Our firm recently conducted a strategic brainstorming session with the managers of a label converter client. As the full day session drew to a close, I summed up the perspective of ownership by using the title of the off-Broadway show "I Love You, You're Perfect, Now Change!" While that show is certainly not about label printing in 2008, its title does suggest the present state of so many label converters within the industry.
Even the most historically successful label printers are finding today's increasingly challenging business climate … well, increasingly challenging. Slow industry growth, combined with the consolidation of not just competitors but vendors, customers, and markets as well, are just the background of the picture. Costs are rising just about everywhere – raw materials, labor, medical benefits, administrative – and the weakened dollar draws even more attention to the looming specter of foreign competition. Worker turnover is rising, and the most common complaint in the industry is the inability to find qualified, quality workers. And of course, all of this is occurring at a time when, more than ever, customers perceive a commoditization of label printing and associated services, and are demanding more bang for less of their buck. Most companies today are finding that their ability to deliver high quality products with quick turnaround times while providing outstanding customer service at extremely competitive pricing is no longer a selling point. It is the starting point!
What all of this comes down to is recognizing the need for change, an attitude captured brilliantly in one of the late folk singer Harry Chapin's pithiest couplets:
I've got this problem with my aging
I no longer can ignore;
A tame and toothless tabby can't produce
a lion's roar.
The astute will recognize the need for change, and the bravest among them will toil in their unwavering pursuit of a Sustainable Competitive Advantage. Perhaps they will innovate through a niche product or service, or maybe creatively bundle a combination of products and services to enhance their value proposition to customers. Others might develop expertise in a particular market niche or in a specialized production or delivery process. Still others might leverage the latest technologies to achieve meaningful differentiation in the eyes of their customers.
The very best companies will work to formulate a strategic plan, but will not sit idly by while waiting for a silver bullet. These organizations will be unrelenting in their pursuit of "Legitimate Lean" operations, and will continue to compete on the basis of their true expertise and competencies, dumping costly distractions and understanding that no single company can possibly be all things to all customers at all times.
But in today's marketplace, production and operational excellence might just not be enough to survive. With converters being squeezed from all sides, it could be time to modify the approach to process improvement not just "below the line", but at the "top line" as well. For certain companies, the time has come to dramatically shift their focus from Sales Driven to Marketing Driven.
The typical North American label company is a Sales Driven organization, relying almost exclusively on a field sales force to generate growth. These organizations generally encounter a host of management issues that both detract and distract from their ability to succeed. First and foremost among these issues is that of sales management, which includes developing and executing an effective salesperson compensation structure which appropriately handles the myriad of variables, including revenues vs. profitability, new sales vs. repeat sales, geographic territories vs. end-use markets, etc. Some companies can't afford (or resent paying) superstar salespeople, while others can't afford anything except a single superstar salesperson. And even superstar salespeople, as rare as they may be, can be far less than the ideal solution, as they have an asymptotic capacity for incremental sales once they max out, tend to run "roughshod" over operations personnel and systems, and keep their employers up at night contemplating the ever-present threat of absconding with their accounts to a competitor. With the investment in training and ramp-up for each long-shot salesperson, having to deliver on the promises of oft-maverick salespeople, and the inherent difficulties in managing an outside sales force, it's no wonder companies have concluded that their only means of growth is via acquisition.
However, proficient marketing can dramatically alter this sales equation. Consider some of the core differences between a Sales Driven and a Marketing Driven organization: Sales responds to customers and competition; Marketing initiates and positions the terms of the discussion. Sales must endure the company's message being filtered by a salesperson with his or her own agenda; Marketing ensures that the company develops and controls the consistent, effective, and brand developing message. Sales pursues one prospect at a time; Marketing pursues one target market at a time. In sales, the relationship is between salesperson and customer; Marketing ensures a company to company relationship. And of course, salespeople depart, often to competitors; Marketing's message and its effect on your company's positioning remain regardless.
So what exactly is a Marketing Driven organization and how does a business go about making the transition?
Remember that the mission of Marketing is perception, not product or service. A fundamental marketing axiom recognizes that the reality within the customer's mind is preferred to reality within the marketplace. Like political spin doctors, trial lawyers, and ax-grinding journalists, marketers understand that what people perceive to be true is the truth. Developing a Marketing Driven mentality begins with creating a strategic marketing plan which addresses three primary objectives: Branding, Positioning, and Communicating.
Branding is a foundational element in just about every marketing campaign. A brand represents the amalgamation of experiences, perceptions, and expectations. A key challenge of marketers is to create and elevate the value of the brand by influencing as many of those experiences and perceptions as possible.
Your brand is, in effect, your promise to the customer. The brass ring of any branding campaign is defined not in terms of prevailing over your competition. Rather, it is for your target customers to instinctively and with certainty perceive your brand as the only legitimate solution to their problem.
Marketing is not selling; it is positioning, and positioning is how you differentiate your company, product, or service in the mind of your target customers. Positive differentiation, obviously, is a marketer's best friend, and its successful positioning is the key to succeeding in a crowded marketplace.
Positioning is an exercise in backtrack thinking. You need to begin by putting yourself inside the mind of your target customer, ignoring your own opinion or perspective. How exactly does your prospect perceive your brand or product? Altering perceptions in our sophisticated and commercially saturated society is extremely difficult. Market research is essential to pinpointing where you are coming up short so that you can focus your time and energies where relevant. Remember that a key to marketing success is segmentation, which enables you to achieve better results by being selective and concentrating on narrow targets. More than any element to a marketing strategy, positioning demands that you ignore the details and focus on the big picture. Positioning addresses perceptions, not transactions.
Developing a successful plan that will convey to customers your brand and positioning is, in effect, the execution of marketing strategy. In many ways, communicating at this level is similar to public speaking. Your goal is to clearly deliver the message by confirming your credibility and connecting with your audience on an emotional level. But marketing reaches for another level by seeking both to motivate your prospect to buy and to cement brand loyalty.
In constructing a communication strategy, you typically will select the appropriate combination of market communication tools, which may include advertising, public relations, web-based activities, trade shows, special events, and promotions and giveaways. A truly comprehensive communication strategy inevitably integrates your company's every customer interface and point of contact with the public.
Effectively transitioning to a Marketing Driven organization should improve your company's long term health by developing brand equity within your target markets. Consistent and reinforced messaging to your target markets will provide greater control over your brand's perception and enhance the productivity of your salespeople – all the while reducing your overwhelming reliance on them. If your company these days feels more like a tame and toothless tabby, strategic marketing may be just the tonic to help you regain your lion's roar, and become king of the concrete jungle.