Don’t Be Out Marketed

“If you know the enemy as yourself, your victory will not stand in doubt.”

-Sun TzuHave you ever worked hard at getting a new piece of business? Maybe it was with a customer that perfectly matched your target profile. Or maybe your product or service fit their need so perfectly that it seemed like there was no other solution. Maybe you quoted a price that was far and away the deal of the century. But still they chose your competition. Why? How did it happen?There is only one reason we lose business:We are OUT MARKETED!The competition knew something we didn’t. Regardless of how convincing our pitch or how great our product, service, price or delivery, the client made their decision based on something more. And that particular out-weighted all of the others. Maybe the odds were so heavily stacked against us we didn’t even have a chance and we didn’t even know it. We may have been outsold while happily pitching features and benefits or perhaps the decision was made from the start. Either way we never addressed the real issues or created the right kind of influence and we lost.Good Marketing Skills are NOT Enough
Conventional sales and marketing techniques help us in only two dimensions of the selling effort. They focus on the relationship between the seller and the buyer. This is only part of the equation. It also makes the customer the threat in the process. It’s US and THEM. The real world is three- dimensional:Dimension One – Seller
Dimension Two – Buyer
Dimension Three – CompetitionWhen we leave the competition out of the picture we get a warped view of reality. Kind of like a two dimensional view of a three dimensional world. The real threat in the transaction is the competition. Now, I’m not here advocating some kind of hostile relationship with the competition. Nor am I saying that it’s not possible to collaborate with your competition. Under the right circumstance complementary competitive relationships are good and appropriate. But in most situations your competition wants that piece of business as much as you do. Typical small business marketers, however make no provisions for the competitive threat.Good Products are NOT Enough
While it is true that superior products will produce more potential marketing advantages, it is possible to win the business even with an inferior product. If you judge yourself and your efforts by the strength of your product then you may make the fatal mistake of judging your competition’s potency by the strength of their product or service. Unfortunately most marketing and selling campaigns don’t focus on building demand, strengthening relationships and infiltrating deeper into the prospective client’s organization. Exceptional marketers find ways to become viable with prospective clients despite product or service deficiencies. They play down the product’s deficiencies while playing up the political and philosophical compatibilities between themselves and the prospect. They might even find ways to bring in other vendors under the guise of a “networked solution” to fulfill the prospect’s motive. Or they may strategically muddy the waters not so much to make themselves more attractive but to make YOU less attractive to the prospect.Imagine if there were a way to weaken the competition’s footing while at the same time strengthening your own. Well there is. Here are a few suggestions about how to “prepare” to infiltrate and influence prospects more successfully. Some are marketing oriented and others are sales directed. But in either case they require good coordination of resources and a strong plan:1. Shop your competition as if you were a buyer. Get their marketing material. Subscribe to their newsletters and analyze their advertising. You can’t come up with a plan to thwart the competition if you don’t know who they are or understand their motives. Remember they are the “third dimension” of the sale.2. Early on in the marketing campaign it is critical that we build relationships at varying levels in the prospect hierarchy. I’m not recommending “going over the head” of your key contact but rather to look for ways to bring value to others in the organization BEFORE you try to close the deal.3. Connect with people within the prospect’s organization who have a clear vision of the future of their company and for whom your relationship transcends the current selling situation.4. Seek for greater “political alignment” rather than just a good fit for your product or service.5. Don’t meet competitive price cuts with further reductions. When your competition cuts their price at the 11th hour, they are doing you a favor. Give your prospect something to think about. Have a discussion as to why the competition would wait until now to offer a drastic discount? Could it affect their service in the future? Will they be paying in some other way? What will they be giving up? It is important that we do this in a casual way without disparaging the competition.6. If you are a victim of disparaging comments, you could also use this to your advantage. Early on in the relationship you will likely talk with the client about their background and they will ask about yours. Don’t respond like most with your job history, alma mater and so on. Instead tell them about your values. How important ethics are and how you would never want to work for a company that made disparaging comments. Do this without mentioning the competition. Tell them why you like working for your company. This is subtle but very powerful. Everyone likes to feel as though they are ethical, have integrity and they want to associate with those who do.Sun Tzu’s twenty-five hundred year old admonition to “know your enemy” is still good advice for small business marketers and professionals today. In order to win, one must prepare to win and one must first win in their mind.

Defining Your Target

Target marketing is the process of choosing smaller market segments at which to aim your marketing efforts. It is the process of locating specific groups of people that have reasonable commonalities in terms of their description and needs.

