This is the seventh part in our series of marketing articles, if you missed the first, second, third and fourth ones you can find them here: Marketing Series: An Introduction to Marketing, Marketing Series: Customer Orientated Marketing, Marketing Series: Determining what your customers want, Marketing Series: Market Research – How do we know which plan is the best? Marketing Part 5: Understanding the sales process, the psychology behind Customer Behaviour and Marketing Series Part 6: Analyse Customer Information.
Most of us don’t trade within an open blues ocean. We will usually operate within a blood red sea, full of predatory sharks, all competing to get to the top of the food chain. Competition is actually a good thing. It forces innovation, helps us understand our unique position and, in theory, provide value for the customer. To understand where we stand in the pecking order, we must keep one eye on our competitors and the other on our potential customers. This requires an in depth knowledge of what alternatives are out there, balanced against our customer’s needs.
Understanding our Customers
In some ways understanding our competition is relatively straight forward. We can buy their products to research the potential, visit their premises, compare the levels of customer service or ask others of their experiences. If they are a company you can download their financial statement from Companies House or get the gossip from a local Chamber of Commerce or trade association.
For understanding our 
customers, we must be clear on what makes them buy from one suppler, rather than another. The jostling for product position takes place in the mind of the consumer and the psychology of how people perceive the value of each brand . That is where all our previous research comes into play. We need to appreciate the motivations of our customers and the variety of options placed before them to determine the likelihood of them purchasing from us. According to the diagram below we must place our “value proposition” at the forefront of the consumers mind.
Value to customers
Value is not just monetary, but is the measure of how important that item is to the consumer, as opposed to the alternatives. One comment made regarding the popularity of the IPad was not the price, as it was more expensive, its features, as there were models with similar specifications, but that people felt “cool” even if it was turned off. The mobile computer had become a fashion accessory. The customer motivation had more to do with the subjective loyalty to the brand, rather than the item itself.
Research has shown that up to 70 per cent of customers make their brand choices in store, so there is increased need to reinforce brand distinction at the point of sale. That is the reason why in-store promotions are so important, to push people over the line and commit to that purchase.
A good exercise to go through is to line up your products against those of your competitors. Identify your “Unique Selling Points” (distinctive price, quality, or feature). Make a realistic projection of your market penetration (i.e. 15% as you are unlikely to take the entire market share) . From that you can get an idea of your profit (units sold, against cost and selling price) . Then revisit your “marketing mix” to determine the amount of effort required to make a sufficient return. If you do this for your entire product range then you can spread the risk between slow moving new products and the main stays of your business. That way you can grow from established income earners, to speculate on up and coming items which keeps the business forward looking and remain relevant in a dynamic changing market place.
Next in the series we will look at types of products and their place in the “Product life cycle”.
Malcolm Ford has had 25 years business experience and has been involved conducting marketing campaigns for companies both in the UK and in Australia. He currently resells and implements Enterprise software systems.
