Surprisingly often, marketing plans are based on outdated assumptions about competitors and customers, says Dr Liam Fahey.
Before you develop your next marketing plan it is valuable to conduct a thorough market assessment that can lead to your discovery of breakthrough insights – that is, truly new understandings that could make a profound difference in how your business competes.
To illustrate, let’s look at an example of how one company’s marketing team arrived at two major insights – one about its biggest competitor and the other about customers’ changing needs. Armed with those two important insights, the team was able to create a far more effective marketing strategy.
Take a fresh look at your competitors
If you think you have a good understanding of your competition, you may need to take a closer look. In our example, the marketing team at a small ingredients manufacturer had competed for many years against the industry’s dominant rival, whom they affectionately dubbed “the Gorilla”. The smaller firm marketed a product line that was similar to the Gorilla’s but sold at a slightly lower price along with basic technical support. The smaller firm did not have the resources to compete outside its domestic market, while the Gorilla was the global leader.
The smaller firm had long assumed the Gorilla would continue to compete as it had done historically. But the marketing team made a surprising discovery after it decided to conduct a more comprehensive marketplace analysis as part of its annual strategy review. Based on the Gorilla’s public statements, announcements, and recent marketing moves, it became clear that the Gorilla was intent on adding to its global dominance through heavy investment in R&D and expansion of its marketing and sales capabilities within key geographies – including the competitive turf of the domestic market.
This unexpected competitor insight led the smaller firm’s marketers to draw two strategy implications, both of which were the opposite of their long-held assumptions about what it took to win in the business:
- First, the firm could no longer depend on its small R&D function to develop the products necessary to win against the aggressively expanding product line of the Gorilla; and
- Second, the firm could no longer treat its customers as merely purchasers of the products, but instead the firm needed to build closer relationships with customers so they could better anticipate customers’ needs.
Better insights help anticipate what customers will need
Acceptance of the two strategy implications above led the firm to send a cross-functional team to conduct a series of customer visits. The customer conversations proved to be very illuminating, and a striking new insight into customers’ needs emerged.
First, these CPG customers were increasingly being asked by their own customers to contribute more value to them – for example, by offering solutions that would enable them to deliver better tasting products to consumers and/or that would be easier to manufacture. In short, it became evident the smaller firm had to better understand the entire customer chain, from its own manufacturing plant out to the end consumer.
Second, the smaller firm’s immediate customers needed more than just a product. In fact, the customers could probably buy similar products from others, including the Gorilla. These customers wanted a relationship with their provider, a partner who would work with them to refine existing products and help develop the next generation of products. Both product refinement and new products were essential since these customers obsessed about their value proposition to their own corporate and channel customers.
It was only through intensive deliberations with multiple customers that the smaller firm’s marketing, production and sales team reached the critical new insight about what they needed to offer their customers. The firm could not just be in the business of delivering a product: it needed to be in the business of co-creating solutions that would eventually enhance the end-consumer’s experience.
New insights can change everything
The team’s realisation led to massive shifts in three major aspects of the firm’s approach to marketing: the value proposition, the marketing offer, and the competitive positioning.
First, they redefined the value proposition to go beyond merely focusing on their product’s technical attributes. Their new value proposition was the returns any customer could extract from the product by creating value for its customers.
Second, the firm’s new understanding of customer value caused it to change its concept of what it was offering: rather than the limited focus on tangible products, the new offer was summarized by one member of the firm as “Everything we do for you and with you, the customer.” The tangible product was only one part.
Third, because of the new understanding of customer value, the marketing team had to change its competitive positioning away from being a provider of a cheaper, sometimes commodity-like product. Vestiges of the commodity-oriented thinking that dominated the early years of the firm were sometimes still evident in meetings. However, the intent of co-creating with customers the next generation of products was to ensure clear differentiation of their new product-plus-service offering compared to the offerings of any rivals, especially those of the Gorilla.
As a result of discovering new insights about their competitors and customers the marketers now saw creating new customer opportunity as the focal point for their efforts, which proved to be a highly successful strategy.
So, my advice to you is to devote some extra effort to taking a deeper look into your market – your competitors, your customers, and your industry – before trying to craft a winning strategy. Your insights could change everything.
Dr Liam Fahey is Professor of Management Practice at Babson College USA and Cofounder of Leadership Forum. His new book, The Insight Discipline, is available from Emerald Publishing.