The CEO’s Marketing Dilemma: What’s Our Niche?
October 28 2011 by Bob Donnelly
Reis and Trout captured it best in their seminal book – “Positioning, the battle for the customers mind.”
Jack Welsh made GE what it is today by challenging his operating unit managers to be the number one or two brand in their respective markets while he was CEO.
Every CEO has to maintain a unique value proposition to own a share of customer’s minds for their brands. Entrepreneurs are infamous for capturing a share of mind by displacing existing brands with new solutions for customer’s requirements. Then the professional managers who eventually take over have to sustain those value propositions.
Unfortunately for many this challenge is their downfall because they do not have the skill set to do so. Especially in today’s rapidly changing high technology markets. Typically, there is a period of business-as-usual for the new professional CEO who takes over from the entrepreneurial founder, like we will witness now at Apple.
However, unless the CEO has a skill set similar to Jack Welsh, AG Lafley, and others with a finely tuned strategic planning system in place, eventually the company will flounder.
For a brand to be number one or two it has to occupy one of the following positions in customer’s minds:
- Be the best in its class.
- Have a unique set of attributes.
- Be the cheapest.
If a brand does not “fit” one of these perceptions then it has a “fuzzy” value proposition for most customers. Brands exist in the mind and represent a collection of experiences over time. The mind is like a dripping sponge of brand value perceptions and the only way anything new can get in is to replace what already exists with a newer better brand value perception.
Typically brands lose positions as the result of the introduction of faster, better, or cheaper solutions. This is particularly apparent in the telephony, computer, and software markets where many of the pioneers like Nokia, HP, and Microsoft are rapidly losing share of mind to more nimble competitors who are introducing a plethora of new devices and operating systems that allow consumers to experience a much richer overall life experience and a level of socialization never before available.
Every CEO must carefully compare their firms’ unique resources with specific customer’s changing requirements and select those that the organization can satisfy better than their competitors. When this is done well and promoted effectively your brand will “own” a position in the mind of a certain set of customers.
Jeff Bezos captured this with his explanation of Amazon’s customer centric philosophy – “we work backward from our customers’ needs and forward from our skills.”
This concept of a competitive advantage can also be thought of as achieving a competitive mental angle. Since marketing is the battle for the customers mind any significant form of differentiation like a better hamburger, a more fuel efficient car, or even toiler paper without a tube represents a perceived value enhancer to specific customers.
Every market consists of customers with strong and weak perceptions of competitor’s levels of satisfying their specific requirements. Marketing in its simplest form is analyzing customer requirements in depth and then modifying your product offerings and related value propositions so that they “fit” better with the requirements of a certain segment of the market than your competitors.
It’s about the future, not the past
Peter Drucker said “that to defend yesterday is a larger risk than to create tomorrow.” Concentrating for too long on what was at the expense of what will be has been the formula for failure for many CEOs.
Another reason that many previously successful businesses have lost their ability to continue to deliver value to customers is that over time they wander too far from their core strengths without considering how these changes are perceived by customers. Howard Schultz captured this best in his profound conclusion about what happened to Starbuck’s after he stepped down as CEO, as the “commoditization of the brand.”
The CEO who knows what to do and when to do it will win; size of company has nothing to do with it.
What are you doing to determine the right mental position that you want your brand to own?
How are you planning to sustain your existing competitive advantage?
Are you searching for faster, better, or cheaper solutions for your customers?