Own a Position

RiedelMany companies make wine glasses. A quick search of Amazon finds thousands of results. Most, like in any category, are apparent commodities and are priced accordingly. And then there is Riedel. Ranging from about $25/glass to well over $100/glass, Riedel makes wine glasses for specific wines. After all, if you’re serious about your wine, would you not want a glass to match?

This company is an excellent example of “finding a need and filling it.” And well I might add. They show that if you can understand What your customer is trying to buy, and can deliver on it, price matters much less than many would have you believe.

If you want to get higher prices than your competitors, be perceived as different from them. What can they buy from you they don’t think they can buy from anyone else? And how much is that worth to them?



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Strategic Execution: Getting The Right Things Done

chessIn his book, The 8th Habit, Steven Covey notes that only about 33% of employees know where the company is going (or at least trying to go); 22% can connect the dots between their goals and the company’s goals; and then (big surprise … NOT) only 9% are highly energized and committed.

Why is turning strategic plans into action such a difficult problem? The age-old axiom that strategic plans end up on the shelf or in a drawer continues unabated. And it doesn’t have to be that way. There is a very simple process that aligns goals with actions thru strategy. We call it Strategic Execution.

Take a read if you are so inclined, it’s free and without obligation. Feedback after the read is welcomed as well.



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Marketing Operations: Foundational or Supportive?

My friend Gary Katz, posed the question that is the title of this post recently. He then posited this answer:

Marketing’s foundation comes from understanding your target market, how they buy and matching how they buy with your solutions, messaging and delivery. It is based on understanding the customer’s needs and how one’s company fulfills those needs effectively. Marketing operations is the facilitator that helps marketing and sales understand if you are accomplishing that mission, how you are doing it, how fast you are doing it and if everything you are doing is working: Providing the foundation of effective, efficient marketing.

I agree with much of what he said except one word: “the” facilitator rather than “a” facilitator. I appreciate that Marketing Operations is working hard to gain respect and value, both of which it deserves. But it is a tool used by Marketing to do a better job.

He also notes that Marketing must understand “your target market, how they buy and matching how they buy with your solutions, messaging and delivery.” This is accurate and insufficient to describe Marketing. It is correct regarding current offerings, but as I wrote in my post last week, Kotler noted that the real leverage in Marketing is before the product is released.

Thus, as we say, Marketing’s job is to align the capabilities of the company with the current and future needs of its customers. Marketing Operations may be helpful in the front-end as well, but it’s the insights needed to truly understand where your customer is going that makes Marketing great.

So, I say “supportive,” and significantly so.


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Compromise Is Not Win-Win; And Split The Difference Isn’t “Fair”

Compromise is not a win-win, it is in fact a lose-lose. You give up something you want in exchange for the other side giving up something they want. Often compromise is necessary at the end of a negotiation to make a “deal.” However, it should rarely be used at the beginning.

Further Split The Difference is not necessarily fair, though most Americans think it is, and experienced negotiators will use it as a tactic to get the outcome they want. I was reminded of both of these tactics when talking with a friend who had just finished a six figure renovation of their house. I am certain the owner of the firm that did they work wanted to make a profit (which he did ) and have an outstanding reference, which he would have had it not been for $100.

This firm, like many firms has many employees who fulfill customers’ needs, wants and demands on behalf of the firm. Owners of firms are less involved in specific customer issues as the firm gets bigger. The question is what metrics are the owner using to measure and then manage his/her employees. In too many situations the metric is $ and lack of a complaint to the owner signifies everything is ok. Not true. Most Americans, even in this day of Yelp and other online reviews don’t complain. They just don’t recommend.

On this particular project a $2,700 item went awry (the actual cost to fix it was unknown at the time). Both the customer and the contractor shared blame. The contractor’s employee asked my friend what he felt was fair. He outlined that he felt a 2/3-1/3 split was fair and why. The contractor’s employee agreed. When the final bill arrived for this “fix” the contractor’s employee asked my friend how to share the bill. Using the same logic that produced the 2/3-1/3 suggestion he suggested he pay $900.

The employee then noted that some of the cost was due to a change requested by my friend that increased the replacement cost, also there was labor and materials involved, which was understood from the beginning. The employee suggested by friend pay $1,100. My friend said he agreed he should pay for the increased cost and 1/3 of the rest. This meant my friend would pay $970. The employee said how about $1,070. As my friend never considered this a “negotiation” (though everything is), he simply said sure. However, he does not feel it was fair, but isn’t going to fight over $100.

