Why marketing is so hard? By John Koetsier I’ve come to believe that marketing is easy

Why marketing is so hard? By John Koetsier I’ve come to believe that marketing is easy.

This perhaps somewhat astonishing idea came to me as I was leafing through some personal archives as I search for just the right items to place on my new portfolio site. Some of my company’s old brochures are in the box, and I remember the struggle we went through at times to find the right words, present the right image, frame the right message.

All of that could have been so such simpler … if we had just built our product with more compelling points of differentiation.

Products with compelling points of differentiation sell themselves. Not that you don’t have to do the marketing, create awareness, sell the idea, and all that. But they write their own story.

A good example is the iPhone. If you’ve seen any of the ads, you know the deal. An iPhone ad never says buy me, or iPhone is better than X phone, or heaven forbid, the either of the words “solution” or “device.” All an iPhone ad does is show you capabilities and possibilities. The rest of the pitch happens inside your own head.

The marketing, in other words, ought to be embedded in the product.

“The marketing, in other words, ought to be embedded in the product.”

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Differentiation: a key marketing strategy

March 30, 2008

By John Koetsier

Seth Godin posted an article on really bad branding a couple of days ago, pointing out some company names that don’t differentiate companies very well:

Jewelry Central is a really bad brand name. So are Party Land, Computer World, Modem Village, House of Socks and Toupee Town.

It’s a bad brand name because Central or Land or World are meaningless. They add absolutely no value to your story, they mean nothing and they are interchangeable.

Why is differentiation such a key marketing strategy?

It’s simple – you only truly succeed as a brand, and as a business, by being top-of-mind in your targeted clients’ minds. And you can only be top-of-mind in your clients’ minds by having a clear, identifiable, distinguishable identity … ideally an unique identity with a story.

The name is a piece of it – an important piece. The image is an important piece. The story is an important piece. The products you choose to create and market are important pieces. The successes you build are important pieces. The customers that you enable are important pieces.

Put them all together, you’ve got a brand.

But if it’s not differentiated … if a client can’t distinguish your name, image, story, products, and successes from competitors … all of it is meaningless.

Because that client will open up the yellow pages (in other words, Google), search, find you and your competitor, and go eeny meany miny mo. Which means that all your hard work and all your investments in marketing mean nothing. Differentiation, which needs to start before your marketing, and even before your product development, is an effort to ensure this doesn’t happen.

This is all obvious. So why are so many companies not differentiated?

Here’s why: differentiation requires discrimination. If you want to be differentiated, you must say no. There must be certain products you won’t build. Certain markets you won’t pursue. Certain clients you don’t want. These are all clear and undeniable corollaries of choosing certain products that you will invest in, certain markets that you will pursue, and certain clients that you definitely do want.

However, many companies can’t say no.

They fail to see that in saying no, they gain increased capability to say a very focused, powerful yes.

Marketing Strategy

Philip Kotler discussed five issues of marketing strategy in his 9th edition of Marketing Management

Differentiating and Positioning the Market Offering

Developing New Products

Managing Life cycle Strategies

Designing marketing Strategies for Market Leaders, Challengers, Followers, and Niches

Designing and Managing Global Marketing Strategies

These issues are covered in different knols by me.  This knol describes differentiating and positioning. 

Differentiating and Positioning the Market Offering

The issues discussed in the area of differentiating and Positioning the market offering are:

• Tools for Competitive Differentiation
• Developing a Positioning Strategy
• Communicating the Company’s Positioning

Tools for Competitive Differentiation

Differentiation - Definition: is the act of designing a set of meaningful differences to distinguish the company's offering from competitor's offerings.

Boston Consulting Group's differentiation opportunities matrix: Actually it is a competitive advantage matrix applicable to differentiation opportunities.

Four types of industries identified by BCG matrix are:

Volume industry: only a few but very large competitive advantages are possible. The benefit of the advantage is proportional with company size and market share. Example given - construction industry

Stalemated industry: in this type there are only few opportunities and the benefit from each is small. The benefit is also not proportional to the size or market share.

