Gathering Information Market Product Company Key

As a general rule, the most successful man in life is the man who has the best information. —Benjamin Disraeli

Product Information Good Marketers Need

We’ve all heard the saying, “garbage in, garbage out.” It’s the same when marketing your business. Understanding your market provides you with a valuable base of insights into your business, your competitors, and your customers. It will provide you with both a fact base and key insights that will drive the major tasks of choosing your target market, defining your brand, setting your objectives, and in setting strategies and tactics to make your plan happen.

TIP
Look for what you need, not what you can find. There is a swamp of information out there. Most of it is not helpful for marketing your business. The best marketers determine what they need to find before they start looking.

Here are some key pieces of information many businesses company should start with:

Market Sales

  • Size of market
  • Market growth
  • Market share versus key competitors over time
  • Product and service usage habits

Awareness and Attitudes

  • Brand awareness and shifts over time
  • Brand perceptions and shifts over time

Distribution

  • Industry and company channels

Market Pricing

  • Estimated cost and pricing structure of your company and competitors
  • Price elasticity of your products

Market Trends

  • Current and future trends that affect demand

Market Competitors

  • Strengths and weaknesses (product, company, distribution, pricing, communication)
  • Marketing and advertising spending
  • Brand positionings of key competitors
  • Key competitive strategies

Culture

  • Company history
  • Consumer language and customs
  • Company rituals

Most of the information market you will need is publicly available. This may seem surprising to you, if you don’t purchase expensive market share data from a provider. For most companies, a walk through the store, a studied look at the marketing of your competitors, a read through your competitors’ annual reports, a Google search, and studying trade journals, along with industry articles in business publications, will offer a pretty good foundation for understanding key issues in the market.

Let’s say you have a new brand of bottled water you want to market. A visit to the shelf of Wal-Mart can tell you a lot. You can roughly estimate market share from the product facings on the shelf. You can see what size assortment consumers are purchasing and what pricing strategies they are using. You can see which new products are being launched as a clue to where the category may be going. 

Simply observing how consumers are shopping the category can be enlightening. Do they stand in front of the aisle for minutes studying the category, or do they go right for the brand they want and leave? Good marketers spend a lot of time studying the environment in which their customers choose and use their products and services.
Simply observing how consumers are shopping the category can be enlightening. Do they stand in front of the aisle for minutes studying the category, or do they go right for the brand they want and leave? Good marketers spend a lot of time studying the environment in which their customers choose and use their products and services.


Toyota’s product development engineers spent years observing the behaviors of truck owners before successfully entering this large segment with their product Toyota Tundra. It’s a good idea to provide comparison points. Single numbers often don’t provide enough useful information. Reporting that you have 13 percent market share doesn’t really tell your organization much at all. However, reporting that over the past three years, market share has increased from 9 to 15 percent and that your company is now third in market share, with the leader holding 47 percent and the second place competitor at 15 percent, provides important context. It shows you are gaining share in a market that is dominated by one strong competitor.

It would signal that your company is probably seen as more of a niche player and that you are probably competing not as much against the leader but the other smaller players by providing a different set of benefits than the market leader.

Thus, it is important to understand how consumers see your product versus the leader and the other smaller players with whom you compete. The comparison of reference points allows this insight. When you are gathering information in this section, think about the following ways to show points of comparison:
  • Compare trends within your company. For example, growth in sales over a five-year period, increases in average sales per transaction from year to year, the use of different distribution channels over time, and the increase or decrease over time of your advertising-to-sales ratio.
  • Compare your company to the industry. A good measure of where you are is to compare key metrics for your company to that of the industry as a whole. The industry represents the sum of your competitors. Comparing your company to the industry along key metrics provides you a snapshot of how you are doing relative to the average performance of all your competitors.
  • Compare your company to key competitors. It’s also very helpful to compare your company to the group of competitors that you’ve identified as your core competitive set. Many of you are in industries that have many different levels of competitors. In retail, for example, the industry is often made up of the big-box mass merchants, the mid-tier that can be found in strip centers offering value to its customers, and the specialty shops often found in malls carrying more upscale products. It helps to define the three to four competitors that most affect your success.

