areas, such as focusing on marketing efforts or improving their generic product for future growth. Striking a balance between these factors will produce the best results.

Breaking a False Sense of Security
Often times, when a company creates a product that appeals to an affluent consumer base, they feel overly confident in the success of their business. This lack of focus can open up opportunities for other competitors to create products that appeal to the customers’ needs.

Also, some companies have the misconception that their product is “indispensable.” Although you might not see an immediate substitute for your product, it’s important to not get too comfortable. New developments in the market can quickly make your core product irrelevant, which will result in a downward spiral of profits.

Evaluating Mass Production
As a product gains popularity, often times a company will ramp up production to drive down per unit cost. However, companies should be careful about managing this process. This also creates a high amount of pressure to “move” the product. This attitude can shift the focus of staff to sales, rather then marketing the product to drive sales. This process is important because selling focuses on meeting the needs of your company, while marketing addresses the needs of the consumer. And, ultimately what drives growth is the connection consumers feel with your product.

Creating an Emotional Connection with Consumers
When a consumer is purchasing a product, they need to be able to connect with the item. For example, products that consumers “have” to buy instead of “want” to buy lack emotional appeal. For this reason, it’s important to approach these products differently. For example, buying gas for your car isn’t always pleasurable, but getting more gas mileage or another added benefit can create an emotional connection. This will drive growth in sales, and create enhanced profitability.

Creating Better Marketing Campaigns
Focusing on creating more creative advertising strategies and sales promotional strategies can protect your product from competition, and help establish a unique position for new products. Often times, when exploring these strategies, companies will discover they haven’t asked basic marketing and sales questions.

Changing the way your company thinks about marketing can give your business a competitive edge in the marketplace. Also, understanding that even though your company has a strong position in the marketplace right now – it’s possible for that to change anytime. Investing resources in marketing will help protect and grow your company in the future.

Resource:

Theordore Levitt. “Marketing Myopia.” Harvard Business Review.

Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of “Driving Business Value in an Uncertain Economy,” “Selling Your Business the Easy Way,” “Enhancing Your Business Value…The Climb to the Top,” and co-author of “The Business Sale…A Business Owner’s Most Perilous Expedition.” For more information, contact him at 770.399.9512 or click here to email Mark.

Winning Over the Marketplace: Competing with Analytics

Maintaining and expanding your position in the current marketplace is essential for survival and growth. But many businesses are left asking the question, “What strategies can drive better success?” This is especially true if your company has a disadvantage, like higher pricing due to competition from companies that use offshore production.

But, even without the best pricing, there are ways to differentiate your products, become a market leader, and ultimately maximize your revenue. Analytics is the new “secret weapon” of choice for many companies. Having a heavy focus on analytics allows companies to make better decisions based on a high quality of data and analysis.

These tools can be used for a variety of functions, from determining pricing strategies to enhancing your company’s brand loyalty. But, before tackling your analytics strategy, it helps to have a few pointers.

Choosing your Focus
When creating a plan for analytics, it’s important to focus your efforts on areas with potential for the largest impact. Developing data and strategies around these areas pave the way for market leadership, and better results. Here are a few items to consider:

• Research and Development: Many companies allocate large resources on research and development, which can be smart when done effectively. When managing this area, use analytics to improve the effectiveness of this process.
  
• Brand Loyalty: Once you’ve identified the most profitable market segment, it’s important to focus efforts on measurable retention strategies. Analytics can help you gather the information needed to accomplish your goal. This will enhance brand loyalty, and create lasting momentum for your company.
  
• Quality of Services or Products: Catching problems before they become widespread will help you quickly contain problems, and create solutions. Analytics can help you track this information, and create strategies for improvement.
  
• Supply Chain Management: Holding inventory too long is expensive and can negatively affect your bottom line. The quicker your product moves, the less holding costs, and the more revenue. Using analytics to manage this process will allow you to operate more efficiently, and have better cash flow.
  

Fine Tuning Pricing Strategies
An important part of analytics is determining your consumer’s threshold for pricing, and setting a pricing point accordingly. You can also expand your offerings, as discussed in The Harvard Business Review article, “Competing on Analytics.” After mastering pricing strategy, Marriott International expanded their expertise to areas like conferences, catering, and internet sales. This gave the company many opportunities to fine tune pricing, and appeal to profitable market segments.

Focusing on Retention Strategies
Most businesses know it’s more expensive to generate new customers than retaining your existing customer base. This means that developing optimized programs and targeting your loyal customers is worth the expense. Allocating resources on analytics focused on this area will yield positive results.

Shaping Revenue Strategies
In addition to implementing a retention program, companies should consider measurement tools which allow tracking for optimal revenue potential. For example, in the same article “Competing on Analytics” by the Harvard Business Review, Marriott created a revenue-management system that was designed to measure and grow revenue. Using this measurement tool allowed Marriott to grow their revenue from 83% to 91%.

High Impact Analytics Teams
When incorporating analytics into your company’s strategy, consider choosing skilled employers across all business units to join the team. For example, employees working in business units such as: marketing, operations, sales, and consumer research can maximize the impact of your team. That’s because a variety of backgrounds allows greater insight into the process and strategy behind analytics.

Role of Leadership in Analytics
Although not every CEO or senior manager has a background in statistics, having a trusted group of advisors can help them wade through information easier resulting in better decisions. These leaders should have internal consultants with expertise in this area to assist with questions. Also, when hiring employees in all departments, make sure there is a nice cross-section of employees who are skilled in analytics.

Managing and Sharing Analytics Data
The data collected during the analytics process is valuable across all sectors of your organization. For example, analytics can be used for developing pricing and promotional strategies - and for sharing with vendors and business partners to work towards future strategies and promotions.

In addition, this information can be used to tell a story about your company. Results generated from this information are valuable in your annual report, investor communications, and even marketing materials.

Balancing Analytics
Overcoming disadvantages in the marketplace isn’t easy. But having analytics on your side will enhance performance, and drive revenue. And remember that analytics should guide your decisions, but ultimately you’ll also need to trust your instincts. Using facts to direct your company’s resources, combined with your business instincts, will yield the best results.

Resource:
Author Info. “Competing on Analytics.” Harvard Business Review, January 2006

Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of “Driving Business Value in an Uncertain Economy,” “Selling Your Business the Easy Way,” “Enhancing Your Business Value…The Climb to the Top,” and co-author of “The Business Sale…A Business Owner’s Most Perilous Expedition.” For more information, contact him at 770.399.9512 or click here to email Mark.