Brand Position And Price Position Must Align

Regular readers know I often comment in this blog on articles I read. Sometimes I find an article that is just really good, and I can’t add to it. Here is one by Al Ries on pricing strategy and brand position.


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Misguided Competitive Advantage

Much is written on competitive advantage. The website brings up 1000s of search results in the books section alone. My second book, The Secret To Selling More, discusses it, and my third book (along with Ralph Mroz), Value Acceleration, has competitive advantage in its subtitle.

Many of the newer books on competitive advantage, and many self-proclaimed experts on the subject, write and speak extensively on the need and value of finding your competitive advantage. I agree.

What one means by the term competitive advantage is where we greatly differ. Variations on the idea of competitive advantage go back decades and include phrases like “unique selling proposition” or USP. Experts have known for a very long time that to succeed in the market, you must have a difference. I agree.

What constitutes a competitive advantage is where I part ways with many other self-proclaimed experts. Too many of them have you focus on what you do that makes you different. They push you to figure out what you do that makes you different? Who cares, with the possible exception of your mother?

It’s not about what you do, it’s about what the customer gets! Ruth’s Chris serves your steak on a 500 degree plate. So what (other than keep your hands off of it)? What you get is an experience where every bite is as delicious as the first. Meanwhile Morton’s proudly notes they have no secrets because they have all been published. Who cares about either. What am I getting is all that matters.

Most customers don’t care what you do (some aficionados might). They care about what they are getting. Once they get that some may choose to learn more about how you do it to add to the experience. But the real competitive advantage does not come from knowing what you do, it comes from knowing what the customer is buying from you they don’t feel they can get anywhere else.

Stop focusing on you and focus on your customer. What are they getting or believe they are getting from you they can’t get elsewhere.

Several years ago they asked a “loyal” Lexus owner why he was trading in his Lexus to buy a Mercedes. He noted the Lexus was the best car he had ever owned and the dealer was unsurpassed. Both of which should have created a competitive advantage according to many. His answer tells the story: “People look at you differently when you drive a Mercedes.” Maybe not what you care about, but plenty of Mercedes owners do, including the woman in my neighborhood whose personalized plate says 4 MY EGO.

Stop focusing on what you do. That’s not where competitive advantage lies. Understand what the customer is buying … and leverage the heck out of it.


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B2C CRM And On Whom To Focus

A recent and insightful article notes that adding names to a B2C database to send out indiscriminate email blasts is confusing activity with results. I agree. The article notes that B2C marketers should be focusing on the 4.7% of their consumers who generate social referrals. The so-called connectors. This small minority of your consumer-base are also often early users of your products.

The article does a great job of reminding readers how to cultivate and encourage these key proponents of your products/brand. This is all good, and ignores two important reasons to build a larger consumer database.

The most important of those two reasons is for you to know who your consumers are. In today’s world, many big retailers don’t need your brand to attract consumers to their store. The balance of power between retailers and consumer brands continues to shift to the retailers as brand managers become ever more disconnected from their consumer, while their company’s ability to truly innovate in new products also erodes.

The more a brand marketer actually knows about his/her consumers, the better position they are in to help their retailers make more money with the brand. A large consumer database, properly populated with available demographic and psychographic information, can help the brand marketer really understand their consumer-customer base.

In addition, while much of what is sent to a mass-consumer database via email is useless (or worse), that does not prevent the astute brand marketer from parsing that database in informed ways to allow the information sent to be more likely of value to the recipient. So-called B2me communication. Unsolicited mail (email or snail mail) is always unsolicited. However, that does not make it junk. It’s junk when it is not of value to the recipient.

B2C CRM is a significant undertaking. But if brand marketers leave it to the retailer, the balance of power may eventually shift totally to the retailer, thus relegating brands to minor value, with the resulting negative impact on the company.


