by Kenneth Rudich

As discussed in an earlier post, the market opportunity scan (MOS) encourages an organized approach for assessing the marketplace.  In value chain marketing, it includes the combining of a market characteristics analysis with an external forces analysis.

While it is advisable for every business to periodically perform an MOS, it is especially prudent for a start-up to execute an MOS prior to opening its doors (be they virtual or real). 

In this two-part series, we’ll look at an example of a start-up business that came into being on the heels of what can arguably be described as a brilliantly executed MOS.  By the time we’re finished, you should have a clearer idea about the purpose of an MOS, and how to properly conduct one. 

the U of P market opportunity scan background 

Turn back the clock for U.S. higher education to the early 1970’s.  Up to that point in time, and for more than a century before it, the nation’s universities primarily focused on educating 18-24 year olds.  Virtually everything about these higher education institutions, including the systems that supported them, was geared toward serving that age group and that age group alone.

This is not to imply that other age groups were necessarily excluded from obtaining access to a college education.  Exclusion would not be the exact right word.  After all, older adults were frequently granted admission.

One need only point to President Franklin D. Roosevelt signing the G.I. Bill of Rights in 1944, at the close of World War II, for evidence of this.  Many historians credit this governmental policy with saving the country from slipping into a deep economic crisis due runaway unemployment among the returning servicemen.  The education and training they received as a result of the G.I. Bill helped to transform the war-based economy into one able to serve the nation’s peacetime domestic needs.

So exclusion is clearly not the right word when it came to adult higher education.  But neither is inclusion a good one to use in its place.  In reality, the huge influx of adults from the G.I. Bill was something of a blip on the radar screen, and it did little to actually change the modus operandi of traditional higher education.  The aim of developing residential programs specifically designed for 18-24 year olds remained intact, and by the early 1970’s that objective had become as strong as ever.  

Older adults who were granted admission to these schools frequently found themselves feeling treated more like unwanted step children than cherished community members.  They were trying to fit into a system intended for someone else, like a square peg trying to fit into a round hole.

If you think about it, what does a thirty or forty-something year old, with a family to care for and a job to keep, have in common with a residential campus student straight out of high school?  Whereas one group consists of adults that are still under construction, the other consists of fully and firmly established adults with a quite separate set of concerns and needs.  In a lot cases, they don’t even seem to speak the same language.   

Consider this adult student’s answer to an opinion survey conducted about one institution’s so-called adult program.  After indicating that the institution did not seem committed to serving adults, the respondent went on to observe, “I have had no problem completing my desired objective, but I feel it occurred in spite of the program, not because of it.”

This kind of higher education experience became all too common among older and working adults seeking to complete or further their education.

a 1970’s market opportunity scan

What does the 1970’s have to do with this timeline?

Enter a man by the name of John Sperling at San Jose State University in California.  He and his associates began to seriously apply themselves to solving this problem during the early 1970’s.  They conducted a market opportunity scan to determine if a better product could be fashioned for serving the needs and motives of the adult student, and if it could be done in manner that would be economically viable over time.

In case you don’t already know, John Sperling founded the for-profit University of Phoenix in 1976.  The first class consisted of only eight students.  Today it has more than 200 campuses and learning centers worldwide and online education with over 100 degree programs.  It has a student body in the U.S. that is only second to the State University of New York, and its total student body is approaching 500,000.

All of which begs the question, what did John Sperling see while performing the market opportunity scan in the 1970’s, and what can the rest of us learn from his experience? 

We’ll carefully flesh out the answer to that question in part 2 of this series, which will be published in the next post to MSM.  See you then.   

by Kenneth Rudich

You may recall that market segmentation is about moving away from a one-size-fits-all mentality when it comes to delivering value.
 
Instead of viewing customers as a single-minded group, all with the same motives and needs, it investigates how motives and needs might differ among them, and how those differences might influence their consumption patterns.
 
It then segregates the larger potential market into smaller groups based on those differences.
      
The intent is to improve the level and quality of interaction with each group by targeting the value chain components to match up with the customer motives and needs.  This can increase both the effectiveness and efficiency of the marketing initiative.

a market segmentation illustration

Here’s a fairly obvious illustration to demonstrate how it works, and what makes it so potentially worthwhile for almost any business venture to consider.

