Archive for the ‘Competitive Intelligence’ Category
This article by Stefan Stern in the Financial Times this week caught our eye. It makes the point that marketing services have become the butt of procurement teams who are eager to save money and feel that this fluffy subject of marketing is fair game. We know the feeling! This is, of course, a tactical move and we wonder what the effect will be in the long-term of cutting back on marketing spending.
In the article Stern leans heavily on Philip Kotler who is always good for an insight or two. Kotler believes that marketing professionals in corporates are better at tactical rather than strategic decisions. He postulates that maybe it would be better to split the marketing teams in to one working on current products (and therefore be responsible for tactics) and another team looking longer term (and therefore be responsible for strategic moves). These are interesting thoughts.
By Stefan Stern
It is easy to see why, of all the services that a company might buy in from outside, marketing is likely to be the most energetically haggled over. Chief executives have long bemoaned the difficulty of knowing exactly what value they have derived from their marketing spend. Out of that frustration arises a natural desire to be extra tough on the costs of marketing activity.
But it is not as though marketing has got any easier in recent times. The opposite is true. Experienced consumers in mature markets have been exposed to just about every trick in the marketing playbook. Cynicism over the claims made by businesses for their products can be deep. Unsurprisingly, marketing departments can find themselves becoming a convenient scapegoat for the leaders of struggling businesses. But in a downturn the real difficulty lies simply in selling anything to world-weary customers who may be satisfied with good-enough but unexciting products.
One person who displays no world-weariness at all is Philip Kotler, the 79-year-old “father of modern marketing”. I met Professor Kotler in London recently and, even after five decades pursuing his subject, he was eager to look ahead and consider new directions for the discipline.
While the current economic climate was not making life easy for marketers, Prof Kotler told me, the crisis had brought one refreshing development: “At least it’s the finance people who are getting blamed for a change.”
Wise-cracks aside, Prof Kotler has chosen this moment of crisis to ask some big questions about what marketing actually does. “Is marketing the enemy of sustainability?” was one of them. For years the task for marketers was to persuade customers that the latest upgrade, the newer model, was a must-buy. But it is time to challenge that orthodoxy, he said.
In a resource-deprived world, businesses cannot hurl more and more product at customers, supported by extravagant marketing budgets. Prof Kotler recalled the message of a book published three years ago, Firms of Endearment, written by Rajendra Sisodia, David Wolfe and Jagdish Sheth.
The authors found that some of the most successful companies in fact spent much less on marketing than their weaker rivals. But they used the word-of-mouth effect of unpaid advocates – loyal customers – to boost their reputation.
Marketing needed to think not just about the company’s “share of wallet”, but also its “share of heart”, these authors said. “Earn a share of the customer’s heart and she will gladly offer you a bigger share of her wallet.”
Prof Kotler plans to develop this idea in his latest book – called, perhaps inevitably, Marketing 3.0 – to be published in two months.
Another challenge for marketing is to assert itself at the heart of the company’s strategic thinking (an idea also suggested by London Business School’s Nirmalya Kumar in his book Marketing as Strategy). “If you have the right people in marketing it could become your engine for growth,” Prof Kotler told me. But while they might be quite creative on tactics, he added, not so many marketing professionals can do the strategic work.
So why not split the department in two? A larger, downstream marketing team working on current products, with a much smaller, strategic team looking at new markets and new ideas for the coming two to three years.
This could work – as long as the interests of customers do not fall between the cracks of organisational silos. As Harvard Business School’s Ranjay Gulati has shown, for all that businesses talk about being “customer-centric” (and marketing is supposed to represent “the voice of the customer”), many simply are not. “They look at customers only through the lens of existing products,” Prof Gulati says.
Right now marketing needs to aim high. That is what Prof Kotler is urging people to do. And he was happy to concede that, as so often, Peter Drucker was ahead of everyone on this topic, too. He even provided a handy mission statement. “The aim of marketing,” Drucker once said, “is to make selling unnecessary.”
In his first Thursday Night Insight, Alex Clements illustrates perfectly how keeping a close eye on the competition and being quick to spot opportunities can really strengthen your own market position.
Atari, Spectrum, Commodore, Sega, Nintendo, PlayStation, Xbox. Regardless of your age, you are highly likely to have heard of at least one of these, possibly even all of them. Games consoles have been around for many years and as time goes by the systems become more sophisticated and the games become more complex and realistic.
