Posts Tagged ‘Competitive Marketing’

I watched the 2nd televised leaders’ debate the other evening and was struck by the maturity of some of the competitive marketing campaigns conducted by the UK’s political parties.

(Please get through this rather turgid and wordy description of the state of current political debate in the UK – there is a marketing-related point to this.)

Here’s the long-hand description of the most significant ideological and tactical difference between the two main parties contesting the UK general election.

To those readers who are not familiar with the subtleties of UK politics we have an incumbent government formed by the Labour party. The majority opposition is formed by the Conservative party with the minority opposition coming from the Liberal Democrats. There are also a number of fringe political parties representing varying degrees of extreme views and specific geographic areas.

A significant difference in ideology between the Labour and Conservative positions is found in their approach to the method and timing for addressing the massive budget deficit that the UK has since borrowing to prop the economy up. The Labour government proposes to increase individual and corporation National Insurance (NI) tax payments which is a secondary taxation levied on earnings in addition to our Pay as you Earn (PAYE) income tax. The Labour government argues that this taxation is needed in order that the country can start to pay off borrowing. The Conservative opposition agrees that there is an urgent requirement to bring down the deficit BUT they believe that this money can be found by cutting fat from what they see as a bloated government.

These productivity savings, they argue, will more than equate to the money that would have been raised from the increase in NI. The labour goverment disputes that this level of saving can be achieved through productivity savings and say that services will suffer as a result. The Conservative opposition refutes this. And so we have some real differentiation between the parties’ policies..

The problem that both parties have, as I hope I’ve proved with this rather dry analysis of UK political prattling, is that the electorate at large finds this sort of debate boring, complex, difficult to break down and of little tangible importance to them. It’s just an inscrutable academic discussion between people that they’re not really sure they trust.

What has this got to do with a technology marketing blog?

Jobs Tax

The Conservative opposition has encapsulated this entire argument into a single, easy to use, easy to remember, difficult to refute and highly damaging phrase – “Jobs Tax”. The term has become the banner under which the Conservative opposition has united behind and which they use to succinctly describe the key difference between themselves and labour and the main benefit one would enjoy if one were to vote for them. All senior members of the Conservative party election team have obviously been drilled to repeat these two words ad nauseum,

They claim that Labour’s “tax on jobs” will result in companies hiring less people, laying off  more people and ultimately slowing down economic recovery. As proof they have enlisted a large number of business leaders who are willing to say that if the Labour government is re-elected then jobs will be lost through this “jobs tax”.

Without betraying any political leanings whatsoever, I have to say that this is a well executed positioning campaign and a wonderful example of competitive depositioning. It takes the power of a “competitor’s” feature, uses the energy with which they promote this in the market and turns it against the competitor and to their own advantage. Every time that the Labour government “advertise” their NI policy, large swathes of the electorate deposition this in their minds as a “jobs tax” which they associate as being a bad thing.

What effect this will have on the result I do not know but I have to applaud the spin doctors (not something I am given to doing lightly)  behind such a nifty piece of competitive marketing.

Danny Goodall

I hope you like the alliterative heading for the blog which was born from some work I’ve been doing recently for a client.  I’m not sure that diffident is exactly the right word but there was no way that I was going to ditch it when it looks so beautiful set against all those “diff” words.

Anyway, I was struck recently by the reluctance of some people to fully embrace the concept and importance of aggressive differentiation.  Whilst I’ve long understood that different types of people reach decisions about products (and lots of other things too) in different ways based on our bias towards one of the following psychological functions (Intuition, thinking, feeling and sensing), I’ve seldom before encountered this on the vendor side of the marketing battle.

I’m certainly not sitting in judgement on this.  On the contrary it has made me look carefully at the way I work with my clients moving forward.  My client has a very strong business and is growing at an incredible rate but they are starting to encounter stiff competition hence my involvement.  I’ve been working on strategies to help to grab a position in the market for them that will undermine their competitors and am pretty pleased with the results.  It’s been a great project and I’ve really enjoyed working with them, they are top people and have great products.  The problem lies in their reluctance to stick out their chest, beat the drum and proclaim their greatness.  They are, I guess you would say, corporately shy.

It made me dust off my copy of Differentiate or Die by Jack Trout to review the psychology of differentiation but this time from the perspective of the vendor.  It set me thinking there is no “one” way to build differentiation strategy.  Whilst it’s important to be able understand the behaviour of your target audience, it’s also important to ensure that you are happy with the chosen strategy and that it sits well with the philosophy and perhaps even the ideology of the company itself.

