With increased global competition it can seem that options for businesses are limited, beyond stepping up R&D with the implicit risk and limited ROI, integrating price discounts into the overall strategy, packing up and moving to lower cost countries… Or buying up the competition. And yet seen from another perspective there remain many opportunities available.
Think of the typical small business purchase of computer equipment: the consumer has a specific need (a new employee needs a PC), goes to a few retailers… And is faced with a wall of unintelligible technological terms which only confuse him (Four cores! 3.2 Ghz!), and price promotions (20% off!). In the end the customer is none the wiser as to which one is best for his business: it might be cheap, the technology might be super, but is it worth it?
The typical reaction by the consumer is to ask a technology savvy friend (a.k.a “the geek”) who will ponder the different processors, hard drive space, memory and half heartedly make a recommendation. But here’s the catch: the consumer’s needs are not about technology, but about the use of technology: Will it be easy to use? Will it have everything that is needed, from programs to energy protection? Will it help us work better? Will it be reliable? WIll it be durable? The customer doesn’t express these needs, his geek friend cannot help with them even if he did, and brands are left competing on price, newness and razor thin profit margins. Everyone loses compared to a situation in which brands responded to the customer’s actual needs.
Other markets may not be as dramatic but if we follow our customers’ quests and establish the end result they achieve we can realize there is usually a better possible outcome and a better experience along the way, which our customer can appreciate and be willing to pay for. In fact that better outcome might be exactly what our brand promises, but then we need to ask ourselves to which extent it is fulfilling that promise and how much room there is for improvement. This isn’t a critique of manufacturers and retailers, it may simply reflect the limitations of traditional advertising based marketing, but is intended to show the opportunities to compete on improving the actual value for our customers, which would let us move beyond competing on prices.