Example: Steel industry - It is hard to differentiate the product or decrease its manufacturing cost.

Fragmented industry: in this type, there are many opportunities, but the benefit of each of them is small. Benefit does not depend on size or market share.

Specialized industry: in this type, the opportunities are more and benefit of each opportunity is high. The benefit is not related to size or market share.

Kotler mentions, Milind Lele's observation that companies differ in their potential maneuverability along five dimensions: their target market, product, place (channels), promotion, and price. The freedom of maneuver is affected by the industry structure and the firm's position in the industry. For each potential competitive opportunity or option limited by the maneuverability, the company needs to estimate the return. Those opportunities that promise the highest return define the company's strategic leverage. The concept of maneuverability brings out the fact that a strategic option that worked very well in one industry may not work equally well in the other industry because of low maneuverability of that option in the different industry and by the firm in consideration.

Five Dimensions of Differentiation

Regarding the tools of differentiation, five dimensions can be utilized to provide differentiation.

Product

Services that accompany marketing, sales and after sales services.

Personnel that interact with the customer

Channel

Image

Differentiating a Product

Features

Quality:  performance and conformance

Performance - the performance of the prototype or the exhibited sample,

Conformance - The performance of every item made by the company under the same specification

Durability

Reliability

Reparability

Style

Design 

Services differentiation

 

 

Ordering ease

Delivery

Installation

Customer training

Customer consulting

Miscellaneous services

Personnel Differentiation

Competence

Courtesy

Credibility

Reliability

Responsiveness

Communication

Channel differentiation

Coverage

Expertise of the channel managers

Performance of the channel in ease of ordering, and service, and personnel

Image differentiation

First distinction between Identity and Image - Identity is designed by the company and through its various actions company tries to make it known to the market.

Image is the understanding and view of the market about the company.

An effective image does three things for a product or company.

1. It establishes the product's planned character and value proposition.

2. It distinguishes the product from competing products.

3. It delivers emotional power and stirs the hearts as well as the minds of buyers.

The identity of the company or product is communicated to the market by

Symbols

Written and audiovisual media

Atmosphere of the physical place with which customer comes into contact

Events organized or sponsored by the company.

Developing a Positioning Strategy

Levitt and others have pointed out dozens of ways to differentiate an offering(Theodore Levitt: "Marketing success through differentiation-of anything", Harvard Business Review, Jan-Feb, 1980)

While a company can create many differences, each difference created has a cost as well as consumer benefit. A difference is worth establishing when the benefit exceeds the cost. More generally, a difference is worth establishing to the extent that it satisfies the following criteria.

Important: The difference delivers a highly valued benefit to a sufficient number of buyers.

Distinctive: The difference either isn't offered by others or is offered in a more distinctive way by the company.

Superior: The difference is superior to the ways of obtaining the same benefit.

Communicable: The difference is communicable and visible to the buyers.

Preemptive: The difference cannot be easily copied by competitors.

Affordable: The buyer can afford to pay the higher price

Profitable: The Company will make profit by introducing the difference.

Positioning  

Positioning is the result of differentiation decisions. It is the act of designing the company's offering and identity (that will create a planned image) so that they occupy a meaningful and distinct competitive position in the target customer's minds.

The end result of positioning is the creation of a market-focused value proposition, a simple clear statement of why the target market should buy the product.

Example:

Volvo (station wagon)

Target customer-Safety conscious upscale families,

Benefit - Durability and Safety,

Price - 20% premium,

Value proposition - The safest, most durable wagon in which your family can ride.

How many differences to promote?

Many marketers advocate promoting only one benefit in the market (Your market offering may have many differentiators, actually should have many differentiators in product, service, personnel, channel, and image).

Kotler mentions that double benefit promotion may be necessary, if some more firms claim to be best on the same attribute. Kotler gives the example of Volvo, which says and "safest" and "durable".

