Marketing Directors should help create competitive advantage

UK Marketing Director helps Chinese firm compete with the Japanese

A marketing director friend of mine has helped run a company in Beijing for an Italian-Chinese joint venture for the last 10 years. One of his many marketing achievements is that his company has successfully created marine-class deep freeze equipment that enables Chinese fishermen and fishing companies to compete with the Japanese for catches in the Pacific tuna fisheries. This, however, is not the main point of this article. In my discussions with my marketing director chum, we worked out that China’s five main competitive advantages are:

i) People. People in sheer weight of numbers creates a highly cost-effective and competitive domestic labour market.

ii) Education. The major cities at least run highly effective education systems.

iii) A global policy of expansionism albeit not quite in the colonial sense as yet. The motivator here is China’s relentless quest for resources, commodities and raw materials. You may not think this is a competitive advantage but witness their miraculous transformation from an inward-looking country to their current status as a massive trading nation.

iv) Currency – strong and stable.

v) Intellectual Property – grab and copy policy! China has been accused of turning a blind eye to international laws on intellectual property (IP) as a conscious government policy.

So imagine my surprise when I received an e-mail claiming to be from a Chinese internet domain registration company treading ever so gently around a delicate IP matter. I am fortunate enough to have a company which has the company name as a competitive keyword and also own the UK domain name for the same keyword. Upon receiving the e-mail from the Chinese domain company I was amazed as they asked whether their applicant was linked to my company in any way with a view to protecting my rights over the keyword. My flabber was completely gasted! Either the Chinese company is being very, very polite or the Chinese authorities are finally changing an unwelcome facet of Chinese competitiveness. If this small act is an example of the national picture, China may consider that it stands to gain more by easing up on its fifth key competitive advantage.

Which leads me to ponder: ‘What is my competitive advantage?’ and ‘What is my business’ competitive advantage?’. More importantly, what is your business’ competitive advantage and how can this be leveraged to best effect in your business. These fundamental questions are addressed by the world-renowned business academic and writer, Michael Porter. He wrote the mother of all business strategy books, ‘Competitive Advantage: Creating and Sustaining Superior Performance’ in the 1980′s. It is still a key reference tome for businesses after more than 30 printings.

A model of competitive advantage

In order to develop a competitive advantage, a business must have resources and capabilities that are better than those its competitors. Without this superiority, competitors could simply replicate what the company was doing and any advantage quickly would disappear.

Resources are the business-specific assets useful for creating a cost or differentiation advantage that few competitors can acquire easily. The following are some examples of such resources:

  • Patents/trademarks
  • Proprietary knowledge
  • Customer base
  • Company Reputation
  • Brand equity

Capabilities refer to a business’ ability to utilize its resources effectively. An example of a capability is the ability to bring a product to market faster than competitors.

The firm’s resources and capabilities together form its distinctive competencies as shown in the diagram below. These competencies enable innovation, efficiency, quality, and enhanced customer service, all of which can be leveraged to create a cost advantage or a differentiation advantage.

Competitive Advantage Infographic

Cost Advantage and Differentiation Advantage

Competitive advantage is created by using resources and capabilities to achieve either a lower cost strategy to build market share or a differentiated product to build profitablity and organizational focus..

Then a business should decide how broad or narrow a market segment to target. Porter’s famous matrix, using cost advantage, differentiation advantage, and a broad or narrow focus, helps to identify a set of generic strategies that the firm can pursue to create a sustainable competitive advantage and higher profits.

Value Creation

A business creates value by performing a series of activities that Porter identified as the value chain. To achieve a competitive advantage, a business must perform at least one value-creating activity in a way that creates more overall value than their competitors do. Superior value and increased returns for shareholders are typically created through lower costs or superior benefits to the consumer (differentiation).

I could really do with another reading of Porter although he might be a bit ‘heavy’ for the beach.

So many marketing ideas – what to do?

The active human mind, especially that of a marketing director, spawns countless ideas in the average day. All of us have the occasional Newtonian or Einstein moment. You know the sort of thing; wouldn’t it be great if you could fill or empty the dishwasher by the power of thought alone… or somehow find a way to make internet marketing less time-consuming… hmmm.

OK, back in the room.

