Special Report Marketing’s New Realities · Understanding marketing’s new realties gives you...

Understanding marketing’s new realties gives you the edge

Special Report Marketing’s New Realities

In The Internet Ageby: Jeff Gilman

“How you think about marketing is the biggest single factor shaping your marketing results.”

The 4Ps of Marketing: Products, Prices, Places, and Promotions have been replaced by the 4Cs - Consumers, Costs, Convenience, and Communications. Driven by competition, demographics, technology, and the internet, marketing has undergone a revolutionary re-think.

This report explains how a 2 millimeter shift in thinking about your marketing can produce extraordinary results for your SME or startup.

jeffgilman.com

Copyright © 2019 Jeff Gilman �1 Ver. May ‘19

http://jeffgilman.com

Marketing today is about people sharing information

The great Will Rogers said, “If advertisers spent the same amount of money on improving their products as they do on advertising, they wouldn’t have to advertise them.”

Will might be on to something. The new marketing reality is people share information about their purchases online: happy customers empowered by social media become evangelists, and unhappy customers take their complaints public.

It’s akin to living in an old fashion small town where we share vital information with neighbors over the back fence. That’s the new marketing reality.

However, consumers don’t talk much about products or services. Mostly they talk about their experiences. Today, people talk about the value they feel they got from a deal. They tell others how they feel they were treated. They talk about how fast they got what they wanted. They talk about how the product made them feel. They talk about who they trust, and why.

This special report helps make sense of what’s happening and shows how you can profit from the new realities.


Now Your Business Can Be Dramatically Improved With A Small Shift In How You Think About Marketing

The original marketing mix; the 4Ps of Product, Price, Place, and Promotion was introduced in 1960. It was the mental model that guided marketing thought. The model worked well for years and left a lasting legacy.

However, a new model is needed for our new reality. The new model is the 4Cs: Customer solution/value, customer Cost, customer Convenience, and customer Communication (Kotler & Armstrong, 2014).

The need to change models resulted from:

• Products are more numerous today, are manufactured world wide. It is unlikely a new product or service can be 10x better than the old or have a niche to itself. There is too much competition. That’s why the new marketing reality focuses on improving the customers’ experience to create more perceived value. This is explained in detail in the We Used To Sell Products, But Then We Learned Customers Buy Value section.

• Price is what sellers charge. Cost is what customers pay. Today, customers think more in terms of cost rather than just price. Because cost includes; time, effort, opportunity cost, training, social stigma and many other factors, it is possible to sell based on total costs. When product and business model combine to lower the customer’s perception of costs, your value proposition improves. See the We Used To Compete On Price, Then We Learned Consumers Think Of Costs section.

• Place is where the customer finds products and services. Today, customers look for goods and services both on and off line. That means when useful information and products are found where customers search, you have the start of the new selling cycle. Convenience is the start of a new marketing model that creates lasting impressions and builds long term relationships. This is explained in We Used To Think About Business Logistics, Then We Learned Consumers Want Convenience.


• Promotion has evolved from advertising at markets to communicating with individuals. Savvy marketers reduce advertising costs by targeting ads better. But they also use social media to build relationships. That’s why communicating with customers has replaced mere advertising. This is explained below in We Used To Advertise At Markets, But Then We Learned People Want To Be Part Of The Conversation.

The new marketing realities are the 4Cs. If you shift your thinking 2 millimeters and adopt this mental model, you get: new ways to deliver experiences that improve customer satisfaction; new ways to improve the cost/value equation; new ways to deliver more satisfaction with convenience, and; new ways to maintain and improve relationships with communications.

The new realities are:

• Consumers - in a hyper competitive world the consumer experience matters more than the product alone.

• Cost - busy consumers think of time, data conversion, driving to the store, maintenance, social stigma, and many other factors as costs. Your opportunity is to lower “costs” by reengineering products or services and the business model to deliver more value.

• Convenience - the new reality is people are busy and leading more stressful lives. Putting information and products where they search, and making buying easier is like catnip to customers.

• Communications - the new reality is good manners matter more than ever. Talking with customers beats shouting at crowds and the internet provides the social tools to do that.

That’s why the 4Ps have become


the 4Cs.

The remainder of this report explains these changes in detail and provides examples of how others have implemented 4C thinking. I hope it offers useful ideas for you.