TIPKeep a notebook of ideas while gathering information. Planning is not linear. Great ideas occur while you are delving into your industry, into competitive and company trends, and while exploring the insights into the target market.

We have always found that there is a time when we are first exploring a category when we have lots of ideas about what marketing strategies might work. As we learn more about the category, we discover that most of these won’t work. However, the newcomer to the category looks at it with fresh eyes and often recognizes patterns of opportunity that industry insiders have dismissed long ago or overlooked. This is why we suggest that you write all your fresh ideas down. Some of them may be brilliant, but you won’t know until you have finished your analysis of the data.

Additionally, as you learn more about your category and the insights of your customers relating to your company, you will often be struck by ideas on how to apply these insights. Capture these. Some of the best ideas come at the moment of understanding.

TRAPAvoid analysis paralysis. You can never get all the background information you would like to have. Prioritize the most important information, find it, summarize it objectively, and move on.

The purpose of gathering information is to provide insights that support marketing decisions you will make. Collect enough information so that you can look at the data and understand directionally what it’s telling you. For example, in most cases it’s enough to understand the sales trends of the key competitors that dominate your market, without taking the time to analyze every competitor.

Likewise, you can’t fully understand consumers’ perceptions of your business. You can get insights through observation, talking with customers and noncustomers, and doing formal market research. But in the end, you’ll need to form educated opinions of the “whys” behind what you think you’re hearing. At some point, you simply need to say you’ve learned all you’re going to until you decide on a strategy and test some ideas and programs in the marketplace.

Try to remain objective as you gather information. Don’t turn this activity into a marketing plan. Stay away from stating objectives or writing strategies and tactics. As you gather information, stay neutral, state the facts, and objectively summarize key findings. Remember, the purpose of gathering information is to gain an understanding of how to best market your business. You shouldn’t form any conclusions at this point.

Analyzing Sales Information of Your Products and Services

Your company’s sales provide a wealth of information. A review of the past five to seven years provides a perspective over time and allows you to project which products stand the best chance for growth in the future. A careful sales analysis will provide you with insights into competitive strengths, consumer demand, the success of new products and programs, and give you the basis for projecting success going forward.

TRAP
Don’t just look at today. Explore the past to see the future.

Don’t just look at this year’s or last year’s sales. The long-term picture of sales provides you with the best insights into shifts and changes and provides insights into future trends. Sometimes, the key to a brand’s success happened early on in its history.

Maybe the key was penetrating a new distribution channel. Maybe it was a certain advertising campaign that ran years ago. Trying to understand the long-term historical sales trends of your brand can sometimes offer a gold mine of insights for your current strategy. For every established brand or company, there was once a time when it was getting started and sales were minimal. Most companies had a breakthrough at some point, when sales really started to take off. What about your product or service drove this rapid increase? 

Was it launching a new service program, innovations to your product, or launching a successful new product line? This can provide important clues about the past core foundation of your business success. The secret of a company’s current success is often waiting to be discovered somewhere in its past growth history.

TRAP
Don’t ignore the parts while looking at the whole. Gather sales information for your company but also for each of your key product lines.

Your company may have many products or product categories. If that’s the case, you should track sales over time for each product or product category and for the company as whole. Don’t just track sales. Include a profit and market share picture as well. Consider the following:
  • Sales
  • Gross margin dollars (sales less cost of goods)
  • Operating profit (sales less cost of goods and expenses)
  • Market share versus competitors (sales as a percent of total industry sales)

Remember to track your sales relative to key competitors and relative to your industry or marketplace. Knowing you gained 3 percent in sales, the industry as a whole gained 5 percent, and the industry leader gained 12 percent provides a relative measure of performance. In this scenario, you’ve actually lost market share and there’s a clear market leader that is capturing consumer preference.

TIP
Almost every business has a portfolio of brands or products. If that portfolio isn’t managed over time, resources are very often undercommitted to the best products and overcommitted to those products that don’t have a rosy future or aren’t as profitable.

