Category: Marketing Strategy

Final U.S. auto sales for 2007 have been tallied, and Toyota has overtaken Ford at #2 in sales behind General Motors. Toyota demonstrates a textbook approach to building a business. Several qualities exhibited by Toyota can be pointed to as keys to its success, but one that impresses me is its commitment to improvement. It would be very tempting for Toyota to rest on its laurels as it has grown market share in recent years. However, top management insists on staying hungry and not being complacent with past success. Toyota’s focus on delivering quality automobiles as well as striving to introduce new products to market that respond to current market conditions (e.g., hybrid vehicles) are strategies that serve it well in both the short-run and long-term.

Many American consumers thumb their noses at foreign made cars (although several “foreign” brands are now manufactured in the U.S.), but foreign competitors create a significant positive effect. The presence of companies like Toyota in the U.S. make all auto manufacturers better because they have raised the bar in terms of customers’ expectations of quality and value. The growing market share of Toyota means that it is imperative for the Big 3 to improve their product quality and bring new models to market faster. Link

Today is January 2nd, and that means for many people it is the first day that they have broken one or more of their New Year’s resolutions. I never make New Year’s resolutions. Why? They appear to be jinxed, destined for failure given the number of resolutions that are broken. I know my gym will be very crowded in January, but I take comfort in knowing the crowds will be much smaller in a few weeks as good intentions go by the wayside!

When it comes to managing the marketing function of your business, do not make New Year’s resolutions. Instead, set objectives, or outcomes, you would like your organization to reach. You can set objectives within the time frame of the year, trimester, quarter, or month. What’s the difference between an objective and a resolution? Three characteristics make objectives good to have:

1. Objectives are Specific – Objectives that are written with a specific outcome in mind give direction to what you want to accomplish. It is insufficient to say “I want to increase sales.” Be specific and state the increase you wish to achieve- 5%, $500,000, 700,000 units, or whatever metric matters most to your business. If objectives are not specific, you have not created accountability for reaching the desired outcome.

2. Objectives are Measurable – Measurability and specificity go hand-in-hand. Write objectives in a way that it can be determined whether the objective was met. For example, do not state “I want to improve customer service.” Better customer service would be a desirable outcome, but how can you measure whether it occurred? Instead, an objective might be to “reduce customer complaints by 50%,” or “I will personally speak with 5 customers each week.” These are measurable (and specific) outcomes that if reached could positively impact customer service.

3. Objectives are Challenging – The purpose of setting objectives is the growth that occurs as a result of pursuing them… even if you do not reach all of your objectives. Objectives must be a “stretch,” providing a realistic yet formidable bar to clear. If you average 100 web site hits a month, it is probably unrealistic to set an objective to reach 2,000 hits a month. Set objectives with the aim of growing your business and having to sweat to make the growth happen!

Be sure to write your objectives. Post them in many different places so that you are reminded of what you have set out to accomplish. Remember, most people (and organizations) do not go through the process of writing down what they want to achieve, so you create an advantage simply by setting objectives that contain the three characteristics identified above.

Good luck on writing and meeting your objectives!

Businesses crave customers, and the thought of losing customers can send shivers down the spines of marketers who work tirelessly to acquire them. While customers are important to a business, are all of them the same in terms of their importance? The answer is a resounding “no.” Some customers are more important than others because they value your product or service more than other customers and are often willing to pay a price premium because of the value you deliver.

Segmenting your customer base can allow you to tailor promotions that can solidify customers’ relationships with your company. A great example is a loyalty program that rewards regular customers with discounts, free products, or gifts. Identifying valuable customers can also be a way to inrease revenues. For example, Southwest Airlines recently implemented two new ticket tiers, Business and Business Select. In particular, the Business Select fare includes double frequent flyer credits, priority boarding, and a drink voucher. The move is an effort by Southwest to appeal to the large business traveler market.

The effects of a move such as the one made by Southwest has potential benefits and dangers. The main benefit is revenue creation. If Southwest sells 10 Business Select tickets on each of its 3,300 daily flights at a premium of $20 over regular fares (a conservative figure), it could potentially realize $240,000,000 in new revenues. This estimate assumes demand for tickets does not change, although Southwest hopes the addition of a Business Select fare will attract new passengers.

