Differentiation – You Must be No. 1 Nobody Gives a Damn for No. 2; How to Position Your Company as the Industry Leader

Differentiation Is the Key for the Successful Marketer

Marketing does not begin with a great idea or unique product. It begins with customers – those people who want or need your product and will actually buy it. They aren't just buying your product/service, however. They're also buying the concept of what the product will do for them, or help them do for themselves.

Find Your Niche

One way to create a customer base is to focus on specific groups of potential customers that share common characteristics. Your product/service can't be everything to everyone. Rather than try to fulfill an illusory/impossible demand, spend time researching the market to find out who is most likely to buy your offering and sell to them. Not only is this common sense, but you build in-depth knowledge of their profile, as well as the industry, and you develop an environment of trust, which translates into customer loyalty and, thus, customer retention.

Once you've evaluated your market, identify your competition. You can't position yourself or your product unless you know what your competition is doing. Don't underestimate them under any circumstances. Try to counter their underlying strategy, not necessarily their exact movements. Don't get caught in the game of one-upmanship, it will make your company look foolish and provide plenty of fodder for the competition to use against you.

Be aware that there is, by definition, a cap to your niche. Take early steps to streamline your organization so as to garner the highest profit you can while still providing the highest level of quality service and product to your customer. If you obtain new customers but can't retain them, your company will fail. Also consider the development of multiple niches with new lines of products/services related to the original. This strategy minimizes capital expenditure, thus enabling you to access related niches with a minimum of effort.

How to Position Your Product/Service

As we stated earlier, positioning is your competitive strategy. The following questions should help you define what you need to be doing, provided you're not already doing them.

• What do you do better, faster, cheaper, with higher quality that differentiates you from your competitors? Don't be vague; be specific.

• What is your target market? Does it know what makes you different?

• How are you letting the marketplace know?

• What techniques do you use to make the point?

• Are your advertisements and public relations efforts spreading the word you want spread?

• Is your ad agency or PR firm (these could be internal departments) aware of your unique solution, and are they making every effort to promulgate that difference in every form of media they create?

• How are you driving the point home at trade shows?

• Do you conduct pre-, during- and post-trade-show marketing? (If not, you should be.) If so, are you stressing your unique qualities?

• Are you using database marketing to contact those with whom you have an existing relationship in an effort to cement that relationship? Are they aware that product/service to which they are accustomed can only be found with your company?

Differentiation Points

You must carefully select the ways in which you will distinguish your company's products/services from the competition. The differences you advertise should be:

• Distinctive – either isn't offered by others or is offered in a more distinctive way by your company

• Important – delivers a highly valued benefit to a sufficient number of buyers

• Superior – is superior to other ways to obtain the same benefit

• Communicable – is communicable and visible to buyers

• Preemptive – cannot be easily copied by competitors

• Affordable – the buyer can afford to pay for the difference

• Profitable – the company will find it profitable to introduce the difference

Your advertising should be bold and go against the grain. Don't be offensive, by any means, but do be original. Every form of media generated by your company or its proxies should continually and eloquently emphasize why your product is the one of choice.

Hazardous Waste

As in all things, there will be copycats who will make every attempt to supplant you from your niche by mimicking your actions and positioning themselves as leaders. And while they add little value to the marketplace, they do perform a vital function – they make you look good. They force you to maintain your competitive edge.

That is why monopolies seldom live up to their potential – there is no outside presence to keep those companies on their toes. As long as you continually position yourself as a leader and you can back up this assertion with verifiable results and achievements, your position will remain secure. But do not forget, ever, that perception is reality. If you don't create an image for yourself, your competition "never overlooks a mistake, or makes the smallest allowance for ignorance."

If Business Gets Any Worse We Should Probably Start Advertising

As lifelong students of marketing, we have always been amazed that so many marketing managers, directors and executives just don't follow the basic principles of the discipline, which is unfortunate for both the companies they serve and their own careers.

Marketing is the lifeblood of every corporation. As we've stated: "Companies exist for two reasons, marketing and innovation." As strange as this statement may seem (to the people who have no clue about marketing), marketing is, in fact, even more important to the survival and prosperity of any company than stated above.

