The quickest way to claim leadership in your market is to narrow your focus to what you do best
Define a narrow market
It may seem counterintuitive, but research shows that companies that define a tighter target market and create a brand that specifically serves that market are more successful than those that try to serve a broader audience. In the words of marketing thought-leader Seth Godin, “A product (or service) for everyone is a product for no one.”
This doesn’t mean that buyers outside your target market won’t be attracted to your brand, but by getting clear on your target market you can better define and harmonize all your communications and messaging – website, business cards, brochures, and even your “elevator pitch.”
There are many examples of this in consumer products and services. Take, for example, Grey Power in Canada: this is a brand that chose to differentiate itself by catering specifically to seniors (those 55 and over). By doing so it has claimed leadership in this space, rather than being just another car insurance provider in a crowded industry.
Doug Hall is one of the top thought-leaders in the marketing space. In his book, Jump Start Your Brain, the data clearly indicate that a focussed strategy has a 60% greater chance of success than trying to serve different market segments. Put yourself in your buyer’s shoes: wouldn’t you rather do business with a firm that only works with clients just like you? We hear this all the time from our prospects in the Energy Sector: “Who else are you working with who are in our same business?”
Getting clear on your target market
So how do you determine where to focus? It starts with a hard look at your client list:
- Take a look at the clients you currently serve and segment them by industry, size, and geography. Which are the biggest segments for you? Which are the most profitable? Which will be the biggest or most profitable over the next three to five years? These are the demographic elements of your target market.
- Next, consider the psychological aspects, or buying behaviors, of your target market customers – are some customers seeking excellence in safety or project management capability? Are others looking for the lowest price? Are some willing to pay more for the added service you can provide? This is psychographic segmentation and, in industries like the Energy Sector, it can be more important than demographic groupings.
Based on your company’s capabilities, which narrowly defined segment can you best serve – both today and in the future – and how do you want to differentiate yourself in that market?
One of our clients specializes in “providing integrated solutions to the energy industry for well stimulation, well completions, and enhanced oil recovery.” By being focused exclusively on the energy industry, they have become renowned throughout the Western Canadian Sedimentary Basin for their proximity to high-demand areas, state-of-the-art specialized equipment, and on-site service capabilities.
The attraction of the specialist
We have seen entire industries move from generalists to specialists. Consider, for example, the automotive repair and maintenance business. A generation ago, we used to take our vehicle to the local mechanic for whatever ailed it. Today, this industry is defined by specialists in transmissions, brakes, mufflers, tires, quick oil changes, body shops, imports, and so on. In fact, in the automotive repair industry it’s hard to find a generalist any more.
We are attracted to specialists because we assume that, because they have more knowledge, they will understand us better and their products and services will be better suited to us. In the above example regarding our client, their specialty products are carbon dioxide (CO2) and nitrogen (N2), or cryogenics. Not that long ago, these offerings were only found bundled in the cement and mud service companies.
Specialists aren’t just another “me, too” in a crowded vendor landscape. Your target market will quickly sense your lack of focus and respond the same way. Don’t forget: “If you are a mile wide and an inch deep, you will evaporate.”
Leading in the eyes of your target market will likely require some strategic moves. It’s usually much more than just changing your brochures and business cards, or creating a fancy new website. It may require changes to products, technologies, locations, distribution systems, core capabilities, or, ultimately, the business model within your organization. These are significant strategic decisions that must be considered in the context of your company vision and values.
The Discipline of Market Leaders, by Michael Treacy and Fred Wiersema, was a runaway bestseller that specifically set out the three value propositions that a company will choose from when seeking leadership in its offerings: Customer Intimate (The Best Solution), Product Leadership (The Best Product) and Operational Excellence (The Best Total Cost). Due to the unique qualities of each of these business models, an organization can only strive to achieve “best in class” in one and “threshold” status in the other two. For example, you cannot sustain a low cost value proposition and still provide tailored solutions to your target market customer.
Your Brand Promise
What do you stand for as an organization? What is your promise to the marketplace? How do you differentiate your products and services? Once you get this right, your company will dominate the target market you have identified. So how do you develop a Brand Promise? One way is to ask a key customer, “Why do you do business with us?” I once asked a major producer customer of one of our energy services clients that very question. They immediately identified “safety excellence, the best people, and cost effective execution” as being the most important reasons for doing business with our client – that was our clients Brand Promise.
The Brand Promise must also explore the following three questions:
- What your products and services do – this is the Functional Benefit
- What it means in time or money – this is the Economic Benefit
- How it makes them feel – this is the Emotional Benefit
In the above client example, “safety excellence” became their lead promise in an industry in which Total Recordable Incident Frequency (TRIF) is the standard Key Performance Indicator (KPI) that defines, for most producers, whether or not an energy services company will even get on the bid list for a project.
A view into 2011
For those companies that survived and reinvented themselves as a result of the recent economic downturn, opportunities to grow and succeed abound. By focusing on a specific target market industry and customer, as well as executing on a powerful Brand Promise, they will increase their market share and dominate their sandbox. How well positioned is your business for whatever 2011 brings to the party?
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