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Tag Archives: Competitive Advantage

Is Product Commoditization An Issue For You?

First published on January 6, 2016 on www.marketingprofs.com – a preminent resource on best practice marketing techniques for the benefit of the members. What is MarketingProfs? Individual marketers, teams, and entire marketing organizations at the world’s largest corporations rely on us to cut through the chaos to find the marketing experts you can trust and the information you need. Trusted by 600,000+ professionals globally, MarketingProfs is the only resource you need to stay ahead of the curve. Read more:

Is Product Commoditization An Issue For You? And What Can You Do About It

January 6, 2016

Commodity Graphic - 123rf
Your company sells unique and differentiated products – or at least that’s what you think. However, your competitors have been trying to match you or maybe offering similar products at a lower price. You also think your consumers/customers are loyal and won’t switch if given an opportunity. Yet, they are much smarter – and are rationalizing purchases more – than ever before.

Marketplace competitors – either direct or substitutes – can easily make your products or services a commodity where everything comes down to price.

How do you know if you’re being commoditized? And how can you avoid that undesirable fate?

Let’s examine what defines various states of product commoditization.

a) Your product is offered by many:
Examples include things like some food and non-food items, restaurants, law, financial services, even personal services like fitness and hair cutting, etc. Meaningful differentiation is essential to deflect lower prices. What do you do?

  • Be the #1 or #2 share leader. Being so gives you critical mass since it implies customer satisfaction and allows you to build entry barriers due to your size.
  • Have third parties talk good things about you – either in social media, product ratings or customer awards. However, don’t just rely on Facebook pages. Not everyone looks at Facebook all the time.
  • Don’t focus just on price. Remind customers/consumers of your products relevant features/benefits.
  • Be the marketplace expert and offer free advice/counsel. Doing so might not result in an instant sale, but people remember who’ve helped them in the past.
  • Be easy to do business with. Customer service/convenience can make or break a sale. Time, too, has value to your users.

b) Your product is offered by some:
You have a somewhat unique product. Also, your product category has substantial barriers to entry limiting competitive entrants. Examples may include utilities, cars, travel, telecommunications, capital equipment, etc. What now?

  • Offer aftermarket service. Buying a car, computer, or telecom services is more than a one-time transaction relationship, offering you a continuing opportunity to build future purchases or upgrades.
  • Off a full-line product/service. Depth can offer consumers/customers a “one-stop” shopping experience, “locking-out” competition. Wal-Mart is ALWAYS looking for “one-stop” suppliers/vendors.
  • Product availability is important. Nothing frustrates people more than being ready to buy but finding out what they want is unavailable – or they have to wait a long time for it. Be sure the logistics side of the business is in sync with the sales/marketing side.
  • Be sure your pricing is still competitive. Even though competition is limited, you can easily price yourself out of the market. Know what your competitors’ prices are, and respond appropriately.

c) Your product is very new, unique & different:
Congratulations! what you offer is new, solves real consumer problems, and is not easily copied (i.e. hopefully patented). You have a great advantage, but you still need to sell.
Ÿ Highlight your differentiation in a meaningful way to consumers/customers. Be sure product or service claims are accurate and relevant to them – not you.

  • Focus on core benefit(s) – not features per se. It might have a different feature, but does it REALLY matter to your customers/consumers?
  • Be sure you proudly communicate your differentiation. Do some type of advertising and/or event marketing to “tell your story” and build awareness.
  • Keep it simple. Differentiation can be very technical. Don’t assume your consumers/customers understand what you’re saying. Avoid jargon. If they don’t understand what you’re saying you can’t expect them to buy your stuff

The bottom line is that you and your sales force need to remember three basic rules when managing your offering in the marketplace.

1) Stay Relevant.  Can your customers/consumers see the value in your product benefits? Remember, they tend to look more at benefits than product features. Are your products still relevant and provide value?

2) Be Sure You Can Measure Your Differentiation.  If you can’t measure how you’re different, how can you expect consumers/customers to see it? Are your product claims accurate? Are you getting third party recommendations and/or awards? Visible differentiation is always better than conceptual.

3) Continuously maintain/upgrade your product line.  Competition is always out there, hard at work trying to gain a competitive advantage over you. Don’t assume your competition is standing still and doing nothing.

If can keep these basic rules in mind, you can avoid competitive lower pricing – and commoditization – you will maintain a profitable and sustainable business.