Let’s start with the demand for a canister of mixed nuts that contains an assortment of peanuts, cashews, almonds, Brazil nuts, hazel nuts, beer nuts and pecans.  Let’s say sales are brisk and it’s profitable.  Let’s also say we’re in the habit of treating customers as one-size-fits-all, and that this is the only product we sell.
    
What happens if some people want only almonds, or only cashews, or only pecans?  Would they be willing to buy the entire mix of nuts to fulfill their desire for, say, almonds?  Or would they forgo the purchase due to a lack of value?
 
Or what if they do want a mix of nuts, but only with hazel nuts, cashews and pecans in it?  Perhaps now they’ll buy the canister and then throw away the nuts they don’t want.  In this case, the compromise they must make to fulfill their desire will have reduced the value of the product offering.

As you can see from this simple example, the demand for nuts can be divided into target groups or segments based on preferences and motives.  It might even be further divided into sub-segments, such as salted versus unsalted, a premium brand versus a generic brand, a large package versus a small package, and so on.

value chain implications

If we evaluate these different desires and motive against the components of the value chain, it becomes apparent there’s an opportunity to improve the match between the demand for nuts and what is being offered.  The one canister of mixed nuts tends to under serve the real market opportunity that exists.  Potential customers will be lost, and you’ll be inviting competiton from others who will gladly fill that gap while also trying to win customers away from you.

Perhaps the ideal solution is to put bins of nuts separated by category on the store floor so customers can make their own individual choices.  If allowed to fill their own container, they can get the nuts they specifically favor in the desired amounts they want.  This relates to the concept of modular thinking and how it supports mass customization.

But not many stores can afford to give up such an allotment of space for nuts.  So you may have to work around a distribution channel constraint (i.e., shelf space) by pre-packaging the nuts in a manner that still matches up better with the targeted needs and desires than does the current single canister of nuts. 

Perhaps you’ll face other value chain implications and need to address them as well.  Or maybe you’ll have detected something during the course of a market opportunity scan that unlocks a hidden opportunity, one that will leave you with a competitive advantage after it’s been executed.

market segmentation for your business 

This simple example barely scratches the surface for using market segmentation.  But it does illustrate the rationale for considering the possibility of a segmented demand, and for tailoring the product offering to match as closely as possible with motives, needs and desires.

Have you taken the time to consider how market segmentation might apply to the products and services you offer?
 
In the next post to MSM, I’ll explore another circumstance where a poor response to a market segment opportunity left the door open for an aggressive competitor to come in and seize it.       

by Kenneth Rudich

In today’s high-tech high-touch environment, “one-to-one” marketing has become fairly commonplace.  So much so that it’s enough to wonder if market segmentation hasn’t become altogether obsolete.  Has it? 

Not according to The Direct Marketing Association Research Council.  They note, ‘These days terms such as “segment of one” or “one-to-one” marketing are the rave, but in practice as soon as the number of customers becomes sizable many of these concepts quickly translate into some type of dynamic customer segment.’  When this happens, the deployment of dynamic customer segmentation techniques provides a systematic means for efficiently cultivating the perception of a one-to-one relationship.   

In order to explain the concept of dynamic customer segmentation, we must visit the two main types of customer segmentation techniques that are often taught.  One is A Priori segmentation, and the other is Post hoc segmentation.

a priori segmentation      

A Priori segments split the market according to pre-existing clusters of people with apparently similar characteristics, such as demographic criteria involving age, sex, geography or social economic status.  A slightly more sophisticated version may include household information, like household make up or type; or life stage information (combining information about age, presence of children and working status). 

This approach represents the easiest way to segment a market, and it’s a good starting point for gaining some knowledge about the customer base, especially as it concerns the targeting of communications to different groups.  For some businesses, it may be all the segmentation that is needed.  It really depends on the degree of customer information precision required, what type of data and information is accessible through A Priori segmentation, and whether it will adequately inform the strategic learning cycle.

Having said the above, it can also be stated that A Priori segmentation is crude at best.  For example, it doesn’t necessarily provide real insight about customer motives and usage patterns.  On the other hand, it can offer benchmark data for making the segments measurable within the context of a database, and this can lead to unlocking deeper insights later on. 

post hoc segmentation

A database can be used to monitor customer interactions across time – for example, by customer type (organization or person), customer state (current, former, prospective), customer segment (strategic or tactical) and customer usage (experiences service or uses product).  This is where marketing metrics or measures come into play, as well as some other more advanced techniques (e.g., Conjoint Analysis for one).  These will furnish information that A Priori segmentation cannot provide all by itself.

