Monday, 23 August 2010

Where is your product positioned??

    What I consistently see as one of the main problems companies have when bringing a new product to market is not knowing where to position their product, and so not knowing what pricing policy to implement which best portrays the tangible benefits and intrinsic values of the product to the customer. Having a clear understanding of the proposition you are providing to the customers you have decided best to target and how this proposition benefits them should be one of the core issues for companies when entering new products into any market place.

    The two main issues to consider when deciding where and how to position your product should be;

• How are you different to your direct and indirect competitors (Do you provide anything more, added benefits, more capabilities etc)

• What is the buying capabilities/priorities of your target audience (How much do they value what you’re providing, to what lengths would they go to purchase your product, do they have the means to purchase what you’re providing)

    Once you know the answer to these questions, you can decide where in the market your product should be positioned, and so using which pricing strategy and via which mediums. Some basic pricing strategies are;

Budget - Look at Ryan Air, Lidls etc. They offer no thrills basics, but at low prices, aiming for the market of conscientious buyers wary of spending above their means and so willing to sacrifice unnecessary luxuries which would make them feel cognitive dissonance (buyers guilt).

Competition based - Take into consideration the competition and how much they charge, and keep your prices similar. This is especially important when dealing with commodities with little room for brand building and so no means to distinguish your product from that of your competition. If you raise your prices too high, then the market has no reason to choose your product above that of your competition, and so you will lose a large share of the market. If you lower your prices too excessively you will also be lowering your profit margins, meaning, depending upon your structure and how much it costs to make and distribute your product, even if you sell vast amounts you will still be making minimum profit.

Premium (Also known as "Skimming") - Look at brands such as Harrods, BMW, Haagen-Daas etc. They charge a premium price because they specifically target an audience that won’t hesitate to pay extra for quality, sacrificing a high number of sales for high profits from specific affluent individuals, and therefore "skimming" the market. If you can position your brand in such a way that people desire it enough to pay excessively beyond its worth, you are looking at a very lucrative pricing strategy. However, if you charge top price for a product which doesn’t meet the expectations of the price then you’ll lose customers quickly and be left with a product you have to discount heavily, taking away the exclusivity and potentially damaging the brand beyond any hope of profitable equity.

Market Orientated - Undertaking vast amounts of research in order to dilligently evaluate the current marketplace and so set prices according to demand. This is the strategy most likely to enable the company to engage with its audience and so create demand, but is also the most costly and time consuming, seen as relevant and appropriate market research can be resource draining.

Tuesday, 17 August 2010

Marketing in the Boardroom

Marketing has for a long time been seen as a peripheral discipline in organizations. Instead of a way of increasing the companies standing in its marketplace, increase short and long term sales and developing brand loyalty, it has stereotypically been seen as an expense which the company could do without and that minimum revenue should be allocated to. This view is short sighted, naïve and when taken by high ranking members of companies, potentially damaging to the organizations chances of success.

Marketing is an investment, but when the right personnel are undertaking the marketing and they are using the right strategies, there is no better way to develop the company in the long term. Relationships being forged and reputations cemented means companies will see customers returning, instead of making short term sales and then seeing those same customers buying off their competition.

In order for companies to see marketing as being as important and relevant as it is, it is important that all marketing departments be held accountable. Accountable for every penny spent, and every strategy implemented. When marketing departments can start showing where the money is being spent, and what is working, what isn’t working and what they’re doing about it, companies will start considering the discipline with the importance it merits and as the most effective way of reaching their audience and understanding their marketplace.

Wednesday, 11 August 2010

New ACA Code on Greenwashing

The ACA (Advertising Association) has implemented changes to the Committee of Advertising Practice (CAP) forbidding what is known as “Green Washing," exaggerating environmental claims. If you're promoting the benefits your products have on the environment, or promoting how certain actions harm or benefit the environment, make sure what you're saying is correct in order to avoid being caught up in these regulations.
The basic premise behind ensuring that environmental claims are correct is that when the average person does something good…they then believe they have the license to do something bad. For instance, should Joe from down the street use your product because it’s good for the environment, he then feels he has a license to fly tip, as all its doing is evening things up. If your product doesn’t do as good for the environment that you claim, then it’s actually had a negative effect on the environment. Obviously if you do good by the environment you shouldn’t feel like you can then even it up, you should just be glad to have helped, but unfortunately the psychology of the minds doesn’t work like that for the average person.
This may seem like the type of regulation that will only really affect or be implemented against large corporations, but the repercussions if you are caught can be very serious, so keep this in mind guys.

Friday, 6 August 2010

Who are your best customers?