Target marketing is a “vertical approach” to increasing your influence and market share. The brands with the most highly focused target audience are usually the most successful. 

Here are the rules to selecting a target audience:

  • Choose one target audience first. My recommendation is to work on penetrating that audience for one year before moving on. You can not be everything to everyone.
  • Choose your target audience based on their revenue needs and budget capabilities.
  • The tighter your focus, the more often you can provide them with relevant information and the more that this information will be beneficial.
  • Choose you target audience based on you own interests.
  • Choose the type of people that you like to do business with.
  • Quality is far more important than quantity.
  • Be Picky
  • Experienced marketers know that if you are rejecting the kind of business that you don’t want, the more attractive you will become to those that are part of your vertical strategy. This also gives you the ability to become experts in your business as it relates to THEIR business.

Research Works
Don’t be afraid of doing some research to understand the vertical market that you select. There are some tremendous resources for this today:

  • Vertical industry publications
  • Trade magazines
  • The Lifestyles Market Analyst
  • Nexus/Lexus
  • The Internet

The first step is to define WHO are target audience is. What do they look like? This is called demographics. An example of demographics are:

  • Age of prospect or target company
  • Gender balance
  • Size of the business
  • Revenues
  • Location
  • Industry type
  • Type of customer base

But this isn’t really good enough. We also need to know WHY they make good prospects. In other words not just demographics but psychographics:

  • Company or personal mission
  • Management style
  • How they make decisions
  • Industry reputation

Example of my demographic profile:
Our weekly consulting clients are Southern California businesses involved in marketing growth oriented services. They typically generate from $3 to $10 million in revenue and yield a minimum of 20% gross profit. While we work with the entire staff, we primarily help owners make better management decisions.

Example of my psychographic profile:
Our clients have good reputations in their industry but seek to overtake their competitors who are typically old-line industry leaders. They have an informal management style but are committed to improvement, training/education. The desire to make better management decisions and become influencers in their industry.I encourage every small business to spend the time to develop their own demographic and psychographic profile.

Define Your Core Business

One of the most important issues facing entrepreneurs and small business owners today is how to GROW their companies. This is the focus of my consulting practice, my weekly radio show, my web site and my sales and marketing classes.

Achieving sustained and profitable growth is extremely difficult without having at last one strong and differentiated core business on which to build. The need for a strong core business to support a growth strategy requires defining both what a business IS and what it is NOT.This is true for small companies as well as large ones. Even as a very small organization, Dell Computer Company established its market differentiation and eventual industry leadership by recognizing the potential for “direct selling” rather than the VAR (value added reseller) distribution channel typical for the computer industry. Today, 35% of computers are sold direct to consumers and Dell now dominates this channel.Often times companies stray from their core business in pursuit of other adjacent opportunities. This can be motivated by industry turbulence, downward price pressure or specific market demands. Take the ophthalmic giant, Bausch and Lomb. Throughout the mid-1980s they leveraged their hold on the market by creating a new technology that made soft contact lenses affordable. The result was an astounding 40% market share. Competitors began attacking their position with newer technologies. Bausch and Lomb responded by diverting their attention from their core business into other adjacent products such as electric tooth brushes, skin ointments, and hearing aids. They developed no obvious linkage to their core lens business and as a result lost their dominance and eventually declined to only 16% market share.It is important to define your core business in its clearest terms. It should be defined as that set of products, capabilities, customers, distribution channels and geographies that embody the essence of what your company is or aspires to be in order to GROW revenue in a sustained, profitable fashion.I know that’s a mouthful. But let’s break it down using my company as an example.My little company offers the following CORE PRODUCTS:

  • Business consulting
  • Advertising services
  • Training classes
  • Management coaching
  • Marketing planning


  1. Creating change from the “Inside-Out” – – Working directly with small business owners to gain the willing cooperation of their staff to establish systems, set goals, measure progress and improve performance.
  2. Creating change from the “Outside-In” – – – Establishing a unique position in the market for the company, develop product/service differentiation, and strong brand value and client response.

Our CORE CUSTOMERS are entrepreneurs and small business ownersOur CORE DISTRIBUTION CHANNELS are our exclusive Internet-based Virtual Consulting Sessions. group training classes, business development programs and one-on-one coaching and consulting.Our CORE GEOGRAPHY is Southern California.Using this as an example, begin to define your CORE STRATEGY. If you are interested in learning more about core business strategy development, enroll in our new class, “Out-Marketing the Competition.”