As the collected data matures, new strategic insights — insights that would otherwise remain concealed from view — will emerge and become available for detection.  Whether based in customer usage patterns, such as product and service affinities, aptitudes, interests, or other value-based concerns such as distribution channel usage, communications or communications channels usage, transactions channels usage, or product development, such insights present opportunities to forge new or better customer relationships. 

One typical example revolves around the often changing status of customers, wherein they may, based on a usage analysis, fall into an assortment of sub-categories that includes prospective customers, new customers, repeat customers, and interval customers (customers who come and go at irregular intervals). 

This is where Post hoc segmentation enters the picture.  By definition, Post hoc segments or groups are identified through gained knowledge about the customer base.  In our present example, the customer base contains four smaller target groups based on trend information derived from a usage analysis. 

Because each of these sub-categories represents a type of customer state, their interactions with the business differ.  Some, for example, may be more profitable.  Others may have the potential to become more profitable.  And still others may yet be converted.  Consequently, the strategy and tactics for handling each should reflect those different states of being. 

This is what it means to dynamically adjust the customer segments — where the purpose is to do a better job of catering to specific customer relationship implications.  It also should be noted that Post hoc segmentation is just as concerned with the elimination of unproductive relationships, products or services as it is with the addition of new ones that are productive and meaningful. 

market segmentation is alive and well

Market segmentation is not a one-off task; it’s an ongoing process of getting to know your current and potential customers better, and leveraging the information to strategic advantage. 

The pay off from staying attuned to the shifting patterns and trends of the customer base include:

• the economics of managing customer relationships according to target group implications are unequivocally better than either a strictly one-size-fits-all approach or a strictly one-to-one approach;
• enduring and diverse relationships can foster a stronger customer base  portfolio;
• such information can be used to bridge customers from one usage point to another;
• communications can be targeted to groups in a manner that efficiently maintains the perception of one-to-one marketing;
• it creates a climate of strategic focus and direction across the value chain.

by Kenneth Rudich

Neil Rackham, a known speaker and writer in sales and marketing circles, is fond of advancing the idea that customers are not simply buying products and services; they are really looking for solutions that satisfy their needs, motives and/or preferences.  In other words, they are searching for the created value I’ve talked about in several other posts.  I’ve spent a good deal of time on this topic because it is the cornerstone to a good marketing initiative. 

The search for solutions puts a premium on businesses who are able to pinpoint the motives of the customers they serve (both implicit and explicit), and then use those motives to fashion an offering that promises fulfillment beyond anything a generic product or service can provide.  So much the better if the same information can also be used to establish a competitive advantage as needed. 

The best solutions attempt to identify and tap the right set of customer motives even as – or when – they vary among a business’s current and potential customers.  This includes being able to distinguish between those things that truly add value and those that only add costs.  In today’s environment of spoiled consumers, the mistake of failing to provide a solid customer experience at every step along the way will almost always call attention to itself, even in cases where the lapse may be seemingly subtle.

the market characteristics analysis does matter

The market characteristics analysis observes the dynamics of the customer base in a manner that helps to regularly unlock insights about it.  You may recall from an earlier post that the market characteristics analysis is part of the larger market opportunity scan.  It, along with an assessment of the external forces, seeks to discover key implications for smartly fashioning the value chain into a complete (and competitive) end-to-end solution. 

Consequently, the market characteristics analysis is of critical importance to businesses both large and small.

market segmentation

One popular method for performing a market characteristics analysis involves the application of market segmentation techniques.

The general intent of segmentation is to reduce goal ambiguity by moving away from a one-size-fits-all mentality.  It does this by identifying groups of customers with similar characteristics, values, needs, aptitudes, motives, behavior patterns or preferences; and then using the information to improve the level and quality of interaction with each group, while also improving the effectiveness and efficiency of the marketing initiative.

