How much do you think your sales persons think outside and beyond your organization's current abilities and comfort zones when coming up with solutions to your customers?
How much idea power and effort do they employ when their customers directly or indirectly present a problem that they don't seem to be able to tackle with your current resources or offerings? Do you enable and help your sales people solve a customer's problem even if its not fully within the scope of your business? If yes, would it be profitable? Moveover, should you be bound by your current strategy or by your customers? Or both, or neither?
Something old, something new
A couple of interesting entries from the blogosphere that deserve a mention in my "social learning diary".
Something old: 101 clichés of B2B marketing. This site has been online for a year now, and they show the 101 worst communication clichés a marketer can use. A terribly funny blog, it also serves as a valuable tool for creatives to measure the differentiation of their communication. It's useful for ad agency types but also for any marketing people who strive to make their message simpler, easier to understand, more attractive but above all recognizable from the mass.
Something new: Rohit Bhargava writes very perceptively about the end of mass broadcasting era. His post is about media convergence of the social media and broadcast television: the possible future role of television is to be a broadcaster specialized in live events, it has a potential point of integration with social media that revolves around real time interaction and collaboration. I agree with Rohit, this is an interesting possible trend that is worthy of further monitoring!
Something old: 101 clichés of B2B marketing. This site has been online for a year now, and they show the 101 worst communication clichés a marketer can use. A terribly funny blog, it also serves as a valuable tool for creatives to measure the differentiation of their communication. It's useful for ad agency types but also for any marketing people who strive to make their message simpler, easier to understand, more attractive but above all recognizable from the mass.
Something new: Rohit Bhargava writes very perceptively about the end of mass broadcasting era. His post is about media convergence of the social media and broadcast television: the possible future role of television is to be a broadcaster specialized in live events, it has a potential point of integration with social media that revolves around real time interaction and collaboration. I agree with Rohit, this is an interesting possible trend that is worthy of further monitoring!
Segmentation based on our competitive advantages?
Thanks to the upcoming Cranfield Experience(tm), I've been pre-reading Marketing by Paul Baines, Chris Fill and Kelly Page (2008). I'll possibly review the book later in depth, but many points have come to mind while reading their comprehensive, massive, but excellent textbook, and one in particular stirred some thinking.
The authors discuss the basics of segmentation and targeting. They go through both consumer and business market aspects of S&T, and while describing the business side of things, they mention some limitations of market segmentation. A particularly interesting point was that there is insufficient consideration how market segmentation is linked to competitive advantage. Moreover, market segmentation has not tended to stress the need to segment on the basis of differentiating the offering from competitors.
Why is this interesting? First we might consider what is competitive advantage. In rough layman's terms it means doing something critical to the customer so much better than the competitor OR having something critical to the customer that the competition has not. A sustainable competitive advantage furthermore is an edge that cannot be easily swayed from the supplier. However the competitive advantage is possibly two-fold: on one side, it's critical to the supplier because it enables it to differentiate from the competition. But on the other side, it might be critical to the customer - the supplier might have been selected because of the competitive advantage, ergo the offering should be vital to the customer's business. It is obvious not all businesses can have competitive advantages that are so remarkable. But shouldn't every business strive to develop advantages that become immensely important parts of the core businesses of their customers? Isn't it every CEO's dream?
Back to segmentation and targeting. A starting business, or even an established firm with a new business, should among other things consider their targeting according to their competitive advantages and their strengths. In other words, be both competition and customer-oriented. Key questions might be: What are our sustainable competitive advantages? For whom are we the most potent suppliers? Which advantage is most profitable? Who benefits most of our advantages, and are they profitable too? What kind of demands are we best suited to fulfill? Who are the customers to whom we could become a lifeline? A bit of blue ocean thinking too never hurts.
Maybe a well thought-out toolbox or a framework/mindset is in order? And maybe I just came up with a thesis project for myself?
The authors discuss the basics of segmentation and targeting. They go through both consumer and business market aspects of S&T, and while describing the business side of things, they mention some limitations of market segmentation. A particularly interesting point was that there is insufficient consideration how market segmentation is linked to competitive advantage. Moreover, market segmentation has not tended to stress the need to segment on the basis of differentiating the offering from competitors.
Why is this interesting? First we might consider what is competitive advantage. In rough layman's terms it means doing something critical to the customer so much better than the competitor OR having something critical to the customer that the competition has not. A sustainable competitive advantage furthermore is an edge that cannot be easily swayed from the supplier. However the competitive advantage is possibly two-fold: on one side, it's critical to the supplier because it enables it to differentiate from the competition. But on the other side, it might be critical to the customer - the supplier might have been selected because of the competitive advantage, ergo the offering should be vital to the customer's business. It is obvious not all businesses can have competitive advantages that are so remarkable. But shouldn't every business strive to develop advantages that become immensely important parts of the core businesses of their customers? Isn't it every CEO's dream?