Rick Steinbrenner
Global Marketing Officer
Brand Marketing Advsiors
www.globalbrandguy.com
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Brand Marketing Advisors are specialists in global brand marketing and new product development.  We help consumer product companies to more effectively compete in product categories in/around the home.  We strive to uncover unmet consumer “need gaps” while partnering up with R&D/engineering to come up with true innovative product and marketing solutions.  We accomplish this through a combination of marketing research, consumer insights and creative thinking.  In most cases, this leads to a strategic and sustainable competitive advantage for our clients.

Rick Steinbrenner Head Shot - Cropped w/red borders

Our team is led by Rick Steinbrenner – Chief Marketing Officer / Principal.  He’s led and managed leading global brands like General Mills, Kraft, Remington Products and Black & Decker – just to name a few.  He’s worked as a brand leader and general manager in both small & large companies up to $12 billion in sales.  His track record speaks for itself – developing and launching over 20 new products that are generating over $200mm+ in sales – both in the B2C and B2B sectors.

Do Your New Products Have Real Competitive Advantages?

First published on 09/02/2014 on www.marketingprofs.com – a preminent resource on best practice marketing techniques for the benefit of the members. What is MarketingProfs? Individual marketers, teams, and entire marketing organizations at the world’s largest corporations rely on us to cut through the chaos to find the marketing experts you can trust and the information you need. Trusted by 618,000 professionals globally, MarketingProfs is the only resource you need to stay ahead of the curve. Read more:

Do Your New Products Have Real Competitive Advantages?

Think Outside The Box Image
It’s a well known fact that brand marketing and new products have radically changed as portrayed by Don Draper and his team in AMC’s “Mad Men” TV series. Back in the 50’s/60’s, mass marketing / advertising / new products seemed to be more of an art than science. Things like intuition, gut feel and luck seemed to have more to do with brand and new product success than a disciplined process. However, since then marketing / advertising / new products have “grown-up” with sophisticated analytical and process models. While a lot of these new tools certainly have their place I would argue some have been at the expense of solid strategic and creative thinking. This thinking “gap” means brand and new product innovations have not been as “disruptive” enough relative to the past – and thus lack real competitive advantages. Reasons include:

  • Retailer and manufacturer consolidation – Unfortunately, stock price pressures from Wall Street have created a myopic view of how to effectively manage and grow businesses – particularly in consumer product companies. The number of retailers and manufacturers serving consumers has radically dwindled since the 60’s. A lot of companies and retailers either no longer exist or now part of bigger concerns. The result has been lower headcount, lower tolerance for long term payback and lower new product activity (source: Nielsen).
  • The retail landscape continues to shift – Brick and mortar outlets have been losing share to online outlets due to consumer “show rooming” purchase behaviors. Moreover, private label / control brands now comprise roughly 25% of all retail sales dollars (source: Private Label Manufacturers Association) decreasing the importance of national brands. Finally, lack of store buyer continuity and buying habits continue to put downward pressure on retail prices – even if a disruptive new product is launched
  • Consumer demographics have shifted – Millennials are changing the face of marketing forever (source: Boston Consulting Group). Millenials will likely outnumber baby boomers 78 million to 56 million by 2030. This segment will have different habits and purchase behaviors vs. boomers and will impact marketing activities to reach them.
  • Marketing and information technology are merging – (if not done so already) – The growth of social media along with more sophisticated analytical tools are bringing these two separate functions together. Older marketers need to better understand social media and tactics and become more “tech savvy”; while younger marketers need to have a better understanding of strategy since more media is now BOTH traditional and digital. Allocation of marketing dollars to the most effective media channel to drive sales is critical since consumers are harder to reach
  • Idea generation/intellectual property have become too narrowly defined – Historically idea generation and intellectual property were sequential activities. This meant you had to have good ideas BEFORE you had a patentable intellectual property. However, some companies have recognized good ideas can come from anywhere – both from inside and outside. As a result, they have formalized their idea generation and intellectual properties processes to ensure they have both sustainable and robust streams of new product/business ideas (i.e. P&G).

