Three Keys to Winning Marketing Strategy

The four P's of marketing are:

• Product
• Price
• Position (distribution)
• Promotion

Usually depicted in a ven diagram with four overlapping circles.

They were originally introduced by Harvard advertising professor Neil H. Borden in 1964 in his article The Concept of the Marketing Mix.

These four key elements have been at the core of marketing strategy since then.

Today, the four P's (alone) don't work.


The new mix for marketing strategy is:

1. Your secret sauce
2. Buyers' purchase decision process
3. Buyers' demands

1. Your Secret Sauce

Why do your current customers buy from you? Do you really know? We've found most companies get this wrong. They think it's product or price and it turns out to be speed, reliability or something else much deeper.

What your customer's value about you is your secret sauce. You must find out what this is and focus on promoting it.

2. Buyers' Demands

Buyers are in control. Still holding on? Think you can control the message? Get over it. You can't. What you must learn is what buyers are seeking. What do they want? For most, it's content. They want answers to important questions. If you provide the answers, buyers will find you.

3. Buyers' Purchase Decision Process

Finally, you must understand the buyers purchase decision process. It consists of:

1. Discovery
2. Information
3. Endorsement
4. Proof/Demo

Where does the buyer go for each stage of the process and what are they seeking? This process determines media channels and influences content.

Bringing All Together

Once you know your secret sauce, your buyers demands, and your buyers purchase decision process, you can know formulate a marketing strategy that will have a much higher success rate than if you simply used the four P's.

How to Interview Your Customers and Find Out What They Really Want

You can't hardly hit a blog or business feed without hearing about the importance of understanding your customer. And to do it, you've got to talk to your customers and find out what they want.

Seems like pretty straight forward stuff, right? Not true.

Harvard Business professor Clayton Christensen says the current tools on which business relies for understanding customers are no longer relevant because they are not designed to uncover complex demands.

Any type of research that asks customers direct questions fails to uncover what the customer can't describe or simply does not understand. Focus groups, quantitative surveys, and even voice-of-the-customer all rely on the customers' ability to describe what they want.

But when it comes to the emotional and social aspects, customers don't know what they want. At the very least, they don't know how to describe what they want.

So how do you find out? Here's how to interview a customer and uncover what they really want:

1. Be Their Psychiatrist - Do not drive the questioning in an attempt to get them to "tell you the answer" -- because they won't. They don't know the answer. Once they identify an area of frustration, stop talking and listen. Let them talk. When there is a lull, use words of encouragement to keep them going such as "How is that impacting you?" or "Do you think it will ever change?"

2. Don't sell--ever - The reason marketers struggle getting good information from their customers is they don't listen; they sell. The minute a customer begins describing a problem, our brains shut off and we go into "sales mode" and begin convincing the customer our product can solve that problem. These are not sales calls. If you start selling, you'll learn nothing.

3. Do not make it a product issue - Avoid your instincts to drive the conversation to your product. Let it happen naturally. If it's a product issue, they'll get there all by themselves.

4. Focus on their world - It's not about you, it's about them. You need to understand the full scope of the job the customer needs to get done. Your product only plays a small part. Sorry, you're not that important.

5. Focus on how they use the product and why - They hire your product to do a job. Focus on the job they're using your product to do. What works well and what doesn't work so well--or what isn't working at all. Remember, there's a huge difference between how well your product performs the job it's designed to do verses how well it performs the job the customer needs it do.

Is it important to talk to your customers? Absolutely. It's critical to your success. But you have to do it right or you'll learn nothing and perpetuate the same old practices.

Get More from Your Market Research: Think Like a Chess Master

Most marketers know how to get data. It's the strategic analysis that they struggle with. I've talked about this before, but it continues to be one of the most important challenges facing marketers. "How do I find out what I should do?"

Here's the trick. "It's not enough to know when to leap. You have to know the reason." This nugget of wisdom is courtesy of Bruce Pandolfini, from his book Every Move Must Have A Purpose.

Why do we struggle with strategic analysis? Because we focus on when and where to leap and ignore the reason. What's the "why" behind the tactical action?

The subtitle of Pandolfini's book is "Strategies from Chess for Business and Life". So what can chess teach us about strategic analysis? "Chess is change. Action and reaction. Every encounter offers a multiltude of intricate and layered relationships to disentangle."

Okay, so how does all this make it easier to figure out what you should do? Data is not insight. Data provides facts, but it is not self-evident. You will not find a piece of data that says, "Here's what you should do next and why." For that, you have to perform strategic analysis. Here are some tips to help you do that. They may seem a little cerebral. Don't be intimidated. They're actually easy--and, oh boy, do they work.

How to Analyze Data Like A Chess Master

1. Use Situational Awareness - For every action, there is an equal and opposite reaction. Look at what you're seeing--the data. Are you seeing the "action" or the "reaction". In almost every case, you're seeing the reaction. As an analyst, your job is to figure out what action occurred to cause the reaction you've just seen. Being aware of the action/reaction relationship is also called "situational awarness". Rather than waiting for data to come to you, you watch for the subtle interaction of everything in view.