Customers as Salespeople

About a week ago, I was glued to my computer, clicking the refresh button on my web browser over and over again. What causes this kind of silly behavior? Something known in the world of nerds as a “Woot Off”. I’ve written in the past about my favorite on-line shopping site,

What makes Woot special is that they only sell one item at a time on their web site. As I write this, they are offering a universal remote control for sale. This item will remain for sale until they either sell out, or until they list their next item at 12 Midnight Central Time. This policy of “One day, one item”, however, changes once in a blue moon to a mode called a “Woot Off”. During a “Woot Off”, they sell limited quantities of items at great prices, and as soon as one is sold out, they list another for sale. When their allotment of computer video cards sold out in five minutes, they listed a backlight keyboard that sold out in seven minutes, followed by other rapid sellouts. 

As a fan of random technology gadgets and products, I couldn’t wait to see what was next, hence my constant refreshing of my web browser. This went on for a few hours, until a bread maker went on sale. Since the typical customer of this site is for lack of a better term a “computer geek”, a bread maker was not exactly tops on the list of items to buy. Instead of a rapid sellout, I was dismayed to see the bread maker sit on the page seemingly with no end in sight. One hour passed, then another, and yet another. Would someone please buy a bread maker so we can get back to USB drives, cell phone headsets, and robotic lawnmowers?

Rather then sit idly by, the customers of went out and began posting about what a great deal this bread maker was on all kinds of websites. They mobilized on message boards, by e-mail, and even began calling friends who might be interested in the appliance. Some customers went so far as to “take one for the team” and buy a bread maker, just so they would sell out faster, despite not wanting one! Eventually, enough bread makers were sold and the “Woot Off” resumed.

Think about what happened. Customers who didn’t even want to buy what was being sold went out and actively sought new customers for this website! They became a de facto sales force for an item just so they could buy something else from them later that same day. Now THAT is customer loyalty.

Now for most businesses selling only one item at a time won’t work, but you may be able to inspire your customer base in a similar way. What can you do to mobilize the good will you have with your customers? I’d love to hear the ideas you come up with. And if any one wants a great deal on a bread maker, let me know and I’ll be sure to call you the next time they’re holding up a “Woot Off”. This article was written by SBA Network Sales technology Specialist Matt Walker.  You can reach him at: or 714-269-4123.

Have a great week!


“It’s a war out there Mark,” I often hear people say. “Business is war. Eat or be eaten. Kill or be killed. Fight the good fight. And may the best man or women WIN!”

Some think that business IS war. Under this scenario there are victors and vanquished. As Gore Vidal said: “It is not enough to succeed, others must fail.” But does that philosophy really work? Does this really get us more business and loyal customers? Do we have to defeat our competitors to become more important to our customers? Let’s look at the flip side. There is also plenty of talk about relationship marketing, listening to customers, working with suppliers, creating teams, empowerment, strategic partnerships and so on. Aren’t these precepts mutually exclusive? Should we strive for competition or cooperation?The truth is that there are few victors when business is conducted as war. Sure there are those players with whom we are in direct competition. But there are far more that we can cooperate with to benefit the market as a whole. We can do both… co-opetition.

Price Wars
Just look at what happens in price wars. Nobody wins. The price leaders drive the market price down squeezing out competition but in the long run these victors lose their profitability and value in the mix. A good example of this was the airline price wars. Between 1990 and 1993 they lost more money collectively than they made in all the time since Orville and Wilbur Wright!

The Solution
Business is cooperation when it comes to creating a pie and competition when it comes to dividing it up. In other words, business is War and Peace. You have to compete and cooperate at the same time. Your success does not require others to fail. You can compete without having to kill the competition.

Collaboration is the process of working with others. More and more marketers are finding that their customers are demanding bundled solutions. By partnering with others we can become far more important to prospects and customers. We can also create a stream of referrals from credible partners. These type of referrals tend to be a higher quality and are more qualified.Think Compliments
Seek out those that compliment your business. A compliment is a product or service that makes any other product or service more attractive. The classic example of compliments is computer hardware and software. Faster hardware prompts people to upgrade. Powerful software motivates people to buy more faster hardware. Just look at Windows and Pentium chips. Discovering “Complimentors” is about finding a way to make the pie BIGGER rather than fighting over how to slice up a tiny Scooter Pie. So how do we identify competitors and complementors?Complementors
A player is a complementor if customers value your product MORE when they have the other player’s product than when they have your product alone. 
Example: Oscar Meyer Hot Dogs and Guldens Mustard

