Niche Marketing Matters

I just finished my new book “Déjà New Marketing: Increase Sales with Social Media, Search Marketing, E-mail Marketing, Blogs, and More”.

It is now with the publisher and should be available in 120 days or so. The book took 3 years to write and is an update to my first book, “First, Best, or Different”. This one is more search marketing and social media focused.

I will keep you updated on its progress.

John Bradley Jackson
© Copyright 2009 All rights reserved.

A basic teaching of Zen Buddhism is that things are always changing. Just because we can see, hear, or feel something today does not mean that it will be there tomorrow. Essentially, nothing is permanent.

And, so it is with our economic slowdown or meltdown or whatever you want to call it. Just because it is bad economy today does not mean that it will stay that way. Zen Buddhism suggests that if you are aware of something, it is actually leaving or maybe gone. It is or will be history. And, history is not relevant.

Thus, the deep recession trumpeted by the media with dreary headlines about layoffs, corporate losses, and blame is a lagging indicator. When the media rants in unison about the lousy economic condition it means that things are actually on the mend or better.

The stock market knows this and will shortly begin a rally like we have not seen in years. But, know that the rally is not permanent.

Just watch.

John Bradley Jackson
© Copyright 2009 All rights reserved.

So how can you differentiate your service or product from the thundering herd? Better stated, how can you create a clear competitive advantage that makes choosing your offering over the others an easy decision?

Michael Porter, acclaimed Harvard strategist, describes a competitive advantage as something about a product or service that is perceived as different or better by the customer. At least, your offering seems different or better enough to make the purchase decision a bit easier. This also helps justify spending an extra dollar or two for this perceived value.

Personalization may be the key for making your offering different from the competition and for increasing your value to your buyers. This personalization could be your competitive advantage.

Increasingly, people want what they want when they want it and no more than that. Why not give it to them?

John Bradley Jackson
© Copyright 2009 All rights reserved.

First movers get all the rewards or so says says the marketing myth. Don’t get me wrong. Being first can be a wonderful thing, until the other guys find out about what you are doing. It is my observation that the rewards are seldom there for the first to market.

Presuming the market is big enough for more than just your firm, it is likely that the competition has been studying the market opportunity just as long as you have. Only they hesitated to go forward and decided to learn from you.

You were the first one to market. You pioneered your way to market like an adventurer hacking your way through the jungle. Customers have been hard to find since people don’t want to take a chance on innovative products or upstart firms.

Building your brand awareness was expensive since you were not sure who your customer was and was not; given that uncertainty you threw out a big net to find out what fish you might catch. Product definition was “fuzzy” because of the lack of clarity about the customer needs. What about standards? Heck, you wrote the rules as you went. Looking back, it was easy to underestimate the difficulty of the task.

Now enter the other guys who will save money and time, since they won’t have to make the same mistakes that you did. Conveniently for them, you defined the customer opportunity and created the market. Many times the “second-to-market” or “later-to-market” firms make the bigger profits. For example, Apple’s iPod followed Rio and Eiger Labs after the market was created. Both had fully functioning MP3 players long before the iPod hit the scene. Ever heard of them?

Amazon.com founder Jeff Bezos recently warned his workers “being first isn’t necessarily enough.” For the entrepreneur in a smaller market, the impact of the second-to-market players may be less of an issue, but the same math still applies. Being first is expensive and difficult.

My recommendation for those of you who are first in your market is to quickly move on to being the best or different, since being first is seldom sustainable.

John Bradley Jackson
© Copyright 2008 All rights reserved.

A few days ago a good friend of mine asked for my opinion about the recent stock market decline. His 401K had lost over 40% of its value in the last 12 months and the market was in a free fall, or so it seemed. He asked me if he should sell before it was too late.

While I don’t pretend to be a financial adviser, I do know a few things about strategy. Strategy is a long term plan of action designed to achieve a particular goal. Thus, strategy is the compass that you use to make day-to-day decisions, while keeping your focus on your long term goals.

In my friend’s case, his long term strategy was to earn a 5-6% annual return on this 401K hoping to retire in ten years. Capital preservation and safety was a priority. His investment vehicle was corporate stocks and bonds.