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Do They Have The Stomach For This? JC Penney Didn’t

josabanklogoApparently Jos A. Bank, the men’s clothier, is trying to re-position itself and is having the same predictable results JC Penney had when trying to do the same thing. Jos A Bank is famous for its buy 1 get a bazillion free promotions that drive traffic. While I have never shopped there, I assume their products are targeted at the shopper who appreciates those kinds of “bargains.”

After being acquired by The Men’s Wearhouse apparently the CEO of Men’s Wearhouse is looking to re-position Jos A. Bank. The original plan was to run the two stores as distinct brands focused on different target consumers. There is some debate about the real difference between the two. However, the re-positioning is not necessarily designed to attract different customers, but rather to increase share of wardrobe with their target customer. But isn’t that what The Men’s Wearhouse already does?

Anyway, as Jos A. Bank has killed its ads for buy one get a bazillion free, the existing customer has stopped shopping. Until and unless they create a compelling reason for their target customer to shop there, sales will likely continue to drop. Just like what happened to JC Penney.

Will the company, publicly traded, have the patience for the re-position? Will the re-position fill a valid segment of the market? The company is probably right that buying four suits at a crack is not likely a broad market these days; but what is their new position? That I can’t see any evidence to understand. At least Ron Johnson had a vision for the revamped Penney. Does Men’s Wearhouse have a vision for Jos A. Bank, or will this 100+ year-old brand die off?


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If This Didn’t Come Up All The Time, Maybe I Would Ignore It

Ad Age, in a recent article, notes that B2B CMOs need to recognize that it’s time to own the customer experience. Really? Too bad GE knew that in 1952. Are we really that late to the party, or is this why CMOs and Marketing in general are still struggling for respect and a seat at the table?

Longer term readers of this blog will recognize that I am often compelled to write about the serious limitations that Marketing either puts on itself, or are put on it by CEOs who don’t know better.

If one views Marketing from the limited (and incorrect)  view of many, Marketing is relegated to the so-called back-end of the Marketing process. If, however, as Ralph and I note in our book, Value Acceleration, you recognize that the true job of Marketing is to align the capabilities of the company with the current and future needs of the customer, it has always “been time for the B2B CMO to own the customer experience.”

Step up and take control of Marketing or be relegated to the head of Marketing Communications. Make the choice yours.


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Recommendation For A Functional Organization Struture

Orgchart1Corporate organizations should be structured to allow the company to execute its strategy effectively and thus achieve its goals. Volumes have been written on organizational structure and the best use of which type of structure in various business scenarios. This post considers a method for organizational structure for the functionally organized company.

Definition of Functional Organization

A functional organization comes about as companies grow and evolve. The CEO hires more C-level executives to whom he or she delegates operational authority. These C-level functions can include CFO, CTO, CIO, COO, CSO, CMO[1], etc.

As companies grow further, some companies will create a more comprehensive/over-arching COO[2] position to whom many of these other CxO positions report so the CEO can function as Mr./Ms. “Outside” and the COO can function as Mr./Ms. “Inside.”

Evolution of the Functional Organization

While this may be a fine way to organize, we suggest that perhaps there is a better alternative. A key consideration in determining how best to organize, and which “C” level functions are appropriate, is to recognize that in strategic execution the company needs to manage people, process, and technology.

If we view the company as a set of business processes operated by people using facilitating technology, it may be that a corporate structure that is process focused can be defined that is most appropriate.

A company has three basic processes:

  1. Demand chain
  2. Supply chain
  3. Financial

Therefore, an organization structure that focuses on those three processes, plus the facilitating technology and people should be an ideal organizational structure.

In this structure the CEO would have five functional reports. A COO (to manage the supply side processes, which include development, production, service delivery, etc.); the CRO[3] (to manage the demand-side processes of marketing, sales, and customer service); the CFO to manage finance, the CIO to manage information systems, and the CPO[4] to manage the people resources.

The later three processes (finance, information and human resources) are equally important to both the demand side as well as the supply side of the business and should be equal with the demand side and supply side process managers.