The employee will be able to show her boss that she recovered more that the $900 originally planned, which will make her look good. The problem is, neither of them know the cost was the loss of a raving fan. He still will recommend them, just not as enthusiastically.

What get’s measured gets managed. Are you measuring what you should or just what is easiest to measure?


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Where’s The Disruption Opportunity Really?

Lever_mechanical_advantagePhilip Kotler, recognized Marketing Guru and Professor, said, “…most of the impact of marketing is felt before the product is produced, not after.” And yet almost everything we read about today is tactics for improving what Marketing does after the product is produced. My friends at the ANA did a study with McKinsey on the need for disruption in Marketing. Their findings were interesting, and yet none of them had anything to do with what Kotler claims provides the most impact, “before the product is produced.”

I wondered why that was. Could it be that Kotler knows less than McKinsey? I wasn’t ready to concede that point. A bit of investigation showed that the team from McKinsey that conducted the study consisted of their Digital Marketing consultants. That explains a lot.

If you bound the definition of Marketing disruption to those functions which occur after the product is produced and you only interview Marketers who have responsibility after the product is produced, which is what they seem to have done, then it should not be surprising that the focus for disruption will be after the product is produced.

No wonder Marketing continues to get less respect than it should. It seems to be self-focused (at least those who claim to represent it) on post-product release issues. No wonder some CMOs don’t want to be associated with the Marketing Communications-focused CMO and therefore want a new title. (I have posted on this more than once, but here is a good one.)

Shouldn’t the CMO assure the company is leveraging Marketing on the front end? Sure, many CMOs do not have these people working for them, but that should not mitigate their purview to assure it is done well. The Product Development and Management Association (PDMA) has noted often that the majority of new products introduced fail (and in some categories it is the vast majority). They also note that an incremental investment in the front end of Marketing provides a better return than more money in R&D.

Apple spends relatively little as a percentage of revenue on the back-end of Marketing compared to other companies in its category. Yet its products sell very well. One might say, sure, they’re Apple. But Apple has almost never spent a lot on the back-end side compared to others and their first decade products (after the Apple II) were busts (Apple III, Lisa I, Lisa II, Newton, etc.) Getting the product right is more important than promotion and promotion is easier when you get the product right.

Chrysler could sell out the PT Cruiser in its day, while needing to resort to pricing promotions such as “Friends and Family” type pricing to move its other cars. The Oakland A’s baseball team, no matter the amount of promotion, could not regularly sell out its games … until they got a good baseball team.

Want to know where the disruption in Marketing needs to be: Leveraging before the product is produced not discussing the latest content strategy. This requires insights that can be transformed into new products, services, or business models. Marketing’s blind spot is in failing to recognize the insights need to come before the product is produced so it can result in profitable innovation.

It has been said that strategy and innovation have a cross-roads at insights. Given that effective strategies, executed well, driven by innovation can create sustainable competitive advantage, then for Marketing to be more relevant simply suggests they must drive insights.


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It’s Still About Execution

drpeppermachineMost CPG companies spend a fortune on branding. I wanted a Diet Dr. Pepper the other night and found these two machines at the place I was visiting. Which one do you think would have the Diet Dr. Pepper in it? pepsimachine

Since I set it up you might have guessed right, but the average person would have gone to the Dr. Pepper machine and been disappointed. It had Dr. Pepper and several Coke products. The Pepsi machine, did though have Diet Dr. Pepper, and likely would not have been checked by those looking for a Diet Dr. Pepper. I only looked because I walked right by it after not finding it in the other machine.

I realize it is tied to the bottler, but really? The company spends a fortune in branding money and the product is available on site, just not where you would expect it. How many sales have they lost through lack of execution?


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Just When You Think They Can’t Make It Worse

jcpennylogo2014I have criticized the Board of J.C. Penney for their decisions over the past few years. (Just search the archives). However, they continue to find ways to amaze me with their decision processes. Despite my predictions, the company is still around (so you can validly question my assumptions or conclusions), but this latest decision may finally prove me right.

What decision? The choice to make a senior executive from Home Depot their new CEO. Marvin Ellison is currently the Executive VP of US stores for Home Depot. So why am I suggesting the choice is a bad one?

Two big reasons: (1) Home Depot is not really a good retailer anymore. They may be big, but that does not mean they are good at what they do. (2) And more importantly, in my experience, Home Depot’s success comes more from bullying their vendors/suppliers than it does from being a talented retailer.

J.C. Penney is in no position to bully its suppliers, so, if I am right, I cannot see how an exec from a company with that kind of culture can possibly be right for the J.C. Penney turnaround.

We’ll see, starting August 2015.


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