Tuesday, November 17, 2009

Defining your brand

Within the Marketing Strategy section of your marketing plan you should clearly define your company or product/service brand. The brand will represent your identity as it will be perceived by the audience so it is extremely important to pay very attention in clearly identifying a good, clear brand concept at this stage of the marketing plan.

A good starting point to know how to define your brand is by looking through your mission and objectives also defined in this section of the marketing plan. Such goals and principles will dictate the attributes of your brand – are you looking to be the most exclusive? The fastest? The cheapest? The most consumer oriented? The highest quality provider? – Whatever you define and see your company as is your brand.

Once you are sure about all the characteristics associated to the brand you should then consider the company’s core values which might influence the way you shape your brand and present it to the public. By this I mean, values such as corporate responsibility, honesty, integrity, efficiency, corporate sustainability and environmentally friendly policies, amongst others. Those that clearly define the way you are planning to conduct business, should be combined with the company’s characteristics to create a cohesive bond which will then be communicated to the public as your brand.

The name you give to the brand which may or may not be the same as your company name (for example under Procter & Gamble you have several brand names including Pantene, Fairy, Pampers, etc. for each different product line) should be defined alongside the company image and the product or service it will be associated with. For example, it may not be a good idea to name a high technology computer provider as “Friendly computers” as for this type of business it will be more relevant to the consumer to get across characteristics such as efficiency, advanced technology and fast systems other than anything to do with friendship and kindness. “Friendly computers” might be a more appropriate name for children’s computers though, as not only the name is appealing to the parents and children but the word “friendly” can also be associated to user-friendly computers which will be beneficial for children users.

Good brand names will effectively build a connection between the brand personality as it is perceived by the target audience and the actual product or service itself. You can keep in mind that some of the most successful brand names are those who had such strong presence in the market that consumers started associating its name as a generic term for a product or service. Examples of these are brand names such as “Post-it”, “Kleenex” or “Tupperware” which are names used to represent all sticky paper notes, facial tissue or plastic containers respectively.

This brand will be representative of what will differentiate you from your competitors so, once it is established, you must stay true to it. All marketing activities you define from this point onwards in your marketing plan must be consistent with getting across the brand image, or the way you want your target market to see you. This is when the definition of a concise integrated communications plan will come into place as you continue writing your plan. Please note that while thinking about your communications strategy you never lose sight of who you are as per your brand definition so you don’t fall into the trap of trying to be everything to everyone. Your brand will represent your niche in the market and will be your biggest selling point so make sure you will stick your actions to what you define in the plan as this will be a great tool to guide you through the brand implementation. After all, your brand implementation will ultimately determine your failure or success.

Saturday, October 17, 2009

What is a Perceptual Map?

When you reach the point of analysing your own product in the marketing strategy section of your marketing plan, this is when you will come across the necessity of creating the perceptual map. This will help you understand how your product is perceived by consumers relative to competition.
Based on a visual 2D representation of how target customers view the competing alternatives, this comparison will combine both the product’s segmentation and positioning with the aim to understand the correct product position so a competitive advantage can be identified.
In these conceptual maps there are two axes, and all competing products will be assigned to one of the four quadrants that best describes the customer’s perception of that product according to those axes categories. So, if we are analysing a stomach ache relief medicine, for example, we will consider as the two dimensions as taste (good or awful) and efficacy (works fast and well to doesn’t work at all).

From the example above we verify that Product D is seen by the consumers as the one that tastes the best and is also quite efficient. Product D is also the one with the largest market share hence its larger circle representation. Product A and B are percepted as very similar products and product E is the worst perceived product as it neither works well or tastes good.
The product’s position is defined through statistical calculations based on consumer preferences that can be acquired through questionnaires. Other than the simpler version of the conceptual map of competing products as above, products can also be analysed in accordance to the ideal vectors established by the consumers. An ideal vector will indicate the preferred ratio of the two dimensions within the quadrant they apply. Each vector will be defined in the perceptual map as a line from the origin to an arrow indicating the direction in which the vector’s attribute is increasing. The longer the line, the greater is the importance of that attribute in explaining the variance. For a better understanding of how this is done and the calculations involved I would suggest you to read the presentation by the Columbia University Marketing Professor Skander Esseghaier here.

