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Welcome

Welcome to the April edition of Strategic Innovation Newsletter, delivered on the first Tuesday of each month.

Last week I spoke at a networking event on how to thrive in these economic times, lots of questions and discussion, with the general consensus that now is the time to market more than ever. In order to do that you need to understand your customers. The following article of which I made a case study of was used in the speech. If you would like the link to the actual study, email me and let me know.

Best,

Dan

Inadequate Market Research: Why Business Strategies Fail

Inadequate market research is a major reason why business strategies fail. If a company wants to develop their brand, one of the most important things that it should establish is a reliable marketing research system.Customers buy or don’t buy a product for a certain reason, and it is essential for the future of your company that you understand what this reason is. What drives your customers?

Every marketer has two weapons that, when used correctly, can help him make good, informed decisions. These are intuition, or gut feeling, and hard facts: without both of these any decision is liable to fail through business strategies heading off in the wrong direction, with massive loss of resource and time, not to mention financial losses.

In many cases financial loss can be tolerated and recovered if the reasons for it is understood, but if it is not, and the company is spiraling out of control because of a misunderstanding of customer motivation,then it can frequently affect the brand. That is why is of such importance. What do people think of your brand?

Let's have a look at a good example: that of Yalumba, an Australian wine company. Yalumba was selling well into the UK through Tesco and relying heavily on their association with that supermarket chain, confident of their success because of the successful association. However, they began to be squeezed on margins, so had a close look at what was happening with Tesco, and were astounded at what they found.

They discovered that their brand was being marketed by Tesco as a commodity- offered on promotion and regarded by consumers as a good wine, but nothing special because it was generally offered at a special price.Their market research discovered that their brand was not considered good enough for special occasions because it was a Tesco 'promotion' wine.

It was not the consumer's wine of choice, and there was little connection between the consumer and the brand. This is a classic commodity trap,causing margin pressure, and not sustainable in the longer term. The company had created this problem of a commodity trap caused by a link between brand loyalty and promotions that led to an expectation of lower price and hence, ultimately, unsustainable low margins for Yalumba.

Apple,on the other hand, has the exact opposite recognition of brand amongst consumers that is referred to by their competitor, Microsoft's, CEO Steve Balmer as "the $500brand", where Apple is priced $500 more than their competitors. This isbrand equity in spades, and exactly where Apple wants to be - and perhaps where Yalumba also want to be.

But where do you want to be? With Yalumba or with Apple: do you want your brand to be recognized as a commodity or as something special?Understanding your market is essential, and good market research will enable you to pitch your brand exactly where you want it to be.

Technique of the month: Conduct Your Customer Focus Group

This month, conduct you own Customer Focus Group.

1. Randomly Select 40 of your customers
2. Invite them to a morning or afternoon session to get feedback on your business.
3. Prepare a series of open questions about how well you meet their objectives.
4. Capture the results.
5. Write them up, email them back the clients with a thankyou note and the actions you will be taking as a result.