Selling on the way down or at the bottom would be a lousy decision for my friend and I told him so. I reminded him that the stock market is volatile and that if he cannot tolerate that volatility he should invest elsewhere.

Despite the recent slide of the stock market, his long strategy had not changed a bit. His long term goal for retirement remained the same and he still had ten years to go before he would make his first withdrawals.

Got a good strategy? Stick with it.

John Bradley Jackson
© Copyright 2008 All rights reserved.

Strategy is an overused and often abused word in the business community. People use the word strategy when they are in trouble or desperately need to change or need do something new. Losing market share and profits falling? Most people will tell you to get a new strategy.

Strategy is a process that is about choice, which affects outcomes. Wikipedia defines strategy as a long term plan of action designed to achieve a particular goal, most often “winning.”

Practically speaking, strategy is driven by long term planning and critical thought and not by reflex action to the ups and downs of the market. Knee jerk responses to an event are better described as tactics.

Tactics are the actual means used to gain an objective, while strategy is the overall plan, which may involve complex activities and decision-making. Thus, changing a price for a product is a tactic. A clever new ad campaign is a tactic. Planning to diversify the company product line by entering new markets over the next five years is a strategy.

The point is that most executives manage tactical activities on a day to day basis while most references to strategy are just lip service. This is because most small to medium sized firms don’t have strategic plans—they just wing it.

And, thus the problem.

John Bradley Jackson
© Copyright 2008 All rights reserved.

When I was kid I had an aquarium in my bedroom that housed dozens, make that hundreds of guppies and neon tetras. They seemed to multiply almost daily and I was quite proud of them. While I enjoyed watching the pretty little fish, I did not enjoy cleaning the aquarium (much to my mother’s chagrin).

The stink got so bad one day that my mom took it upon herself to clean it for me. Her cleaning agent was Clorox bleach, which did a great job eliminating the bad smell. Unfortunately, after the cleaning I had a mass die-off of the guppies and tetras. In a week or so I was left with 5 mutant guppies. As near as I could tell they were all blind, scarred, and unable to reproduce—they also swam kind of funny.

Needless to say, my mother felt horrible. As for me, I learned a lesson from my negligence and the importance of acting now rather than later. The truth is that I am still haunted by the image of the 5 mutant guppies swimming awkwardly in the tank by my bedside. Poor little guys.

Companies can also be negligent and slow to change. Change is hard and companies will often wait until they have to change. Then they are left with little choice but to react very aggressively. Sometimes management will overreact with over-zealous layoffs or they will layoff the wrong people.

With sales declining and profits gone, firms will often call for a “new strategy”, which is business-speak for “make changes now”. While the changes may be needed, the timing is poor. The best time to change a strategy is when things are working, not when things are falling apart.

For example, General Electric takes pride in continuously changing the firm’s strategy. A key to the firm’s success is a constant review and revision of people, practices, and products. While the GE culture can be criticized for being a bit bombastic, it is hard to argue about their resilience. Former GE CEO Jack Welch had a mantra that still resonates in the hallways, “Change before you have to”.

Like the dirty aquarium, firms need to routinely clean house and review strategy. If not, you may end up with a bunch mutant employees scarred by the management’s swinging ax and desperate reinvention.

John Bradley Jackson
© Copyright 2008 All rights reserved.

There are many books written about strategic marketing and the authors seem to delight in making it look really sophisticated and complex. In actuality, strategic marketing is really pretty simple.

Strategic Marketing is about analyzing opportunities while answering three basic questions:

- What might we do?
- What do we do best?
- What must we do?

So, why change your marketing strategy? Most of the time companies change because they have no choice. They are forced to change because of factors such as declining profitability, environmental changes, outright failure, political or legal changes, advances by the competition, socio-economic change, and population shifts.

The word strategy is generally used when people want to change things rather than maintaining the status quo. While there may be many potential marketing strategies, pragmatism generally rules the day and companies will focus on on what must be done to make a profit today.

