Differentiation Creates Sweet Melody in a Tough Marketplace

by Chuck Terry
Executive Vice President and CSO
Carew International, Inc.

I am a huge fan of music. I’m an avid listener, concert attendee, and also play the guitar myself. It was with great interest that I read the WSJ article about venerable high end guitar maker C.F. Martin beginning production of a lower priced, no frills, guitar in response to the economic pressures created by the latest downturn in consumer spending. Is nothing sacred? Apparently, in the real world business of music, decreased discretionary spending is also having an impact on high end instrument purchases. Recording artists and their labels have been feeling the pinch for a while now, as the proliferation of music downloading sites has created downward pressure on the price point of purchased music as well as nightmares associated with royalty collection. When there are fewer discretionary dollars to spread around, no industry is immune from the effect.

The point is simple, really… the fewer discretionary dollars consumers or businesses have to spend, the tougher it gets when you are, or can be viewed as, a discretionary expenditure. So the challenge becomes how to cut through the competition to earn what little discretionary money remains. How can you position your product or service as an INVESTMENT versus a COST? Here are a few ideas:

1) Know Your Clientele: I am not talking about their buying preferences or habits, but about understanding how they create value for THEIR customers. If you can understand their “value chain” or the points within your client’s company where they create the value for THEIR customers, you can align your products and services in a way that aids in their value creation process. When you are helping them add incremental value, you become an investment rather than a cost.

2) Identify the Perfect Prospects: When times are tough, there are also fewer dollars to spread around for advertising and marketing. Laser alignment and a dogged focus on prospecting to a narrow band width can be invaluable. Don’t waste time and effort targeting prospects that don’t meet rigid criteria of the parameters of a “perfect” potential customer. If someone wants to buy something, by all means, sell it to them; but don’t divert time and energy chasing prospects outside your ideal customer definition.

3) Good, Better, Best: An additional approach used by many companies is to adopt the C.F. Martin strategy. The strategy involves developing products at a lower price point to compete in an additional (lower) price range, while keeping your premium priced lines positioned where they have always competed successfully. As with any strategy, there is risk, such as diminishing the marquee value of the overall brand. BMW, Mercedes, and Porsche are good examples of companies who have adopted this strategy successfully without diluting the perceived “high end reputation” of their brands.

These are just a few ideas of how you can cut through the “noise” of intense competition to create some “beautiful music” for your company in a tough, competitive marketplace.