For example could Company A, staffed and populated by conservative and modest management feel comfortable going to market with a message of “We’re different from Company B because we do X better than them”?  It’s not an easy step for them to take.  The opposite of this would be to expect a vendor who really understands competitive differentiation such Oracle to say “Test our product and it will speak for itself”.  Whilst this might be true a company like Oracle will never turn up the opportunity to thrust the differentiation dagger into the chest of the competition.

Somewhere in the middle lies the truth I guess.  There is immense credibility, not to mention the moral high ground in looking to let your product win the battle for you.  But equally, aggressive marketing by aggressive competitors can cause you to be de-positioned in the eyes of your prospects such that they think they know where you are positioned and won’t even bother to evaluate the product.

So I’m going to cover this subject in a series of short blogs taking a look how differentiation works from a psychological perspective and how this translates into corporate psychology.

Danny Goodall.

Part 3 – Sell Differently

I’m continuing this series of blogs here by looking at the techniques that software vendors can use to create the “illusion” of differentiation in markets where technical standards have led to little material product difference.

Perhaps the most obvious differentiator between organisations that have “broadly” similar technology, and an area that particularly hurts smaller or less well established software vendors, is the vendor’s approach to selling.

Which audience strata do you aim at and what do you say to them?

At its most crude this can be the difference between Vendor A talking to a technical audience about the features of Product A whilst Vendor B is talking to line of business managers within the same company about how their product will provide some business benefit or other. Two similar offerings, with similar capabilities being “sold” in very different ways to very different parts of the same organisations.

The benefit of selling at a business level is enormous.  Decisions get made at that level, budgets get signed off at that level and enterprise-wide relationships get built at that level.  However, the difficulty with this approach, especially for smaller or less well connected vendors, is that gaining access to senior management outside of the IT domain of their prospects’ organisations is very difficult.

It takes years of building credibility and demonstrating proof of delivering benefits (reducing risk, Increasing profit, saving time,removing cost, etc.) to buy a ticket to the business-benefits ball.  Unless you’ve paid your business benefit taxes, have documented how you’ve helped deliver benefits and have an army of references willing to stand up on your behalf you’re likely to not be taken seriously.

In addition, in my experience, the skills that a sales exec needs to credibly describe the features of a technical proposition are usually mutually exclusive from the ones they need to engage a senior C-level exec in a discussion about the business issues that keep them awake at night.

So where to start if you’re a technology-focused vendor looking to sell differently?

Well it’s a journey and will involve dramatically changing the way your organisation thinks, behaves and looks.  Many of your staff will have to undergo a dramatic transformation and many won’t make it (especially the sales team).  Then you need to look at developing marketing messages for IT Business and the Business audiences.  You’ll do this by talking less about specific product capabilities and instead aligning yourself with where the prospect wants to be AFTER they’ve done business with you.

What are their pains, what are they looking to achieve, how can you help them do this and what proof can you provide that you’ve done it before?

The marketing materials and programs that support such a business audience-focused sales approach are very different too.  And whilst this has a significant impact on the structure of the marketing organisation, perhaps the biggest challenge is that just because you’re now selling to a business audience doesn’t mean that you stop marketing to the technical audience.  We still have to convince these guys that we’re able to do the job. So now you’re waging a marketing battle on two fronts and this means significantly greater investment.

But before embarking on this approach you should ask yourself whether you’re committed to the journey.  I’ve worked for, and with many organisations that have seen “selling to the business” as the holy grail, the panacea to address their competitive losses and their inability to control the sale.  But embark on this journey without fully committing to the changes it WILL have on your organisation and it will lead to a bloody disaster.  I speak from bitter experience.

Well that’s about it for the “selling differently” approach to differentiation in a homogenised market.  The benefits of selling at the business level while your competitors are talking to “minions” in the technical side of the business are enormous, but as I’ve mentioned about it’s not an easy journey.

I’ll cover some more differentiation techniques in coming blog posts.

Danny Goodall

At the risk of sounding like I’m repeating myself, once again I’ve just got off the phone from a friend and ex-colleague. This is a different friend and a different conversation to my last blog entry, and this time he was looking to do me a favour rather than picking my brains for free.  Which was nice.

