Posts tagged ‘marketplace’

SWOT your competition

dead_flyHow well do you know your competition? I’m not talking about whether you have a laundry list of your competitors, but rather if you have real insight into who they are and what they do well. I’ll bet your answer is, “I have a pretty good idea, but I’d like to know more.” Good answer.

There are a million different ways to conduct a competitive analysis, but instead of focusing on the nitty-gritty details I’d like to give you some advice from the 35,000 foot level…

  • SWOT your competitors – no, I’m not advocating violence. SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. Analyze them, and yourself. You’ll gain remarkable insight into how you match up. You may find that you aren’t focused in the right areas, or there’s an oversaturation in a market or, if you’re lucky, that there’s an untapped area of the market just waiting to be cultivated.
  • Focus on your strengths and differentiators – once you have an understanding of what you and your competitors do, you can more accurately refine your strategy to maximize your strengths while exploiting the other guy’s weaknesses.
  • Good understanding = short cycles – a solid competitive understanding is essential for moving quickly and staying ahead. When it comes to business, you’re either ahead or you’re behind. In the immortal words of Ricky Bobby, “if you ain’t first, you’re last.

You get the idea. A SWOT analysis is one of the big secrets to unlocking your company’s true potential. Like most marketing activities, they aren’t easy, but they are definitely worthwhile. If you need help, contact me and we can come up with a solid strategy.

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October 4, 2009 at 7:51 pm Leave a comment

Boost your customer base by lowering, not raising, prices

This is a tough time for most business. Many companies are losing a lot of customers and having trouble meeting revenue commitments outlined in their 2009 budgets, which are usually created in the previous fall season. This is happening, of course, because most people did not realize that the economy would fall into recession in 2009. Executive management teams are meeting in their boardrooms every single day, trying to figure out what to do to stabilize customer retention. Chances are good that two prevailing schools of thought are being bandied about:

  • School Of Thought #1: Since we are currently losing customers very quickly, we need to make up for that shortfall by reducing costs (which has probably already been done), while at the same time increasing our prices in order to achieve more revenue per customer. If we have lost 10% of our customers, and raise our prices 10%, we could probably close the revenue gap.
  • School Of Thought #2: We’ve lost several customers during the first half of the year, and we need to focus on keeping those customers while obtaining a few new ones. Along with reducing our costs (which has probably already been done) we need to reduce our prices, providing an incentive for current customers to stay with us and encouraging prospects to become customers.

As a marketer and ardent capitalist, I believe in School Of Thought #2. It looks at the marketplace as a non-finite tub of potential revenue, even during recessionary times. It also views an increase in price as a form of taxation on current customers, which is a bad idea during good economic times and an even worse idea now. I’ve seen many struggling companies adopt School Of Thought #1, only to see them descend into a business death sprial. As customers balk at higher prices and bail out, this leaves an even smaller customer base to provide the revenue stream necessary to maintain operations. The cycle of higher prices and fewer customers seals a company’s fate and failure becomes inevitable.

From a marketing perspective, it’s an even tougher sell. We’re always looking for unique selling propositions (USPs) and differentiators, and I’ve found that raising prices kills off great marketing each and every time. It poisons the fragile relationship with the customer, leaving them bitter and resentful. Another aspect to consider is the fact that, nowadays, customers don’t go away quietly. They use social networking and forums to voice their displeasure, and most of the time it ain’t pretty.

Before you pull the pricing lever, be sure you’ve fully analyzed your pricing model and exhausted other options. After all, if you make the wrong decision, it may be you that ends up paying the price.

(If you need help with pricing, or you have other marketing needs, contact me at Aximum Marketing. I’ll be happy to help.)

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June 17, 2009 at 11:19 pm 2 comments

Capitalize on your brand equity to gain market share

Frank Sinatra had a Vegas-inspired song called “Luck Be A Lady.” One of the lines in the song is:

“Stick with me, baby, I’m the guy that you came in with.”