By examining the sales growth and relative importance of your complete product line, you establish a consistent way to continually manage your product portfolio. Years ago, the Boston Consulting group developed a matrix for looking at a product portfolio, called the BCG growth-share matrix, which is still very useful today (see Figure 1). Their matrix places products along two axes: market growth rate and relative market share. If you have a product with dominant market share in a high-growth market, it is one of your stars and it should be well supported. On the other hand, products with a weak share of market in a low-growth market are called your dogs and should be divested. The question marks are the products with a small share in a growing category. These should be watched carefully and evaluated with respect to the opportunities to grow share. The cash cows are the products in a slow-growth market that have a large market share. Cash cows are typically “milked” for cash.

Figure 1. Boston Consulting Group growth-share matrix.
Figure 1. Boston Consulting Group growth-share matrix.


TIP
The holy grail of every for-profit business is to generate profitable growth; therefore, it’s important to try to discover the profit pools in your business.

As you manage your product portfolio, don’t forget about tracking the profitability of your products. Successful companies place additional resources against products with the most company profitability. U-Haul had a very successful overall business. While they did not derive much profit from their truck rentals, they made a bundle on the sales of boxes and moving incidentals.

Feed and grow the areas of your business that matter most. For long-term sustainability, your profitability will need to be comparable with your competitors’. If your key competitors and the industry have higher gross margins or operating profits, determine what you need to do to bring profitability more in line with the industry.

Combine profitability insights with top-line sales insights. Success for most business comes from managing a smart combination of both top-line sales and profitability. If you manage only for sales growth, you could still end up losing money. If you manage only for profitability, you could starve your brands and shrink your business to a very profitable margin—with no sales and no new customers.

For example, you might look at situations in which you have lower sales product and market share but very high profits. In this case, it might be preferable to try to increase market share by lowering margin dollars and operating profits. A slight adjustment in profitability might result in a large increase in demand for your product, ultimately resulting in more margin dollars and more total profits. Big companies will run sophisticated elasticity studies on price and margins. Guided by intuition, most companies experiment their way into the optimal mix of sales and profitability.

TIP
Look beyond simple sales trends. Explore the underlying usage habits of your customers and those of your industry.

Sales trends tell you a lot about customer preferences. However, there is another level of analysis that will provide you with important insights when you start developing strategy—product and service usage habits. Your products are purchased for specific reasons, some may be the same as competitive offerings and some may be very different. Famous product Footwear customers spend very little time in the store relative to the DSW shopper.

The two retailers share many of the customers, yet they shop each retailer for vastly different reasons and occasions. DSW is about the thrill of the hunt and Famous Footwear is about the thrill of the find. The DSW customer shops the store for herself and often considers her experience there as recreational shopping. The Famous Footwear shopping occasion is primarily a family shopping trip, often with kids along. Here ease, success, and the ability to get in and out in a reasonable amount of time are paramount.

Now think about automobiles. All cars get people from Point A to B, but the use and occasion reasons vary by brand. The use differences between Jeep, Lexus, and Smart (from Daimler AG) vehicles are obvious. Understanding the usage or occasion differences of your customers will allow you to develop product, service, and communication strategies that relate directly to why your customers choose you over other competitors. As a result, you will be reinforcing your brand differences and help to create an even more meaningful brand experience.

Awareness and Attitudes

Track your company’s and your individual product’s awareness and the attitudes toward your brands relative to your key competitors. Both of these measures are critical scorecards for your company and, when viewed over time,  provide insight into the health of your company and its brands.

We feel that this area is important enough to provide a more detailed discussion that can be found in Appendix A. We strongly encourage you to read and study the consumer behavior model found in Appendix A and to apply the insights gained from this approach as you market your business. 

Gathering Information on Distribution

At a football game, a hot dog in the stands can cost twice what it costs if you leave your seat and go to the concession stand. The concession stand price may be five times the price of what you would pay if you prepared the hot dog yourself at home. If you are hungry and enjoying the game, you are willing to pay for the convenience of getting the hot dog in your seat.

How efficiently and effectively your product or service gets into the hands of your customer can make or break your business. It is important to understand the dynamics of your key distribution channels and their trends over time.

Distribution is about getting your product or service to your customer when they want it, how they want it, and at a price they are willing to pay. When you are getting started on your marketing plan, it is important to understand the dynamics of your distribution channels. Which channels are used most by your customers? Which channels are growing the fastest in the industry? Is your brand growing faster or slower in these channels? Why? How are your key competitors doing in these channels? Are there any emerging distribution channels, such as online selling, that you should consider penetrating?