Anyway, after a while we got on to the subject of how sales of his organisation’s SOA, ESB and BPM offerings were going.  A mixed bag was his response.  “Where it’s good it’s very good and where it’s tough it’s very tough” was his view.

My mate is in sales looking after a geographic and industry-focused region for a large integration/SOA infrastructure software vendor.  One issue he has is how to take his products to market in a specific industry sector.  In this case energy and utilities.  His concern is differentiation.  As he put it to me “How do you compete when all of the other vendors can do what you can do?”.

It’s a good question and one that I touched on briefly in these hallowed pages earlier in the year.  It’s a phenomenon that I refer to as “standards-based marketing” – a tongue-in-cheek description of what happens to an organisation’s marketing efforts when they are taking technology to market that is driven and governed by technical standards.  Effectively as the market matures, so all vendors in the segment meet the standards which in turn means they can all do broadly the same things which makes being unique, from a marketing perspective, very difficult.

Or put another way, Goodall’s third law of competitive marketing states that:

“As the impact of software standards bodies in a market segment increases, the probability of nil vendor-to-vendor differentiation approaches one”

…or

“I’ve got generate leads and my marketing campaigns look like they could’ve been written about my competitors.”

Actually there is no Goodall’s third (or first or second for that matter) law of competitive marketing.  But it did make me think that I should spend some time in these pages addressing this area.  So over the next several blog postings I’m going to focus on some of the differentiation tactics I’ve seen and used to create that illusion of differentiation when in reality your competitors are in fact your evil identical twin.

Danny Goodall

The Primary Competitor or Alternative

I’ve been looking at the positioning statement In this series of blogs.  This entry will focus on the UNLIKE [the primary alternative or competitor] element.

So just to recap here we’re constructing a natural language statement that captures a number of key strategic marketing positioning elements.  This particular element in the positioning statement above is where the ideal customer’s alternative to our product is defined.

First let’s see this element in the context of the complete positioning statement.

FOR [the ideal customer] WHO [has this specific pain or problem] OUR [product name] IS A[product category] THAT PROVIDES [this main benefit and reason to buy] UNLIKE [the primary alternative or competitor] OUR PRODUCT [has this unique selling proposition].

Whilst this sounds straightforward – “It’s just the number one competitor, right?”, it actually requires a fair bit of thought, analysis, and planning.  This element effectively recognises that the ideal client has a choice as to how they will go about solving their problem.  The primary alternative from the ideal client’s perspective is captured in this element.

In my experience this element is nearly always paired with the OUR PRODUCT element that follows it in the positioning statement.  The combination allows the UNLIKE element to define the primary alternative or competitor and the following OUR PRODUCT element outlines the Unique Selling Proposition benefits that differentiates “our product” versus the primary alternative.

For example:

UNLIKE alternative approaches to managing risk OUR PRODUCT not only manages risk but also reduces your corporate governance budget by up to 15%.

This example assumes that the ideal client believes that they have a number of “alternative approaches to managing risk” we then go on to differentiate ourselves versus these alternative approaches.

I have seen and used many different approaches for this element and it is critical to understand who or what we need to be “better than”, or at least “different from” to convince the prospect to put their business with us.  The key question to ask here is:

What does my ideal client perceive as their primary alternative (to my product) to solve their pain, need or desire?

This is key question.  Many mistakes that I see in competitive marketing start by getting the perspective wrong here.  It is critical to think from the prospect’s perspective and not from one’s own organisation’s perspective.  Many marketing organisations typically think:

• “who do we compete with here?”
• “who has the largest market share?”
• “who has a product that is most similar to ours?”
• “who do the analysts think we compete with?”

Each of these approaches is internally-focussed and whilst answering them will certainly help with competitive marketing, the answer might not be that important to the ideal client.

Approaches that I’ve used or seen for this element include:

• A key competitor
• A key competitive product
• A number of key competitors (it’s better to have a single defined alternative)
• A key category of competitor
• Other vendors’ approach in the same market category
• An alternative approach to solving the problem
• Inaction – i.e. doing nothing

Examples

• UNLIKE ACME Corp…. (key competitor)
• UNLIKE ACMEProTurbo… (key competitive product)
• UNLIKE ACME Corp and XYZ Inc…. (multiple key competitors)
• UNLIKE relational database vendors…. (a key category of competitor)
• UNLIKE other cloud computing vendors…. (other vendors’ approach in the same market category)
• UNLIKE using spreadsheets to manage data…. (an alternative approach)
• UNLIKE outsourcing your data management needs…. (an alternative approach)
• UNLIKE managing information manually as you’ve always done…. (inaction – doing nothing)

