A marketing consultant I know recently asked me to be a sounding board for some work she is doing with a client. She needed a bit of a reality check since she was asked to do work on positioning yet the company didn’t even have a plan of who they would segment or target. In fact, they didn’t even have a clearly identified industry to focus their effort.
How can you start to market a product or service, if you are unsure what industry you are focused on, how you are segmenting that industry and who is your target you want to reach?
Let’s take a simple example to illustrate why this is sequential and you have to start at the beginning.
The Electric Company
Imagine an electrical cable company that is basically a ‘job shop’ selling to anyone who needs their product. They are not marketing themselves today, they are just answer requests that come in when potential customers find their front door. Their marketing is purely reactive to requests as they wait for the phone to ring.
In order to change this dynamic, the company has to pick at least one vertical market that they want to focus on as a place to start. Let’s say they determine that they want to focus on residential wiring and electrical needs. Once an industry is picked, they can start to see how this market is segmented.
- Who are the major competitors
- What do they sell
- What gaps are there in the market
- Does your company have some unique and patented technology that gives you an opportunity over the competition
- Do people buy based on price or seasonality or other needs
With some clarity about this how the market is organized, you can then ask the question, who would I target with my product and offerings?
- Who is the decision maker?
- What drives their purchase?
- What problems do their need to solve?
- What outcomes are they interested for this purchase to solve?
- What is the difference between the high, middle and low-end of the market
As you answer these questions, suddenly the opportunity will come into focus.
Joe’s Electrical Company has been selling traditional wiring and cable like their competitors. There is no difference between what they sell and their competition except the name and the price. Recently, their R&D team started to develop a new product that is focused on a super insulated wire for residential home builders with a proprietary sensor system built in to the product. Think Nest, the self-learning thermostat that Google bought but for electrical wire.
The industry has 3 main players who all sell commodity-type wiring that is identical and often purchased based on price. Joe’s has developed a high-end product that is triple insulated and design to provide the most ultra-safety and protection from shorting out and fires. And, with their built-in sensor system, their electrical cables can send a signal to the fire department if there is a defect in the electrical system caused by a surge or some unusual activity. Joe can’t compete with his competitors on the basic market product because his product is he doesn’t have the scale to sell at the price the competitors sell. What should he do?
Now, the marketing thinking can begin.
Joe now has a clearly defined vertical marketing segment (residential markets), he has a clearly defined segment (the luxury end of the market where price is not a concern but safety is valued above cost) and his target is the consumer of luxury homes not the home builder.
Like the pharmaceutical industry, Joe determined that he should go directly to the consumer. In this case, high net worth consumers who will want this special patented wiring system in their multi-million dollar homes. He needs to reach people who work with custom builders and to get those builders to use Joe’s product with its special capabilities.
Marketing requires an order. You can’t develop a brand or positioning before you define the market, segment and target.
Have you clearly defined what industry you are in, what segment matters most and who you are targeting? The marketing effort can only be effective if you get this work in the right order. And like Joe, once you are clear who you are selling to and what problem you solve, you can communicate effectively to explain your value.
Shocking, right?
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