Sunday, 27 January 2013

Marketing Differentiation eBook The Goose Bump Effect 2

Following on from the first section preview: eBook The Goose Bump Effect

Marketing Communications

Differentiation reduces advertising spend and increases conversion

Have you seen the number of large companies that advertise absolutely everywhere but are seeing declining revenues, profits or market share? One of the reasons is that the business focus’s more of the budget on marketing communications; more especially advertising promotion tactics.

Now I have a Masters Degree in Marketing Communications, and have never been in the position of running a large multi-national with millions to spend. However I can tell you this much, like any small business owner would agree with me, spending millions on advertising really does not guarantee your business prospects will improve in most cases. (See Woolworths, Game and JJB case study above for reference why promotional spending was useless.)

I’m sure a lot of ad agencies will disagree with you and me, they may even show us awards and stats to prove otherwise. But then, for every great ad that helped a business, how many have spent millions and failed to achieve anything significant in terms of sales?

Differentiation is a must in marketing strategy to determine what exactly the prospective customer will willingly volunteer to buy off-their-own-back. Once you have done this, then advertising what is your differentiated product will increase conversion. 

When you have done the differentiation marketing strategy bit properly, then you will know your customer better than anyone. You will have realistic targets and realistic results. You will likely get better conversion due to better targeting. If you are more targeted then you will spend less on mass advertising. In fact your advertising will be more creative, more focused and may involve specific channels rather than mass mediums due to your knowledge of your target customer.

Differentiation gives you power over marketing, ad spend and budget. You are in control

As you get to know your customer inside out from your differentiation exercise, you will also have a much clearer idea of your ad spend and budget.

This by default will give you much more control over the budget too. You’re less likely to be lead astray by creatives and agencies when you are pitched ideas and marketing channels to go down. On the other side, you will find new channels to use that are worth you investing in. Even if you increase your budget you are more likely to get a return due to your increased knowledge.

Where you once gave your power to other people, now you are in control and can filter out good promotion ideas and the not so good. Now you can relax as you don’t have to sign off that dodgy leaflet ever again for the mail drop (or whatever is your spam equivalent.)

Differentiation makes you visible and everyone else invisible, controlling the light setting for your competitors, while keeping the spotlight on using you.

Differentiation will mean your product and service offer is just what your prospective customer is looking for. Your offer will shine like a beacon amongst the sea of similar competitor offers. If you’re wondering how this is in the customers eyes, let’s use a product example to demonstrate this.

Imagine you get offered ten types of accounting software. You have never liked accounting, you dread doing your books, and each software package looks soooo boring. As you go through the accounting packages, the jargon like: double entry, credit and debit, and journal entry scare the heck out of you. Then you get to the last package and it is made especially for people who want to do it simply, easily, with minimal jargon, needs minimal training, and it doesn’t even look boring. You can see here how powerful differentiation is.

From this accounting software example, all the alarms are going off in the prospective customers head and she is doing cartwheels down the store isle as she makes her way to the till. It’s like the software stands out so much that a spotlight has pointed at that package to guide her to buy, without any need for any slick sales lady to give any opinion or consultatively sell her.

With good differentiation, she cannot see any other product in front of her face. It’s like her periphery vision has been blacked out. If yours is the differentiated accounting software it’s like you can magically tweak the attention given to competitor products.


Differentiation makes you more memorable

If you’re business is not differentiated, how can you expect customers to remember you when they are ready to buy? Have you ever been to buy a commodity product like a note pad or pen with lots of close competitors and found yourself just buying the cheapest? That’s because you are not looking for a brand or a certain product; you may not be able to recall one brand instantly in that industry or category.

But there are good examples of companies that make sure their product is differentiated from other commodities. Can you think of any brands in industries such as washing up liquid, toilet roll, toothpaste? 

Now think of the times you have been at the grocery store and chosen the brand you know. You might even be well aware of how it is different from other commodities. It makes selling easy, doesn’t it?

Differentiation helps you move ahead of close substitutes and competitors

Naturally when your business is differentiated to suit your target market, when prospects are ready to buy and know about you, you will move ahead to the forefront of prospects minds.

Unless your competitors give away their products and services for free, your competitors will have less chance to convince the same prospective customers to spend with them instead. More impressively, there will be instances where competitors offer huge discounts and it gives your prospective customers even more reason to use your product – because they think your competitor is flogging a useless product in desperation.

Lastly, think of horse racing. You may have seen a photo finish where at least two horses are crossing the winner’s line at more-or-less the same time. Why put yourself through that doubt every time a prospective customer is ready to buy where it is hard to tell which one is the winner? With differentiation, your business will be clearly crossing the winner’s line with other horses behind you.

Differentiation protects you against copying

Many of your competitors will copy the market leaders. It’s just the way of the business world.

There are some differentiation tactics you can create which are really hard for competitors to copy. 90 per cent of your competitors will copy the easy USP’s and try to make it their differentiator. 

That’s why, by using differentiation, you will create truly unique and irresistible value added armour to your offer which competitors cannot or find hard to copy to protect yourself from being commoditised.

Differentiation Case Study: Bob The Cat

I’ve met Bob the cat in Covent Garden.

You’ll see tourists there taking pictures of the cat that can do many tricks such as a high five and sit on the owners shoulder.

Bob travels the streets with his owner who plays guitar as a busker. There is nothing special at all about the guitar player. But the owner has said on television his takings were up 300% since he had the cat sat with him when he plays on the street.

If you ever visit London you will hear and see hundreds of street performers, but Bob the cat is one-of-a-kind. That’s why the owner enjoys higher earnings due to his uniquely differentiated way of performing his act: with a performing cat.