A player is a competitor if customers value your product LESS when they have the other player’s product than when they have your product alone.
Example: Coca-Cola and Pepsi -Cola

Typical partners in success have been:

  • Disney and McDonalds
  • Universal and Burger King
  • Sears and Allstate
  • Visa and American Airlines
  • Perfume Makers and Department Stores

Who are good complimentors for your business? As a business advisor, good complimentors for me are attorneys, CPA’s, designers, Internet professionals, computer consultants, training companies, TV and radio stations, magazines, newspapers, printers, and more. I challenge you to brainstorm a list of 5 to 10 complimentory businesses. Then make a list of specific contacts within those categories that could currently be utilized. First see what you can do to help them. Then watch the magic of co-opetition unfold!

Companies are People Too

Last week news broke about K-Mart purchasing retailing giant Sears. It sounds unbelievable but it is happening. This made me think about Attraction Rule #11: Who we are is more important than what we do. Does K-Mart know who they are? Better yet does K-Mart understand who the public THINKS they are?

The real question is can Kmart and Sears together work enough magic to pull in new customers? And can they together establish two viable store brands that stand for something distinctive in consumers’ minds? Maybe. Maybe not. But one thing’s for sure: It won’t be easy. 

Every company has a personality. While the people inside the company have personalities, the company itself has a personality. For example when you think about Starbucks, you think a fun place to meet and “hook-up” with people. It’s casual but trendy. On the other hand when you think about getting a cup of coffee at Denny’s, the personality is altogether different. Denny’s is a place to have a good inexpensive breakfast. It’s great for one-on-one private meetings. Their personalities or “brands” are very different from one another.
The Branding Statement
Everything that we do and say both internally and externally should revolve around our Branding Statement. For obvious reasons I will NOT refer to the Branding Statement in its acronym form as BS. I think we are all sick of hearing BS from the sugary sweet-talking of those slick marketers. The last thing we want to do is have some contrived little sound byte that makes our ads and brochures read like proto-typical marketers. We should use our branding statement internally to help us construct our marketing message that will be communicated in every aspect of our business. Then when we do deliver the branding statement in our material, we do it in the course of highly targeted marketing material.

We are Influencers, NOT merely Marketers
Our goal is not to SELL or, market to our customers, but rather to influence them. When we SELL them, they move away from us, because they are fearful of being coerced into making the wrong decision. We must earn the right to influence them by aligning ourselves in a way that sets us apart as a friend, advisor and confidant. Then we will become the ONLY solution to their needs.

Speak in Terms of THEIR Interest
As the great master of human relations, Dale Carnegie, said, “speak in terms of the other person’s interest.” We need to be willing to give a little. The reason people are running away from you is that you are trying to TAKE. Be willing to give. What can I give, you ask? It doesn’t have to be about tangible items you give away- in fact, it is best if you don’t give away trinkets, but rather knowledge. If nothing else, give them an education. That’s right. EDUCATE your prospect, and you will create a customer for life!

Here’s a great example of how a branding statement works:

10 Key Criteria for Developing the Branding Statement

  1. Express your exclusive marketing position
  2. Targeted to specific audience
  3. Let them visualize you in action
  4. Express a benefit oriented solution for the prospect that alleviates some pain
  5. Positively influence the customer rather than try to SELL them
  6. Align yourself with the customer
  7. Speak in terms of their interests
  8. Educate the customer
  9. Deliver the branding statement in a friendly way
  10. Give examples of client successes

The bottom line is “who we are” or what people perceive we are is far more important than what we do. This is true for K-Mart as well as Sears and it is true for you and I. Chances are your competitors are doing the same thing that you are doing but they can never be the same person or have the same personality as you. As with individuals, companies have personalities. Is your company’s personality bland, unrecognizable or “me too?” Or is it bright, vibrant and hard to forget. I hope the latter. 

Developing Brands – Monday, Nov. 22 at 1pm
While this article may just begin to address the subject of branding, I will be conducting a Tele-Clinic on Branding next Monday, November 29, 2004 at 1pm during which I will focus on the steps to creating a powerful branding strategy and how to put a branding campaign into action in a practical way. During this 30 minute Tele-Clinic I will be referring to numerous case studies and I will take questions as well. We will only be able to accommodate a limited number of participants for this telephone clinic so act now. Tele-Clinics are held over a standard telephone line during which I present detailed information on ways to improve your business performance. They are a great way to get your specific questions answered directly by me. The cost is only $29. To read more go to, and to register, go to

Thanks to you, our loyal listeners and readers, we’re back in prime time! Check out the Small Business Hour every Saturday at 3pm on 97.1FM in Los Angeles. You can still hear us on the internet at

Have a great week!I hope that this “Business Update” has been helpful in assisting you to improve the performance of your organization. For more information on how the Small Business Advisory Network assists companies in improving their performance, please feel free to contact us at 310-320-8190 or email 

Mark Deo

Collaborate Rather Than Compete

Print this article.