Said another way, segmentation assumes each group has its own ideas about what constitutes value for them,  and their perceptions carry implications for shaping and molding the value chain.  The Balanced Scorecard authors Robert Kaplan and David Norton say, “Organizations that do not segment their market run the risk of doing nothing well for anybody.”  In The Marketing Imagination, Theodore Levitt contends, “If you’re not thinking segments, you’re not thinking.  To think segments means thinking beyond what is out there to see.”

using market segmentation

Market segmentation is a fairly expansive topic, and it will probably take at least a few posts just to convey an introductory level of information about it.

But even an introductory level of understanding will be enormously helpful to those currently unfamiliar with, or only slightly familiar with, this topic.  It will definitely support your strategic learning cycle once you begin to frame your thinking in this manner, let alone begin to formally use it as a decision-making tool.  And it will help bolster your business strategy not just a little, but to a substantial degree.

In future posts about market segmentation, we’ll explore the larger universe of concepts associated with it, how to choose the right approach for your business concern, and how it can be used to keep your value chain vibrant with end-to-end solutions.

market opportunity scan case study

by Kenneth Rudich

With a steady churn of breakthrough innovations constantly affecting product life-cycles, it has made the market opportunity scan as important as ever.  Any number of examples could be used to illustrate this point.  Few, however, are likely to show it in more vivid detail than the video rental industry over the past 25 years.

You may recall the MOS primarily concentrates on the market analysis and external forces parts of the value chain.  The objective is to retrieve relevant information that may affect the outlook of your business, for better or worse.  It aims to support the strategic learning cycle, to gain a leg-up for deploying effective strategies and tactics along the value chain – whether as a countermeasure to a threat, or to take advantage of a new opportunity.

The video rental industry has seen its fair share of measures and countermeasures.  What follows is an abbreviated version of that story.

the value chain story for video rentals

In 1985, newly launched Blockbuster, Inc. identified a market opportunity for customers wanting to rent their choice of movie titles on videotape.  Its value chain included a wide dispersion of company-owned stores as the means for distribution.  Customers would come to the physical location, make their selection, take the videos home, watch them, and then return them to the store. 

By 2004, it had over 8,900 stores and had grown into a $900 million company.  It was regarded as the industry leader for nearly two decades.

But now, in 2010, Blockbuster, Inc. is contemplating Chapter 11 to eliminate debt.  Its woes are such that a recent finance article suggested it may become one of ten disappearing brands in 2011.  Though others contend that that is unlikely to happen, the article does point out that one of its chief rivals, Movie Gallery, the parent company of Hollywood Video, announced in February 2010 it would be closing its 2415 stores and liquidating all assets.  Movie Gallery was using the same kind of value chain model as Blockbuster.

so what happened?

Three key dynamics, all of which were visible within the realm of the market opportunity scan, can be held up as having had a hand in Blockbuster’s reversal of fortune.  They insinuated themselves on the marketplace almost simultaneously.

The first notable one of them was the technology factor – namely, the growth of the internet and also video on-demand for satellite and cable. 

The second was the foresight of competitors who saw an opportunity to re-design the Blockbuster value chain and create new forms of perceived value, particularly as it pertained to the distribution and transaction channels.  Netflix combined the internet with traditional mail for their transaction and distribution channels, and Redbox later came along and put vending kiosks in pharmacies, fast food restaurants, grocery stores and convenience stores.  Neither built their own stores.  Both also improved upon the transactions component by lowering the rental price.  

The third dynamic – and possibly the most painful in retrospect – was Blockbuster’s inability to adequately appreciate the first two.  There was an undeniable lapse within the context of its own market opportunity scan.   

Blockbuster was a latecomer to the Internet compared to Netflix and Amazon.  It also could have employed vending kiosks ahead of Redbox, which passed Blockbuster in 2007 in number of U.S. locations.  Unfortunately for Blockbuster, it was so thoroughly entrenched in its bricks-and-mortar model that it forfeited the opportunity to seize whatever first-entry advantage it might have gotten by branching out into new channels sooner.  It failed to heed the external forces and the market analysis of the MOS.   

