Monday, May 23, 2016
CRITICAL MARKETING MISTAKES –
LACK OF DIFFERENTIATION
Marketing is losing its relevance. This results from failing to provide a clear line of sight in creating customers and driving business outcomes. Consequently, most corporations view marketing as a cost center as opposed to producer of results.
Poor marketing practices negate achievement of favorable business results and undermine the role of marketing. This is the third in a series of articles that will tackle critical marketing mistakes, those slip-ups, oversights and poor practices, and address what needs to be done to make marketing matter (more).
The first article started at the beginning with, what we believe is the most important “P’ in marketing, “Positioning” (click here …). The second article addressed the Target-Customer, more specifically miss-targeting and inadequately defining Target-Customers (click here …). This third article deals with the lack of relevant and meaningful differentiation needed to compel Target-Customer preference.
Need for Differentiation
“Differentiate or die.” Jack Trout
“Differentiate to thrive.” Richard Czerniawski
There are three ways to win in the marketplace: 1) having a lower price than competitors; 2) exerting more muscle than competition; and 3) creating relevant and meaningful differentiation versus competition. (One might include “superior execution” as another way to win, however, while it was declared in corporate corridors as the key to winning some 20+ years ago it has, or should have, been long silenced since even achieving the most basic execution is a challenge.) Our clients’ pricing is never, ever lower than competitors. In fact, it’s just the opposite. They are premium priced. Moreover, our clients do not flex more muscle than their competitors. More muscle equates to putting more feet on the street, outspending competitors, launching more marketing initiatives, providing more marketing funding that exceeds market share, etc. Outmuscling the competition is no guarantee of success and is generally inefficient. So the only fertile area remaining that we may use to win in the marketplace is differentiation. Yet differentiation is the exception versus the norm.
Stating the obvious “differentiation makes a difference.” Differentiation sets your rather generic product offering apart from all the others and counteracts the “way of the marketplace,” which is to commoditize your, and all other, offerings. It’s the nature of the marketplace to commoditize the plethora of products available in this “age of ‘abundance’ and ‘sameness’.” There are so very many offerings in virtually all categories. These product offerings do the same things, work in the same general ways and get the same basic results. They are, in reality, generic. So to make choosing from among the plethora of offerings available easier, prospective customers pigeonhole them as being interchangeable, exerting downward pressure on pricing. In this case Mr. Trout’s proclamation “Differentiate or die” is prophetic.
Even if your entity enjoys an advantage in pricing and/or muscle (or, if you insist, execution) it is still wise to differentiate. Differentiation serves to help your offering stand out from the herd. It defies commoditization because it is different. When properly applied differentiation bolsters the growth acceleration rate of your offering and ROI for your marketing initiatives. Differentiation immunizes your offering from competitive inroads. It may even provide a basis for premium pricing. In this case we proclaim, “Differentiate to thrive.”
But it’s not about differentiation for differentiation sake. Instead, it needs to be “relevant and meaningfully” differentiated. Differentiation needs to be “relevant” not to the marketer but to the Target-Customer segment. Relevance means it is both pertinent and important to them, such as representing a compelling, unfulfilled conscious or subliminal need. Meaningfully differentiated means the Target-Customer segment is able to perceive and, importantly, unequivocally appreciate either the kind and/or degree of differentiation.
Critical Marketing Mistakes with Differentiation
Mistakes around differentiation include errors of omission and commission. With omission the differentiation just isn’t there. In commission there are a few missteps that obfuscate, dilute and prevent differentiation. Here are some noteworthy mistakes:
1. Following the herd – This is about doing the same things in the same way as competitors. Category practices serve (consciously or unconsciously) as the default standard operating practices for all competitors. Marketers accept this as the way to success. It’s lemming-like behavior. It’s jumping off an undeniable cliff into obscurity. As an example, competitors make the same promises to prospective Target-Customers, and execute them in the same way because it is the accepted belief of what is required to be successful in their category. With everyone in the category doing the same it is no small wonder then that prospective customers perceive them as being the same and commoditize them.
2. Trying to be all things to all people – There’s no doubt that many of the marketing miss-steps we share with you are interrelated. We revealed this error and many of its consequences in the second article in this series, “Miss-Targeting Target-Customers.” When we attempt to go too broad with our Target-Customers and/or try to be all things to them we dilute any differentiation that we might possess. All too often we hear pharmaceutical marketers promise efficacy, safety and tolerability so as not to miss anyone or anything. Marketers are not making choices with whom they want to establish a relationship and what they stand for, thereby, losing any distinction and advantage they may have in any one of the aforementioned areas with a specific Target-Customer segment.
3. Success – Yes past success could be a problem. In a 1999 Harvard Business Review article, “Why Good Companies Go Bad, “ which can easily have been titled, “Why Good ‘Brands’ Go Bad,” Donald N. Sull writes, “Success breeds active inertia, and active inertia breeds failure.” Virtually every marketer can point to a company, brand and, even, industry that was once perceived as impregnable but now lies buried, felled by innovation. Success can lead to hubris, a false sense of security and complacency all of which undermine those successful ones’ willingness to adapt and build upon any advantage they might hold, or seek a new one. A content marketer also is an easy mark for a determined competitor to topple (see point 6).