This week’s business update is focused on Rule #10 of the rules of attraction.  We will be discussing all 14 rules of attraction and working on building an action plan for each participant at our upcoming Attraction Workshops.  Go to: to read more and to register.  As an added bonus, all paid attendees will receive their choice of our Attract More Business programs on BrandingTarget Marketing, or Generating Ad Response for FREE!Siemens, the global communications company, announced in 2004 that it would cooperate withtheir BIGGEST rivals, Motorola and Ericsson, with the goal of developing a standard for so-called “push-to-talk” technology. Now why would these competitors cooperate on such a mission critical technology? Aren’t they afraid that one competitor might hold back a key ingredient? Or that one competitor might use information gained to try to damage or eliminate the other competitor once and for all?Not at all! They have far bigger fish to fry. You see, push-to-talk allows handsets to be used like walkie-talkies – a feature mobile phone operators believe will significantly increase their revenues by encouraging users to talk more. Apparently, the three companies will conduct tests to make their technologies totally compatible with each other, enabling customers of different operators to talk to one another – something that is essential if push-to-talk is to penetrate the mass market. Do you think this will have a negative or positive effect on revenues and client satisfaction of each player? Do you think that this will increase the “attraction” of each of these players? You bet! In fact it could literally revolutionize the telecommunications industry makingEricsson, Siemens and Motorola the only games in town.Many would say that our entire free-economy system is built on the foundation of competition. Competition drives the supply and demand curve, it is the catalyst in pricing models, and it fuels the need for innovation. Yet some have suggested that cooperation and collaboration with our competitors can be valuable. Co-opetition, the book by Adam Brandenburger and Barry Nalebuffof Yale Business Management School makes a powerful case that under specific circumstances there is greater value in cooperating with certain customers, suppliers and even competitors rather than competing.  The central concept is that we can create complimentary product or service relationships that allow products and services to become more important when purchased TOGETHER rather than separately. This relationship results in a reduction of marketing costs and ultimately in an increase in marketshare, client loyalty and even brand value. Using “game theory” the authors demonstrate how complimentary related products can lead to expansion of the market and the formation of new business relationships.In order to increase our attraction we must seek out those partners that compliment our business. A compliment is a product or service that makes any other product or service more attractive. The classic example of compliments is computer hardware and software. Faster hardware prompts people to upgrade. Powerful software motivates people to buy faster hardware. Just look at Windows and Pentium chips.Recently I needed to make color copies of a report so where did I go? Kinko’s. We all know Kinko’s as a reliable, convenient and cost effective place to get your reports printed, copied and bound.  But when I drove to the store I was shocked by what I saw. The name on the front of the store no longer said, “Kinko’s.” It said “FedEx/Kinko’s.”  Prior to acquiring Kinko’s, FedEx spent millions on testing the concept of combining locations. The test was so successful that FedEx eventually bought Kinko’s, lock, stock and barrel. It makes sense. If you are going to a store to design, develop, print and copy business or personal communication material, doesn’t it make sense that you will want to SHIP it somewhere? For FedEx, collaborating with Kinko’s turned-out to be a tremendous windfall.Discovering “Complimentors” is about finding a way to make the pie BIGGER rather than fighting over how to slice up a tiny Scooter Pie. So how do we identify competitors and complimentors? A player is a complimentor if customers value your product MORE when they have the other player’s product than when they have your product alone.Let’s revisit our example of FedEx and Kinko’s. Customers value Kinko’s MORE now that FedEx is located directly inside the Kinko’s location. What used to take visiting two locations (a Kinko’s and a FedEx store) now takes ONE visit. This makes things smoother for the customer and increases value for both partners. A player is a pure competitor if customers value your product LESS when they have the other player’s product than when they have your product alone. An example of this would be Coca-Cola and Pepsi-Cola. Either you have one or the other. You would be hard-pressed to find someone going to a convenience store and ordering a Coke and a Pepsi at the same time. One is valued in EXCLUSION to the other.