The company lost $65 million last quarter.  Its revenue continues to rapidly decline with Netflix and Redbox chipping away at it, not to mention the losses also suffered due to cable and satellite video on-demand.  Despite that, many industry analysts believe it still has a chance at remaining viable as a company, but only with distribution channels consisting of DVD’s via mail, vending kiosks, and internet delivery.  Convenience (consider the social lifestyle factor under external forces) and low price is the new success formula, and that’s not something the bricks-and-mortar model can do nearly as well.  Blockbuster is down to about 6000 stores and is continuing to close them. 

much of the story still remains to be written

The composition of the value chain for the video rental business has been forever changed from its original formula, and it’s still evolving.  Every one of the current players needs to stay atop of what’s going on via the Market Opportunity Scan.  And they need to keep an open mind for converting that information into sound strategy and tactics all along their value chains.            

by Kenneth Rudich

In today’s marketplace, every business is feeling the pressure of having to remain agile, keep pace, and make the right moves at the right time.  For many, their survival depends on it, and they often have a small margin for error.

A big part of staying on top of this challenge rests with the ability to effectively scan the market and retrieve information about it that is both timely and relevant to their business.  Such information should provide a foundation for making informed decisions about what to do next.

the market opportunity scan

This is where the Market Opportunity Scan enters the picture.  It encourages an organized approach for regularly assessing the market outlook of the business.   

One aspect is to make sure the information is relevant, which requires a determination of what qualifies as desirable in terms of quality and scope.  The scan should be business-specific, and it should be comprehensive enough to give people a good complement of what they need without trespassing into information overload. 

Regular assessment speaks to the concern for timeliness.  This means it should be replicable in design, and that it should be routinely monitored.   

In the final analysis, the objective is to support the Strategic Learning Cycle of the business as was discussed in an earlier post.  

the basic elements of a market opportunity scan

The market opportunity scan encompasses those parts of the value chain that are highlighted in yellow up above.  These areas exert the most influence on what can or should be done across the value chain as a whole.

It concentrates on achieving three broad objectives:

1. Analyze the composition of the customer base for your business 
2. Recognize the impact of the external forces on your business 
3. Reconcile the implications of both as they converge on your value chain

For now, I’ll give a brief overview of the activities involved within each of these objectives.  Later posts will discuss them in greater detail.

As you read this content, bear in mind that part of the overall goal is to help you establish a business framework for developing timely strategies and tactics.  As always, the focus is on creating a value chain that will deliver value fulfillment. 

analyzing the customer base

The customer base consists of the current and potential customers for your business.   There are two vantage points from which to survey the customer base for identifying applicable opportunities:

1. Start with existing internal competencies and find related opportunities in the market
2. Find a need in the market and develop the internal competencies to fill it

Future posts will examine some different tools and techniques for analyzing the customer base from both of these perspectives.   

analyzing the impact of the external forces

The external forces are typically beyond your control but exert an influence on your business nonetheless.  The challenge is to navigate the external forces in a way that minimizes the harm when they’re working against you, and maximizes the good when they’re working for you.

My preference is to divide the analysis of the external forces into two categories because each can be substantially influential in its own right, and it makes more intuitive sense to me if they are organized in this manner.  The two categories are:

1. All the external forces minus your competition
2. Your competition by itself

reconciling the value chain implications

Fashioning a value chain that factors in the results of the market opportunity scan involves the ability to transform raw information into knowledge – or more specifically, into applied knowledge.  With that knowledge in hand, you might then decide to:

1. launch new value chain initiatives
2. modify old ones
3. leave some current value chain initiatives alone
4. stop doing some current value chain activities

More often than not, the real challenge will lie in pinpointing which actions to take and where, particularly when you have to establish priorities in the face of budget constraints.  As authors David Kaplan and Robert Norton point out in The Balanced Scorecard, “The essence of strategy is not just choosing what to do; it also requires choosing what not to do.”   

customer fulfillment imperatives

by Kenneth Rudich

I once heard it said that people use products but experience services.  For instance, an individual purchases a shovel with the intent of using the product.  A reservation at an haute cuisine restaurant, on the other hand, carries the expectation for a fine dining experience.

Whether you agree with that assessment or not, it does bring up an important point.  Marketing must consider the role of these two – use and experience – as it pertains to delivering customer value fulfillment and satisfaction.  A failure to properly think this through could result in a poorly executed value fulfillment proposition.

Here are five examples of scenarios where customer use and customer experience influence the value proposition:

1. Is one clearly more dominant than the other in importance?  Consider the case of the shovel and the fine food restaurant.  As long as the shovel serves its intended function, it’s hard to imagine anything you could do to make it a better, more agreeable, or memorable digging experience.  The restaurant, meanwhile, sits at the opposite end of that spectrum.
  