As a result, many consumer product companies are losing/lost their competitive edge / advantages and not really innovating any longer. This can be seen in the Boston Consulting Group’s latest white paper: “The Most Innovative Companies 2013”. In this report, BCG continues to track the state of innovation via interviews with 1,500 senior executives which rate and rank their views of their own innovation plans and competition. They rank the 50 most innovative companies and their movement up/down this list over time. The sad fact from their latest report is only 5 consumer product companies are listed:

Boston Consulting Group’s Most Innovative Consumer Product Companies

Boston Consulting Group's Most Innovative Consumer Product Companies

So what can you do to make sure your new product programs have the right kinds of competitive advantages? I would argue you need to think big and “outside the box”. You need to persuade your CEO and CFO that investment in new product initiatives are worth the time and effort – despite the risks. However, that being said you do need to prepare compelling case(s) or basis of interest(s) so other senior line managers can better see opportunities. You can do this by following 10 steps:

1). REALLY understand your consumer / customer – Figure out what really motivates your customers / consumers to purchase your product or service. This could mean going beyond just focus groups to real quantitative analysis that gets to the core of purchase behaviors and attitudes.

2). Think big – Be creative and think outside the box. Remember the customer / consumer might not think about your product category in the same way you do. This is where creativity, intuition and gut feel really counts – if you need help get it.

3). Involve more than just marketing people – While marketing people usually drive new products, they don’t know everything. Good ideas can come from other functions beyond marketing….and also listen to your customers who resell to the ultimate end user. They see what your competitors are doing.

4). Test the validity of your ideas/concepts and prioritize them – Once you have a range of ideas you need a way to quickly screen them with the right target consumer. Quick concept market research screens are usually the best way.

5). Put together alternative business proposition(s) – At this point you need to summarize your top product ideas so senior management can better judge their attractiveness relative to other options. I recommend “single sheet of paper” approach summarizing the a) opportunity, b) barriers to entry, c) product line strategy/expansion potential and d) rough unit/$ volume potential.

6). Use a new product development process – If you don’t have a new product development process – get one. There are many staged tollgate new product models that can fit your business. Each “approved” business proposition should have its own tracking model and metrics for go/no-go decisions.

7). Put together new product roadmaps – Product life cycles are now incredibly short due to a combination of changing consumer needs and competitive offerings. You should plan a multi-year new product roadmap outlining what could be follow-up innovations to extend their new product life cycle.

8). If you sell to a reseller – be sure to highlight the opportunity from their perspective. – You need something to give your reseller (i.e. retailer) a reason to stock and carry the product. Otherwise, end users might not never see your idea.

9). Put together a comprehensive marketing plan – You will need to “broadcast” your new product news so customers/consumers can see it in the marketplace. Don’t just assume consumers will “find” your product on the internet or word of mouth.

10). Go back and re-evaluate if your new product programs were successful – Once you launch a new product or service it should be re-evaluated to see if it performed as expected and if not why?

Developing and launching new products are challenging – no doubt about it. However, if your business follows the above steps you should have much greater probability of success. You need to assume your competition ALWAYS knows as much or more than you with end users. If you keep this in mind don’t be surprised if you show up sometime on future Boston Consulting Group’s most innovative company lists. This is a great way to measure your success/failure as an innovator – because it from your peers.

Rick Steinbrenner
Global Marketing Officer
Brand Marketing Advisors
www.globalbrandguy.dot.com

Staged Tollgate NPD For Successful New Product Ideas

This presentation discusses the importance of BOTH product and branding as key drivers for commercial success in new product development.  It details a best practice staged tollgate new product development process along with an example of how it was used to successfully develop new product ideas from scratch.  Then successful development of effective branding and positioning are also presented along with three live examples of how they were successfully deployed in the marketplace.

(Note: this presentation includes three you tube videos which shows execution of the presented brands positioning.  In order to view the videos, you need to do three things.

1) Must have a live internet connection while viewing

2) Save & download the presentation.

3) Then view the presentation in slide show and enable the content when the security alert for macros and active X comes up – (this may or may not happen depending on your computers settings.)

Building Brand Equity Starts With Effective Advertising

This presentation discusses great advertising just doesn’t “happen”. It comes from full understanding of your target audience and developing the right messaging that exploits your strategic competitive advantage and helps build brand equity. The right positioning will help develop a brand that’s memorable with consumers. The presentation also shows real live examples of successful branding applications.

(Note: this presentation includes three you tube videos which shows execution of the presented brands positioning. In order to view the videos, you need to do three things.

1) Must have a live internet connection while viewing

2) Save & download the presentation.

3) Then view the presentation in slide show and enable the content when the security alert for macros and active X comes up – (this may or may not happen depending on your computers settings.)