Differentiation gives you power to choose which customers you want. Not to attract bad customers as part of your lead generation

With differentiation, you will have more power and control over your offer, over your competitors and your prospective customers. In fact, you will have enough power to further fine tune your offer to meet the needs of who you would consider ‘good customers,’ and repel ‘bad customers.’

Imagine if you could sweep up a lot more ‘good customers’’ whether that means they pay on time, or are less hassle to service, and so on. It will help your business be more profitable as productivity increases dramatically.

Meanwhile, your competitors chase the ‘bad customers,’ you know the ones, always moaning and complaining, arguing over every penny, getting you to call back and go through the invoice again and deal with yet another complaint and threat. While you’re surfing the internet on a Friday afternoon after another good week, your competitors are straining at the pump to meet made-up deadlines due to unforeseen delays created by ‘bad customers’ who just want to double the amount of service time.

Differentiation allows you to control your price offer and profit margins, take away power from the customer

Have you ever wanted to do something or use something and there was only one supplier or version available? That’s what clever differentiated businesses do, and they usually can charge more because you want to use them. 

Why do cinemas still charge a premium for new films when you can see the same film a few months later at about the third of the cost; or bands charge up to £100 for a concert ticket when you can watch the DVD for just over £10, or Interflora charges £50 for flowers when you can a bunch of flowers from Asda for £5? You already know by now that they are the only supplier that can make an offer of superior value: differentiation allows you to raise prices, and increase profit margins. 

As long as the prices you charge are not so ridiculous and your business’s offer is differentiated enough, you have the power to charge what is profitable and what you deserve. Gone will be the days of worrying about competitors and customers threatening to go elsewhere. When you master making a differentiated offer that customers are desperate to have, you have the power.

Long-term benefits

Differentiation creates longer lifetime value

In the long-run, once you have a customer on-board they’ll know about the quality of what you have to offer which helps them. Your offer has been fine-tuned over time to suit their needs so that you get near enough an exact match of what the customer requires. 

Your research can over time ensure you evolve your differentiation. Businesses that follow the methods of differentiation will know their customers inside-out. By doing this, it is very hard for a customer to leave to use a competitor. For example, if Sarah the hairdresser knows you like a quiff like Tintin and does it for you after each hair cut; if that’s your thing, then no other hairdresser is going to take your business away from Sarah. (Yep, Sarah might even watch the Tintin movie for research too.)

A lot of businesses spend money upfront in sales and marketing promotion tactics. Expenses can include sales staff, equipment and office, running costs, marketing promotions such as website, leaflets, exhibitions, ads ... and so on. But service a repeat customer and there is no need to allocate a lot of spending on sales and marketing communications as the customer knows you. It’s just a case of servicing, repeat ordering or introducing them to other products and services. Costs are lower, and each customer will be worth more money per quarter or per annum as they buy more from you.

Differentiation creates referrals

Happy customers are always happy to tell other people when they’ve got a good product or service. If a friend or relative is in trouble, you may notice yourself giving advice if there is a solution you know will work. So expect that your happy customers to introduce new customers to you.

Customers also tend to hang around with similar profile networks, whether its friends or business acquaintances. So if your product suits a certain person, business type or job profile, then your customer will almost certainly know another matching prospect that will enjoy the benefits of what you have to offer. Just think of that restaurant you enjoyed or new web site you are using, can you think of any people who would like to use it too?

Most customers will only buy what they demand is of value, not what you want to sell.

Differentiation improves your customer conversion – mouse trap, monkey and coconut with peanuts

You may have heard that all businesses want to build a better mouse trap, i.e. a slicker, faster, and better way to attract and convert new customers.

There are numerous ways to attract and convert a customer. I’m sure you have seen the same methods used in your industry by competitors, such as: restaurants that focus on a nice table, music, good menu and service; or an accountant that advertises she is fully qualified, has so many years of experience, good service; or a book shop with book categories, chairs, a cafe and price discount offers. If you are doing the same as your competitors, then the cheese on your mouse trap smells the same. If the mouse can only choose one cheese to go for, and there were say ten mouse traps on the kitchen floor, would you not want a better smelling cheese on your mouse trap?

In Africa, to catch a monkey, they use another trap. The Bushmen carve a hole in a coconut and fill it with some nuts. The coconut is also tied to a trap. When the monkey puts its paw in, it has to clench its fist around the nuts. At this point, the Bushmen trap the money. As you can see, a mouse trap with nuts would not trap a monkey. It might injure a monkey, but not trap one. Differentiation will help you build you a better trap that is more enticing and more effective so that prospective customers who are looking for your kind of products and services will find your offer more irresistible than your competitors.

Regarding existing customers, your research should make it easier to acquire new customers. You already have a proven formula that works so you can test out your offer on new prospective customers. Therefore, your conversion rate should be higher. It should be like shooting fish in a barrel in the future.

Differentiation case study: James Bond

There are thousands of films involving a secret agent or a hero who saves the day.

But none is more profitable and recognisable than James Bond.

What is it that Bond does so successfully?

Firstly, the writer is Ian Fleming has worked for the British Government as an intelligence officer. So his work is full of insight and authentic.

The Bond brand is recognisable and consistent: the Bond music kicks in when Bond does something that is heroic, Bond meets lovely ladies, says great one line jokes, and has the best gadgets.

Other films can copy gadgets and a hero, but they can’t copy the music, the title sequence, the story that Bond is the alpha male for the British Secret Service, and the other characters such as Q and M.

Bond has been created as the ultimate alpha male fantasy. It is fiction after all. But the consistency of the brand ensures that this fictional character hits the spot every time the male population wants a hit of alpha male fantasy.

Nobody does it better!

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