2. Are the two so closely intertwined that fulfillment requires both?  A luxury automobile fits into this category.  You may use a car to get from point A to point B.  But unlike an economy car, the experience of a luxury automobile leaves an indelible impression.  Who would pay the higher sticker price if it didn’t?

3. Are the customers who use the product or service different from the ones that experience it?  Education is a good example.  Students typically experience the education process.  But employers, governmental and community agencies, and society use the product.  Educators must fashion a learning experience with that end product in mind.

4. Do the customer touchpoints differ between use and experience?  A business website falls into this category.  A business’s customers tend to experience the website – it’s look, feel, usability – more than simply use it.  The business, meanwhile, uses it to drive sales.  If the business has outsourced the development and maintenance of the website, it experiences the services of the web provider.  In this case, the web services provider must factor in each of these three differentials for achieving value fulfillment.
           
5. Is the use of the product dependent upon the quality of a related service or vice versa?   It’s possible to have a great product but lack the services-based technology to support its use.  Imagine how disappointing a streaming video application experience would be if internet access was limited to the slower speed of a phone modem connection.

marketing use, experience, or both

After walking through the use and experience dimensions of a product or service, marketers must then frame their offering to meet the customer fulfillment expectations.

click on image to enlarge

by Kenneth Rudich

Effective marketing?  Don’t do it!

A competitor once offered me that gold nugget of a marketing tip.  I have been keeping my eyes peeled for evidence of him following his own advice ever since.

Truth be told, it’s a good idea to keep an eye on the competition regardless of whether you have been goaded into it or not.  It’s important to know where you stand relative to them.  Do you have a competitive advantage, a competitive vulnerability, the potential for improving your competitive position?

Gathering this information will help your strategic planning.
 
There’s even a method to guide the process.  It’s called a SWOT Analysis, where the acronym stands for Strengths, Weaknesses, Opportunities, and Threats.
 
Only, in this post, I’m going to suggest a slight modification in how to use it.  For our purposes, you’ll be enlisting it to see how well you measure up, whether favorably or unfavorably, with each key competitor.

And then you’ll incorporate the results into your strategic planning.

the conventional use

If you’re unfamiliar with the conventional use of a SWOT Analysis, let me briefly walk you through the basics:

• Strengths: your business’s internal characteristics that are favorable to achieving its objectives.
• Weaknesses: your business’s internal characteristics that could or do impair the achievement of the objectives.
• Opportunities: external conditions that favor your business, like new avenues for growth or expansion.
• Threats: external conditions that could or do impair your business, such as a bad economy. 

If you look at the generic value chain for marketing, this analysis would investigate every aspect of it.  Again, the idea is to inform the strategic decision-making process in some manner.  For instance, you might focus on turning a weakness into a strength; or, if you can’t do that just now, try minimizing or avoiding the harm it could unleash.
 
If one or more external conditions are favorable to your business, you’ll want to assess how you might exploit them to advantage.

Okay, that’s the more conventional deployment for a SWOT Analysis.

a competitive swot analysis

A competitive SWOT Analysis operates under a slightly different mindset.  It aims to assist in determining how well your business is positioned against each key competitor.  So, it might ask questions like:

1. How do your strengths compare with the strengths of each competitor?
2. How do your weaknesses compare to the weaknesses of each competitor?
3. Are there comparable functional areas where you’re strong and they’re weak?
4. Are their comparable functional areas where you’re weak and they’re strong?
5. Can you learn to turn a functional weakness into a strength based on their functional strengths?
6. Is there an opportunity to advance your business objectives by exploiting their weaknesses?
7. Is there a threat of them using their strengths to exploit your weaknesses?
8. Are there any external threats that will affect all of you?  How will it affect each of you?
9. Are there any external opportunities that are common to all of you?  Who is likely to pursue it, and what are the odds for success among those that pursue it?
10. Given the totality of this information, are you positioned in the market – or can you position yourself – in a way that differentiates you from them, and/or puts you in a more favorable light than any or all of them?

This is not an exhaustive list, but you get the idea.   It uses the SWOT Analysis to compare and contrast for the purpose of eliciting strategically valuable insights. 

as for the matter of effective marketing

If you are not one of my competitors, then by all means do it.