The key question here is what to do with all your ideas? How can you harness this hyperactive imagination of yours? Firstly, recognize that you are in great company. Ideas are what we do best. They may drive us potty but thinking stuff up is embedded in our genes. Think Netwon, think Faraday, think Brunel, think Darwin, think Dyson!

Know this – your thoughts can be turned turned into world-beating innovative products and services. Your ideas can have life-changing consequences for you and your employer. BUT only those ideas that are implemented will have any benefit for you or for your employer. If you accept this cruel discriminator, then you have to focus next on which of your ideas should receive that special implementation attention.

One solution to harness and maximize your ideas is to push them through a New Product Development (NPD) process. Here’s a page from one of my own NPD process. Apologies for the old school appearance but it was created before infographics became trendy.

New Product Development Methodology infographic

New Product Development Methodology infographic

A carefully thought out NPD process can help filter your precious ideas for amazing new products and services. It can also generate new ideas and prioritise those that have the best chance for commercial success. NPD helps focus your resources or your company’s resources on those ideas that are more likely to be the shining stars in your product portfolio.

The downside is that you lose a little control because your big idea is out there competing with others, will be exposed for group critique and be implemented by others who don’t have your vision. The upside is that the group will help make your winning idea happen.

Outside of the group, there are tools and resources that can help you through some of the stages in the above NPD process e.g. low cost online surveys that can help filter or improve your ideas. However, this is the subject of another post.

For now, realize that most marketing directors are not simple implementers, nor are they exclusively political beasts, nor do they sit in a darkened room thinking stuff up solus. The best marketing directors are the ones that take their own ideas or the ideas of other willing participants and make them happen.

By the way, am happy to send out my NPD process with full explanation of each key stage. Just leave a comment below.


Digital marketing and food

How on earth can you find the time or the budget to explore all the digital marketing channels? I’m talking about video sales letters, SEO, e-mail marketing, article marketing, lead generation, Gmail advertising, Banner advertising, Facebook advertising and Pay Per Click (PPC) to name but a few.

The simple answer is you can’t and you shouldn’t; well not all at once. And even if you could how would you determine which digital marketing element worked or not. The effort of unravelling the impact of individual media on a successful or unsuccessful campaign must rise exponentially with the number of channels used.

The best campaigns, like the best food recipes are simple, easy to understanding and yet so easily spoilt. I mean you wouldn’t add anchovies to a crepe suzette would you? Or turmeric, despite its new-found status as a super food. Come on!

At Gatwick Airport last year (2011), I ran a campaign with 30 different elements. It included more than 10 digital marketing channels – a microsite, QR Codes, sms marketing and even a dash of Bluetooth messaging to name a few – a positive banquet of digital channels, in fact. Called “Gatwick Goodbuys”, the campaign was a roaring success generating over £5m for the airport’s retail partners and more than £1m for the airport’s bottom line. It even attracted ‘finalist’ status in the Chartered Institute of Marketing’s annual marketing awards.This was all achieved without paid-for advertising. The Return on Marketing Investment was around 500%.

Job done one might say. But trying to fathom which channel made the most impression took almost as much work as creating the campaign in the first place. This included primary research among departing passengers. The truth is that most campaigns do not require such a ‘flagship’ effort or complicated approach.

Today’s marketing director has to clearly understand the potential for each specific marketing channel, whether digital or traditional. And the channels must be deployed sparingly and in a specific order, just like exquisite and balanced items of a food recipe.

She must use each digital marketing channel sparingly so that each ‘flavour’ is detected, appreciated and its contribution to the campaign recipe easily assessed.

You can always add layers later ….and some sprinkles on top …like a strawberry trifle ….yummeee.

Well here we are

Fellow marketers and aspiring marketing directors, regard this site as your home.

Make yourself comfortable, contribute, argue, be friendly or be awkward. Help yourself to any free resources which I can muster for your benefit. You can even rant at your useless boss if you like.

After several false starts and two hosts later, I have finally installed my own WordPress theme on a domain name that has lain dormant for far too long – Phew!

This blog’s going to be a bumpy ride but an enjoyable one. Together, we’ll cover a broad range of topics from marketing planning to our collective marketing experiences. Will also add any progress that my year-old business makes as I endeavour to apply some of my own musings in the real world.