Four major positioning errors

1. Underpositioning: Market only has a vague idea of the product.

2. Overpositioning: Only a narrow group of customers identify with the product.

3. Confused positioning: Buyers have a confused image of the product as it claims too many benefits or it changes the claim too often.

4. Doubtful positioning: Buyers find it difficult to believe the brand’s claims in view of the product’s features, price, or manufacturer.

Different positioning strategies or themes

1. Attribute positioning: The message highlights one or two of the attributes of the product.

2. Benefit positioning:  The message highlights one or two of the benefits to the customer.

3. Use/application positioning: Claim the product as best for some application.

4. User positioning: Claim the product as best for a group of users. - Children, women, working women etc.

5. Competitor positioning: Claim that the product is better than a competitor.

6. Product category positioning: Claim as the best in a product category Ex: Mutual fund ranks – Lipper.

7. Quality/Price positioning: Claim best value for price

Which differences to promote:

This issue is related to the discussion of worthwhile differences to incorporate into the market offering done earlier. But now competitors positioning also needs to be considered to highlight one or two exclusive benefits offered by the product under consideration.

Communicating the Company’s Positioning

Once the company has developed a clear positioning strategy, the company must choose various signs and cues that buyers use to confirm that the product delivers the promise made by the company. 

Are you ever frustrated or hesitant when you talk to prospective customers because you can't readily explain why they should come to you rather than go to your competitors? Sure, you might have your 30-second elevator speech, but then they ask you that dreaded question, So what makes you different? Then, all those self-doubts creep in, and you just aren't sure what to say. Differentiation can boost confidence--yours in yourself and that prospective customer's confidence in you!    

Dif-fer-en-ti-ate v. tr. To perceive or show the difference in or between; discriminate.

In business terms, to differentiate means to create a benefit that customers perceive as being of greater value to them than what they can get elsewhere. It's not enough for you to be different--a potential customer has to take note of the difference and must feel that the difference somehow fits their need better. (Other words that mean virtually the same thing: Competitive Advantage; Unique Selling Proposition; or Value Proposition.)

As you are building your business, you can use differentiation to attract more customers. Once you have momentum, differentiation allows you to charge a higher price because you are delivering more value to your customers. Make a point to evaluate and adjust your differentiation methods at least annually.

The various methods of differentiating your businesses fall into four general categories:

• Price Differentiation
• Focus Differentiation
• Product/Service Differentiation
• Customer Service Differentiation

Price Differentiation

Differentiating on price is probably the most common and easily understood method. HOWEVER, for Solo Entrepreneurs, caution is in order. On the one hand, potential customers might expect a lower price from you than from your larger competition because they perceive you as having less overhead, etc. On the other hand, cheaper prices can evoke perceptions of lower quality, a less-stable business, etc. And if you compete on price against competitors with deeper pockets, you can price yourself right into bankruptcy. Be creative with this differentiator by competing on something other than straight price. For example, you might offer:

• More value - offer more products or services for the same price.
• Freebies - accessories, companion products, free upgrades, and coupons for future purchases.
• Free shipping, etc. - convenience sells, especially when it is free!
• Discounts - includes offering regular sales, coupons, etc. (see cautions above)

Focus Differentiation

For Solo Entrepreneurs, this is the most important method of differentiation, and in many ways, the easiest. Why? Because as a Solo Entrepreneur, you simply can't be everything to everybody, so you must pick a specific way to focus your business. Once you have done that, you have an automatic advantage over larger companies because you can become more of an expert in that one field --and you can build close relationships with key customers that will be hard to duplicate. For example, you might differentiate yourself through:

• Location - take advantage your closeness to prospective customers.
• Customer specialization - be very specific about what characteristics your customers will have for example, racing bicycle enthusiasts or companies with a spiritual conscience.
• Customer relationships - know customers really well, form partnerships with them, and get them to speak for you!
• Affinity relationships - associate your product/service with a well-known person or organization.
• One-stop shopping - offer everything your target market needs, in your area of expertise.
• Wide selection (within your niche) although this one may seem to be the opposite of focus - the key is to be very specific in one dimension and very broad in another.