TIP
Review your channel of distribution trends over a five year period. Changes in distribution often occur over several years. A single-year snapshot doesn’t show movement and the development of a shift in either a market or in a brand's use of distribution channels.

Understand your market share within each of the channels you use. If you are weak in a given distribution channel relative to your key competitors, it could be that they have a product offering more suited to that channel (e.g., club stores) or that they have stronger relationships with key retailers in these channels. If you don’t have enough market coverage, your mass marketing efforts will be inefficient. Historically, large package goods companies launching new products have chosen to wait until they have at least a 60 percent weighted distribution on the product before beginning expensive proposition mass advertising.

TIP
How you sell your products or service is part of your distribution; your distribution strategy can be a key source of competitive advantage.

It is often useful to examine how you sell your product relative to your competition. You might use an independent rep system, an in-house sales force, a broker network, or depend exclusively on wholesalers. Each has its advantages, but you need to be able to link up the advantages it provides with what’s important to your customers.

Professional auto mechanics only get paid when they are working on a car. It is critical for them to have the right tools to complete jobs quickly. If a tool breaks or gets lost, the time it takes to go to the store and replace it can result in lost income for the mechanic and the shop. Snap On Tools recognized that mechanics didn’t have time to shop for tools. They built a distribution model with franchisees driving trucks loaded with tool inventories directly to the mechanics. Their tools sell for a significant premium and have a reputation as being the best in the business. If they had tried to build their business through the traditional retail channels, they would not have been so successful.

Dell Computers also created a competitive advantage by figuring out how to build and ship computers directly to the consumer, bypassing the traditional distribution channels. Tupperware created a unique direct distribution model, bringing products directly to the homes of millions of consumers via fun parties thrown by friends.

Subway now has more restaurant locations than McDonald’s, because it created a totally different distribution strategy. Instead of exclusive freestanding locations, Subway aggressively partnered with interstate filling stations, fitness centers, school cafeterias, and other nontraditional locations that all had one thing in common lots of traffic.

The companies in these examples looked at distribution as a potential competitive advantage. They studied how best to get their product to their customers when, where, and how the customers wanted it. When you are building your distribution strategy, consider the disadvantages of the current distribution system and the needs of your customers. How have other industries satisfied similar needs and wants of their consumers? Can you translate this learning to your situation?

TIP
Your distribution should be consistent with your brand positioning remember that the cheapest distribution channel may not be the best if you have a premium brand.

If your product or service is about convenience, don’t locate in a mall. If it’s about personal service, don’t depend on a rep firm to sell your products, but consider building your own sales force: one that receives an incentive for what you want to be known for great service.

Many brands must deliver a unique brand experience to their customers, requiring greater control of the distribution. For example, Starbucks does a great job of making customers feel rewarded when relaxing over Venti Mocha. Their employees receive ample training and enjoy good healthcare benefits. Their shops are not cheaply decorated. Starbucks does all this because it knows it needs to create a positive experience for its customers.

On the other hand, one could argue that selling Starbucks ice cream in the freezer bin of the grocery channel detracts from the overall image of the brand, because there is no experience attached to the purchase or consumption.

Gathering Pricing Information

How should you price your product or service? Companies use many approaches. In most established categories, there is a set of competitors with entrenched price points that dictate the range of prices into which you must fit. In the information-gathering stage, you will need to know what key competitors are charging, which price segments are growing, and which retail channels require distinct pricing strategies. At most big-box retailers, you will find a pricing strategy of “good, better, best.”

Similar to product and distribution, you will gain tremendous consumer behavior insight by tracking sales and profit (gross margin dollars) by the different price lines across your major products and product categories. A price line is nothing more than the different price zones for which a product can be purchased in your industry. For example, shoes can be purchased for under $20, $21 to $50, $51 to $80, $81 to $110, and over $110.

TIP
Make sure the price points at which you sell are consistent with the positioning you develop for your product. A high price point suggests a premium product. If that is what you intend to communicate, make sure your sales are coming from higher price points than the industry as a whole.

