Confident Market Leaders

It’s very safe to operate in the predictable realm, in the one where you do what’s asked of you – from customers, suppliers and distributors. But if you move past that – away from satisfying demands – and instead focus on building enough confidence in what your company does and what you have to offer, you’ll realize a new kind of market potential.

This holiday season, Apple^® is expanding its distribution channels to more retailers in order to sell the iPad to more customers. Ever the aloof manufacturer, Apple has communicated to retailers in no uncertain terms that if they want a piece of the apple pie, they’re going to have to play by the rules of Apple. Apple is controlling everything from distribution message and methods to price.

At first glance, you might question why Apple is being so harsh. After all, when a manufacturer sells a product to a distributor, both sides stand to gain, so one would think that bargaining power is equal. The manufacturer holds the “killer app” and the distributer has the economies of scale access to the customers. So why is Apple so free to take charge?

Because they’re confident. They know what they have to offer and they’re not shy about it.

So many companies get caught in the race to the bottom. They’re so focused on what the competition is doing and  matching every step that they trip over themselves and fall away from their purpose for existing. Apple’s snarky behavior has been known to ruffle feathers with customers and suppliers. They’re known for not listening to customers. But, they know that what they’ve got is more than you can imagine at the moment. And that gives them the power.

By strictly controlling the product and distribution, Apple sends clear messages:

• We are confident that our product meets your needs and it will be valuable to you.
• Can’t find the product in your price range? Feel free to keep looking, but you’re not going to find our product any cheaper. If you want the cheaper version, look for our competition’s product.
• You don’t like our price? Not a problem, because we’re not selling the product to you.
• You don’t like the product? That’s okay, because we had someone else in mind when we were building it.
• You still don’t like the product? Don’t worry; over time, you will because the market will. We’re confident of that.
• You like our product? That’s good; we knew you would.

When you stop looking to please the market, and instead focus on courageously expanding into areas that are new, or different than what the market is looking at, you can free your company to focus on surprising the customer. Instead of looking eye-to-eye with your customers, look beyond them.

Think about this concept:

*

So many companies operate in the bottom left-hand quadrant. They listen to what their existing customers want and on the needs that existing customers can articulate. Many times they fail to look at the potential that exists in the untapped market space by building products and offering services that customers aren’t even aware of yet.

Look at your market, think about the trends and think about the gaps. It’s safe to operate in the bottom left-hand side. But eventually, you’ll reach the edges. It takes courage to get past the edge, but it’s the kind of courage that will be good for you in the long run.

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* Graph from Competing for the Future; Hamel and Prahalad, 1994

Filed under: Marketing, Messaging, Steadfastness

Receptive messages in receptive moments

In a market where scarcity of choice is extinct, a product (or service) gets little more than one chance to impress a customer. As I was browsing the back of my milk carton this morning, I read the following text:

Does that mean if I drink 52 cartons of this milk, I save only 4.8 lbs of synthetic nitrogen fertilizer from being used for the entire year? Or do I save 4.8 lbs of synthetic nitrogen fertilizer per week? What is synthetic nitrogen anyway? And what does it do to harm the environment? Why do I care?

As a new customer, who made this purchase decision based on a referral, I am still highly influential on my next purchase decision for organic versus non-organic milk. I’m not completely sold on the cost/benefit of organic products. So as I’m reading the back of the carton, I’m looking for incentives that will sway me one way or the other, especially my switching costs are higher (by a price factor of three) for this product.

A purchase decision based on trust (e.g., a referral) is the most powerful way to influence a new customer to try your product. But your product has got to be able to stand on its own and deliver an experience that will make the customer want to try you again. Your product gets once chance. And that one chance, that one experience determines whether or not your product becomes the customer’s new “must have” or “some product that I tried once”.

The devil is in the details. Every channel that you can use to influence your customers (advertising, promotion, price point, placement, packaging, delivery, product experience) should be directed towards the goal of retaining the customers who try your product. When I read the back of the box while eating cereal, the message didn’t compel me to go out and buy my next carton of Organic Farms milk. It made me think “so what?” and “why should I care”?

Also, if you’re going to use numbers to sell your product, put them in their proper context. Make your story believable.

When your product (or service) involves higher switching costs than the competition (whether it’s a higher price, longer learning curve, limited access, etc.) these marketing principles are even more important. Focus on receptive messages in receptive moments.

P.s. In case you’re wondering…the product experience (including taste) wasn’t enough to compel me to buy my next carton. My husband summed it up nicely: “it’s wet…that’s about all it has going for it in the milk category”.

Filed under: Marketing, Messaging