Rather than trying to outdo others' offers or products, re-de"ne the market, writes Patricia Murray A ping pro traders has never been easier. Or has it. . . ?
WHEN it comes to sales and marketing, there are few limits set by geographical location which can't now be overcome by the internet and on-line technologies. The widening of routes to the market has brought bigger share to smaller players and buyers to sellers like never before.
Recognising that where you sell from doesn't limit who you sell to is simple.
Every small-town marketstall holder may only dream of selling in the big city, but he or she knows it's possible, if it's what they want and they put their mind to it.
And so Dubliners pay top dollar for West Cork cheeses made in tiny little dairies and Parisians pay for Dordogne chutneys and Milanese pesto and mustards from specialist producers who use the internet and advertising wisely to gain a foothold into the larger outlets where major markets merge.
Technological advancement or location don't open markets though. Ideas and beliefs do. It's not that the traditional focus on developing competitive advantage within your own area never worked; of course it did.
It's just that it's too competitor-focused. Can't-seethe-forest-for-the-branches thinking.
That's according to the best-selling business author Renee Mauborgne, distinguished Fellow and Professor of Strategy and Marketing at INSEAD at Fontainebleu in France, the second largest business school in the world.
Speaking to the Sunday Tribune last month when she was the visiting keynote speaker at the Leaders in London conference, the Fellow of the World Economic Forum and Harvard Business Review writer presented the tools and techniques outlined in Blue Oceans, a book now translated into 35 languages and awarded business book of the year last year at the Frankfurt book fair, as well as occupying a proud place in the Amazon website's top 10 sellers.
"Marketing as we know it is based on differentiation.
Competition. Getting a slice of the cake.
"What my colleague Chan Kim and I are saying in Blue Ocean Strategy is that the way forward is to redefine markets, ignore the competition; don't even consider it . . . it's a cul de sac and culturally corrosive to economic leaps."
The confining impact of trying to out-do competitors' results in limited world views and blinkered vision, the theory outlined in Blue Ocean Strategy goes.
Whether this wilful self deception is down to outdated thinking or lazy marketing, Maurborgne doesn't care.
As an academic and author at the prestigious French Academy, she and co-author Chan Kim undertook one decade of research into 150 companies across 30 industries analysing strategic moves over a 100-year period.
Data collected was used to identify patterns and principles which resulted in innovative leaps forward. These were then further deconstructed to reveal their constituent parts.
"They all involved ignoring the competition and concentrating on the whole markets . . . the whole population, not those who the other producers of similar products had already captured."
Blue Ocean Strategy is not a marketing strategy but a business development one, she says.
"At its core are three key propositions. You need the value proposition . . . utility and price; why people buy it. You need the profit proposition . . .
price versus cost and the simplest production methods to maximise profit.
"And you need the people proposition . . . motivating and driving all partners involved and creating alignment of these constituents.
"When these are aligned as an integrated whole, you will have success. There is no mention here of the competition."
Blue Ocean approaches are unconsciously created when a new industry is invented, such as eBay . . . it's all about novel approaches to the world and its mother. It's what the entrepreneur orientation is all about.
Otherwise, Mauborgne says, the focus is on the others already doing what you want to do.
Instead of broadening the boundaries and bringing the entrepreneurial urge that started you, up a notchf or 10.
Maurborgne takes as an example the hugely successful Yellow Tail wine brand.
Now the highest selling wine in the United States, Yellow Tail is just over five years in the market. Their success . . . they out-sell all French wine sold in the US . . .
is down to following those core principles.
"If they had tried to outdo the competition, they'd be nowhere. Instead they looked at new markets. They saw the huge number of beer drinkers and asked them about their preference for beer.
They looked at the price of the six-pack, its sweetness levels, the choice range and the people who bought them.
They then used that knowledge to reduce production costs because they didn't go with the huge variation in product that those trying to compete with other wine producers would have taken on board.
They have two wines, white and red. This is cheaper to produce than a range. The year doesn't matter, again, reducing the need for working capital and storage costs.
The name is easy to recall.
They made it slightly sweeter for the US beer drinkers' palette; it is priced around the six-pack price zone.
They took away the scare factor . . . the beer drinkers felt foolish around wine . . . the labels, even, were intimidating and they couldn't pronounce the names. So they got a yellow label and called it Yellow Tail and made a new market.
"The wine industry was shocked but when they then started training up in-store sales staff and showing them the wines, giving them tasting and making them familiar with it, sales increased further.
"They developed branding around the wine that went against the traditional 'special wine for special occasion' idea. Their branding said 'ordinary wine, everyday drink'. Baseball caps, sweats, t-shirts.
'They did no advertising in the glossies and, instead, had some well-placed billboards and sat back.
Marketing has been stuck, she says, in this differentiation bubble so that growth potential is being ignored and competing has become a blind alley; the real way to grow and gain is to focus on the non-customers with most of your energy, keeping the existing customers satisfied at the same time.
Mauborgne keeps it simple sounding, but really, isn't it all easier said?
"It's easier than doing it the traditional way. It's the opposite of competing really, because competing means finer and finer segmentation to serve everyone in overcrowded, often declining markets. This involves higher production costs and sophisticated methods and very elaborate production lines.
"We say de-segment markets and key commonalities, concentrate on fewer factors;
make competition irrelevant.
Blue Ocean strategy will no doubt attract its own competitors over time and getting leaders and directors to think and implement this novel approach will prove an interesting challenge.
Marketing strategies change year in year out, but attitudes and beliefs take something more.
Ultimately it's older than any strategy . . . according to Mauborgne.
"It's about a leap of faith, but fine tuned, focused faith."
|