Spend time analyzing whether the price you are charging for your products or your company’s services matches that of your positioning. Remember, price is always a factor, but it is rarely the determining factor in a consumer's decision process. The business world is filled with examples of success tied to raising the price to communicate a better product. Do you think Corona or Michelob costs any more than Miller High Life to produce and distribute? In the beer business, it’s common to find a regional beer charging higher prices the farther it gets away from its point of distribution. In its day, Old Style was an inexpensive beer in the Midwest, where most of its distribution occurred, but it was a premium beer in the South. Where it was priced high, its quality perception was much higher than in the areas of the country where it was a competitively-priced beer.

TRAP
Ignoring your competition’s pricing can be detrimental. Set up a review of your competitors’ pricing during the year. Simple shopping trips throughout the year can provide you with insight into what your competitors are doing and provide the basis for decisions on whether you want to follow what they are doing or diverge from it.

If there are price lines that are growing significantly more than your company’s price lines are growing, review why this is happening, and determine whether you need to increase your presence there. If you are a mass player and depend upon volume, you will need to stay within the price lines that account for the most volume. However, if you intend to be more of a niche player and differentiate around quality or some other attribute that allows for a higher price, you will need to make sure your sales are in price lines consistent with this strategy.

Try to understand the price sensitivity of your company’s customers and the consumers in your industry. Customers can tell you a lot about the strength of your products relative to competitive offerings. Consumer demand changes as prices are increased and decreased. Study the times your company has fluctuated its prices either up or down and determine this effect on volume and margin dollars.

Does a modest increase in price above that of your competition do little to stifle demand for your product but result in additional margin and margin dollars? If this is the situation, you have a strongly differentiated product that consumers are purchasing for reasons other than purely price. Do you compete in a fairly undifferentiated marketplace, in which a decrease in price would bring about lower margins, but enough additional top-line sales volume to result in incremental margin dollars?

Two things affect price sensitivity most:

  1. Brand relevance. If the customers purchasing your brand do so because of superior attributes or some other more intangible connection that you’ve established over time, they will be far less price sensitive. On the other hand, if you have an undifferentiated, parity brand, you will find more price sensitivity and elasticity. There is only one coffee shop in many people’s minds and that’s Starbucks. Within reason, they can raise prices without a fall-off in demand, especially since competitors will closely watch, and often follow, the leader’s pricing strategy.
  2. Brand differentiation. In many instances, the more intangible or differentiated your brand, the less price sensitivity exists. Service firms are very good examples. Why does one law firm, one advertising agency, or one insurance firm charge premium prices? It’s difficult to determine the value of many of these firms relative to other competitors except from intangible signals, such as the look of the office, the dress of the individuals, and the reputation of the firm.

Understanding Market Trends

Every market is constantly changing, and good marketers need to understand these changes. Every trend brings with it opportunity and threats to the marketer. The athletic shoe industry has experienced many industry trends that have affected the business. 
  • The steep growth of participation in popular sports in the 1960s and 1970s led to specialized shoes. Instead of a “gym” shoe, there evolved running shoes, basketball shoes, aerobic shoes, tennis shoes, and many other shoes for specific occasions.
  • Recently, the advent of “sports fusion” shoes has changed the athletic shoe business again. In the 1980s though the early 2000s, athletic shoes represented fashion as much as they did sport. The introduction of the new Air Jordans were events with long lines of people waiting to get the most recent Nike product. Athletic shoes defined street fashion to suburban fashion. Athletic shoes were worn for sport, for “kicking around,” and even for nights on the town. Enter the new Euro Sport of Sports Fusion shoes—athletic-inspired casual shoes. Today, runners use their running shoes for their early Saturday morning jog. But after the shower, the athletic shoes stay in the closet. 

Both of these examples show how industry trends can affect consumer demand. Companies like Nike, Adidas, and New Balance all understood the first trend and built empires by following product segments and consumer segments that used the specific sports’ shoes. In the second example, many of these same companies missed the trend and their business was negatively affected while companies like Skechers, who jumped on the sports fusion trend early, became market leaders in the category and built huge business during this trend.

Understand the demographic trends affecting your business. 