Isn’t the CRO just a VP of Marketing/Sales? Could be, but that isn’t the idea. In too many companies that combine sales and marketing under a single Vice President, Marketing and Sales (or Sales and Marketing), the person tasked with that job is really responsible for SALES, and Marketing’s role in supporting Sales.

In this “new” view of corporate structure the CRO is responsible for all the demand side of the business processes including new product/service/market considerations, future direction and alignment of capabilities issues as well as near term revenue. Thus the CRO would be responsible for all process that support the top-line of the business.

He/She would be measured by top-line success and the processes designed to support that top line including customer retention, new customer acquisition, share of customer, new product success, etc.

As envisioned, the CRO would have people reporting to him/her that would be responsible for sub-functions within the demand chain. The number of management levels and titles would depend on need, size, organizational maturity, etc.

This is similar to the role of the COO on the supply side who is responsible for both long-term issues such as R&D direction and near term manufacturing issues. The COO thus has a VP/Director/Manager of Engineering and VP/Director/Manager of Manufacturing (or VP/Director/Manager of Service Delivery in the case of a service company). Again, depending on need, size, organizational maturity, etc. there may also be VPs/Directors/Managers of Research, Field Services, etc.

The interlink between demand side and supply side is in the area of new product/service development. As we have discussed in a white paper, “Integrating Marketing With New Product/Service Development,” there is an important linkage between Marketing and Product development, which is too often dysfunctional due to Marketing’s inability or Engineering’s unwillingness to understand that this partnership is critical to creating successful new products and services. That delusion needs to be corrected.

As noted in the beginning of this post, there are countless organizational structures one can apply, and many courses at the undergrad and graduate level are taught about proper organizational structure. Our belief is, for a functional organization structure, organizing around process, people, and technology gives the best approach to assuring strategic execution.


[1] Chief Financial Officer, Chief Technical Officer, Chief Information Officer, Chief Operations Officer, Chief Sales Officer, Chief Marketing Officer

[2] Chief Operating Officer

[3] Chief Revenue Officer

[4] Chief People Officer

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Sense And Respond; Or Wonder What Happened

flexibilityI was looking back through some files and found an article from the July/August 2011 issue of The Harvard Business Review: “Adaptability: The New Competitive Advantage.” I’m sure I kept it because its basic premise: the need for flexible, adaptable, sense and respond organizations is exactly the point we made in our book Value Acceleration. (Come on, we all love articles that support our positions).

The article’s authors note that competitive advantage “no longer arises exclusively from position, scale, and first order capabilities in producing or delivering an offering.” They note that to thrive and survive you have to be “quick to read and act on signals of change.” This further supports my premise that the CMO must spend a lot of time out with customers to be able to sense those signals of change.

Business success comes to those who can skate where the puck is going to be as Wayne Gretzky famously said. And once there, you have to support trying new things. In the same HBR article, Scott Cook of Intuit is quoted, “It is only a failure if we fail to get the learning.”

As we note in our book, competitive advantage comes from aligning the capabilities of your company with the current and future needs of your customers. It is those “future needs” that are hardest to sense; and yet that is where the opportunities lie. Everything else can be outsourced, and so no longer a competitive advantage.

The great CPG (Consumer Packaged Goods) brands used to have a competitive advantage from their ability to create unique and excellent products. The major retailers have access to outstanding companies that can create equally good (if not better) products for them as “house brands.” If the retailer already has substantial foot traffic and they can produce as good or better products than the brands do, who needs the more expensive branded products. (I recently posted on this specific issue.)

The key is to sense and respond to consumer needs, wants and demands. Are the CPG brand managers out in the field with customers, or too busy crunching data to understand yesterday in the hopes it will predict tomorrow? It can, until it doesn’t, and that’s when the new leader emerges.

Get flexible, get adaptable, and beyond all else, get in touch with your customer. It is your job to think like the customer, not hope they think like you.



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