Product/Service Offering Differentiation

How much you are able to differentiate your product or service offering will vary based on what type of business you are in. For instance, if you are in a highly regulated business, your options may be limited. Explore a totally new market or type of product or service, however, and the possibilities abound. The key to successful differentiation in this category, again, is to know your customers, really, really well. Talk to them often, and you will know what they need most and be able to offer it, long before your competitors know what is happening. For example, your product or service could stand out in one of these ways:

• Quality - create a product or service that is exceptional in one or more ways. Examples: Lasts longer --Better --Easier to use --Safer
• New/First - be the first one to offer something in your location/field.
• Features/Options - offer lots of choices, unusual combinations, or solve a problem for a customer in a way no one else does.
• Customization - as a Solo Entrepreneur, you may be able to more easily handle special orders than big, mass-market competitors.

Customer Service Differentiation

Have you noticed how customer service seems to be out of vogue these days? This situation makes excellent customer service a great opportunity for differentiation and another natural advantage for Solo Entrepreneurs that already know what s important to their customers. Build your reputation on making customers feel really good about doing business with you. Works great with referral marketing, too. Examples:

• Deliver Fast - next day, or one-hour--make it faster than customers think possible.
• Unique channel - offer a service over the phone or Internet instead of in person or in their office rather than yours.
• Service-delight customers! - it may seem expensive to offer exceptional service--but it pays off in word-of-mouth advertising.
• Before/during/after-sales support - provide technical or other support to customers using your product. You might use joint ventures to provide that support--but customers will perceive it as being from you!
• Guarantee/warranty - offer 100% money-back, or free replacement parts.
• YOU - offer yourself, your unique blend of talents and skills, to attract customers. Make sure they get access to you, too!

Keys to Successful Differentiation:

• Know your customers, really, really well.
• Pick a blend of differentiation methods that, in the eyes of your customers, truly sets you apart.
• Talk about your differentiation in terms of customer benefits.
• Tell everyone about what differentiates you--often.
• Keep your differentiation fresh by listening for changing customer needs.

 
 
 

Without business differentiation, all businesses selling the same product or service would be challenged to compete against one another, as the market's perception of the business can make or break an entrepreneur. The goal is to discover a niche in the marketplace that:

·  is large enough to make money;

·  small enough to position the business in a different light than the others in the market or area;

·  is well suited to the needs, skills, interests and strengths of the business, and;

·  fills a need in the marketplace.

Ways To Create Business Differentiation

Of the business differentiation list that follows, not all will fit any given entrepreneurial venture- and that's a good thing. Every business cannot compete on the same level, in the same way, and therefore why there are so many business differentiation methods and tactics to choose from. A marketing plan will be very helpful in this business differentiation decision making process, as it provides all of the business strategy needed.

This list is not comprehensive, but it is a good starting point. Do note that it is impossible for any one business to use all of the business differentiation tactics listed below, as it will muddy the message. This is a situation where less is most definitely more.

• Quality
• Service
• Price
• Perceived Value
• Durability
• Convenience
• Warranty
• Financing
• Range of Products/Services Offered
• Accessibility
• Production Method(s)
• Reliability
• Familiarity
• Credentialing

One Last Note On Business Differentiation

As an entrepreneur works through the how to start a business process, more business differentiation ideas will come to light, as well as different ways of implementing them. Just be sure that once a decision is made regarding business differentiation, that it isn't changed once its been put in place, as it can be extremely difficult to reposition a business, if downright impossible.

The image a business portrays in the marketplace - especially with smaller businesses or entrepreneurs- is how customers come to relate and refer to the business. Remove that, and clients can become confused, frustrated, and will likely go looking for another company to frequent that they feel is more stable and reliable.