Demographics include things like:

  • Age of consumers
  • Income of consumers
  • Education levels of consumers
  • Family composition of consumers, such as female-headed household, number of people per household, presence of children, and number of children
  • Ethnicity of consumers

Most companies are affected by these demographics. If you are a realtor, the growth of key demographics in a given city will predict demand for housing in the future. If you sell a product related to retirement or primary education, the age of the population now and in the future will help predict your success and help you decide whether your product offering needs to evolve to meet the changes.

TIP
Become an expert on the future. Pick the one or two most important consumer trends to your business and stay up on them. Consumer trends provide another level of insight into consumer demand that can help you make smart decisions about whom to market to and what products your business should market.

IDEO, one of the leading product design and development firms in the country, uses an approach by which they project what a consumer's life will be like for five to ten years, and then they brainstorm ideas from this future perspective.

Trends such as activities, purchase trends, attitudes toward aging, time pressures, apparel, accessories, body piercing, health, food, environment, recreation, sex and dating, education, economics, social and business etiquette, and many others, may be relevant. Choose the one or two trends that you feel are most important to your business and make it a habit to stay up on them.

One key trend in the baby care category was a shift among moms away from the use of bar soaps to liquid soaps for bathing babies. The bar soaps were perceived as less gentle and convenient. Rather than fight this trend, Johnson & Johnson accelerated it with new product launches, including a “Head-to-Toe” baby wash for both bathing and shampooing. Today, bar soaps for babies are rarely used.

There are many easily accessible magazines and Web sites to help you track consumer trends relevant to your business.
  • Faith Popcorn and her firm, BrainReserve. Faith has published several books on future trends. You can contact her at Faithpopcorn.com.
  • Gerald Celente, of The Trends Research Institute and publisher of The Trends Journal. His Web site can be found at www.trendsresearch.com.
  • Iconoculture (www.iconoculture.com). A research firm that tracks trends and acts as an extension of your team. They provide customers with a newsletter and customized searches across consumer insights and product categories.
  • The McKinsey Quarterly (www.mckinseyquarterly.com). An extension of the McKinsey consulting firm.
  • American Demographics Magazine. Dedicated to exploring demographic trends and their ramifications for American life and business.
  • Nielsen’s Buzzmetrics division hosts a free Web site called BlogPulse (www.blogpulse.com). It allows you to input any term and scours tens of thousands of blogs for comments using that search term.

It’s important to follow the technological trends that will affect your customers and your business. We all know that technology is moving faster and faster. What used to be impossible yesterday is possible today: the ability to capture customer data for use in a customer relationship management program; use of sophisticated point-of-sale scanning equipment; productivity changes due to technological advances and manufacturing trends; or technology changes that will lead to new products and change the way you need to do business.

Understanding Your Competition

Good marketers have a solid understanding of their competitors and their strengths and weaknesses. It would be foolhardy for a small company to take a well-entrenched, well-resourced competitor head on. For years, many marketers have followed the tip below from Sun Tzu, the influential Chinese military strategist from the sixth century BC.

TIP
Target a weakness in your competitor’s strength. A competitor’s strength is something they will be incapable of changing. Study strengths to find weaknesses in your competitors.

This may seem counterintuitive, but if you think about it, it is a very powerful strategy. For example, McDonald’s is perhaps the most efficient purveyor of mass-marketed fast food. They can serve a perfect hamburger and fries every time in a clean, friendly environment. Understanding this, Burger King competes on a benefit that McDonald’s model can’t address: having it your way, or customizing your burger. Subway goes after a chink in the armor of both of these fast-food giants by celebrating the freshness and healthfulness of its sub sandwiches relative to the burger chains with its “eat fresh” tagline. Taco Bell asks us to “think outside the bun,” because this is something the burger chains will never change.

Monitor both your primary and secondary competitors. All business have a primary and secondary set of competitors. It is helpful to define the key competitors with whom you compete those that are most like you and serve the same customer profile, with the same shopping intent, with the same channel, with roughly the same price and product categories.

How Much Should We Spend on Advertising?

One trend that good marketers are especially keen to track is the advertising spending of their competitors. This is because in many markets the advertising share of voice will directionally equal the share of market over time. Directionally, we mean that you typically won’t be number one in market share if you are number seven in share of voice. There are many exceptions to this rule of thumb, but generally speaking, the more awareness and relevant differentiation a mass brand can build for itself through advertising, the greater its share of the market over time. There are various monitoring services that will track advertising spending for a fee.

