StratTalk eNews — Issue 7, October 2008

Every day the headlines scream doom and gloom over the economy.

Many business leaders are sitting on their hands, waiting to see where the fallout will impact them. At 60 Minute Strategic Plan, we firmly believe in getting out ahead of any crisis. Now is the time to think strategically and plan for the future. Don’t sit back, wait, and see if your business will be impacted. Pick up a copy of The 60 Minute Strategic Plan, read it, and make your plan to stay ahead of any potential financial impact. We believe strategic thinking and planning can help any business get through tough times. And don’t forget that if you want one of our intrepid leaders to come “show” you how it’s done, give us a call to set up a workshop. We are primed and ready to help!

John E. Johnson, CEO
Anne Marie Smith, President

Strategic Advertising: Are you putting lipstick on a pig?

If you try to dress up an undifferentiated product or service (i.e., a pig), with advertising, it won’t work—and don’t blame the lipstick that is the advertising. Once the makeup wears off, you are still kissing a pig. No kind or amount of advertising can disguise a product or service that fails to deliver the features and benefits promised. As a matter of fact, hard-hitting advertising hastens the demise of an inferior product/service by quickly attracting and turning off customers whose anticipation and expectation were unrealistically raised, then dashed by actual product performance. (Hint: There is nothing inherently wrong with dressing up a pig unless you dress it up to look like a turkey.)

Strategy: Make Illusion = Reality

Advertising is illusion; marketing is reality. Advertising is the pitch; marketing is the delivery. Marketing is the first stage and advertising is the last stage in the launch sequence of a product/service. If marketing strategy is ambiguous, then all that follows is compromised.

Pick a focus

A study of how businesses strategically lead their respective markets by Treacy & Wiersema as reported in the Harvard Business Review showed that the clue to marketplace leadership is consistently outperforming your competitors in one of three key customer purchasing criteria: price or service or state-of-the-art (latest, greatest) performance. Note that while all three criteria play a role in any product/service delivery, only one can strategically lead, rendering the other two subservient.

If you determine that leadership in your marketing niche requires delivering the lowest possible price for your product or service compared to your direct competitors, then you must operate lean/no frills, which precludes the costs associated with super service or heavy investment in research and development to provide state-of-the-art performance (think Costco).

If leadership in your marketing niche requires consistently delivering superior service compared to your direct competitors (think Nordstrom’s), then that precludes competing at the lowest customer price because you must recover the higher service costs from relatively higher customer prices.

If state-of-the-art or the latest-and-greatest product performance is your marketing strategy (think Apple), then it is extremely important that you beat competitors to the finish line with accelerated product performance and that means expensive R&D and that means capturing your costs with relatively higher prices and relatively less customer service.

In fact, in the latter two cases, “superior service” and “state-of-the-art performance,” consumers are inclined to pay a premium provided they get what they pay for.

Are your customers perfectly clear on what you deliver?

In your product/service niche, what do customers value most?

If it’s the lowest price, are you operating as inexpensively as possible in order to pass along the savings to your customers? Are you relentless in cutting expenses and consistently lowering operating costs?

If its service, are your people trained for and able to deliver, with attitude, almost anything the customer requests as it relates to your product/service? Remember the apocryphal story when an accommodating Nordstrom’s clerk refunded the cost of car tires for a customer? Do you constantly check for customer satisfaction and reward employees who deliver exceptional service?

If its state-of-the-art products/services, are you way above average in R&D investment? Do you encourage and reward employee innovation? Do you anticipate customer wants and needs by way of extensive and ongoing consumer research?

If you do all that, then your product/service has integrity—bring on the cosmeticians.

Now carefully apply the lipstick

When marketing strategy delivers a highly focused and superior competitive product/service, then advertising strategy and execution should be a slam dunk. But a few things stand in the way of effective advertising and we will discuss that in the next newsletter.

What People Say About Our Workshops

It was a great presentation that did an amazing job of bringing not only focus but also a realistic action plan for a solution to the challenge. I feel like it was a fantastic use of my time!!!

Nancy Allardyce, Allardyce Resources

I really enjoyed the workshop even better this time than last. I would ‘chalk’ it up to business maturity—my appreciation for simple, quick and effective business tools has risen dramatically in my time as president. So this really hits the spot!

Stephen C. Patterson, President, Central Valley Builders Supply