Sincerely,

Jeff Gilman

Port St. Lucie, Fla.

P.S. I think the best learning tool is observation. My challenge question to you is:

What do you see your competitors doing to adapt to the new realities? How’s that working for them and “how could you become the kind of firm that could put YOU out of business?”


We Used To Sell Products, But Then We Learned Customers Buy Value

Historically, companies that mastered manufacturing technologies, had the advantage. You had to make something to sell anything.

However today, we have a general condition of surplus. Changing economics, technologies, and globalization mean almost everyone can manufacture, deliver a service, or cause something to be made or served. It’s hard to have a unique advantage when so many know how to make, deliver, or create things.

That’s why competitive advantage has shifted from the mere ability to make stuff to creating unique value for buyers. When the consumer asks:

“If I were your ideal customer, why should I buy from you, rather than a competitor?”

1) To win the customer’s business, you must make the customer feel, “the seller offered a unique value”, and;

2) To retain an existing customer, you must make the customer feel, “the seller delivered a superior experience.”

If your value isn’t unique, the customer can easily find what she wants on her phone. If the experience isn’t great, the customer starts shopping again.

That’s why today, marketers devote more resources to understanding customers; who they are, what they value, what their choices are, and how to improve satisfaction by changing the experience.

That’s how McDonalds evolved from stand-in-the-sun-rain-and-snow-to-buy-a-burger ‘kiosk’, to a state-of-the-art-fast-food-dining experience. And they did it without changing the product. The Big Mac was introduced in 1967. And the burger in the 1940s.


That’s why the iWatch, which doesn’t tell time any better than any other watch, is so popular: it’s fun and useful and changes the watch experience.

The value is in the experience,

not the product. It isn’t the burger or the time that counts, it’s the experience of getting the burger or knowing the time that matters today.

Two Types Of Value

There are two types of value: real and perceived. A watch that tells time better is real value. A watch that’s more fun is perceived value. A healthier burger is real value. A faster and more consistent burger is perceived value.

The new reality is perceived value - the experience - is as important, and often more so, than real value.

Value Example

Today, the bus system in my home town of Cleveland, Ohio is asking customers this: “would you prefer service to more locations?, or more frequent service on the existing routes?”

My marketing response to this is they’ll attract more customers and serve the community better by changing the bus ride experience - the perception of value.


Install lap top tables, charging stations, and free WIFI on commuter busses. Make seating more comfortable. Make paying a cell phone app that takes reservations and avoids over crowding. Make the location of the bus known to riders like the Uber app to eliminate the uncertainty that goes with waiting. These changes would cost virtually nothing, eliminate uncertainty, and provide greater value. Customers will happily skip the hassle of driving themselves through rush hour traffic and ask for the busses to slow down.

The new reality of marketing is you don’t have to invest lots of money if you can improve the experience and change the perception of value.

Challenge Question

“I love how you make me feel”, is a great answer to the question, “If I were your ideal customer, why should I do business with you rather than a competitor?” The challenge question is, what are three things you can do on a shoe string budget to dramatically change your customer’s experience?


We Used To Compete On Price, Then We Learned Consumers Think Of Costs

The marketer’s job is to get more money for the same thing, not less. That’s why companies that explain….

“…this is why you should do business with me instead of a competitor…”

….have an advantage. When you sell on price, the only advantage is to discount. When you sell on the customer’s idea of cost, new opportunities arise.

The trick is understanding cost is the customer reality, and price is merely the company reality.

• Software subscriptions are about cost - not price. We used to trek to Egghead Software to buy virus protection. And then went back to buy updates. The real cost was the price plus the cost of maintenance. Today, most of us don’t think about the price because the cost is almost nothing: updates are automatic. A fringe benefit is the cost of switching is perceived as high, and thus reduces customer defections.

• Uber is based on cost. The cost of not Ubering is standing on the street wondering if or when the taxi will arrive. We experience this same uncertainty when we wait for an elevator that doesn’t provide a floor indicator. This non-economic cost - the pain of uncertainty - is removed by the Uber app. Uber people don’t want to go back to the uncertainty associated with taxis.

• Planet Fitness and Gold’s compete on cost. To the Gold’s consumer, the cost of Planet Fitness is no personal coaching. To the Planet Fitness


customer, the cost of Gold’s is being forced to work out with people who judge you. Eliminating those costs are the foundations of the businesses.