If you are a competitor, DON’T DO IT!

At least, that’s my advice.

Related Articles:

Using a SWOT Analysis for Personal Strategic Planning

click on image to enlarge

click on image to enlarge

Editor’s Note: This is actually the third posting in a set of three.  It builds on the content contained in the first two titled, “Creating Value with Modular Thinking,” and “4 Value Creating Scenarios,” as shown in slide 1 above.  

By Kenneth Rudich

Be it for-profit or not-for-profit, the overarching aim of marketing is to cultivate interactions that produce value creating outcomes.  The interactions themselves are the engines that help drive a business toward meeting its objectives, and they tend to be grounded in either one of two perspectives: the outside-in perspective or the inside-out perspective. 

the common ground

Though the two perspectives do differ, they also share some common ground:  

1. both are focused on the implementation of the value creating scenario. 
2. both seek to identify and address the six W’s — who, what, where, when, why, and how – as it pertains to their vantage point.
3. lastly, most importantly, both tap into an identifiable market opportunity as their primary source of motivation.   

After that, they diverge in their thinking with the intent to converge in the end.  

outside-in perspective  

The outside-in lens identifies the nature, breadth and scope of the market opportunity.  This is sometimes referred to as a market opportunity analysis and it involves market research.  At the outset, it seeks to unearth the key characteristics of the opportunity, including what will be needed to deliver value fulfillment, and the requirements for building and/or maintaining competitive advantage.   

Over time it evaluates the extent to which the product or service is actually achieving value fulfillment, and whether there are gaps that need to be filled or other considerations that should be addressed.  It also looks for key directions and trends that are currently influencing or will influence the opportunity in the months and years ahead. 

Here is a sampling of questions it would explore:  

• would it be advantageous to segment the market and, if so, how?
• how might prospects and customers prefer to access the product/service?
• how will they learn about the product/service?
• how will transactions occur?
• will support services be needed?
• how will pricing influence customer decision-making?
• who is the competition and how do we stack up?
• what other external forces merit attention?  

inside-out perspective  

The inside-out lens concentrates on what the provider should do in order to satisfy its objectives.  

This includes, first and foremost, deciding whether it’s viable and worthwhile, especially if it’s a new market opportunity.  Or, if it’s already been mined or being mined, should it continue to be pursued.  These are product life cycle issues and they require a thorough understanding of the market opportunity analysis.  In a rapidly changing business world, the timely phasing in or out of an offering can be critical to the maintenance of the product/service portfolio.  

There’s also an array of decisions concerning things like marketing strategy and tactics, return on investment expectations, funding requirements, quality assurance, market share, the potential for growth, competitive stance, and so forth. 

Still another set of decisions will typically revolve around design matters like:   

• the people (expertise) or human resources that are needed?
• what the organization will look like?
• the processes that should be put in place or revised?
• the type of facilities that are required?
• what technologies should be involved? 
• what should be the design of the product/service offering?

when outside-in and inside-out converge 

The answers to these questions will help to identify the activities that should be plugged in to the value chain for any given interval of time.  The more elegantly this is done, the better off your business will be.

create interest

 by Kenneth Rudich

Some things are shrouded in secrecy.  This post is not one of them, however.  It comes straight from marketing 101. 

Be that as it may, there remains a chance you’ll still be glad for having read it just the same.  Sometimes it’s good to step back and take stock, just to make sure nothing comes up missing or seems out of place.   At any rate, let me know what you think about this piece, won’t you? 

the power of three

Three words describe marketing better than any others, and they should hereafter roll off your tongue with mantra-like ease.  They are awareness, interest, and action. 

awareness

Awareness amounts to getting the word out and around, and around, and around.  It all boils down to asking: who among my potential prospects is unaware my product exists, and how might I reach them to change that? 

The means and mechanisms for spreading awareness range from old to new.  It’s a dizzying array when you think about it.  Magazines, newspapers, radio, tv, billboards, business cards, fliers, signage, and good old fashion word-of-mouth all carry the well-worn stamp of having been time-tested.  The advent of the internet, on the other hand, has introduced previously unknown opportunities like social media, web sites, email, social bookmarking, blogs, discussion forums, and search engines.  And this is not anywhere near an exhaustive list of every possibility.  Think of the countless trinkets and gadgets bearing names and logos, or all the other points of visibility they’ve somehow managed to assume.   

