By Brian J Majeska
“The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.” – Peter Drucker
One of my favorite movies ever is the John Hughes film Planes, Trains, and Automobiles with the great acting of John Candy (Del Griffith) and Steve Martin (Neal Page). Whenever I think about the “weird factor” sometimes associated with marketing, I think of the opening scene where Neal is presenting an advertising campaign to a New York executive who can’t make a decision. Shortly there-after the dichotomy of sales and marketing is showcased.
Del and Neal are seated in the same cramped coach row of a plane going from New York to Chicago. Del introduces himself as Del Griffith Director of Sales for American Light & Fixture, Shower Curtain Ring Division, and Neal introduces himself and says he is “in marketing.” Then Neal indicates that “[he] doesn’t want to be rude, but he isn’t a real social person and would like to finish an article that a friend of his wrote. Del’s response is that he doesn’t want to be a blabber mouth that goes on and on, and if he is being a chowder head that Neal should poke him in the ribs… With that, Del proceeds to take off his shoes and twirls his socks around like a lasso in Neal’s face (Click here for the link: Planes, Trains, & Automobiles).
So, why do many in business look at marketing as a bunch of creative types, or wonks that are not effective with loading the wagon with volume and sales? It is because of marketing’s complexity, and often jargon driven content. All of the jargon loses the reasons for marketing – have people make informed decisions and choose to buy your products.
Based on reflection of the approaches that have worked in industrial marketing, there are three principle areas of marketing with a plus one that makes all the difference. the three areas are:
- Marketing activities or processes
- Marketing cycle
- Business value chain
And the plus one is: What do your customers truly need?
Out of this entire blog if you can retain two things, 1) What do your customers truly need, and 2) the use of the business value chain with understanding of how each link makes money currently, and how your products or services make more money in the future for the links, you will have the core strengths of marketing.
The other components improve overall business results, but too often businesses focus on the new and complex versus the common sense. As Tony Narducci often said, “Common Sense is often not common practice.” Let’s attack each of the three plus one items now.
Marketing Activities and Processes
Understanding the various marketing activities is confusing – Let’s take a look at the terrain of marketing activities in Diagram 1.
Pretty complex stuff, and it looks like an area that needs a great deal of time, money, and consultants to solve based on diagram one.
If we clump the myriad of activities into a three areas the marketing process becomes clearer (Please note, there are many more processes that could be included in Diagram one, but hopefully you see the point).
Diagram two aligns the process into three areas:
- Vision & Strategy Development
- Knowledge Systems
The small distinction of clumping the many activities into the critical elements for success makes the activities manageable. Let’s examine the three activities of the marketing trio.
Vision & Strategy Development – Hardest and most highly leveraged activity that a business can do. Spend the time and develop your teams Point of View (POV) on the market, the segment economy, and the health of your product line. Upon developing your point of view, consider where the business can be in the next ninety days, one year, and three years. With Adventus Material Strategies being a start-up we are working on this one area of marketing probably the most.
Getting the partners of Adventus Material Strategies to the point of declaring that we are a marketing and development company in the paving industry was a significant step for us, and then clarifying our core values as the the following:
OUR CORE VALUES
- We Make Money through Sales
- We create simple elegance through customer focus
- We have high energy & resilience in the creation of our business
- We choose resourcefulness versus creativity for problem solving
- We have fun through success, growth, and humor
Is vision and core values a marketing role or a leadership role? The answer is Yes it is for both of the capabilities. Vision and values needs to be a team activity, but the purpose of a business is to satisfy your customers needs while making money for the owners.
Knowledge Systems – In this blog and several of the previous ones, I discuss the importance of creating a POV, and in the Vision & Strategy Development section it is the first step in the vision creation.
Adventus’s efforts around knowledge systems include:
- Our POV is that an industrial marketing is a gap in many parts of the paving industry. This is based on our tacit knowledge. Creating a business on thoughts and feelings can be a bit reckless, and we are now in the process of surveying and meeting with customers and decision makers in the community to understand if our POV is accurate.
- Trend analysis – We see several trends in the construction segment, the overall economy, and the demographics further changes our POV from a personal opinion to a fact based view. In our case, we see the major shifts in natural gas production along with demographics in the world driving significant changes in the chemical industry.
- We develop these POV’s based on data and reading which yields a knowledge base in which we can make rational decisions.
Coupling the above information with feedback from customers and prospective customers is what takes the information and converts it into knowledge to drive the business. This last step, is what a friend and mentor of mine, Wayne Mackey (voice of the customer & product development expert) describes as the million dollar seat. By getting in front of the customers, users, and complimentary providers to the industry you now can build a well founded understanding of the emerging needs of your market while not getting caught up in serving acute needs with existing customers. Acute needs should be solved through the sales and leadership functions, but that is outside the scope of marketing knowledge systems.
Marketing Execution – This is where marketing goes from a nice to know for a business to a core capability for a business. Each component in the marketing trio is somewhat symbiotic, but the point of marketing is to take thoughtful action. With clarity of vision and strategy the entire organization gains alignment and marketing becomes predictable. With knowledge systems marketing facilitates the change from internal opinion to market based and economic based insight. And, now with execution, marketing makes an impact on the business.
Each of the execution activities in diagram two are important, and play a role in marketing success. Let’s look at the top few to gain better understanding.