Generally speaking there are only four types of marketing strategy:

1. Market Penetration Strategy- Sell existing products to existing markets.

2. Market Development Strategy- Sell existing products to new markets.

3. Product Development Strategy- Create new products for existing markets.

4. Diversification Strategy- Create new products for new markets.

Marketing strategy involves the selection of markets and the development of programs to reach those markets. The programs that help reach those markets are venerable 4 Ps of Marketing: Price, Place, Product, and Promotion.

It is really that simple.

John Bradley Jackson
© Copyright 2008 All rights reserved.

“Different isn’t always better, but better is always different.”

- Marshall Thurber, entrepreneur

I like this quote because it sums up my thinking about how customers will buy an offering because of its differences not because it is like another offering. This is true even if the offering is a commodity or is nearly the same as the competition. Invariably, the customer buys because of the product’s differences not because of its similarities.

Think about it. When a buyer is deciding between two seemingly identical products, the buyer instinctively looks for differences in price, quality, or delivery. With some perception of a difference, the buyer chooses one offering over another. The operative word in that sentence is perception.

It is my contention that buyers buy for the following underlying reasons:

• “Needs” are things that you must have to survive and to function; this includes shelter, food, clothing, and medicine. These purchases are easily justified and are basic motivations for a buyer.
• “Wants” are things that are desired, but not necessary such as wanting an iPod. Wants are tougher for the buyer to justify, but people will buy them because of an innate ability to rationalize most any purchase. If I buy an iPod I will be happier and more popular.
• “Desires” are wishes or dreams, which can be powerful motivators. You can desire to be famous and this can motivate you take to action or not to take action. Desires can motivate people to change or modify their behavior. If you lose weight, you will be more attractive and this can help make you famous.
• “Fear” can motivate the buyer to take action or not to take action. Fear can create barriers to success by holding people back from taking a promotion. Or, fear can also keep people safe by keeping them from taking unnecessary risks; if you don’t buy this book, you will not be successful, so you buy it out of fear.

With these underlying reasons driving them, customers then seek to justify their decisions with their perception the difference’s in the offerings available.

The essence of niche marketing is presenting your product as different while fulfilling the buyer’s underlying reason for buying the offering in the first place.

John Bradley Jackson
© Copyright 2008 All rights reserved.

“If everyone is thinking alike, then somebody isn’t thinking.”

- George Patton, US General during WW II

Please extend my apologies in advance to James Surowiecki, the author of “The Wisdom of Crowds”. His best selling book suggests that groups make better decisions than any made by a single member of the group. To this notion I say “bull hockey” (note that I am expressing this opinion as an individual and I belong to no partisan group).

“Group-think” is flawed for a number of reasons. The chief flaw is the raw emotion of the crowd or “mob”. Call it herd instinct, but the weak and intellectually inferior will follow the strong and manipulative. Think of the failure of the crowd to second guess the lunacy of Nazi Germany during World War II. Of course, fear was a factor for many who blindly followed the crazed leadership in Germany.

By examining current events in business, we can find the same blind subservience to the wisdom of the crowd. Consider that General Motors has been given market feedback for two decades that the US auto consumer prefers small, fuel efficient vehicles such as those offered by Honda, Toyota and Nissan. Despite this consumer demand, GM decided to build large SUVs and full sized trucks. When the price of oil jumps, GM has no choice but bleed red ink.

(Note to self: consider selling the ¾ ton Chevy Suburban in the front driveway before it is too late.)

Entrepreneurs are often rejects from large corporate culture—they cannot follow the crowd, so they choose to do it on their own. Abandoned or fired by the crowd, entrepreneurs take it upon themselves to create better products or services. They may deserve the reputation of “control freaks” for their compulsion to do it their way, but at least they won’t be lead by the crowd, goose stepping off into oblivion.

Other examples of dumb crowds: Enron, the New York Knicks, AOL merges with Time Warner, IBM rebuffs startup Microsoft, Ford and the Edsel, Napoleon and the Louisiana Purchase, etc, etc.

My message? Think differently. Reject the crowd.

John Bradley Jackson
© Copyright 2008 All rights reserved.