Each alternative has its pros and cons, and not all of them are equally accessible or usable to everyone.  Some may be cost prohibitive for the sender; others may not reach the right audience.  Some can be carefully controlled; others invariably cannot.  Some lend greater credibility such as word-of-mouth among friends or other trusted sources; others get the nod because of their shock value or amazing ingenuity.   

It’s always advisable to have a clear reason or purpose for choosing the mechanisms you do employ, and to determine whether they should be used only as a one-off or as part of an ongoing campaign.  The term cross-platform marketing was coined to signify the importance of managing message consistency across the different communication channels, particularly if it’s in the context of a branding strategy.  In this case, each channel should be selected with the specific intent of it reinforcing or complementing the others.          

Also be sure to track the effectiveness of the reach of each channel – in other words, how many people is it reaching, does it appear to be reaching the right audience, and is it catching their attention long enough to create awareness?  After all, not even the seemingly free channels are genuinely free when you consider how much time they can consume.  If you’re not getting a good reach among your potential prospects, there’s little point in continuing to use the same channel(s). 

interest

Once you’ve reached your prospects, you have to capture their interest.  As anyone who has ever tried can readily attest, it’s not easy to cut through the clutter of messages that are already bombarding people left and right.    

The objective of creating interest is best served by promoting the benefits your product offers.   Sometimes messages of this kind contain information about the features of the product or service and then fail to mention the benefits.  Knowing about the features is not always the same as knowing about the benefits they deliver.  Insofar as you have only a minimal amount of time to make your message stick – think of your recipient as having a very small piece of it to spare – you must try to maximize the impact of it.  If you do mention a feature, make sure it either also conveys the benefit, or be sure to add that information along with it.  You might even consider whether you can get away with talking only about the benefits alone.  Never assume the recipient will figure out the benefits or automatically see them.  Be conspicuous when drawing attention to them.   

In an earlier post, “Creating Value…or Climbing Up a Waterfall?” I encouraged the idea of learning to speak directly to people’s motives and needs.  The ability to distinguish these motives and needs helps with evaluating how to frame the message for making it meaningful to your particular target audience.   

It also helps to know the difference between the mass communication information capabilities of some marketing channels and the customization capabilities of others.  There is a big difference between broadcast tv and, say, a social media tool.  Broadcast channels literally deliver a carefully packaged message, and they typically try to do so with a broad brush stroke.  Social media involves the nurturing of a conversation with a community of people.  As is the case with any conversation, it can move in various directions and cover a lot of ground.  Information in this channel is more likely to take on the characteristics of customization according to what people are interested in or what they already know and want to share about your product. 

action

After awareness and interest comes action.  In my estimation, there are two facets to the notion of action.  One is the call to action, and the other is the actual experience people have with the product or service while in the midst of using it. 

Once you’ve whet a prospect’s interest, the call to action prompts him or her to take the next step of using it.  It might be as simple as urging them to “act now,” or it might be in the form of some inducement such as a limited time offer, a coupon, or a free added extra thrown in as a bonus.   

You may need to distinguish between new customers, repeat customers, or returning customers in the call to action.  This is particularly true if a returning customer had a lackluster experience the last time around and has reservations because of it.  Or maybe something recently disclosed in the media has threatened to tarnish the brand image.  For instance, Toyota is currently dealing with the issue of a sticking gas pedal and the dangers it foreshadows.  Unless they can convince people they’ve identified the real source of the problem and fixed it, the next call to action is likely to fall flat. 

This brings us to the actual experience people have with the product or service.  Once you’ve created interest by telling them the benefits they will derive, you have to deliver fulfillment.  If that happens, you can then do a new call to action for getting them to come back again.  Or prompt them to spread the word among friends and associates for gaining more awareness. 

the mantra

As you can see, awareness, interest and action do not operate as individually separate or discrete functions.  Strong ties exist between them, and they must be managed in a way that makes them work in a harmonious fashion.  They may be three words but they make for one marketing mantra.   

Please share your thoughts and insights on this subject.  Should we delve more deeply into certain areas while ignoring others, or is there an altogether different approach that would work even better?