Strategy and Marketing
As one of my favorite professors used to say, ‘the number of people who do not understand the meaning of Strategy is exactly equal to the number of people who routinely talk about strategy
So what then is strategy?
Strategy is the essence of a product or a brand or even an organization. It is the answer to the question “Who are you?”. However, it is not what you think about your brand or your company. It is what the customers think that matters.
For example, Indigo Airlines stands for on-time performance. However, they did not just stop at advertising it. They trained all their employees to focus on getting there on time. From getting passengers through security check to getting airplanes cleaned up before the next flight, the focus was clear and understood (and accepted) by all employees. And now, customers are beginning to agree. Indigo has grown to become 3rd largest airline in India. Will it grow further? Mark my words, it will.
On the other hand, what does Air India stand for? The employees have no clue. The customers have a lot to say, though most of it can’t be printed here. Unfair comparison? Ok. What does Kingfisher stand for? Unclear. Is it about a luxurious experience? About high quality service? If so, why the hell did you buy Air Deccan, which is clearly, a low cost no frills airlines? Shri Mallya would want to customers to think best service when they think of Kingfisher and low cost when they think of Kingfisher Red. Mostly, we think ofbeer when we hear the name Kingfisher. So no wonder Kingfisher Airlines is making huge losses.
Customer Perception is the reality
As a brand or an organization, you are what your customer’s perceive you to be. So Hero Honda is perceived stands for reliable fuel-efficient bikes. It doesn’t matter whether some bike from another company actually gives a little better mileage. Customer minds are made up and while they can be changed, it is an extremely difficult and time taking process. In the minds of the customer (the marketing battlefield) Hero Honda is fuel efficiency.
Yamaha tried for years to take over that position to no avail. In fact, the net effect was that Yamaha actually lost out on sales. Recently, Yamaha has got back to its original strategy – Style and performance – with bikes like R15 and FZ. So I would predict that Yamaha is back on track.
Similarly, Hero Honda tried to take over the style and performance position with Karizma. Now Karizma is a great bike (have driven it myself) and, with its 225 cc engine, was superior to the Bajaj Pulsar (till the Pulsar 220 launch). However it was the Pulsar that outsold the Karizma every year. Why? Because the Karizma doesn’t fit with people’s perceptions about hero Honda.
Can we think of other such examples? Maruti Suzuki, India’s largest seller of cars by far. So what do people think of Maruti. Dependable, good mileage, easy to maintain, good service network (remember the ad about finding a Maruti service station in Ladakh?). But Maruti doesn’t stand for Hi performance or Luxury. So premium cars from Maruti like Baleno, Grand Vitara etc etc have always failed. Now they have launched a 16 lakh + car called the Kizashi. Now ,will it work? My bet is absolutely not.
Of Complexity and Confusion
The customer’s mind is overloaded with information. He is thinking about many things, about work, about his boss, why Dhoni doesn’t play Ashwin, etc, etc. When it comes to choosing a product he is again faced with a choice from a large number of products, all making claims of superiority.
How do you choose a TV from among 15 brands, each with at least 8 models? How do you expect the customer to understand the difference between Dynamic and Static Contrast ratio, about in plane switching, etc, etc.
The key is in simplicity. Organizations should aim to simplify the choice that consumers make.
One of the mistakes that companies make is to play on features. The customer does not wish to understand the technology behind your product. She would like to know what this does for her.
The Internet is full of jokes on Microsoft Windows. It’s prone to crashing, has lots of bugs, and is vulnerable to virus attacks. Linux is far more robust; Apple Mac OS packs a far greater punch. Where Windows really scores is ease of use. People can learn to operate it almost immediately.
Man is an emotional animal
Much has been said and written about the nature of Man as rational. However, rational decisions require a heavy investment of time and mental effort on the behalf of the customers. That might well be the case when an Large Corporation is buying a 2 $Million piece of machinery.
However, ordinary people like you and me have neither the ability nor the patience to go into such great depths. We cannot learn digital imaging technology before buying a camera, nor understand mobile telephony before buying a handset. Tell how many of us understand EDGE, HDSPA etc etc.
It makes sense for any product to attempt to connect emotionally to your customers while keeping it simple and focus on customer benefits and ease of use.
Do you think Apple IPod was the best music player or that it has the most features? Hardly, experts have always recommended players like Creative Zen, etc. What apple did was to create a stylish cool device that has an excellent user interface.
I see something similar happening in the Iphone and Ipad wars. Motorola and HTC and others have focused on features and specifications on their Android phones, while Iphone users really want to be cool. Ditto for Ipad. There is a lesson here. Gadgets are made by techies and bought and used by ordinary people. I don’t really care for the tech specs. My Iphone is great fun to use and pretty cool to carry around. Go Apple.
Enough for today. Will be back with more common sense Strategy and Marketing concepts. Would appreciate comments and queries.
Written by –
Director Vanguard Business School
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