4. Participate versus compete in the marketplace – Most marketers would claim they are competing in the marketplace with their offerings. After all they face “competition.” That’s what they do. But to “compete” one must “try to outperform.” A new entry in the marketplace is not competing if it doesn’t differentiate or attempt to differentiate in either the product offering or the marketing of it. In reality these entries are merely participating in the market to get a piece of the action and despite proclamations to the contrary that’s all they intended to do. This is evident by launching without differentiation. (Please note that differentiation is not in the eyes of the organization but the Target-Customer.)
5. Cutting investment to create and/or maintain differentiation – Many organizations have narrowed their time horizon to quarterly in order to satisfy Wall Street’s expectations and demands. In fact, some organizations we know have contracted their time horizon even further to monthly (with significant scrutiny of weekly and even daily sales results). In order to meet profit expectations deep and frequent cuts are made throughout the organization (e.g., R&D, manufacturing, marketing, quality control, etc.). As a result of cutting investment differentiation erodes. Cuts in investment also allow lead shrewd competitors who pursue a strategy of being fast followers to match or even leap frog your offering to erase differentiation, obliterating former advantages. These aggressive competitors may up the ante by offering discount pricing thereby contributing to intensifying the nature of the market to commoditize and then capitalizing on it to capture market share. While the focus may be quarterly the consequences of cutting investment are significant and prolonged.
6. Rationalizing the product – This is related to the previous point. In this case an ongoing string of reductions is conducted on the product offering (e.g., formulation, packaging, terms, etc.) over a period of time (usually years). Something, or things, is/are removed or diminished. The reason rationalizing is implemented is to cut costs. It is characterized by a series of minute changes that evidence no statistical difference versus the previous rendition. However, when viewed in the aggregate these reductions represent a significant compromise in product quality and/or the customer experience from the original offering. This is what’s referred to as “creeping decrementalism.” At the very least it narrows “meaningful differentiation.” At its worst, it eradicates it.
7. Misuse of marketing research – We truly believe in the value of marketing research. However, it is often misused in ways that contribute to driving sameness and undermining differentiation. To illustrate, when a needs analysis is conducted the needs are prioritized in order of importance to the customer. The most important needs typically become generic needs as virtually all competitors are compelled to work to exploit them. They also tend to be needs that are already being satisfied.
Oftentimes it is a need further down the list that will make a difference just because it is, well, different. As an example, relief from a debilitating condition is clearly more important than convenience of dosing. But if customers perceive all competitors as equally satisfying relief then convenience could prove to be a relevant and meaningful differentiator. Yet it is not explored because it is not one of the key (generic) needs and it viewed absent of specific Target-Customer segmentation.
Also, marketing research is a snapshot in time. It’s a picture of the marketplace at the time the snapshot was taken. Every competitor with the same research has the same snapshot and sees the marketplace in the same identical way. As a result everyone is directed to pursue and promote the same things (and, remember, in the same ways).
8. Culture of consensus – Unfortunately, originality (a requirement for differentiation) is not always appreciated in large corporations. It tends to scare managers, as they fear making a mistake – and losing their jobs. Accordingly, responsibility and accountability is dispersed via consensus. Consensus is about gaining approval to something. It is not the same nor as valuable as collaboration. Collaboration recognizes that everyone has a piece of the puzzle. People contribute their diverse experiences, knowledge, perspectives and insights to create a mosaic with one person holding the responsibility and accountability for the decision, and results. With consensus it’s a group decision and outcome resulting from the members desire and willingness to compromise in reaching agreement. There is little exploration into what could be. It is more about what will please senior management, what will keep us out of trouble and what will be approved. The outcome of compromise is far too often a lack of differentiation.
9. Focus on the physical product – The physical product is only one part of the whole product. It represents the tangible aspects that comprise the physical product such as features. The other part of the product lies outside the box or compound. It consists of elements such as services and terms. As stated earlier, physical products in the same category are often undifferentiated, thereby predictably resulting in the same generic benefit promise around what the products do.
10.Using “fat” words – Fat words are imprecise. The open the door to many interpretations. As such, they lack focus and distinction. They lack power to induce behavior. Take the word “efficacy” used in a previous point. Is the marketer referring to speed? Duration? Quality? Some combinations of these? Something entirely different? Fat words obfuscate the meaning and any distinctions in the offering. Moreover, when many competitors use the same fat words the collective messaging is like wallpaper. It blends into the background and Target-Customers can’t recall it.
Now, what to do about it? Next week we’ll share suggested actions to avoid these significant errors and adopt ways to offer relevant and meaningful differentiation to create brand loyalty.
Best wishes for making your marketing matter (more),
Richard Czerniawski and Mike Maloney
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Kenilworth, Illinois 60043
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Austin, Texas 78703
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