Shifting your Marketing Strategy from Products to Customer
Topics: Focus Defining your Center of Gravity, Getting a Perspective to map your Marketing Strategy, Competitors, the Bottom Line.
Author Niraj Dawar’s [Professor of Marketing at Penn State Univ] book – TILT – is a compelling explanation as to why & how companies must shift their “value creation” efforts from the upstream activities of Product development to the downstream Marketing activities in order to gain sustainable competitive advantage. In light of maturing markets with increasing numbers of products clamoring for limited shelf space, this is a big challenge. The book is divided into four parts.
Part 1, “Defining your Center of Gravity,” Changing “focus” from Manufacturing to Marketing. This part is a veritable history lesson in how companies have focused on leveraging economies of scale to optimize production costs. Mass production resulted in cost bulge shifting to downstream activities – how the product is handled by consumers along the entire path to purchase. Author purports that, sustainable competitive advantage today will result by finding the value of “how” consumers buy products – not simply how efficiently they can make product. The strategic question to find the value in the downstream is by asking what costs & risks can be reduced for customers in their search for, purchase of, usage & disposal of your product. This becomes a launch pad for innovation. In the end, the market is the ultimate test. Staying focused on upstream advantages limit competitive advantage to focus completely on product costs or better products. Competitive advantages from downstream efforts are less prone to erosion by creating a reason and trust that consumer’s risks and costs are reduced.
Part 2, “View from the Perch (perspective] & Mapping Market Networks,” gives concrete examples of how unexploited knowledge can be a company’s greatest & most under-valued asset as a source of unique insights – only they possess – that are a starting point for creating the downstream value for customers. Companies can begin to see new value in customers by performing business reviews to give them a snapshot of how they are performing against competitors and in the marketplace. This service is something that customers don’t know and can’t find out on their own because of constraints, such as too narrow a focus on their own experiences. Assembly of data points will uncover predictable patterns & trends + even blind spots – to which your company can provide unique solutions. This results in a relaying & connecting platform to discover what else customers want, and reducing their cost of searching, evaluating, comparing & decision making – thereby reducing risk of choosing the wrong product. Ultimately a company stands to gain customer engagement & market stature by becoming the pipeline through which customers learn the larger context of their business, find solutions & avoid dead ends.
Part 3, “The Deep Dive: [The Competitive Playing Field inside the Customer’s Mind],” explains the down-stream focus of a brand. It weighs the value of being first-to-mind vs being first-to-market – as being a sustainable advantage. Being first-to-mind is based on the ability for a company to align their brand along the criteria that customers consider important. Since no consumer’s mind can absorb all the vast info in the marketplace, there exists a serious imbalance between available information & available mental processing. This principle of cognitive economy drives the fact that focus on brand, with strong associations to well-defined criteria of purchase, tend to win over the long term as the brand itself becomes the criterion for purchase. Associating brand with criteria of purchase is the first step in influencing customer behavior. The following strategic goal is convincing – as large pf a segment of the market as possible – to use cutoff criteria that favor your brand. Next is to ensure membership of the set remains as exclusive as possible in terms of size & composition. Once inside the consideration set, the game changes and requires constant evaluation of the purchase criteria to ensure your products remain relevant.
Part 4, “The Bottom Line,” The Author’s focus on downstream competitive advantage destroys myths in marketplace wars such as:
- To win against competitors you must have a better product;
- Competitive advantage is only gained by listening to customers and giving them what they want;
- You can’t choose your competitors;
- Innovation always means better products & technology;
- the Technological improvements drive the pace & evolution of markets; and
Further TILT marketing introduces & leverages the ideas of network effects & cognitive inertia as the reasons that downstream competitive advantage is sustainable. Finally, Part 4 discusses how an organization must fundamentally change their strategy from the top down, focused on a focus that resides in the downstream, and organize in order to focus on defining why customers buy from you.
Conclusion: TILT is explained by numerous business cases of those firms that stayed so stuck to their upstream efficiencies, that they failed to stay relevant to their consumers – leaving themselves prey to those companies that understand that providing “value” is in the down-stream. It has checklists of critical questions at the end of each chapter to help you evaluate where your firm is on the fulcrum of upstream vs the downstream continuum. This is recommended reading for new product development (NPD) professionals – who need to incorporate downstream value in their efforts to gain sustained competitive advantage.
Comments: What Marketing Strategy have used that has the best results?
from Product Development & Management Association 14 May 14 enhanced by Peter/CXO Wiz4.biz