Today’s new reality is you must think like the customer.

The new marketing skill is getting inside the consumers’ brain. This is difficult. As David Ogilvy said, “Consumers don't think how they feel. They don't say what they think. And they don't do what they say.” The marketer’s greatest challenge to understand what the customer values.

Cost Eliminating Example

An example of solving the cost problem is this Avis campaign.

Avis was facing bankruptcy. Research showed the consumer knew Avis was #2 and drew the conclusion they weren’t very good at the business. That’s the inescapable conclusion in a small market. To the consumer, the cost of doing business with #2 Avis was inferior service.

The marketing solution was the ‘We Try Harder’ campaign. The campaign removed the cost of doing business with ‘2nd rate Avis’ by changing the story. ‘We Try Harder’ became an opportunity to buy from an underdog who really needs and values your business.

Seriously, do you want to rent from the big guy who doesn’t need you or care, or the little guy who must try harder just to survive?

Avis was profitable in less than a year with this approach. They proved value and price are all about the perception and story. Remember: It’s all about what the customer thinks things cost.


Challenge Question

“It costs less” is a great answer to the question, “If I were your ideal customer, why should I do business with you rather than a competitor?”

The question is, what costs, real and perceived, confront your customer? What does it cost them to find you? What is the cost to do business with you? What is the cost to enjoy or use your product?

How can you lower those costs and barriers to working with you? Can costs be eliminated with perception? Or must there be a change in reality?


We Used To Think About Business Logistics, And Then We Discovered Consumers Want Convenience

Today, we use the term ‘business model’ rather than ‘business logistics’. Logistics are about getting the goods someplace the customer can buy. That means warehousing, shipping, getting product on the eye level shelf, and so on.

Convenience is the new reality. Powered by the internet, new business models can make doing business with you more convenient and enjoyable.

Conveniences is always a good answer to the question, “If I were your ideal customer, why should I do business with you rather than a competitor?”

As Vala Afshar said, “The difference between market takers and market makers isn’t product innovation, it’s business model innovation.

Examples

Harry’s makes razor shopping more convenient with a subscription and home delivery. So does RidEx - the septic tank chemical company. So do the people who send me AC filters.


An access control app on a phone can make facilities more convenient by keeping them open when customers want them open. There’s more convenience for the member and lower labor costs for the company.

In a competitive world where consumers have so much going on in their lives, a more convenient business model can be the answer to a prayer.

Challenge Question

“It’s more convenient” is a great answer to the question, “If I were your ideal customer, why should I do business with you rather than your competitor?”

How can you make it 10% more convenient to do business with you? 50% more convenient? 100% more convenient? What is your competition doing to make it more convenient to do business with them?

What’s an obstacle to doing business with you that costs you money too? Like the cost of having staff on hand to monitor the gym?


We Used To Advertise At Markets, But Then We Learned People Want To Be Part Of The Conversation

“Modern marketing calls for more than developing a good product, pricing it attractively, and making it accessible. Companies must also communicate with their present and potential stakeholders and the general public. For most marketers, therefore, the question is not whether to communicate but rather what to say, how and when to say it, and to whom, and how often.

Consumers can turn to hundreds of cable and satellite TV channels, thousands of magazines, and newspapers, and millions of internet pages. They are taking a more active roll in deciding what communications they want to receive as well as how they want to communicate to others about the products and services they use. To effectively reach and influence target markets, holistic marketers are creatively employing multiple forms of communications.” - Philip Kotler, Marketing Management

At the risk of repeating myself, as the great Will Rogers said, “If advertisers spent the same amount of money on improving their products as they do on advertising, they wouldn’t have to advertise them.”

The Dog DNA Communique

An example of modern communication is my recent experience at the dog park. A woman told a little group of us about her dog DNA test. She talked about the ad, the cost, and where to get it. She told us how easy it was to order - how fast the test kit came in the mail - how easy it was to take a sample - the convenience of sending the sample back in the provided prepaid envelop - and the email that delivered her results.

Then two other women told their dog DNA test stories.


This is what people do. They talk up their buying experiences.

And because of the satisfaction, because of the brilliant communications, she couldn’t resist telling us all about it. The dog DNA company doesn’t have to advertise. They turned her into their evangelist through a conversation built on recognizing her as an individual.