- Connecting with Customers – Many companies delegate this activity to the sales team. This is an area of cross-functional support. What should marketing be doing to make sales easier? This drives the other activities listed in the execution portion of diagram two
+ Communicating value
+ Delivering value
- Pricing – The price of the product is one of the principle information criteria in making a purchase. Understanding of the value derived from a product and knowing the alternative products for the customers is crucial for market success. Too often emotion, or ego, or a cost plus mentality drives this decision.
- Brand Creation/Equity – What is the brand and the identity of your company? What is the Brand of your company when you are sitting in the million dollar seat?
- Product Development – Innovation is the future of you business, and the technical team wants to create products that are market based – We will cover this more in the future.Hopefully the marketing trio provides a simplified model and some context associated with marketing activities. Let’s see what marketing cycle means.
This is a relatively new insight for me, and it comes from perspectives on business. Specifically, at the formation of our previous business, Majeska & Associates, the leadership brought in paradigms and processes from the asphalt industry, the chemical industry, and the automotive industry. Each paradigm was often correct when looked at within the context of the previous business, but was not always correct for a start-up.
If you take this a step further and apply lifecycle to marketing, four different stages emerge. They are: Assess, Validate, Scale & Grow, and Retain.
(Okay, Majeska, you got a chance to show off my mad skills in Pages with the diagram to the right, but what does it do for my business?)
Let’s define these four elements of the marketing cycle, and then apply them to a business or a product.
- Assess – This is where the product attributes begin to be defined in technical terms and specific value to the customer. Additionally, this is the period that the initial market POV is developed.
- Validate – This is where the value proposition to the customer is confirmed and the beginning of the messaging pertaining to the product is completed. This phase is where pricing models should begin to be built. And, finally the lead users and test markets are identified and initial customer evaluations take place.
- Scale & Grow – Upon completion of the validation phase the desire is to go to mass market release. What is needed is concentration on your second market and/or your key earlier adopters. Upon developing the commercialization process in this next market, you now have a scaleable model to increase the speed and scale of growth.
- Retain – Marketing must include developing a strong customer relationships and trust. Also, marketing needs to be pragmatic and understand the competitive landscape and alternatives that either you or your customers are facing. Retention needs to be an activity that marketing is undertaking – As Intel’s mantra implies, “Only the paranoid survive.”
The reason for the arrows in the marketing is to indicate the dynamics of business. Outstanding marketing teams understand that reality and customer need can often disrupt the best of plans. Flexibility is needed, but the discipline marketing cycle provides clarity of purpose.
Let’s spend a bit of time on the third area, the value chain.
The concept of understanding and diagraming the value chain has been around for decades, but its inclusion by Micheal Porter at Harvard was transformational in strategy and understanding competitive forces. The process of drawing a value chain and the questions that are raised upon review with a management team is a highly leveraged activity. An example of a value chain in the asphalt paving industry is diagramed below.
No big deal, it is simple diagram of the flow of raw materials and supplies. The strength of this exercise comes from asking a few basic questions, for example:
- How does the each link in the value chain currently make money?
- How does our product or service facilitate greater profitability in the various links
- What link will perceive our offering as a threat? As a benefit? Or, as a complimentary product?
- Who in the link is critical for stimulating demand? And, who is the key decision maker in make the purchase?
- Does this value chain hold true in the various market segmentation exercises?
Spending an afternoon asking this questions with you management team in a facilitated session can pay handsome dividends in the future.
Okay, the force multiplier of the +One is the next section.
In a book I read about a year ago called Pitch Anything written by Oren Klaff, he helped with re-orienting my mindset pertaining to sales, business, and marketing in one basic way. Oren wrote that most sales people have it wrong, they see the customers money as the treasure when in fact, it is the customer who is spending his money to be the treasure of your product. I disagreed with major portions of his book, but this one idea was worth the time investment of reading the book.
If a company re-orients its perspective that the thing that what they should love is their customer. And, by providing massive value for their customers you are providing the treasure that helps your accounts business succeed.
If you are providing additives in the asphalt industry, for example, what is the treasure that your customer is seeking when they buy this product? How can this product be even more valuable in an equitable way for you and the customer?
When you look at the great marketing geniuses in history, Like Ray Kroc, the man who built MacDonald’s into an incredible business. He valued his customers time, desire for consistency, and their money. Because of his passion about the customer need, he created the fast food industry, and made more money for just about every stakeholder in the value chain. Everything with marketing ultimately needs to be the holistic approach to efficiently satisfying customers needs.
In future blogs we will dive into other facets of marketing and business strategy. Predictable performance, and a perspective of how to leverage a community approach have been sources of marketing innovation for the teams that I have been associated with through the recent years.
If there are two items to work on first, it is gain a deep understanding of your true customer need. What is the treasure that they want from you? Secondly, invest the time on the value chain. Upon doing those two activities, the remaining parts of marketing become apparent in validating and growing your business.
At the end of Planes, Trains, & Automobiles, Neal Page (Steve Martin), found himself, and actually, saw the person versus the market. Marketing always needs to return back to the individual and the customer to impactful versus weird and monkish. The Plus One of this blog returns the marketer back to the point of focusing on the customer and thus becoming human.
Please give us feedback on the best examples of marketing that you have experienced, and please forward this blog on to others who are interested in industrial marketing.