2. Find the Purpose of the Action - People and organizations don't make meaningless movements. As Pandolfini says, "every move has a purpose." What purpose you ask? Pandolfini explains it: "In an ideal state of affairs, moves should always do at least two things in concert: foil our opponent's aims while fostering ours." So every action is motivated by the desire to foil our competitors' efforts or improve our own position. Begin with the premise that all actions are selfishly motivated until proven otherwise. You'll be amazed how often you're right.

3. Think Three-Dimensionally - Pandolfini says, "We must be supple-minded, for neither the position nor the opponent is likely to calcify." In the movies, they call it a "reversal". When it appears that one thing is about to happen only to have something entirely different happen. It makes us laugh, wince, and smile. It makes the story fun and compelling. Thinking three-dimensionally means looking for the reversal. Not accepting the obvious. "Rigid preconceptions can lock us in, preventing us from finding alternate routes," Pandolfini explains. Magic relies on our entrenched belief that all things happen the same way always. When you look at data or you read a story...ask yourself, is this really what is happening of is it slight-of-hand, a head-fake.

4. Sit in Their Seat - Actors work to understand Stanislavski's system and Strasberg's method style of acting both of which are focused on the actor immersing themselves in the character so their intuitions stem from the character rather than themselves. Too often, marketers rush to judgement and only see data that supports their assumptions or opinions. They don't take the time to sit in their customers' seat--or their competitors' seat. Stop selling and start listening.

5. Never Stop Thinking - How do we get mentally lazy? What does it look like? We begin relying on our experiences, beliefs and principles rather than what we see. The minute we recognize a familiar pattern, we abandon thinking altogether. As Pandolfini advises: "To win at chess...You don't play principles. You play moves. They decide your fate; cliches' don't." This may be a little difficult to grasp. It's part of the three-dimensional thinking. If what you see doesn't fit what's familiar, or only partially fits, don't make it fit. Look at it as something entirely new.

These five steps are not about research or data. They help you think about the data. That's where the insight is. Think of it as a game of chess and every move must have a purpose.

Thank you Bruce!

Market Research Doesn't Work

Too often I hear marketers complaining about their market research. They tell me they've invested thousands of dollars in studies that just don't paint a clear picture of what they should do.

Here's why this happens: Data is meaningless. Analysis is meaningful. Market research is about data collection, not analysis. With apologies to my market research friends, I am not talking about statistical analysis.

Statisticians will look for patterns in the data using different statistical analysis like conjoint or regression. All good stuff. But to really understand what's happening so you can make good decisions, you need to conduct behavioral analysis. This is how our government intelligence agencies do it.

How Behavior Analysis Works

In behavior analysis, meaningful data are the behaviors or activities of individuals and organizations that either promote or discourage future behavior. For example, a "discourager" could be a new law that says lenders cannot loan money to unqualified applicants. This law would "discourage" the behavior of loaning to unqualified applicants.

In contrast, there could be a "promoter" law which says everyone, regardless of credit history or financial capabilities, is entitled to a loan and the government will guarantee it. This would "promote" the lending of money to unqualified applicants.

So you have two types of meaningful data: promoters and discouragers.

We know from our example above that laws are important data points for behavioral analysis. But those are pretty obvious. The other key data points are not so obvious and require skill and experience to identify and judge. But you can do it.

Here are the six key data points you need to analyze:

Financial - This data defines the availability of cash and credit. Without cash or credit, commerce cannot happen. It is the fuel for the economic engine.

Demand - How well is the buyer satisfied with current solutions? Is the buyer seeking better, faster, cheaper or a combination? How strong is their demand of new solutions?

Availability - How available are raw materials, labor, finished product, services, and suppliers (aka competitors)?

Social Acceptance - Is a behavior encouraged, accepted, unaccepted, or actively discouraged? The Green movement is a good example. Right now, Green, is encouraged. And equally, waste or anti-Green is unaccepted and discouraged. In contrast, smoking is actively discouraged and unacceptable.

Personal - Whether you agree or disagree, intelligence experts and law enforcement have known for centuries that people tend to consistently act to serve their personal self-interests. Examine the behavior of individuals and organizations (organizations behave like people because they're run by people). How are they acting to satisfy personal fear, pride, greed, lust, power, or envy?

Regulatory - This is from our example above. These are laws, taxes, and the level of enforcement (strong or weak) present. There may have been laws in place to discourage Enron's management from doing what they did, but the enforcement was weak and the power of their personal greed exceeded the impact of the regulatory discouragers.

The Behavioral Truths

Why should you pay attention to behavior? Why should you invest in learning and implementing the processes I've outlined above? Because it is remarkably accurate and reliable. And it's only substitute are trends. If stock is going up, we buy. If a market is growing, we want in. If something works, we keep doing it. We're always betting that current activity will continue--at least long enough for us to get something out of it.

