Focus on substance. Increase value – Invigorate outdated marketing programs. Make sure you implement. Expect impact on company valuation.
Focus on Substance
Step 1. Define your current position, decide on the position you want, outgun the competition.
Difficulty rating: Defining is easy. Sticking to your plans takes focus.
“Lite Beer from Miller. Everything you always wanted in a beer. And less.” [Refer to Reis and Trout's Positioning the Battle for Your Mind. Warner Books. 1981.]
The beer market is huge. How can you possibly sell more against competitors like Anheuser Busch?
Redefine the market place by segmenting the landscape and defining a new niche to own all for yourself. If you can’t own the whole beer market, what beer market can you own?
Step 2. Plan for the chasm between the early adopters and ultimate market.
Difficulty rating: Requires perception shift. Tech firms fail early if they do not make the leap.
Define the battle very carefully. Create an elevator pitch that says it all in a few short words. Launch into a product segment that you can win in. Expand only after you own that segment. Choose achievable goals that are capable of growth into long-term success. And don’t accept just any sale. Take only the ones in your target market. Discipline is crucial. The only correct strategy is the “big fish, small pond approach.” [Refer to Geoffrey Moore's Crossing the Chasm. HarperCollins. 1991.]
Think back to one of Apple’s first strategies. Apple owned desktop publishing long enough to demonstrate the credibility of the company enough for it to continue to grow in other sectors.
Step 3. Include Connectors, Mavens and Salesmen in your plans.
Difficulty rating: Word of mouth epidemics require careful observation of your market and crucial actions.
Hush Puppies were huge in the fifties. Why were they successful in the nineties? A few hipsters – Mavens in Gladwell’s parlance – in the East Village realized that Hush Puppies were comfortable and cheap, and that no one else was wearing them. Other people watch hipsters carefully to find out what the newest fashions are. They started to buy Hush Puppies. The rest is history. [Refer to Malcolm Gladwell's The Tipping Point. Back Bay Books. 2002.]
You can’t advertise everywhere. Focus on the hipsters in your segment.
Step 4. Create remarkable products that the right people seek out.
Difficulty rating: Makes marketing easier – and maybe less expensive.
In the post-TV advertising age, create remarkable products, advertise them to the early adopter, stop worrying about your strategy, operate in short cycles and make big changes. An interesting example is the Aeron Chair from Herman Miller. Miller created a very expensive chair that looked different and cost a bunch. [Refer to Seth Godin's Purple Cow Transform Your Business by Being Remarkable. Portfolio. 2002.]
The chair sent a message about what you – and your company - did and who you were. They didn’t invest in marketing. They invested in creating a product that everyone wanted. The key is, since so many marketing dollars are misspent, it is better of focus on creating better products than marketing programs.
Miller didn’t make a safe chair that everyone would buy. They made a risky new design that the market embraced. They spent their money on product design, not advertising.
Step 5. Go beyond competitive advantage to alternative products and services.
Difficulty rating: Requires new thinking.
Michael Porter defined competitive advantage in the early eighties. All of us have been following his competitive analysis process ever since. Blue Ocean Strategies go way beyond analysis to a new way of thinking. [Refer to Kim Chan and Renee Mauborgne's Blue Ocean Strategy. Harvard Business School Press. 2005.]
Ringling Bros. And Barnum & Bailey circus took one hundred years to reach the same level of revenues that Cirque du Soleil did in twenty in a declining industry with supposedly limited growth prospects.
Cirque du Soleil stopped trying to beat the competition, expanded existing market boundaries by competing not against other circuses but against upscale entertainment like Broadway plays. They dropped animals from the show along with the three rings that had defined what a circus is since the mid-eighteenth century. They added a story line to the show and moved back under the big-top, something Ringling hasn’t done since the mid-fifties.
Interestingly, Ringling Bros. has announced that the 136th edition of their circus is dropping rings and will follow a story line, strategies Cirque du Soleil adopted years ago. Let’s watch to see if Ringling’s competitor-based approach will trump Cirque du Soleil’s “redefine-the-market” approach.
Marketing Stalled at Your Firm?
Work through all the steps. While they represent twenty-five years of marketing history, the references also represent a marketing process that wins you more revenues and profits. They both feed to increased company valuations.
We’ve been talking about the first four steps for years. Blue Ocean Strategy is new. We’ve called it outside-the-box thinking or some such thing all along. But it is new. In combination with Purple Cow strategy (focus on the product not the marketing) you have two powerful new tools.
Make Sure You Implement
Position from the customer’s point of view, especially when defining your differences from the competition.
Sell “before the chasm” products to “before the chasm” buyers.
Consider whether your traditional marketing program continues to make sense. Identify key referrers. Focus on Connectors, Mavens and Salesmen.
Shift from heavy marketing expenses to heavy product development investment.
Re-define your market place. Consider alternative industries, a new chain of buyers, complementary product offerings, a new emotional appeal to buyers or look farther out to new changes that may effect your business.
Impact on Company Valuation
There is a shift in marketing processes taking place. Positioning within the market is shifting to creating new markets with breakthrough products and services. There is risk in the movement, along with possibilities for increase valuation.
The approach is strategic. It works well before the sale of a business as well as after the sale. While turnarounds are sometimes special, marketing evaluations still make sense, especially later on. Expect changes to take twelve to eighteen months to implement. Strategic changes require the involvement of your whole company team. Include marketing, operations, research and finance.
Outmoded strategies have an effect on your company valuation. Positioning and competitive advantage forced you to continually duel with your competitors. Breakthrough products and services require new breakthroughs to maintain momentum. The days of creating a new product and staying with it for a long time are receding.
The strategic approach takes time. Time is money. The impact of outdated marketing strategies on valuation may be significant.
COPYRIGHT 2006. JACK MIXNER. ALL RIGHTS RESERVED.
JACK MIXNER 714 449 1040 jmixner@mixnerstrategy.com