Here are some typical partners engaged in successful complementary marketing relationships: · Disney and McDonalds 
 · Universal and Burger King 
 · Sears and Allstate 
 · Visa and American Airlines 
 · Oscar Meyer Hot Dogs and Guldens MustardThese represent collaborative relationships at the “end” of the supply chain. That is to say the collaboration occurs in the arena where marketers cooperate to increase the potential opportunity for each player. Collaboration can also be used at the “beginning” of the supply chain to significantly reduce the cost of manufacturing, development, or delivery. Suppliers and end-users can collaborate on technology, applications, processes, and even supply chain in order to make themselves more attractive as an industry.Ed Marien, director of logistics and transportation management programs at the University of Wisconsin School of Business has made a career out of studying collaborative strategies. He said in an interview with Supply Chain Brain, an industry publication that “collaborative alliances are a means of sharing strengths.” He cites Federal-Mogul, a piston maker for the automotive industry that is using its buying power to purchase sheet metal for many of its suppliers at a lower cost than they could negotiate alone. How about process collaboration? ConsiderBridgestone/Firestone, which began mounting its tires on wheels at the request of automotive assemblers. As is happening in many cases, this activity has been spun off into a whole new business unit that now is mounting not only its own tires but also those of Bridgestone’s competitors. This unit has become one of the company’s fastest-growing and most profitable divisions, illustrating how alliances can lead companies to develop core strengths they did not previously have.Who are good complimentors for your business? As a business advisor, good complimentors for me are attorneys, CPA’s, designers, Internet professionals, computer consultants, training companies, TV and radio stations, magazines, newspapers, printers, and more. I challenge you to brainstorm a list of 5 to 10 complimentary businesses. Then make a list of specific contacts within those categories that can currently be utilized. First see what you can do to help them. Then watch the magic of co-opetition unfold!With all these changes taking place in our society we are seeing the emergence of work-groups, virtual teams and alliance, affiliate and even cooperative competitive relationships like co-opetition. The way collaboration is being used in business today is literally smashing the traditional concept of supplier, vendor, and competitive relationships. The line between partner, competitor and supplier is blurring. In order to be more attractive we all must find ways of using Rule # 10 of the rules of attraction more effectively. We must collaborate rather than compete.Seeking a way to put this into practice for your business?  Come to our Attraction workshops!  Go to: for more information!

Category Killer

Curiosity killed the cat.