1. If you don't market, you don't exist.

2. Marketing is not a part-time job.

3. Unlike the common belief of most high-tech companies, marketing should not be regarded as a necessary evil, but rather it should really be the other way around!

No company can go very far or even exist without a wellprepared, strategically sound and realistic (cost-effective) marketing program.

The lackadaisical approach of high-tech companies toward marketing explains their high failure rate, a rate that is, in fact, higher than any other sector of business.

The Case for More Aggressive Advertising in a Slowing Economy

The worst thing any advertising executive can do is to stop advertising in a slowing economy.

Here is what an article in the Harvard Business Review stated:

"Advertising in an economic downturn should be regarded NOT as a drain on profits, but as a contributor to profits."

It is a known fact that all sales begin with qualified sales leads. The majority of sales leads come from effective and regular advertising. In short, there can be no new sales without new sales leads. If the economy slows, naturally sales and revenues of most, if not all, companies decrease, and about the only way to compensate for that is to bring in new business. And new business comes from new qualified sales leads generated from continuous and effective advertising. If anyone has any problem understanding this basic and elementary fact, that person should not be in business.

Advertising Is Vital to Reverse the Loss of Business

During a good economy, one might lose about 30 to 50 percent of its business due to natural attrition. In a slowing economy, this number is more like 50 to 75 percent of business lost due to natural attrition. It is vital to replace this attrition with new business, meaning new dollars coming from new sales leads and continuous advertising for new products and services offered by any company. It is really just as simple as that.

A Review of Positioning Laws

One of the most informative articles we ever read about positioning stated that the great marketing battles are not fought in the business environment, but rather in the minds of the consumers. After all, the ultimate essence of advertising, marketing, PR, etc., is to influence consumers to prefer and purchase the brand of products or services that are being advertised. Therefore, the most important by-product of advertising, positioning and marketing should be to win over the mind share of consumers or, in the case of business-to-business transactions, the mind share of end users.

An article in San Diego Executive magazine stated:

"If during an economic downturn you maintain a strong advertising presence while your competitor cuts his budget, you will automatically increase your "Share of Mind."

In a related article, ABM (American Business Media) stated the need for advertising in a different way:

"When times are good, you SHOULD advertise; when times are bad, you MUST advertise."

Here is another comment regarding this subject matter from Coopers & Lybrand:

"During an economic downturn, a strong advertising/marketing effort enables a firm to solidify its customer base, take business away from less aggressive competitors, and position itself for future growth during the recovery."

You Can't Argue With Success

"History has proven companies that maintain or increase their advertising investments in periods of economic downturns increase their sales and share of market, both during and after the downturn."

Source: American Business Media.

The Best Way to Increase Your Market Share

As indicated above, most marketing managers and executives tend to do the wrong thing during an economic slowdown. In other words, instead of aggressively advertising and marketing, they do just the reverse, and that usually spells disaster for their companies. In fairness, however, one cannot always blame the marketing or advertising managers of companies for doing absolutely the wrong thing by cutting the advertising and marketing budget of a company.

The necessity for aggressive advertising in a slowing economy must be understood by everyone in any company, particularly by the CEO, CFO, as well as by sales, marketing and advertising senior management. While the marketing manager might remind the CEO that the company simply cannot stop advertising in these periods, he or she is often overruled by someone else who has no clue about the vitally important necessity of advertising in a slowing economy.

On the other hand, this unfortunate elimination of advertising budgets by the majority of companies can have a positive effect in terms of market share swing. In other words, the ill-advised decision by 80 to 90 percent of companies not to advertise creates a tremendous opportunity for savvy companies to redouble their advertising efforts during a slowing economy, thereby significantly increasing their market share while their competition is napping. History is full of examples of companies that lost their market leadership due to lack of marketing during a slowing economy.

Marketing Is Not a Part-Time Job

Everyone in the entire organization must understand this vitally important, basic principle of marketing, and unless everyone supports it, the company will end up going nowhere. It is not enough to periodically advertise when the CFO tells you there is money available to advertise.

It is not only imperative to market and advertise on a regular basis, but your advertisement must also be powerful and highly effective.