That’s brilliant marketing.

Regular Communication Builds A Juggernaut

This guy is one of the great business communicators today.

If you do a Google search for “Seth” the first result is a link to his blog.

This is the famous Seth Godin who has been sending out a short email every morning 7 days a week for years. His communications have won him over 600,000 site visitors a month and has him listed as #6 of all bloggers worldwide.

People buy his books, attend his seminars, take his Udemy courses, attend his Alt MBA program, hire him for speaking engagements, and more.


He has a record setting Go Fund Me page that sold a book before he even wrote it.

Today, any company can gain rock star status by communicating with customers…. in the way they like…. with the information they want. It’s cheaper and more effective than throwing money at advertising.

Today, your customer insists on being part of the conversation. She wants to be involved in the things she purchases.

Challenge Question

“I enjoy my interactions with you because you communicate with me” is a great answer to the question, “If I were your ideal customer, why should I do business with you instead of your competitor?”

Think for a moment about the UPS tracking number and how important the delivery confirmation email has become to you. Then list 25 ways you can improve how you communicate with your customers.


The Ideal Customer

Through out this report I refer to the ‘ideal’ customer, not just any customer.

The reason is this: you can’t be all things to all people. There will always be a competitor better than you at something. That’s why the best results happen when you become everything to someone.

That’s why we always ask the question, “If I were your ideal customer, why should I do business with you rather than a competitor?”

One of the problems of not focusing on the ideal customer is customers get the wrong idea. When you offer too many things, they start thinking you are like a Swiss Army Knife: cool….. but not good at anything and therefore probably not good for what they want.


The New Marketing Realities - Summary

The new marketing reality is the pinnacle of marketing skill is to inexpensively create a profitable new customer.

The best way to do that is ask the question, “If I were your ideal customer, why should I do business with you instead of your competition?”

When you answer that question from the buyer’s point of view, you are half way home.

The best framework to answer that question is by fitting your offering to the customer so perfectly it sells itself. This is done by creating, communicating, and delivering value as we now know the customer sees value - through the 4Cs:

• Customers. Thinking in terms of the customer experience beats talking about the product.

• Cost. Marketing works better when the customers’ costs are upper most in your value proposition.

• Convenience. Making goods and services easy to buy is a winning marketing strategy because it pleases busy customers.

• Communications. Talking with people beats talking at people.

Marketing will continue to evolve. It always has. It always will. People change. Technology changes. Economics change. Marketing is just connecting to people in ways that help them understand how you solve their problems better than the other guy in this changing world.


About Jeff Gilman

Jeff is the management consultant who became a marketing consultant.

“The number one problem SMEs and startups have is creating customers. When companies stop thinking about themselves and start thinking of solving customer problems, everything falls into place. The function of the business is to create customers and that can only happen by creating, delivering, and communicating value as customers see it.

All the other stuff - the business plan, the financing plan, the staffing plan, the site location plan, the break even point - absolutely everything - makes more sense when the business is built on customer needs and values.

I believe every number in your business has a story behind it, and every story your business tells has a number to explain it. How you arrive at sales estimates or strategy or anything else only makes sense when the numbers are based on what customers value.” - Jeff Gilman

As a management consultant, Jeff worked for and represented firms including Peat Marwick KPMG, Reuters, and Microsoft. He has also worked with hundreds of SMEs and startups.

You can connect with Jeff and learn more at https://jeffgilman.com


https://jeffgilman.com

Work With Jeff To Become A 4C Company

If you want:

• to grow;• more customers;• more profitability;• or anything else……

There’s only one way to move forward.

• Einstein said we can’t solve problems with the same thinking we used to create them.

• Maslow said when the only tool you have is a hammer, every problem looks like a nail.

• And Steve Jobs said only the people crazy enough to think they can change things ever do, because they are the only ones that ever have.

The only way to solve problems, is to change thinking.

I’m Jeff and I help people solve business problems with thoughtful conversations and coaching. That’s because I believe the only way to solve a problem is to explore the thinking that created it and the ideas that can change it.

As an MBA with many years of business and consulting experience, I help people think through their challenges and find ways forward.

Contact Jeff at https://jeffgilman.com


https://jeffgilman.com

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