There are four ways that you can approach your market with your products and services.
The first is by creating utility, usefulness, and by satisfying the needs of your customers to achieve a specific result. This approach requires that you offer customers something they need and can use to accomplish their other goals. You’ve heard it said that “people don’t buy drills; they buy quarter-inch holes.”
An example of a new industry that was built on utility value or needs is FedEx. Years before Apple created entirely new industries for the iPod, iPhone, and iPad, FedEx created an industry for overnight mail that never existed before. Fred Smith, the founder of FedEx, saw an immense need for rapid letter and package delivery overnight because of the slowness of regular mail.
Look at your market today. What will your customers and potential customers want, need, and be willing to pay for in the months and years ahead? As Peter Drucker said, “The trends are everything.” What are the trends in customer demands in your market? If you can answer this question accurately, you can often leapfrog over your competition and dominate a new market even before it emerges.
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A second approach to marketing is by changing your pricing. By bringing your goods and services into the price range of your customers, you can open up entirely new markets that do not today exist. Henry Ford became one of the richest men in the world, after struggling financially for decades, because he had this rare insight. He saw that by mass producing the automobile, he could get the price down to the point where most Americans would be able to afford one. In achieving this goal, he revolutionised manufacturing and mass consumption forever.
Many companies have been able to achieve market leadership by focusing on bringing their prices into the affordability range of more customers. What we have found is that the greater your market share, and the lower your cost of production, the lower the price that you can charge. The Japanese use this strategy brilliantly year after year. First of all, they price their products and services as low as possible to gain market share. As they gain market share, they begin to enjoy economies of scale, manufacturing their products at ever-lower prices. They then pass the savings on to their customers with even lower prices and increase their market share once more. Eventually, they end up dominating many of the markets they have entered.
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Your Customer’s Reality
The third strategy in marketing is adapting to the customer’s reality, both social and economic. A perfect example is how Sears became the world’s largest retailer of its time by initiating an unconditional money-back guarantee policy in the catalogue business.
The customer’s reality up until that time was that if they bought something that didn’t work or didn’t fit, they were stuck with it. Sears realised that the way to overcome that major barrier to purchasing was to adapt their product offering to the customer’s reality, which led to a revolution in merchandising and retail sales.
Every product offers a “key benefit” that is the primary reason the customer would buy that product. Each product or service also triggers a “key fear,” which is what holds the customer back from buying the product or service in the first place. For example, customers are terrified of risk. They are afraid of paying too much, getting the wrong product, losing their money, and getting stuck with something that is inappropriate for their purposes. Whatever their fear is, it is the main reason that qualified prospects hold back from buying any product or service, at any price.
When you can emphasise the key benefit, the unique added value a customer will receive by buying your product or service, and at the same time take away his or her major fear, you can open up an enormous market for what you sell.
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Delivering True Value
The fourth approach to marketing strategy is for you to deliver what represents “true value” to the customer. True value can only be identified by working closely with your customers.
IBM is the perfect example. The company controlled 80 percent of the world computer market in its heyday, and for good reason. IBM discovered that in the field of high-tech and high-end equipment that sells for hundreds of thousands or millions of dollars, it was not the functionality of the computer that attracted buyers as much as it was the assurance the computer would be serviced and repaired quickly if something went wrong. IBM provided not only world-class computer products, but also the security that once you bought from IBM, you were protected with perhaps the best service support in the world if the equipment broke down for any reason. This was “true value.”
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