With behavior analysis, you can go beyond trends. You can reliably predict the end of a trend (long before it appears) and the beginnings of a new trend before its on the radar screen.

Why?

Because of the fundamental behavioral truths.

1. It is costly and risky to oppose or control behavior

2. There is little cost and low risk when taking advantage of behavior

Add behavior to the fundamental forces of the universe. It is that powerful. When the six key data points we've discussed above line up to promote a specific behavior--that behavior will occur. It is the irresistible force.

Now there have been many examples of individuals and organizations that have opposed or sought to control behavior with some success. Can you say Microsoft? But they do this at great cost and they can only do it for a limited time before they lose their control and behavior wins.

By the way, once a Microsoft loses control (Can you say Vista?), they usually try to quickly make nice and deliver those things buyers always wanted but could never get. Buyers tend to resent this and migrate to competitive alternatives.

Market Research Works Well - With Behavioral Analysis

Market Research works very well and is critically important. But it is simply data collection. Use the behavioral analysis techniques above to examine the data and you will find real value.

5 Steps to Quickly Analyze a Market

Sizing up a market is less about data and much more about behavior. As a result, you don't need mountains of data--you just need a few key data points. Here are five quick steps you can use to quickly understand a market.

1. Who are the buyers and sellers?
First, describe the buyers and sellers. Who are they? (Not literally all of them, but in general.) If it's shampoo, you have large CPG's like Proctor and Gamble and Unilever who are the sellers and the consumer who are the buyers. You also have channel players such as Target, Walmart, and Krogers.

2. Identify the successful activity of buyers and sellers
In this step you want to find out if the buyers are happy with the existing products, prices, and distribution--or if they are seeking a new, better solution. Questions you want to answer include: Who is winning and why? What are they winning? Is a product winning? Is a channel player winning? Or are the buyers stable. The answers are readily available in a Google search.

3. Identify the struggles, problems and failures of buyers and sellers
Once you know who is winning, you need to examine the flip side of the coin and look at who is losing and why. Problems are like canaries in a mine. When they appear, they are indicators of change--they are especially good early warning signs of change.

4. Choose the meaningful data points
You want to pay attention to data that define the behavioral truths of business--power and money. When a company acts, they do it to gain or avoid losing power or they do it to make or avoid losing money. Don't get distracted by rheotoric. Intellectual motivations are PR spin. In the immortal words of Deep Throat: "Follow the money." Meaningful data defines how a player is winning money or power, how their money or power is threatened, or how they are losing money or power. Anything else is just noise.

5. Assess the data like a cop
A cop never believes what they're being told. They're always looking behind what's being said. Once you've got your meaningful data assembled, examine it like a cop. Don't believe a word of it. Look behind it. What's not being said? What are they protecting? How are they really trying to win more money or power?

What makes analysis difficult, is too many of us use the wrong metrics. Business is not about making things better. That's a by-product. Business is about making money. Read the quote below from the movie You've Got Mail. Tom Hanks character "Joe Fox" reveals the true nature of business.

"The Godfather is the I Ching. The Godfather is the sum of all wisdom. The Godfather is the answer to any question. And the answer to your question is 'Go to the mattresses.' You're at war. 'It's not personal, it's business. It's not personal it's business.' Recite that to yourself every time you feel you're losing your nerve. I know you worry about being brave, this is your chance. Fight. Fight to the death."

Johnson Controls Gets It Right

A recent Johnson Controls study of women’s preferences for automobiles was interesting from a customer-centric marketing perspective.

The Milwaukee Journal-Sentinel quoted Renae Pippel, Johnson Controls’ consumer research manager, North America, “For women the vehicle plays so many different roles. It might be the breakfast table when they’re dropping the kids off, and then it might be the commuter vehicle on the way to work, and then it’s a girls’ gossip area because you’re taking your friends out to lunch, and then it goes back to picking the kids up and turns into a homework place or family room. Or it’s an environment for downtime while you’re at soccer practice and can’t commute all the way home.”

Why is this interesting? Two reasons: One, how it illustrates the growing demand for personalization. Two, its focus on the problems women want to solve.

Let’s look at the demand for personalization. How do you figure out what product to make and sell? The customers’ demands are all over the place. The real question is, how can you mass produce a product that most customers will buy? The answer is you can’t.

We buyers want the low cost of mass production, but the personalization of custom manufacturing. The Dell model. The demand for this type of product solution is growing rapidly and expanding into every product category. Manufacturers take note! Customization is the future.

The other aspect of the study that caught my eye was the focus on the problems women want to solve. High marks to the research group and Johnson Controls. Rather than focusing on preferred features, models, or brands, the researchers looked at the real problems women want a car to solve for them. Again, these problems are diverse and personal, but this is the key to what women want in a car.

So as an auto maker, what do you do with this? Invent features you think will do what women want. And then pitch the features. After all they’re in the car sales business not the customer problem solving business. Can’t wait until one of them figures out what business they’re really in.