BERKONOMICS

If only newspaper publishers, book publishers, record companies, and movie producers would have had the vision to see their future as we now see it, we might have become a digital society with much less disruption and loss of jobs than we have experienced these past years and continue to experience.

Did the proprietor of the neighborhood bookstore or national rental chain not see this coming?  Frictionless distribution through moving bits of information is so much cheaper for all but those making their living in the middle of the supply chain.  Money always flows to the most inexpensive solution that meets the needs of a buyer.  It should have been obvious to all in those niches and others like it that digital distribution would supplant product manufacture, inventories, physical distribution systems, warehouses, and limited retail shelf space, as soon as the infrastructure allowed it to do so.

And yet, as we have explored in past insights, it is human nature to protect the business, the existing product and the existing revenue stream – and against human nature to displace one’s own product when it is still generating good income.

[Email readers, continue here…]  There are many ways businesses can reinvent themselves, even if a product must be manufactured and put into the hands of the user in physical form.  Product marketing materials, user manuals, service manuals, sales guides, and catalogs all must migrate to the web to cut the use of paper and make them

Dave’s book: Positioning

more accessible over time and distance.  But even more important to the future of your company is the deliberate reinvention of how the essence of the company’s core is delivered.

Can a consultant be as effective when half or more of the meetings held are using Skype or telepresence?   Can a software product be delivered as a service “on demand,” saving hardware and human error in updates?   Is there a way to speed to the user a product, such as a new music release, to gain instant gratification and lesser cost at the same time?

Everywhere we look the supply chain is being disrupted by companies finding ways to deliver bits of information or entertainment instead of atoms of paper, DVDs or hardware.

In your strategic planning, do you consider ways to obsolete one or more of your products or services by delivering it in bits not atoms?

We have grown more than a bit weary of most advertising, no matter in what form.  We are constantly bombarded by ads in multiple types of media, to the extent that we most often tune them out unless particularly entertaining from the first moment.

Dave’s book: Positioning

In my keynotes on trends in technology, I often lead into one of the trends with the proposition that we have left the information age and are solidly within the age of recommendation, pointing to the fact that 69 percent of us research major purchases online before buying; 62 percent look at online peer reviews and 39 percent of us compare prices across outlets.  I make the point that this is good for consumers, because it creates an environment where there is much more consumer pull – and less producer push – in our new world of connectivity and transparency.

How do you reach an audience that pays less attention to advertising then at any time in the past one hundred years?  Given the statistics quoted above, you must find ways to have your consumers endorse your product publicly, and in a form that is divorced from looking like an advertisement.

[Email readers, continue here…]  There are a number of ways to do this effectively, including the use of social networks to create buzz, seeding product acceptance through early adopters or celebrities, or by creating a small niche market that shows unusual acceptance and more.  People are more trusting of unknown third parties endorsing your product that they are of direct ads touting the benefits of the product in large, clear type.

And the best way to do this is with the placement of a case study, a story told about and by a satisfied customer with something to say about how your product solved their problem or pain. That story can be in print or in multimedia form.  But it must be told about and by the customer, with your product as the tool of solution, not the focus of the story.  A good case study quickly lays out the pain, the players, the search, the solution, and the pain-reliving effect after implementing the solution.

All of us can identify with a successful solution to a painful problem. And some number of readers will identify directly with the problem as their own, and be moved to act.  The only named solution will have been yours.  And that’s delivering power at the right moment to the right recipient.

Over the years, advertising money is being moved from display ads in magazines and newspapers to social network sites where people with eyeballs have migrated.  But people still read, hear and see stories they can identify with, and content providers still need content.  Where content providers or publishers push back when seeing a press release, many will embrace a good story demonstrating a painful problem and a happy ending.  And as a result, more money is flowing into story-telling.

Particularly for companies with limited marketing budgets, case studies are perhaps the most effective marketing tool available for the cost – other than just lucky or skillfully-ignited buzz.

It is an old warning in the entertainment industry.  Define your persona the way you want others to view you – before someone else defines you by comparing you to someone not as flattering as you would like.

I have a friend in the music business who worked hard to gain introductions to, and become mentored by, several known names in the business.  One well known informal mentor called him the “Stevie Wonder of Hip Hop.”  That description stuck, and it is helping the young artist to define himself through instant branding and a positive image.

If you are proud of the fact that you were first to market with a product or service, you might define yourself as the “first and best”. If you are the largest company in your niche, you might want to define yourself by relative size, which connotes success and staying power.  If you are the quirkiest of suppliers in your niche, you could create a campaign around your company’s counter culture.

[Email readers, continue here…]  One great way to define your story is with a word picture in which you associate yourself with a person or company that is recognized in a positive way and helps you tell your story more easily.  For example, if you have a bicycle currier service that you want to be known as speedy and reliable, define yourself as “the FedEx of urban couriers.”   (See “Manage Your Mantra” from several weeks ago.)  Your failure to do this early in the life of the company may come back to haunt you when others refer to you as just another street currier.