Monday, October 5, 2009

Establishing Critical Success Factors

Under the Situation Analysis section of your marketing plan you should define your business Critical Success Factors (CSF). These are the vital elements for your strategy’s success, or in other words, the CSFs are the factors that you must focus on to achieve the company’s ultimate objectives. Reaching such factors will be decisive to whether your business will be a success or a failure.
The principle of identifying critical success factors was first presented by D. Ronald Daniel in 1961, but it was later in 1986 when J.F. Rockart developed the concept as we know it today.
Rockart defined critical success factors as “the limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for the organisation. They are the few key areas where things must go right for the business to flourish. If results in these areas are not adequate, the organisation’s efforts for the period will be less than desired.”
To make it clear on the areas that these CSFs will usually fall into, Rockart categorised them in different types:

  • Industry CSFs: result from specific industry characteristics;
  • Strategy CSFs: defined through the analysis of the business competitive strategy;
  • Environmental CSFs: through the analysis of the business macro-environment resulting from economic changes, technological advancements, business climate or other related environmental factors.
  • Temporal CSFs: specific to the organisation’s internal needs and changes.
The critical success factors are intrinsically related to the business mission and strategic goals, therefore, it will be through their combined analysis that the CSFs can be clearly identified, having in consideration the above mentioned types.
To help you identify your organisation’s CSFs you can follow the below stages:
  1. Establish the business's mission and strategic goals.
  2. Looking at the mission and objectives, brainstorm ideas regarding the areas of business that need attention so these two can be achieved. The result will be a list of potential critical success factors.
  3. Narrow down your list by considering only the ones that are absolutely essential and that will be definite in whether your business is successful or a failure. Some examples of generic CSFs are cashflow; new product development; new customers’ attraction; secure financing; amongst others. Although there is no rule defining the number of CSFs you should try limiting them to five or fewer absolute essentials. By keeping a small number of CSFs it will be easier for you to have a direction and prioritise which ones are really important for your business.
  4. Identify how you will monitor and measure each of the CSFs.
  5. Communicate your CSFs within the organisation so everyone is focused on what needs to be achieved.
  6. Keep monitoring your CSFs throughout time to ensure your business keeps moving towards its main aims.

Sunday, September 20, 2009

Porter’s Five Forces analysis

Within the Market Summary of your Marketing Plan it might be useful for you to include Porter’s five forces analysis. This is a framework for industry analysis that determines the attractiveness of an industry by helping you understand both the strength or your current competitive position and the strength of a position you are looking to move into. Developed by Harvard Business School professor, Michael E. Porter in 1979, the Five Forces analysis has some similarities with other environmental tools such as the PEST analysis, although the first one is more closely related to the company (microenvironment) by measuring how it can be directly affected in its ability to serve its customers and make a profit.
These 5 forces that affect your competitive strength can then be defined as follows:
  • The threat of entry of new competitors - your strength is affected by the facility of other companies to enter your market as based on:

- economies of scale

- initial investment and fixed costs

- brand loyalty

- close customer relations

- switching costs for customers

- ease of customers to change provider

- the relative price for performance of substitutes

- ease of access to distribution channels

- learning curve advantages

- expected retaliation by competitors

- government action to new entries

  • The threat of substitute products - your strength is affected by how easily available are there any other substitutes or complementary products that have either lower prices or better performance. This is determined by factors such as:

- price performance of substitutes

- buyer switching costs

- perceived level of product differentiation

- close customer relationships

- current trends

  • The competitive rivalry - this force is many times determinant to define the industry competitiveness as high competitive pressure can result in changes in prices, margins and innovation for each individual company and for the overall industry. To determine the competitive rivalry the following should be analysed:

- number of competitors

- industry growth rate

- players strategies

- product differentiation

- barriers for exit

  • The Bargaining power of suppliers - company suppliers may have a source of power over the company depending on how dependent the companies are from their suppliers. To analyse this force should be considered:

- number of available suppliers

- switching costs from one supplier to another

- threat of forward integration by suppliers

- presence of substitute inputs

- cost of inputs relative to the selling price of the product

  • The bargaining power of customers - this force will define how much customers can impose pressure on margins and volumes. To analyse this, the following factors should be considered:

- cost of switching between product providers to the buyer

- the product's ability/ease to be replaced

- how strategically important is the product to the buyer

- possibility for the customer integrating backwards

- buyer concentration to firm concentration ratio

- bargaining leverage

- buyer information availability

Th Porter’s Five Forces model can be illustrated as below:

Each force should be analysed individually as only by identifying the strength and direction of each one, you can assess the strength of your company’s position and its ability to make a sustained profit within the industry.
To clarify how this can be done let’s look at an example:
“John Smith is tired of the high demands of his job at a financial firm in the City of London and is looking to start up a more relaxed business as an Internet cafe owner. To understand the potential benefits of entering this market he decides to make a Porter five forces analysis and classifies each force with one or more “+” (if the force is in his favour), “-“ (if the force is against him) or “0” (if the force doesn’t affect him) signs depending on how strongly the forces influence his business competitive position in the market. The result follows:

Porter’s Five Forces Analysis – Internet Cafe

Click image to enlarge

After conducting the Porter’s Five Forces for his potential new Internet cafe business, John decided to stick to banking while he thinks about a new business to get involved.”