Another key measure you may want to track is the advertising-to-sales ratio. In other words, how much are competitors spending to advertise their brands as a percentage of their sales? This is important to understand, because as you build a profit and loss statement, it can be a general guide to how much you will need to budget for advertising. The chart in Figure 2 is the way Famous Footwear, a major retailer of shoes, tracks its competitors’ advertising-to-sales ratios.

In one sense, Coke competes directly with Pepsi in the “cola wars.” Yet both companies are aware that when you are thirsty, you have many options besides cola. They consider themselves to be competing for “share of stomach” rather than cola market share. Because of this, they need to monitor what is going on in bottled waters, sports drinks, coffee, milk drinks, etc. In fact, both companies support brands in many of these segments.

Figure 3 is a template you can use to get a better sense of your competitors’ strengths and weaknesses. The template is filled out with the example of a shoe retailer, Shoe Carnival.

Figure 2. Competitive spending chart. Courtesy of Famous Footwear.
Figure 2. Competitive spending chart. Courtesy of Famous Footwear.


Figure 3. Competitive template. Courtesy of Famous Footwear.
Figure 3. Competitive template. Courtesy of Famous Footwear.


Understanding Your Company History and Culture

The information you need to develop a strong marketing program is not just external. Every company has a history. Understanding the history of your company and its products gives you tremendous insights into the brand—insights you’ll use in marketing your business. What stories do employees tell about how the company was founded? What were some of the biggest challenges the company had to overcome and how did it overcome them? What was the founder like? What sort of charities does your company support? What kinds of people do well at your company? What does this tell you about the culture?

It’s important to remember that where you’ve been is usually where you are going. The internal, “tribal” stories are critical to understand, because today, marketing needs to be honest and authentic. The first people to see through a company telling an inauthentic marketing story are its employees. If they can’t get behind it, how are they going to convince a customer to connect with their offering?

Naturalizer: A Brand That Temporarily Lost its Way

In the 1950s and early 1960s, the Naturalizer brand was the only brand that was targeted directly to women via national advertising. Its basic promise was both comfort and great fashion, and the brand essence was brought to life through the famous Leo Burnett advertising campaign with the tagline, “a beautiful fit.” However, in the 1980s and 1990s, the brand strayed from its roots. Naturalizer was nearly forgotten and then nearly killed after a brand manager tried to revive the brand. The brand went younger, it went sexier, it tried to become cutting edge fashion, and it changed whenever the next photographer had another idea about what the shoe should be and how it should be portrayed (see Figure 4).

With a management change, the marketers went back to basics. They went back through the history of the brand and worked hard to understand what it stood for and why it was loved in the first place. In addition, through consumer research, they discovered that those reasons still resonated with the brand today. The Naturalizer brand was and still is about comfortable fashion. It does best with a target market of  “the woman who is comfortable with herself.” She wants fashion but won’t be a slave to it. She demands comfort along with style. It was this understanding of the brand’s original positioning and essence that led to the brand’s reemergence as one of the leading women’s shoe brands today. The brand is once again the leading department store brand, and is profitable as well (see Figure 5).

Figure 4. Naturalizer: A brand that lost its way. Courtesy of Naturalizer, Mathias Vriens, photographer.
Figure 4. Naturalizer: A brand that lost its way. Courtesy of Naturalizer, Mathias Vriens, photographer.

Figure 5. Naturalizer: Back on brand. Courtesy of Naturalizer, Pamela Hansen, photographer.
Figure 5. Naturalizer: Back on brand. Courtesy of Naturalizer, Pamela Hansen, photographer.

The Nike shoe was created by Bill Bowerman, a track coach at Oregon University, to help his star, Steve Prefontaine, perform better. The brand is still is about performance today. Chevrolet was created to be an affordable quality car for Americans. Some of the first ads had Doris Day singing about seeing the USA in a Chevrolet. The company has been very consistent in telling this story, even through the current campaign with its “An American Revolution,” tagline.

