In recent years, management has enhanced its vocabulary with words and phrases such as "downsizing," "career regression," "fiscal consolidation," "asset realignment" and "negative career development." The words were developed by some MBA-types to say that a company has missed sales projections, fired people and made cutbacks.
"Chainsaw" Al Dunlap gained a reputation and boardroom fan club for being able to slash and burn, seemingly without a second thought and without looking back. Many felt he got what he deserved a few years ago when he was fired in a less than diplomatic manner. An increasing number of CEOs agree with what he he did and only wish they could do it as easily.
There's a new business climate and sense of urgency in every sector of industry and commerce. The "good old days" are gone forever. It wasn't that many years ago that nearly anyone could make money in business and consumer marketing. Almost no one could fail. Or, to put it another way ... in a hurricane even turkeys can fly.
Well, the hurricane has passed. It has changed the look of the entire landscape. Our emphasis on product innovation has placed us at the
mercy of a constantly changing customer base. Profit margins for "brands" are being driven down by the high cost of marketing (PR, sales literature, advertising, promotion, etc.), defensive product line extensions and the competition.
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In this new environment, management is confronted with the need to survive in conditions that they often don't understand, and generally cannot control.
The New Marketing Strategy
When people think they have a marketing problem, the first solution isn't a barrage of news releases, an editorial tour, a brochure or a corporate ad campaign. Wrong.
The power of the market has shifted and you're getting the short end of the stick. Instead of giving your management the communications activity that worked in the past, you need to help them do something dramatically different, like targeting new or different prospects, refocusing the distribution/channel strategy, finding new applications for existing products--anything to create a new model.
In other words, a new look at strategic marketing is needed. Strategic marketing isn't bogged down in the preconceived concepts we have of management and marketing. Instead of focusing on R&D, produc-
tion and finance, everything that is done and said needs to focus on the market and customer.
Some people will take this idea and run with it, only to fail because they missed the point. The new orientation isn't to sell something more to a customer. That kind of thinking dooms hundreds of firms every year, and it can destroy you. The destruction comes when you aren't flexible enough to move from one marketing opportunity to another ... quickly. Or when you have too much tied up in production capacity investments, long product development cycles, or limited sales coverage.
The people who are going to succeed in the years ahead are those who take a new look at new product development/product usage. Simple ...more
product enhancements to extend the product line, or those that are only slight improvements over existing products will not make it in the new marketplace.
In the past few years, we've seen this type of new product fail to attract customer interest again and again. Furthermore, it can be easily copied by the competition. This means that there is little done to enhance product differentiation or to increase profits.
Shorter Product Cycles
Instead of relying on their production facilities for answers on what should be sold, management needs to look outwardly to anticipate what the market needs and determine how to develop and produce it. Success is further complicated by the fact that product life cycles have been rapidly declining from five years to two years to six months or less.
Take the PC industry, for example. Today, companies have to operate on the 4-2-3 schedule. They must develop the product in four months, move it into/through the channel in two months and clear the channel in three months to prepare for the next system. Your notebook computer is obsolete before you take it on its first trip. There is absolutely no opportunity to build an individual product's identity or following.
Market research and new product development are an integral and ongoing part of your organization's activities. The new product development/roll-out process has to work with pure precision to ensure maximum results. These changes lead to other changes in the organiza-tion's marketing communications philosophy and approach.
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As firms becomes more customer-oriented, there have to be greater and closer ties with customers. Emphasis will be placed on customer services such as training, product support and maintenance.
New Relationships
The lines between manufacturers, distributors and dealers will be less distinct. These partners now need to join together to help each other meet the customer's ever-changing needs. People who refuse to recognize and accommodate the change will find themselves on the outside looking in. Firms that succeed will be those that are adept at establishing, building and constantly reinforcing new relationships and their customer base.
In the past, we've given a lot of lip service to niche markets, but as industry matures and customers become more definitive in their needs and demands, every market will be composed of hundreds of niches. Manufacturers and suppliers who become more adroit at niche marketing will find it is a means to increase sagging profits.
Niche Considerations
Savvy management teams of organizations will:
* Identify and prioritize niche markets based on the company's investments and the potential return on that investment
* Determine what products and services will be needed by the niche markets which are best for the company
* Tailor production/service capabilities to meet the niche market's needs
* Develop totally new marketing and communications strategies, as well as distribution avenues, to economically reach the niche market.
* Develop and refine feedback mechanisms to more rapidly determine the degree of acceptance of the products and to forecast changes within the niche market
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Niche marketing will mean a whole new way of doing business and will have to be constantly refined and redefined because no organization will be able to do everything. Instead, there will be an increase in strategic alliances to meet the unique needs of the smaller niche markets.
The Small Business Niche
In the past, everyone wanted to sell to the Fortune 1,000. Firms are now realizing that there may be 1,000 very large firms, but there are also over 40 million small businesses/home businesses (SOHO). For example, there have been 250 million personal computers sold to date, and most of them are found in SOHOs that are involved in hundreds of niche markets.
Throughout the PC industry's brief history, companies have launched major efforts to win over the seemingly very large home computer market. Their goal has been to make the computer as common as the TV set in the home. Despite the fanfare, less than 40 percent of the homes in the U.S. have computers. This figure has remained relatively constant for more than six years.
How about all of the firms that are going to enjoy giant revenues selling the consumer the benefits of surfing the Web at home? There's a slight problem, since less than 50 percent of the home computers have modems, and without modems you can't access the Internet.
Promoting a bigger, better, more advanced, faster and sleeker solution for businesses or consumers isn't the whole answer, because you're talking about their money and their investment. The illusion of a market is much like seeing a mirage ... it's never as satisfying as the real thing.
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Better, Cheaper Isn't Enough
Being better, cheaper, or faster isn't as important as customer service and support. Again, it means that companies have to shorten the channels of distribution. They will not only be closer to their customers to provide faster and better solutions to problems, they will also be able to obtain
better and more accurate customer feedback.
Within the organization itself, it means that the standard organiza-tional chart will soon be a thing of the past. Engineering and R&D will no longer be able to make the decisions on the new products because such products will have to be looked at much more closely by finance, marketing and communications. Manufacturing has to develop the ability to change its output as quickly as the market changes. Sales and marketing will have to more closely coordinate their activities and input from customers and prospects with the other departments. There will be a much stronger interrelationship and interresponsibility in every organization.
Communications is becoming the tie that binds.
The Winds of Change
The hurricane has passed. The turkeys were either dashed on the rocks by the high winds, or they are once again walking around looking up at the skies. And the skies are ruled by the hawks and eagles who are able to pinpoint their targets from a distance. They strike quickly, silently and with deadly accuracy.
Even here, the hawks and eagles will have to be able to react quickly and decisively to the unseen, ever-present, wind conditions. But at least they won't have to worry about bumping into a turkey that had no real idea of what to do when it was airborne.
# # #
IN A HURRICANE, EVEN TURKEYS FLY - To learn more about this author, visit Andy Marken's Website.
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