The best business advice that Luke Meurant says he ever received was “know your business”. Here, he explains how he’s translated this advice into a better understanding for his market.
When I entered the workforce at the turn of the century, Peter Thorburn MNZM, a successful pharmaceutical sales and marketing strategist and sports coach told me I needed to know the business I was in. He didn’t necessarily mean that I needed to know how LANs and WANs worked during my telecommunications days, nor did he mean that I would need to intimately understand how motors on each axle of a BEV propelled vehicles forward – he meant that I should know how the business made its money.
As marketers, it is entirely in our best interests to allocate our time and resources to the parts of the business that deliver the greatest positive revenue impact today and/ or provide the business with the greatest growth potential for tomorrow. And I say ‘as marketers’ intentionally, as we often have the greatest obligation to the business as a highly visible cost centre.
Of course, there are exceptions to this rule, but it is hard to be wrong, to be caught out or to be accused of missing the mark strategically when your efforts are congruent with the activities that drive revenue results.
Know Your Market
While this advice serves each of us incredibly well throughout our careers, the next step up from this advice is to also “Know Your Market”.
Almost all marketing professionals strategise based on a limited, market share-based view of their environments. We closely monitor the movements of competitor brands; their campaign activities and sales results, with an expectation of fighting and winning on this battleground. This market share-based view of our competitive landscapes can however cause us to commoditise our products and erode brand value through increasing price competition.
Avoiding this pitfall requires us to better understand what our products actually do for our customers. We need to widen our perspective on what the substitution set is for our products and services and therefore define what markets we are truly in.
The late Clayton Christensen understood and documented this following his research with the McDonalds Corporation (USA). Through this work, McDonalds were able to uncover what their products were delivering for customers, particularly the large sales of milkshakes before 9am on weekdays. Customers weren’t hungry or thirsty on their morning commute, they were simply bored by the task of driving across town and purchased a milkshake via the drive through window to make that trip a little more bearable. McDonalds now knew that they weren’t in the fast-food breakfast market at this time, more so they were in the market of providing a break form the mundane. McDonalds could therefore position their products to appeal to more prospective customers who faced this arduous morning routine and focus R&D on products that delivered on boredom-busting, rather than entering the value eroding practise of price competing against their rival fast-food outlets each morning.
This approach plays out locally, too. At the advent of video conferencing, business execs and travelling salespeople rejoiced at the notion of significantly reduced domestic travel time for meetings and began re-forecasting their travel budgets. However, the undeniably (and timelessly) excellent Air New Zealand marketing machine had other ideas. Understanding that from 5am to 9am every weekday they were in the market of facilitating business meetings, and not just in the transport market, they could immediately recognise a substitute threatening their revenue stream. Air New Zealand launched a campaign called “Being there is Everything”, underpinning their Express class product launch, promoting the value and the importance of the in-person meeting. At the time, marketing and alliances vice-president Ed Sims publicly stated that this activity was in response to a Telecom campaign that promoted the use of technology to keep in touch without needing to be physically close.
While a pandemic has irrevocably shifted the paradigm 15 years later, to this day I wonder if the travelling execs from Clear Net and Telecom in 2005 appreciated the irony when they boarded their domestic flights from Auckland to Wellington each week?
This is not just about defensive strategies, however. Knowing this means knowing who you are competing against beyond other brands in the market you had previously defined – this allows you to take revenue from substitutes, not just from ‘competitors’, and therefore grow sales opportunities and revenue from other sources.
With these two historical examples it is worthwhile considering if this more macro view of market definitions is still applicable. Evidence of this holding true in today’s world is abundant. A starting point would be to ask automotive importers what happened to the demand for their products when international travel ceased in recent times. This shift in market demand shed light on the wider competitive set of luxury personal experiences (suitable category name pending) and which products or services are fighting it out for their share of revenue.
Of course, the meta label for this area of strategy is likely Customer Insight. But this categorisation doesn’t necessarily help tease out what your product does for your customer or what your competitive market is… so perhaps start by asking your customers “When you were buying this, what else were you considering?”