Sometimes we business leaders can be like cats. We become a little too curious for our own good. Like cats our curiosity finds us “straying” from the core products and services that provide profit and growth to our business.I spent the first ten years of my career in the consumer electronics business. In the early eighties I found myself running the U.S. operations for a high-end audio company called Nikko Audio. Nikko was a prime manufacturer of, what we referred to in those days as, separate components. We specialized in separate power amplifiers, preamplifiers and tuners. We also sold receivers, tape decks and (Uh Oh – I’m dating myself) turntables. But the “separates” were our core products.This was well before the days of the electronic super stores. At that time the consumer electronics marketplace was dominated by small, independent, and salon type retailers. At Nikko we had built a reputation for providing a great deal of training and support for our retailers. When we pursued a retailer we would spend a considerable amount of time educating the owners and managers, training the sales people and even requiring every retailer to put at least one salesperson per location through our Nikko University. The cost of acquiring new clients was astronomical but we maintained a very loyal retailer base. We were enjoying steady annual growth, strong brand recognition and higher than industry-average profits. Our retailers were also enjoying a high profit margin and the consumer was getting a great product.Disco Days
In those “disco days” the one-brand audio system was gaining popularity. Companies like Fisher, Sony, Pioneer and JVC were packaging amplifiers, tuners, tape decks and turntables into one box in order to lower the price for consumers and provide greater profit margins for retailers.At that time I was the V.P of Sales and Marketing for Nikko Audio. I was receiving a great deal of pressure from our sales force as well as my manufacturing counterparts in our Tokyo office to enter the one-brand system fray. They agreed that our higher-end separate components were our core products and should receive our primary focus but they believed that many consumers could become audiophiles by starting with the one-brand system approach and then “growing into” higher-end separate components. They argued that many consumers simply could not afford our separate components and that the one-brand approach gave them the ability to at least have an experience with the Nikko brand. They also said that this could expand our brand recognition and top of the mind awareness with general consumers. They felt that if we satisfied the consumers need for a one-brand system then they would remember us in the future and choose our brand when their audio palette became more discerning or they had greater resources. They also felt that this would allow us to collaborate with speaker manufacturers, CD makers, cabinet companies and so on thereby making Nikko more valuable to a greater number of retailers and consumers. They argued that these large suppliers were not competitors but rather complimentors to the Nikko brand.Convincing Argument
These sounded like very persuasive and compelling arguments. They made sense on the surface. But all of my instincts told me this was the wrong solution. My feeling was that this would water down our core products, lower our position in the market and destroy our point of differentiation in the industry. In addition, I was concerned about alienating our loyal retailers when these “low cost” systems hit the street. I was concerned about losing our leadership in the market. The Nikko line of audio components were designed for discerning audiophiles NOT the average consumer. I argued that with our current cost of acquisition, the reduction in margin of these “one brand systems” would quickly chew up our profits. I even gave them projected profit and loss statements showing this potential outcome.Unfortunately I lost this debate. Nikko did introduce a line of “one brand systems.” They sold like hotcakes and I ate crow. However, it was the calm before the storm. Within 12 months the marketplace was flooded with these systems and the price war began. It was a blood bath and we couldn’t stop the bleeding. Our warehouse was full of one-brand systems that were simply “me-too.” Our pricing was 30% too high, we were losing money and we had alienated our loyal retailers. Without trying to, we had abandoned our core product selection. Our curiosity in this “one-brand” system approach KILLED the demand for our core category of products. In short, it was the “curiosity that killed the cat.”The First Deadly Sin
We made the first deadly sin of product marketing. We abandoned BEING the leader in favor of FOLLOWING the leader. The only people that won were those companies that we collaborated with – the companies that supplied us with the speakers, CD players, cabinets and so on. We lost, the retailers lost, even the consumers lost in the end.Less than a year later the bubble burst. Nearly every company that entered the one-brand category showed red ink. Companies like Sansui, Marantz, Rotel and others literally went out of business. Thank God I gave those projections to the CEO in Japan. Within months ALL of the executives at Nikko (US and Japan) were fired and those projections saved by skinny butt in the end. But Nikko was left only a shell of what it was in the past. The company was sold to Yamaha electronics for (you guessed it) the “high-end separate component” technology. I was tasked with managing the transition.Maybe you are being seduced by an attractive collaborative relationship. Tread carefully. While I am a huge supporter of collaboration, I urge you to carefully investigate the impact on your core product categories. Remember collaboration only works when it COMPLIMENTS your core product category.Beware of Wolf in Sheep’s Clothing!
As Adam Brandenburger says in his book, Co-opetition, “know the difference between a complimentary relationship and a competitive relationship.”Complimentors
A player is a complimentor if customers value your product MORE when they have the other player’s product than when they have your product alone. (Example: Oscar Meyer Hot Dogs and Guldens Mustard). No one buys Guldens Mustard INSTEAD of Oscar Meyer Hot Dogs. Guldens is only beneficial if it’s WITH Oscar Meyer products.Competitors
A player is a competitor if customers value your product LESS when they have the other player’s product than when they have your product alone. (Example: Coca-Cola and Pepsi -Cola)Also measure the reward basis. Does your profit grow when you are selling your collaborators products or does it shrink? If it shrinks, then this is not a complimentor, likely this is a competitor. Today collaboration, affiliate marketing and co-branding are very much in vogue. Many small business owners and entrepreneurs are becoming involved in what they see to be complimentary relationships when in fact they are just sharing their customer base with the competition. Take particular caution of the large market leaders. They often prey on small players under the guise of collaboration. This is very dangerous and as you can see, for Nikko, it was disastrous.Don’t Follow the Leader
Finally, find some small way that you can be the leader NOT the follower in your market. I see so many businesses making decisions based on the move of a leading competitor in their market. When I ask them why they decide on a specific course of action they tell me, “well that’s what the competitive leader is doing.” This is the very reason NOT to follow the competition. If you do this you will always be a follower – a brand that has nothing unique to offer to your customers. In fact there is greater wisdom in doing the OPPOSITE of your competitor. David Yoffie and Mary Kwak in their book, Judo Strategy talk about how to turn your competitor’s strength into your advantage. They say that the best way to defeat your competition is by NOT copying them. They recommend building your own collaborative relationships not mirroring theirs. They site example such as Real Media, Capitol One, Palm Computing, CNET and Handspring. All of these revolutionary market leaders were born from doing the OPPOSITE of the mainstream.In short product marketing success is about being different, remaining a leader, protecting your core and knowing the difference between complimentors and competitors.

Buzz Marketing

What influences customers and prospects? Is it what a company says about their product or service through advertising, marketing and direct sales?