The danger is that creating classes of customers can alienate some members of the “lower class.” This danger is particularly relevant to Southwest, a company that built its brand in part on equality among customers (e.g., no reserved seats and open boarding process). A move to segment customers could create a backlash of negative response, which has happened to Southwest. This possibility must be considered, and management has to project whether the backlash will be short lived or create negative goodwill that hurts the company.

The definition of your business and brand in the minds of customers is crucial to marketing success. A recent article in Advertising Age by marketing guru Al Ries illustrates how defining your company by the product category in which it operates can confine future growth. He chronicles the slow demise of Eastman Kodak, a company that achieved status as a brand icon in the photography category. But, as film gave way to digital photography, Kodak has been left to fight to regain relevance in the minds of consumers.

Ries’ article reminds me of the often used example of the decline in the American railroad industry. Many people believe railroads lost their competitive advantage over airlines not necessarily because airplanes can deliver people faster. Instead, railroads lost their competitive advantage because they failed to understand they are not in the railroad business, they are in the transportation business! Their success depends on meeting the transportation needs of businesses and individuals; trains just happen to be the means by which they make it happen.

Define your business in terms of the benefits you provide, not the type of category or industry to which you belong. Technologies and tastes change, a fact that can seriously threaten businesses whose operations are not guided by the consideration of the benefits people want from products or services they buy. Categories may come and go, but if you are in tune with customers’ needs and wants you will be in a better position to change along with them.

The battle for market share in the beer category has been fierce for many years. The latest move in this category may be the boldest yet: Miller and Coors are forming a joint venture in the U.S. The aim of the venture, known as Miller Coors, is to combine resources to better position their brands to compete with category giant Anheuser-Busch. Savings will be realized and efficiencies created in marketing and distribution. It is expected that the joint venture will also be beneficial in terms of strengthening relationships with retail partners for all brands involved.

This move couldn’t come at a better time for Miller and Coors. A-B’s market dominance makes it a never-ending uphill battle to take away market share. Also, the beer category has seen its share of total alcohol consumed slip as consumer tastes have shifted toward wines and distilled spirits. Today, all beer marketers are challenged with remaining relevant with consumers. Miller and Coors stand a better chance of success as a result of their joint venture. Link

Cerebrus Capital Management, which recently completed its buyout of Chrysler from Daimler, grabbed headlines by naming former Home Depot CEO and GE VP Bob Nardelli as its CEO. It is unusual for an auto manufacturer to go outside the industry for its top leader. It’s even more noteworthy that Cerebrus tapped the polarizing Nardelli as its leader. While at Home Depot he led the company to impressive earnings results, but the stock price languished and he alienated shareholders and employees alike with his management style. Customer service declined markedly during Nardelli’s tenure as many consumers preferred the atmosphere and service offered by rival Lowe’s. Link

Bob Nardelli might be a good fit for Chryler in terms of strong management of costs and production issues. But controlling costs doesn’t sell cars, style and reliability sell cars! Chrysler has had success in recent years with the PT Cruiser and the Chrylser 300, but it does not have the market presence that Toyota, Honda, Nissan, or even the other US auto brands have. If Chrysler can define a relevant point of difference to consumers, it may have a chance to succeed provided the company backs up its position. A recent move to offer lifetime warranty on powertrains is perhaps one way Chryler can set itself apart, especially from its domestic competitors. Without a relevant position, the brand is likely to remain in neutral.

A study by researchers at Iowa State University reveals that women wield a great deal of power in the home. The study’s researchers were quick to point out that their findings go beyond the amount of communication initiated by wives, such as the popular notion that wives talk more than their husbands. Rather, it is the significance of the issues being communicated and the finding that husbands are often receptive to going along with the ideas communicated by their wives.

These findings are counter to the traditional view of the “lady of the house” having a lesser role in making household decisions. The marketing mindset has been to focus on reaching the male head of household given that he is often the primary provider for the home. The assumption has been that the leadership role of the male wage earner extends to taking the lead on deciding how money is spent by the family. However, it appears that in today’s household consumption decisions are often a joint venture between husband and wife, with many decisions made based on the wife’s influence.

So, rather than believing wives are relegated to handling certain household purchases (food, clothing, and home furnishings), marketers must consider every purchase situation and seek to learn more about the dynamics of the buying decision process in the household. Whether it be complex purchases such as health care services and automobiles or more mundane purchases such as casual dining and entertainment, the “traditional” role of wives in making these decisions no longer applies in many households. Marketers that respond to the more proactive role of women in the household could reap benefits from their efforts. Link