Clever marketing changes the playing field of competition. Marketing and communication does not reduce manufacturing costs; instead it influences the buyer’s perception of what is being offered. It makes the product or service a little more interesting. A little more attractive. A little more valuable.
This is most often done by creating attention and capturing the interest of the intended buyer – not by improving the product or service in terms of higher performance, longer lifespan or other measurable physical attributes. Rather, it improves the experience of the product or service according to the buyer’s subjective evaluation.
The value of this can be immense. I normally use beds as an example. Many years IKEA puts in an ad that summarizes testing from a bed testing institute. The test basically shows that all beds are equally good from a quality and functional standpoint. Still people gladly pay 100,000 SEK for a bed from Hästens when you can get a bed from IKEA for 10,000 SEK. Why? Simply because it makes you feel better. And that the blue and white checkered pattern shows that you can afford it.
The similar logic works in B2B too. With the right arguments and the right communication you can create a price premium, and in some cases stretch it to become very profitable. One of our customers is a fantastic example. They sell their products at a 30% premium price, and still have more than 90% market share…
Marketing is about generating higher revenues and beat competition, which in my book is crucial for any company. Still marketing is not highest on the agenda in many companies.
Management teams like things that are measurable. But they like things that are predictable even more – that is, where the risk is low. Reducing tied-up capital by increasing inventory turnover from 4 to 5 times per year. Lowering production cost per unit by investing in a new fully automated assembly robot that does the same work in half the time. Tangible things –or at least things that can be calculated. Efficiencies. Cost reductions. Continuously playing the same game a little better.
The legendary Jeremy Bullmore once wrote:
“Brands are fiendishly complicated, elusive, slippery, half-real/half-virtual things. When CEOs try to think about brands, their brains hurt. And I sympathise. Given the nature of brands –and the persistent perversity of customers – who wouldn’t choose to concentrate executive time on simple, rational, quantifiable things: like gross margins and case rates and return on capital invested?”
And this is where I believe we in marketing face our challenge. Even with measurable effects and well-supported reasoning, we marketers must teach the rest of the organization to go one step beyond the ordinary. Anyone can follow a rulebook – but if everyone uses the same rules, most will also achieve the same results.
But if we open the door for creativity – we open the door to a more profitable business.
If you want to discuss how you can develop your unfair advantage, reach out to ulf@sfinxagency.se