The Ogilvy advertising agency was founded by David Ogilvy, who was originally a market researcher. The agency pioneered advertising based on consumer insights and research. This remains an important driver of the agency today. All brands have a story that’s rooted in their history if you dig deep enough. Spend time to understand your company’s past. It helps create the future.

Capture your company’s story. Ask:

  • What’s your company’s history?
  • Who were the important leaders, what were they like, and what mattered to them?
  • What were the defining challenges they faced?
  • What’s your company’s culture like? What does the company value?
  • What were the major successes and why?
  • What failures happened along the way and why?
  • How has your industry changed over the years? How did your company react to these changes?

Understanding the Language of Your Category

Every company has its own set of arcane acronyms and phrases. At my first job, they kept talking about BFD. To me it meant something totally inappropriate, until I found out they meant “Best Food Day” (the best day to run a food ad in the local paper). It is easy to get sucked into the trap of using “marketing speak” as you develop your marketing strategies for your customer communication. Remember that your customer doesn’t think this way.

TRAP
Don’t be an outsider. Ignore the “code” and you won’t be able to communicate effectively. Understand and use the language of your target and you will connect with them as one of them.

Every category has its own “code” language of unique words and phrase that connect the users to each other. Understanding the meaning and importance of words is one of the key to understanding your customer and marketing your business. Every business, every occupation, every recreation, every culture, even every set of friends have specific sets of words that are particular to the group.

Have you ever participated in a triathlon? If you have, you know what the words listed below mean. Even if you recognize some of them, you probably can’t truly comprehend the meaning and spirit of the words unless you’re an “insider” and actually participate or are part of the tribe that lives triathlons.
  • T-1
  • T-2
  •  Zip wheels
  • 76-degree seat post
  • Bonking
  • Gu
  • Anaerobic versus aerobic training
  • Body marking
  • Transition area
  • Intervals
  • Zone 1,2,3,4,5
  • Aero position

Now think of Starbucks. The Italian words Grande, Venti, and Frappuccino are all unique to the retailer of coffee. They are purposely used to suggest a sense of quality and taste. Understanding their meaning and how customers relate to them is one of the keys to understanding the target market. Nothing is less cool than an adult brand trying to appeal to a younger target, while not understanding the “code” language. Words are the language of understanding. They unlock very important meaning to your customers. Know the “code.”

TIP
Identify your company and customer rituals. Understand what they mean and why they are important.

In our family, we have a little ritual to make birthdays special for the kids. We bring out the brightly-colored “birthday plate” and the birthday girl gets her favorite meal cooked for her. One day, the “birthday plate” fell and broke. The kids insisted on gluing it back together, rather than getting a new one. It’s a simple little thing, but our kids would be crushed if we stopped this tradition.

When you think back on your childhood, what do you especially remember? Working on a project with your dad? A family gathering? A traumatic event? Chances are, those key memories are also associated with strong emotions. We only truly learn things when there is emotion. We only really remember things when there is emotion. When brands understand this and are able to connect with these emotions, they become truly iconic. Every company has rituals that make it special to their customers.

Whether it is the presentation of merchandise when you open the smiling package delivered from Amazon, or the ritual of ordering at Starbucks, then moving to the end of the counter where the unique name of your drink is called and you lovingly place a sleeve over the cup before you take a sip. Rituals define cultures and we all take part in them. Most people are involved in weddings, funerals, birthday parties, engagements, and bachelor parties. The morning shower, the walk to the mailbox to pick up the Sunday paper, going to the ballgame with your kids—these are all rituals that define our lives. Good marketers are keen observers of these rituals and how their brands fit into these rituals.

Your customers have repeated experiences with your business. Maybe it’s the way you engage them when they call for customer service, or how they are greeted when they walk into your store, or the yearly “thank you party” you throw for your vendors or suppliers, or how you conduct a sales call all these are rituals that help define who you are and how you do business. Spend a little time to make sure you capture the rituals of your company and those of your competitors. Celebrate your rituals and make them part of your customers’ interactions with your company. As mentioned above, the purpose of this section is simply to gather information that you will use in marketing your business. You don’t have to be judgmental or think about how to make your rituals more powerful at this point, just understand them. We’ll show you how to use this information in subsequent chapter post.

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