Real world example

(This section for those interested in the SOA and ESB market only…)  In this series I’ve used an example positioning statement from Microsoft’s go to market strategy for their ESB product.  Here I’ve used our REPAMA methodology to reverse-engineer the positioning statement for Microsoft’s ESB Guidance product from their outbound marketing communications, Microsoft apparently perceives the primary alternative to be:

UNLIKE traditional ESBs…

So Microsoft is using the “other vendors’ approach in the same market category” strategy listed above.  This suggests that Microsoft believes that their prospect’s primary alternative lies with other ESBs and also that there is something about Microsoft’s approach to the ESB category that sets it apart from “traditional” ESBs.

So being clear about the primary alternative or competitor is important as is thinking from the prospect’s perspective and not from the organisation’s.  That is the UNLIKE element covered and in the final blog entry in this series I’ll be looking at the “OUR PRODUCT [has this unique selling proposition] element.  <More information can be found in the Lustratus REPAMA Guide here>

Danny Goodall.

BTW
It should be borne in mind that Lustratus’ focus is on the high-tech software industry and whilst positioning as a concept will transfer to just about any business to business industry, many of the classifications we use assume that we’re dealing with a technical audience for infrastructure software.  So please bear that in mind for your own industry.

Whilst I couldn’t find any reference to restrictions on the use of the Spot The Difference caption used in this blog entry, I wanted to ensure I provided a link back to its original location.

The Main Benefit or Reason to buy

In this series of blogs I’m exploring the format of the positioning statement that Lustratus uses in our REPAMA research methodology.

Today I’m looking at one of, if not the most important elements.  This is an element that in my experience vendors often find the most difficult to define about their own offering.  This is the “THAT PROVIDES [main benefit]” element.  First some let’s look at how this element fits into the context of the complete positioning statement.

FOR [the ideal customer] WHO [has this specific pain or problem] OUR [product name] IS A[product category] THAT PROVIDES [this main benefit and reason to buy] UNLIKE [the primary alternative or competitor] OUR PRODUCT [has this unique selling proposition].

In my experience, this positioning element is often watered down so that it lacks any real convincing power.  The purpose of the THAT PROVIDES element is to describe the main benefit that your product or service provides your customer.  It details the value that your target customer can potentially derive and should be compelling enough to provide a reason for them to buy from you.  Instead of this, I often see this element used as a place to add another ho-hum feature or an also-ran benefit.  The question that should be asked is

“What benefit or value will compel the target customer to want to go through the process of buying from you?”

Whilst this is not a hard and fast rule, the THAT PROVIDES element is often paired with the WHO [has this specific pain or problem] element of the positioning statement.  So that the WHO section  sets up the main pain experienced by the target customer and the THAT PROVIDES section often outlines the solution or antidote to the pain.

It’s worth stressing one more time that the positioning process should produce a description of your overall approach to the market so that a target customer feels that you, and you alone a) understand their problem b) have the most compelling solution.  Ideally, they should be left feeling that you went into business simply to solve their specific problem.

Examples

• THAT PROVIDES a reduction of up to 20% in data centre costs
• THAT PROVIDES a 15% reduction in the time to bring new products to market
• THAT PROVIDES complete alignment between corporate objectives and IT infrastructure
• THAT PROVIDES complete, accurate and timely visibility into corporate risk
• etc.

The impact of this positioning element is improved dramatically If the benefit can quantified or at least expressed in detail.

There is often a temptation when creating this element to fill it full of technical features or justification.  This is especially true of early market technology companies.  Whilst it is a generally held rule that it is better to concentrate on what the product leaves behind (i.e. the benefit), it is OK to focus on the technical value of the product IF the target customer or at least the target audience within the target customer, is highly technically-focused.

(This section for those interested in the SOA and ESB market only…)  I’m using an extract from one of Lustratus’ REPAMA reports to illustrate “real-world” positioning statements.  Here I’ve reverse-engineered the positioning statement for Microsoft’s ESB
Guidance product.  According to their outbound marketing, Microsoft sees the following as the main benefit they provide their target customer (BizTalk developers):

THAT PROVIDES an infrastructure for enabling service oriented architectures

This example falls into the “vanilla” category and certainly doesn’t really cut it as a compelling reason to buy.  That said, for the target audience (technical) within the target customer (BizTalk Developers), it represents a clear and (albeit overtly technically) compelling proposition.