In many ways, marketing is like Lady Luck that ol’ Blue Eyes is singing about, especially when it comes to branding. This is one of the trickier subjects to explain to someone new to marketing. In a nutshell, branding is the sum total of experiences and perceptions that a company has with its customers, competitors, and marketplace. The tactical elements of marketing — websites, brochures, advertising, etc. — are physical manifestations of branding. There’s also something called brand equity, which is not only a perceived value of a brand, but it can also be a tangible value. In fact, many organizations carry their brand as an asset on their balance sheets, with an actual dollar amount attached to it. Google has the highest brand value in the world, which is estimated to be worth more than $100 Billion. Software giant Microsoft has the second highest rated brand in the world, worth over $76 Billion.

There’s a reason why I mention these two examples together. You’ve undoubtedly noticed the “Bing” logo at the top of the entry. You may also be asking yourself, “what the hell is Bing?” As it turns out, Bing is the newest incarnation of Microsoft’s search engine, renamed from Windows Live Search. In my opinion, Microsoft made a big mistake and squandered a golden opportunity. They took one of the most high-profile aspects of the Internet (search engines), went up against the 800-pound gorilla, and didn’t take advantage of the Microsoft brand equity. Even worse, when you go to the Bing home page, the Microsoft name is nowhere to be found, so they can’t springboard their new brand off the established Microsoft name. How can you realistically pit a $100 Billion brand against a brand with zero equity? Frankly, you can’t. Microsoft doomed Bing to the ash heap of history before it even launched, just like another one of their infamous failures. The rest is just an exercise in futility.

What’s the lesson here? The Microsoft branding team should have told the Bing team, “stick with me, baby, I’m the guy that you came in with.” The only thing left is a roll of the dice and the hope that Lady Luck is on their side. I wouldn’t bet on it.

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June 15, 2009 at 11:30 pm Leave a comment

Market sizing vs. market segmentation

tape-measure

Does size really matter?

Get your mind out of the gutter. I’m talking, of course, about market sizing, a common and deceptively unproductive exercise. Let me explain… how many times have you heard someone say something like this:

“We’re looking at expanding our business into the Blah Blah industry because it’s currently a $78 Billion market and expected to grow 10% this year. If we could only get 0.04% of the new market, we could add another $3.12 Million to our revenue stream with almost no effort at all!

You’re currently nodding your head and saying, “yup, I’ve heard that before.” Or perhaps you’re saying, “yup, that’s me.

As you know, this approach can be very challenging for many reasons. By jumping into the big pool, you’re joining the countless competitors that are doing the same thing. This results in lots of companies chasing after the same dollars, with very little chance of getting them. In all reality, only the biggest companies in your industry have a chance of winning most of that business, and you’ll unfortunately spend a lot of time, money, and energy with little to show for it. Another disadvantage with this approach is that it’s very broad and unfocused, which means you’ll need to spread your resources very thinly across many different marketplaces, demographics, price points, and time frames.

To answer the question, “does size really matter?”, the answer is yes, to a degree. It’s the first half of a great solution to help you expand your business and increase your revenue. The second half of the solution is market segmentation, which will be your very best friend when it comes to new business development. Market segmentation makes the numbers derived from market sizing realistic, attainable and, above all, more focused on customers that play to your company’s strengths while reducing the amount of competition.

Let’s take the Blah Blah industry as an example. Suppose you did a little more research and determined that focusing on customers

  • in the southwest
  • that are female
  • between the ages of 24-40
  • with median incomes of $61,000
  • that like the color fuchsia

presents a current market of $46 Million, which is expected to grow 30% this year. Yes, this is way less than the $78 Billion mother lode, but there are only 3 competitors in this entire micro-market and one of them is probably going out of business this year. That means that you are competing with one other company for almost $14 Million worth of new business, and $60 Million in total. This approach allows you to ignore 99% percent of the overall market, most of the competitors, and a majority of the business development efforts, while providing over four times the revenue potential.

Ah, the magic of market segmentation, the less popular, often misunderstood, and regularly underutilized little brother of market sizing. If you do your homework and spend a little more time and resources on good market research, the results can be amazing. If you need some guidance with this, talk to us. We’d love to help you.

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May 10, 2009 at 11:55 pm 3 comments


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