I remember text-based adventure games on the Atari and Commodore 64 which required the player to type a keyword into the console, which would in turn prompt an action on the screen. I remember Bubble Bobble; a game featuring two small, brightly coloured, 2D characters (in fact, little more than a blob of colour) that were supposed to be dragons, where the aim of the game was to blow bubbles which could trap and eliminate enemies such as ghosts and flying purple sharks (yes; flying purple sharks!).
Games developers certainly were creative all those years ago and although games are more realistic these days, it doesn’t mean that people in the games industry no longer need to be creative.
The video games industry is one which has grown and grown over the years. More users, more games, more consoles, more money and, for the manufacturers, more competition.
Now that there is so much on offer to the public, we have a huge amount of choice in the types of video games we play: We can choose a favourite genre, a favourite series of games and we can even choose which console we would prefer to use to play them. Companies who are in competition over the same market need to think very carefully before every move. The games industry is an interest of mine and I commend some of the marketing strategies I have noticed recently.
In 2005, the world was due the start of the next generation of video game consoles. There was, predictably, much hype and speculation over what each one would have to offer. The battle had started long before they were released. To this day, the Microsoft Xbox 360 and Sony PS3 still battle for sales, offering similar types of realistic games and modern online services. Meanwhile, Nintendo released the Wii. The Nintendo Wii was released for a unique target market, offering an experience to consumers which was not available from either of its two potential rivals. Instead of competing to be the console with the best graphics, most functions and most realistic games, Nintendo made a console which was for light-hearted family fun: The games aren’t trying to be realistic but, instead, boast colourful cartoon worlds and let users embrace an unusual controller unlike any other, which can be waved at the TV like a magic wand to operate.
There is much to think about when marketing a product, but before you even start to plan, you need to understand your product and your target market, and it will be highly advantageous to know the competition. Some very careful (and intelligent) decisions were made over the period of time mentioned above and Nintendo’s adaption to the available market means that more Wii consoles have been sold to date than either the Xbox 360 or PS3, despite being released last.
I will conclude my first ever Thursday Night Insight with one more example of an opportunity that was promptly taken. It was, once again, Nintendo and their online marketing strategy for a new handheld console called the “DSi”. Nintendo were aware of their competition at the time, which happened to be Sony’s “PSP go” which was due to be released in the forthcoming months. The two products are similar and have a very similar target market. Upon realisation that Sony had not bought the UK domain name for their new product’s website in preparation for its release, Nintendo decided to step in. The result was that any consumer visiting www.pspgo.co.uk, looking for information on Sony’s product, would be taken directly to the main page of its rival, the Nintendo DSi. Try it yourself and see by clicking on the link above!
Underhanded? Or a stroke of genius? It’s probably a bit of both, but the fact still remains that all PSPgo customers aiming for the UK website will land directly on Nintendo’s website, faced with a fresh new product they were not expecting which will undoubtedly only mean positive things for Nintendo’s sales.
New York’s Westchester County Business Journal, in its weekly business advice column, has just run an article entitled ‘keeping abreast of the competition’. For us, as market research and competitive intelligence experts, we can never read enough articles that encourage organizations large and small to recognize the importance of quality, up-to-date business intelligence.
As anyone who is familiar with Porter’s Five Forces will be well aware, very few, if any, companies operate alone in their given marketplace. Each company’s specific micro environment consists of forces that affect its ability to serve its customers and make a profit.
Competition is out there in the form of direct established rivals, as well as the threat of new entrants to the market or the threat of substitute products.
Any change in any of these forces normally requires a company to re-assess the marketplace, hence the need to regularly review your competitive intelligence. Even the decision of a competitor to get out of your chosen marketplace, for example, should be viewed with a degree of caution rather than unbridled celebration. Why does your competitor no longer wish to be in your market? Do they know something important that you don’t?
Intelligence is, of course, available from a wide range of sources. In its most basic forms there is much you can do yourself: talk to your suppliers, customers and employees; keep abreast of developments by reading industry periodicals or industry reports; scour the internet for news.
Yet much information – especially that of a sensitive nature – can be difficult to come by, and not all companies have the necessary people resources to conduct a thorough and comprehensive competitor analysis. In many cases, they may require the help of an external research consultancy who will be adept at sourcing data – from mystery shopping, to competitor pricing research studies, through to conducting structured interviews with customers, suppliers, distributors, industry experts and even competitors themselves.
There is no doubt that there is a whole world of information out there, and that competitor intelligence at your fingertips enables you to make intelligent future business decisions.
Find out more about how B2B International’s competitive intelligence work can enhance your own knowledge by clicking here.