OK so that was the THAT PROVIDES section. In the next blog entry in this series I’ll be looking at the “UNLIKE [the primary alternative or competitor]” element.  <More information can be found in the Lustratus REPAMA Guide here>

Danny Goodall.

BTW
It should be borne in mind that Lustratus’ focus is on the high-tech software industry and whilst positioning as a concept will transfer to just about any business to business industry, many of the classifications we use assume that we’re dealing with a technical audience for infrastructure software.  So please bear that in mind for your own industry.

lustrat

If I were to write in this blog

“18th century art has always been my passion.  It’s my belief that since the mid-18th century, art, as captured by oil on canvas, has never been surpassed in terms of quality.”

You may ask what on earth that has to do with you – a visitor to a blog about high-technology marketing.  You’d be right to question it because I’d obviously written the wrong thing to the wrong audience.  My message may have been exactly what I wanted to say but I chose the wrong audience to deliver it to.  As it happens, I’m afraid I’m a bit of a philistine when it comes to art appreciation – but hopefully you get the point.

This happens a lot in the marketing world. Many hi-tech vendors are confused about who their audience is or should be for outbound communication.  Others are not confused but through desperation, they will simply throw out as many credible messages as they can, hoping that some of it will stick with someone.

As we know, effective communication comes from providing the right level of information to the right audience.  Just because a message “works” or seems credible, doesn’t mean it the right message for any audience.

When marketing high-tech products, you have a number of ways of communicating to the potential end user of the product.  But first you have to understand how your target audience is segmented and what each segment wants to hear.  Lustratus refers to this as the audience strata and we broadly categorise the segmentation for end-user consumers of IT products as follows:

IT Technical - Represents the overtly technical disciplines within the IT organisation that have no management, strategic  or commercial responsibilities
IT Business – Represents the  higher management levels of the IT organisation that have strategic and/or financial responsibilities
Business – Represents the line of business functions outside of the IT organisation

Both the language and the type of communication used at each level has to be directed specifically at the needs of the individual audience stratum.  Take the example below.  If I was communicating to the Business about our new product called “Product A”, would I write?

“Product A complies with the latest duplex standards (KPT2, RRI v4) and is able to perform the Smithson Benchmark is 18.2 seconds (19.2 with override).”

Or if I was talking to the IT Technical layer, would I write?

“Product A will make your software development team productive in a quarter of the time needed for traditional products”

Finally, is this of relevance to the IT Business layer?

“The risk of corporate governance failures is reduced dramatically with Product A.  Internal systems can be brought up to date quickly as Acme Ltd. found out.  They implemented a complete change of governance systems in less than 2 months, removing risk of failure and resulting in a 20% cost saving.“

The answer to each of these questions is obviously “no”.  Whilst each of these messages may be valid for the capabilities of Product A, we have to understand the specific needs and drivers of each level of audience.  The question as to whether one vendor can legitimately communicate to all three layers is moot, but selecting the most important audience constituent and developing messages that specifically talks to them is key.

After all whilst each audience constituent above might be able to understand the implications of the statement, in their day to day jobs these statements add nothing, solve nothing and give no value.

It’s not easy for early market or innovative companies to understand who their audience should be.  As a vendor grows and evolves so the audience that they need to reach will change.  A useful technique to ensure that you are saying the right things to the correct audience layer is to monitor closely what your competitors do.

The diagram below is taken from a recent REPAMA Segment Analysis Study (the vendor names have been changed to protect the innocent).

The Market Element Distribution diagram shows the priority of each audience strata for each of the different vendors in the study.  As you can see, there is a high degree of correlation between the different vendors as they are all very close to the market mean. If I were a vendor in this space, I would have two choices.  Either I assume that each of the vendors has got it wrong and I should aim at a different layer of audience.  Or I believe that my competitors each understands who the audience is, and I aim for the same category.

Either way understanding who will be most receptive to the value you can provide is essential.

All of the above will only makes sense you you if I’ve done my job properly.  That is, if I’m right that the average reader of the Lustratus REPAMA blog is a right-handed, 32 year old male product marketing manager living and working in the US.

So if you’re an art critic, apologies but you’ve come to the wrong place.

Danny Goodall