How do you define yourself?  A mantra, tag line, motto, or logo with your unique brand definition is a good start.  Press releases and PowerPoint presentations with a uniform use of the mantra or phrase will reinforce your effort.  Back your story up with a statistic if possible. “There may be forty companies that do what we do, but we’re the first, largest and used by more Fortune 500 companies in our area than all the others combined.” (You can tell that story by limiting your market to the lower east side of town, where you are all of those things.)

Teaching your associates and employees to use the phrase each time they introduce the company to another social or business contact helps spread the word.  There is no one who will ever be as passionate about telling your story as you.  It is worth the time and effort to work on telling it well and in a memorable way.

One important element of positioning a company is pricing strategy.  There are five niches you can chose when defining your positioning strategy:  price, quality, service, innovation, and elegance.

And although many positioning efforts cross the lines between these, great companies play to the strength of just one.  And within that slice of differentiation, to make any sort of impact and lasting company, the difference between you and your competitor cannot be incremental.  “Me too” positioning is lost in the noise of today’s targeted marketing and corporate reach through inexpensive, but effective, use of Internet marketing.

First, and easiest to understand, is creating differentiation by price.  Certainly Wal-Mart, Target and others have gotten the attention of their potential customers using price as the primary leader to drive sales.  Wal-Mart succeeds because it has changed the game with its suppliers, actually partnering with them to help drive costs down so that prices can truly be lower at the store level.  Since that capability is far beyond most every other retailer, there is great risk in competing by price alone.  Most anyone else can meet or beat your price any time they wish.  And their motive may have little to do with short term profit, a most frustrating finding when you finally realize that it is impossible to compete with such driven opposites.

[Email readers, cintinue here…]  Price can become a competitive tool by creative companies when they can change the game, reducing the number of parts for example to lower manufacturing costs, or reducing the time to install a product, lowering after-sale costs.  But, for the most part, competing on price alone is not a good strategy for the long run.  Success is not rewarded appropriately by continued dominance of a niche when price alone built that niche.

Quality can be, and is, an important differentiator.  Ford returned from the land of the nearly-dead to become not only profitable but a desirable alternative to the dominant Japanese cars by emphasizing quality at competitive prices.  And some brands are built principally upon quality even at increased price, including Mercedes, Jaguar and Lincoln, to name a few auto brands that have successfully been able to charge more for quality than just the added features above their lower-priced competitors.

Service is a remarkable differentiator.  Those who shop constantly at Nordstrom’s are knowingly paying more for personalized service that has proved endearing and able to withstand the competition for decades of continued high standards, uncompromised by the need for profit first, service second.  Internet hosting providers, iSPs, are often distinguished by larger potential customers by the level of uptime which equates to quality of service, even at incrementally higher hosting cost.

Innovation certainly defines a number of companies catering to early adopters and the mass audiences that follow.  Apple stands out as the first name on most minds when thinking of innovation, even though Apple originated none of its dominant product lines, choosing instead to come to market with innovative adaptations of existing products.  The iPad created an entirely new market segment from what was for over a decade a sleepy niche computer tablet market dominated by a few small-selling products aimed at niche markets.

And finally, elegance serves as a major differentiator for those who are willing to add quality and service into a brand that is priced well above reach of the masses.  Coach, Bentley, Patek Philippe, and Chanel are brands defined by elegance, not feature-functionality and certainly not by being the low priced competitor.  The great benefit of reaching for differentiation outside of low price is that the public you court is the public loyal to you over time because of your brand and your brand recognition, and the least likely to abandon you for another when their price is lower by increments.

Branding, price strategy, and positioning are related as differentiators that help you to increase margins and drive profits when competitors fail with inferior strategies.

I am constantly surprised when speaking with entrepreneurs and CEO’s who act puzzled and a bit flustered when I ask, “So what is your mantra?  Tell me about your company in ten words or less.”  Almost every one begins a long explanation of their business that is nearly impossible to follow, let alone recall a few moments later.

And each lost an opportunity to tell their story in a memorable way that has power and boosts their enterprise value in the minds of the listener.  I recently spent fifteen minutes in front of a table-top display, attempting to coach an entrepreneur who repeatedly tried to state why his business was better than a competitor (one I didn’t recognize) and never explaining what it was that he did.

In explaining what you do, and what you do better than the other company, you have seconds – and only seconds – to get your image across into the minds of your listener.  The best way to do this with a young company without name recognition is to appropriate the image of another, known company, to invoke the quick mental understanding of what you do.

[Email readers, continue here…]   “We are the Skype of moderated Internet broadcasting,” evokes immediately the mental picture of a company that provides a platform for broadcasting town hall meetings or large group gatherings over the Internet, much as Skype does with one-to-one video connectivity.  Yet, if you took the time to describe the company with the longer description above, you’d lose many of your listeners with too much detail and too many words.  With the short description evoking the image of a known company, the listener immediately grasps enough to engage in a discussion – or at least walk away and be able to repeat to another the main thrust of the business.

That’s a mantra: a short, quickly understood picture of your business in just a few words, often using the name of a well-known company or process to complete the picture-story.

You have only seconds to make a first impression.  Your mantra is the ticket to entrance into a longer conversation.  It is often the most powerful but inexpensive marketing tool a young company has to offer.   And it is often extremely difficult to craft effectively in just a few words.  So what is your mantra?