product strategy Archives - Syneka Marketing

Do you Start with the ‘Why’?

By Advice for Businesses One Comment

A profitable business provides motivation for ongoing growth and development. A business does this by finding a need in the market and aiming to fulfil these needs through its products and services.

For example, Johnson & Johnson exists to advance healthcare to people of all ages, and in the case which I am familiar with, NIKE exists to help athletes improve their performance in their sporting pursuits.

This is the point of origin in which the company started, because:

  • They are convinced of a better solution to what was available then
  • They sense an unfulfilled needs that can benefit the target market

There is a difference in NIKE selling shoes because it has the best designed shoes in the market place or NIKE selling shoes because it can help an athlete achieve a personal best. The former relates to NIKE seeing a market opportunity for it to compete in whilst the latter is more about NIKE driving its beliefs and passion about helping athletes succeed.

If NIKE were in it to make money, then it could well sell dress shoes in addition to the sneakers range. In fact, it is what they did when the Swoosh logo became cool. In the 90s, mass consumers started to wear NIKE because it was cool and fashionable. NIKE decided to launch a range of `fashionable’ NIKE labelled products, including jeans and other apparel range to appeal to the fashion conscious. The brand became undone very quickly. Its core market segment, the sportsmen and women who value the performance-driven focus on the products, began distancing themselves from the brand. There is no performance focus on NIKE’s product design anymore; the emphasis seems to be on the design and colour.

As a result, NIKE lost it market share leadership to Reebok. Luckily it didn’t take long for NIKE to realize and the product strategy reverted to its performance-driven design roots, where it was able to recapture its dominant position.

The product still appeals to the fashion conscious, but from NIKE’s perspective, it is an added benefit to the appeal of the brand. Its core product design focus continues to deliver products that drive performance and function, and that basically contributes to its continuing success today.

Have a think about this. If you have started out your business on the order of `What’ is your business, `How’ are you delivering it and `Why’ is it good for your customer, do the following instead:
Question `Why’ you are in your business in the first place, `How’ are you taking it to market and `What’ can you offer to your customers. It can radically shift your thinking on your business model and how you can deliver it.

I treasure one of the hand-outs given to me when I was at NIKE, which I still refer to occasionally. It was a copy of the original document titled NIKE Principles. It outlined NIKE values and was handed out to its employees in the 70s when NIKE was a fledgling corporation. Type-written Principle #10 reads, “If we do the right things we’ll make money damn near automatic”.

Not exactly politically correct corporate language but it is a crystal clear message that resonates true even today. I interpret `do the right things’ as incorporating passion into an area of expertise that you have and believing that it benefits your target market. It sums up the “Why” in which you are in your chosen field of business in the first place. In NIKE’s case, it is to help athletes improve on their performance.

Question your “why” if it is something that you have not put much thought into before. It can help provide clear thinking to the existence of your business, know if you are in it for the right reason and potentially help you refine your business model for success.

Which P Drives Your Business?

By Advice, Advice for Businesses 2 Comments

Keat Chiew is a marketing consultant for Syneka Marketing. Keat has worked for some of the world’s largest global brands and brings extensive expertise in brand management and marketing strategy. This is Keat’s first blog post for Syneka Marketing:

As a business owner or marketer, the understanding of the concept of marketing mix is one of practical importance. It drives the go-to-market process to a large extent. The 4 fundamental Ps (Price, Place, Product and Promotion) provide the basis in which the business operates; what does one sell, leveraging what promotional activity, at what price and through which channel.

Whilst it is not difficult to grasp the concept of each Ps, the deeper question is which P is the biggest lever that drives the success of your business. In a challenging business environment it is not at all surprising if many small business owners today rank Price as the biggest influence in their decision making process.

Competing on price is not necessarily a bad thing. It does provide an entry point for a business to get into the market. It can also drive inventory turnover if the price point is suitable. Sell-through does have a positive impact on cash flow, which is critical for small business to sustain itself. And Price is perceived as the prime lever to help drive sales.

In my opinion, using price as the primary lever is flawed. Let me explain.

Firstly, the spark or trigger of a great idea is often a product, service or solution, not price. A target market segment or addressable market is then developed. It is through this thought process that you wrap the other important marketing tools such as the pricing and distribution strategies to elicit the greatest response of your target customers, i.e. to buy your product. Hence, Product drives the strategy behind pricing, promotion and distribution. It is not logical to use Pricing to drive your product strategy.

Another important consideration is your financial stamina. The old adage ‘Revenue is Vanity, Profit is Sanity, Cash is King’ holds true. Competing on price might drive up your top line revenue; it will however eventually erode your profitability. Unless you have deep pockets to sustain the business, it will eventually bite you. This is especially true if your competitor is a larger entity. They typically will have stronger financial muscle to outlast you.
I have been exposed to organizations that use price as the major driver of their marketing mix strategy. In most cases, this approach has proven to be unsustainable. Whilst they achieved short term financial goals, more often than not, they find themselves spiralling to a situation where, in order to sustain the business, they have to continually lower their prices and sacrifice profit margins to maintain their market presence. Eventually, they either exit the market or absorb the loss, neither of which is desirable from a business point of view.

It is also critical to lock in your target segment based on the product/service you sell; following this you should develop a clear positioning statement and know your value proposition to your customers. By doing these, you are effectively building a brand that is centred on delivering value to your customer. And price is only a small component of value.

If you have been using price as the axis of your marketing mix strategy, I would strongly suggest that you re-orientate your views and let your Product be the driver of the strategy that you employ to take your business forward.