Back to segmentation and targeting. A starting business, or even an established firm with a new business, should among other things consider their targeting according to their competitive advantages and their strengths. In other words, be both competition and customer-oriented. Key questions might be: What are our sustainable competitive advantages? For whom are we the most potent suppliers? Which advantage is most profitable? Who benefits most of our advantages, and are they profitable too? What kind of demands are we best suited to fulfill? Who are the customers to whom we could become a lifeline? A bit of blue ocean thinking too never hurts.
Maybe a well thought-out toolbox or a framework/mindset is in order? And maybe I just came up with a thesis project for myself?
How do we define our business
In order to pursue profitable growth, companies need to define what exactly is their business. Levitt's Marketing Myopia turned heads and revolutionized executives' viewpoints in this regard alrady back in 1960. Others, Clayton M. Christensen and Michael E. Raynor for example, have given other, similar perspectives for executives. Christensen and Raynor in particular have an interesting viewpoint on segmentation, which they describe in their book The Innovators Solution (2003). According to them, customers hire products [incl. services] to do specific "jobs". These jobs are as numerous as customers have needs. This is in other words a demand-based perspective that directs companies to align their businesses according to specific, select needs their customers have.
All in all, I think Christensen and Raynor have a solid perspective that deserves further observation. All businesses have long been seeking to become customer-oriented or customer-driven - many have succeeded while others have failed. But if companies adopt their perspective, do they face the risks of innovative stagnation and hampered business development caused by customer-overdrive? In many industries, small subcontractors and suppliers who chose to specialize in serving certain customers have hit rock bottom after these customers no longer continued business with them for varying reasons. They were customer-overdriven, and went bust because of it. These businesses had been entangled in processing and handling the current needs of their customers and had dismissed their own business development and innovation work.
Considering the different perspectives and these risks, I came up with this diagram, four perspectives to defining your business.
The diagram shows the classic perspective (aka "we're in the oil business and supply our customer with petroleum"), Levitt's marketing myopic (if you may) perspective, Christensen and Raynor's perspective and a fourth, Proactive customer-oriented perspective.
The fourth perspective is an attempt to fuse the best sides of myopic and demand-based perspectives. The myopic perspective's one groundbreaking advantage is that it expands the innovative horizon of the company - by defining business this way, new growth options become visible for innovative executives. Demand-based perspective's advantage is naturally customer-orientation. Combining these we achieve a viewpoint where we are customer-driven, grow as our customers grow, but also consider the larger horizon of business opportunities. Being customer-driven should not translate to being too focused in day-to-day customer demand satisfaction and to dismissing real out-of-the-box thinking and proactive satisfaction of hidden demands. While explicit and tacit information from customer and their ever-changing needs are essential for companies, they should not rely on them only, but keep a myopic perspective on their own business aswell. By doing so, they can enjoy being customer-oriented but evade risks mentioned above - and escape the danger of customer overdrive.
All in all, I think Christensen and Raynor have a solid perspective that deserves further observation. All businesses have long been seeking to become customer-oriented or customer-driven - many have succeeded while others have failed. But if companies adopt their perspective, do they face the risks of innovative stagnation and hampered business development caused by customer-overdrive? In many industries, small subcontractors and suppliers who chose to specialize in serving certain customers have hit rock bottom after these customers no longer continued business with them for varying reasons. They were customer-overdriven, and went bust because of it. These businesses had been entangled in processing and handling the current needs of their customers and had dismissed their own business development and innovation work.
Considering the different perspectives and these risks, I came up with this diagram, four perspectives to defining your business.
The diagram shows the classic perspective (aka "we're in the oil business and supply our customer with petroleum"), Levitt's marketing myopic (if you may) perspective, Christensen and Raynor's perspective and a fourth, Proactive customer-oriented perspective.
The fourth perspective is an attempt to fuse the best sides of myopic and demand-based perspectives. The myopic perspective's one groundbreaking advantage is that it expands the innovative horizon of the company - by defining business this way, new growth options become visible for innovative executives. Demand-based perspective's advantage is naturally customer-orientation. Combining these we achieve a viewpoint where we are customer-driven, grow as our customers grow, but also consider the larger horizon of business opportunities. Being customer-driven should not translate to being too focused in day-to-day customer demand satisfaction and to dismissing real out-of-the-box thinking and proactive satisfaction of hidden demands. While explicit and tacit information from customer and their ever-changing needs are essential for companies, they should not rely on them only, but keep a myopic perspective on their own business aswell. By doing so, they can enjoy being customer-oriented but evade risks mentioned above - and escape the danger of customer overdrive.
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