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18 Defining the Marketplace
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THE OLD WAY: The market is an ocean of consumers.
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Few things in this world are as inspiring as the immensity and mystery of the ocean’s depths. It is understandable that early business leaders co-opted the image to describe the marketplace. This inspiring yet straightforward image provided an easily understandable description of what happens to our products and services after the sale. |
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As if we were actually dropping things into the deep, so too did this market place swallow up the fruits of our labour. (This was most readily true back in the day of the Model-T Ford, which came in any colour you could want, so long as it was black.) To use the analogy, money simply jumped out of the depths and landed within easy reach on deck. This was how business worked during the early days of the industrial era, when markets were indeed boundless, and competitors were few and far between. |
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To satisfy the incredible hunger of this ocean-like market, high-volume production became a necessity. Of course, this also meant a narrower range of offerings, in order to limit development, tooling, training, and changeover and inventory costs. (Just In Time Production) To succeed with this strategy, companies had to develop generic or mass-market appeal – the one size which actually did fit all. |
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When an established design became a little dated, a simple dress-up of the original version was usually enough to renew customer interest. Inevitably though, dressing-up fails to bring the same enthusiastic customer response. Customer demand can shift in a heartbeat, especially when the competition lays an egg. In these instances, the big guns get pulled out — glitzy, high-gloss advertising — the flashier the better. Whether it's a catchy jingle, an oversized billboard, or a multi-media web site, companies are constantly reaching for the best medium for their message. |
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Contrary to what you may have thought, advertisers have discovered that the message itself need not relate to the company's offerings to be effective. This is the discovery that brought us the "life-style" or "image" ads that annoy many of us and lure many more. You have seen pool parties full of attractive people holding beers, or the athletes with milk moustaches. Here, advertisers associate their product or service with an alluring image. Done well, this kind of advertising can bring in droves of buyers. |
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Eventually, even this powerful media strategy fails to cut it. This is when companies resort to their final option. Discounts, rebates, special offers and bonuses are thrown into the fray in an attempt to shake sales right out of the woodwork. Taken to the extreme - frequently in automobile dealerships - the result can become rather pushy. (Lean Manufacturing for Lean Marketing) In the beginning, this strategy works, drawing out those reluctant customers who were waiting for the price to come down. |
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But we already know that customers who buy according to sticker price are never brand loyal. If your competition can beat your price, they can win these customers away from you. When such discount-motivated sales eventually taper-off (and they always do) what is left? |
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What is left is all too often an under-capitalized company, with an under-diversified mix of offerings and a reputation for "cheapies". This is no place to position your company. |
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