Do you know who your best customers are? Instead of trying to market your products/services to everyone, why not try and sell more to your main customers? Depending upon your business strategy/logistics, it may well be more cost effective targeting developing key customer relationships above having a large and diverse customer base who only buy from you once.

Customize what you provide to the needs of these core customers and ensure the best possible customer service, as well as the best product/service, and unless their needs/desires aren't alligned to what you provide they will return.

Marketing research has in the past pointed towards up to 80% of many companies revenues coming from their loyal customer base. If you can keep these key stakeholders happy, you're on to a winning strategy.

Wednesday, 4 August 2010

Communicate with your customers!!(even the bad news)

It may seem obvious, but the amount of companies that don’t sufficiently communicate with there customers is both shocking and the cause of most business problems. You may not be communicating good news, your message may not seem that interesting, but finding a level of communication the customer is happy with and finds informative but that they don’t find overly encroaching is often the difference between customer loyalty and customers switching to your competitors.

Consider the situation; you’ve promised your customer to deliver a product to a certain deadline, but can no longer make that deadline. The obvious next point of action is to communicate with the customer through whichever medium you usually would and inform them of the situation. They may be extremely disappointed, they may not use your services again and they may bad mouth your company. But not nearly to the extreme they will if you were to not inform them of the problem, and then leave it until the last minute with your fingers crossed that a miracle will happen. This will attain you a reputation as unreliable and dishonest and damage your brand equity far beyond what the initial mistake would have created.

This is the same whether you’re a large multi-national serving millions or a small enterprise serving a local market. Even if you own a restaurant and there’s been a mistake with an order, communicating with the customer and explaining there will be a delay will make them a lot less irate than just bringing the food out when it’s ready. Communication and honesty are what creates relationships, without them problems just build up and relationships are destroyed.

Tuesday, 3 August 2010

Book Recommendation - SWAY

The first Marketing book I would recommend is not strictly a Marketing book. “Sway, The Irresistable Pull of Irrational Behaviour”, was written by Ori Brafman and Rom Brafman, two Israeli brothers with education in Business and Psychology respectively. It delves into the human psyche and creates an understanding of what makes humans act the way they do, and make the decisions they make. From a Marketing perspective the ability to cipher what will make consumers act in particular ways is the industries version of gold dust, and this book is an excellent starting point for any marketer looking to build an understanding of consumer psychology.

If a charity were to ask you to give up your time to help them, say in a raffle sale, or were to offer you a nominal sum to help them, which offer would you more likely accept? Basic economic theory states that some money, even if it is nominal, is better than no money. However, as explained in SWAY, two parts of the brain are at play that cannot function at the same time. When asked to undertake an activity for charity, the Altruism Centre of your brain is in function. This is an area that does not take a lot of stimulation. However, whenever reward is added to an equation, the Nucleus Accumbens part of the brain takes over, which is stronger than the Altrusim Centre and in essence closes this part down. This part of the brain takes a lot of stimulation, and so mediocre rewards will not suffice in order to make it accept an offer. This is what made the citizens of a town in Switzerland agreement numbers to allowing nuclear waste being dumped in their town go down when offered monetary reward, and what makes you more likely to do your friends a favor if they don’t offer you money.
The next time you've created a questionnaire, or need any consumer feedback, consider how's best to get them to cooperate? Is it through offering them a meaningless prize...or through appealing to their Altruism Centre?

This is just one example of the widely researched psychology theories used within this book. If you want to learn a basic understanding of what makes your customers act the way they do, you could do a lot worse than logging onto Amazon and looking up this book.

Monday, 2 August 2010

People Lie, Numbers Don't

You go to all the effort and cost of organising, collecting and collating market research, so why not listen to what your marketing data has to say? A number of companies that undertake market research, which is very important in determining opportunities in the market as well as your current footing and many other purposes, then completely disregard undesirable results.

If you’re going to the cost of running the research, it’s important to take heed of what the data has to say. If the results of the research say you’re new product improvements aren’t needed or wanted, your market is telling you not to produce them, and it certainly wont increase sales if you do. If 90% of answerers say they haven’t heard of your company, you’re being told to increase your brand awareness activities. If 70% of answerers say they’d purchase from your company if you increased your green credentials, guess greens the way to go.

The worst thing a company can do is make excuses for the results. “It wasn’t a big enough sample group,” “it wasn’t the right audience” and “the questions weren’t clear enough” are just some common excuses for unfavourable results. If you’d had the results you wanted, would you be making the same excuses?

It’s extremely important you interact with your market, and assuming you’ve done your homework and asked the right questions to the right people, the results you’ve received represent what the markets currently feelings and desires. By ignoring these results you’re ignoring your audience, who will grow disillusioned with your organisation and make their purchases elsewhere.