To make an ad memorable and highly effective, often you need to go against the grain. If your competition is using Method A for advertising, you definitely want to use Method B, which is totally different from Method A, to thereby make your products and services stand out.

Business-to-business ads, particularly in the case of niche-type businesses, that are highly focused and placed online and in targeted magazines are extremely effective, provided they are well prepared and response driven.

Getting back to the need for advertising in a slowing economy, here are some more excerpts from American Business Media (ABM) on this topic:

1. "Maintaining or increasing advertising budget levels during economic downturns may be necessary in terms of protecting market position vis-a-vis forward looking competitors."

2. "If a company fails to maintain its 'Share of Mind' during an economic downturn, current and future sales are jeopardized. Maintaining 'Share of Mind' costs much less than rebuilding it later on."

3. "Advertising through both boom and down times sustains the necessary brand recognition."

4. "Maintaining a company's advertising during an economic downturn will give the image of corporate stability within a chaotic business environment, and give the advertiser the chance to dominate the advertising media."

5. In addition, The Strategic Planning Institute states: "Economic downturns reward the aggressive advertiser and penalize the timid one."

In Summary

From all of the above, one should conclude that as the economy slows, advertising not only must continue, but also must increase because this is the time when market share changes hands. Second, it is the job of marketing, sales and advertising managers to inform senior management that it is vital not to cut the advertising budgets during the slowing economy and, in fact, the budgets should be doubled to be effective and to maintain and indeed increase market share.

Niche Marketing

The First Law of Marketing: It is better to be FIRST than to be BETTER in marketing.

No matter how good your product is, without marketing you cannot sell much.

On the other hand, if you made a good product and supported it with powerful integrated marketing, then you have a good chance of being successful. Follow the guidelines provided for effective digital marketing outlined in Chapter 2: The Rules for Successful Marketing in Today's Online World.

Remember that online marketing will not succeed unless and until you read and understand the guidelines provided in this book. Then and only then can you expect to see results from your digital marketing.

In the 1960s, when computing began to emerge as a solution for business processing, the technology was basically controlled by IBM. As other competitors emerged in the market, they were unable to outsell IBM, as even their systems had to be IBM compatible. IBM had developed the core mainframe computers and complex PBX phone systems for most organizations, and it was successful in locking competitors out due to compatibility requirements. Customers were contractually bound to long-term arrangements in which they were essentially forced to upgrade to the latest hardware.

IBM was first to market and it was able to quickly position itself as the leader. Big Blue was No. 1, and as a result took the majority of market share for many years. IBM's dominance persisted until personal computers became an alternative. With competition, other products became available which were often more powerful, but always offered at a lower price.

Apple has performed a similar feat in today's environment by maintaining a somewhat locked environment to its operating systems. Microsoft, on the other hand, provided flexibility for developers and others to connect to its systems and offer complementary hardware and software.

Nadji remembers his son, Rich, ordering computer parts and putting them together for a fraction of the cost of purchasing a pre-built system.

The first law of positioning is worth repeating: It is better to be FIRST than to be better.

The second law of marketing: if you cannot find a way to be FIRST, it is better to find something else where you can be FIRST and go to market that way.

You must be No. 1! We mentioned this earlier, but we will review it again here with added emphasis.

Who was the first person to fly solo non-stop over the Atlantic from the U.S. to Europe? Charles Lindbergh.

Who was the second? You can't recall, can you? That's because, "No one cares, no one gives a damn for No. 2." You must be No. 1!

Let us give you another example: In 1973, which horse won the Triple Crown of Thoroughbred Racing in the U.S.? Secretariat, of course!

Which horse was second that year? You can't remember, right? That's because, "No one cares, no one gives a damn for No. 2." You must be No. 1!

In the longest distance race in 1973, The Belmont Stakes, Secretariat came in ahead of the next horse by thirty-one horse lengths in a still record time of 2:24. The second horse, actually named Sham, came in last that day, even though Sham had been a close second to Secretariat in both the Derby and Preakness that year. No one really remembers Sham, even though the horse was very good and came within two and a half lengths of Secretariat in the Kentucky Derby that year, and Sham actually beat Secretariat in a couple of the Derby prep races that same year. Again, No. 1, Secretariat is the horse history remembers!