Or, is it what other people are saying about the company’s product or service?Surely the later. Then why do we spend so much time and money on traditional marketing, advertising and selling, and so very little on word of mouth marketing?From Your Mouth to Their Ears
Most marketing focuses on building a case for a better product or service. This is good and necessary but it ignores the fact that for many, purchasing is part of a social decision. People rely on invisible networks of friends, relatives and co-workers for recommendations. This is buzz. I have spoken before about establishing a unique identity, branding and differentiation. Buzz is the natural extension of a branding and identity campaign. And it is beginning to take a much more influential role in the purchasing decision.Why Buzz Works
Today customer are suffering from information overload. They see and hear so many advertising and marketing messages that it becomes difficult to filter out what is valuable and credible through all the clutter and noise. As a result customers are turning to their friends and associates for purchasing advice more that ever. Marketing experts believe that the new customer, Generation Y – those born between 1979 and 1994 – shop by word of mouth. In the coming years, buzz marketing may that much more important. 
Buzz works so well because talking is in our genes. As human beings, we need to talk. We talk to connect with people. Sharing information is essential to our make-up. We talk about the latest movie we saw, the car we test drove, the book we read and so on.How to Create BuzzHere’s some simple ways to create buzz about your product or service:1. Good buzz begins with a positive customer experience. 
There is no substitute for exceptional performance. The key here is to underpromise and over deliver. Try to change your thinking from: “I need to get this sale,” to “How can I get this prospect to talk about my product or service?”2. Give a little away. 
Ask yourself, “How can I get people to experience my product or service without them making a big commitment? How can I giveaway a small piece of my product or service so that people will start talking about it?” When Hotmail launched its Web-based free email service, it experienced the fastest adoption rate of any product ever introduced. Subscriptions went from 0 to 12 million in just 18 months. And each person who signed up helped to recruit other members because a message was sent with each email.3. Work at building trust
Let’s face it at the core most customers and prospects are just plain skeptical. They don’t trust us. To begin with, they don’t know us. They don’t know our values, our history, or our background. The more we tell them how great we are and how wonderful our product and service is, the less they trust us. Instead of pushing our product or service, let the product spread itself through the invisible customer networks through good buzz.4. Know your customer. 
If you want to create buzz, you have to know your customer and how you are reaching them. Ask yourself the following: From who do your customers learn about your products? What do people say when they recommend your products? In what invisible networks are your products discussed? What kind of information spreads through the networks fastest?

Branding the Stones

We’ve been talking about branding in the last few Business Updates and as Plato said, “the example teaches.” With that in mind we thought we’d take a look at some of the most famous and successful logos over the last few decades.
The first logo I’d like to discuss is the famous lips and tongue. It was suggested to me by one of our subscribers, Tim Mehloff, that the Rolling Stones “lips and tongue” logo would be an interesting case study. As Tim put it, “I mean, how many rock and roll bands had a logo back then?” More importantly the lips and the tongue came to mean something far more than just the Rolling Stones. It came to stand for a generation weaned on rock and roll. It also came to symbolize the party-like, free attitude that dominated the 60s and early 70s.
Where did the logo come from?
It all started at a party in New York in 1969 when Andy Warhol casually mentioned to Mick Jagger that it would be amusing to have a real zipper on an album cover. A year later, Jagger proposed the idea for Sticky Fingers, the first release on the new Rolling Stones label.
Album packager Craig Braun had also suggested releasing the album in a clear plastic jacket with heat-sensitive liquid crystals inside — “so you could make your own little Joshua Light Show,” he says — as well as with a mammoth foldout cover of Jagger’s castle in the sound of France. But Jagger knew what he wanted: The packaging of Sticky Fingers proved the Rolling Stones had not lost their gift for outrageousness and, as their first post-Altamont studio album, very shrewdly moved the Stones away from what Braun calls “the evil thing” and into a more sexual mode.
Sticky Fingers
Sticky Fingers also debuted the famous Stones logo: a caricature of Jagger’s lips and tongue. The heavily merchandised image was soon incorporated into pendants, key chains, belt buckles and even tattoos.
Warhol took the cover shot; though many assumed the model was Jagger, it has often been rumored to be a hanger-on at the Factory, Warhol’s studio, named Joe Dallesandro. Then Braun realized there had to be an extra layer of cardboard to protect the record from the zipper; that layer features another Warhol shot of a different man, possibly the twin brother of Warhol’s “boyfriend” and assistant Jed Johnson, this time in his jockey shorts.
But it turned out that during shipment the zipper would press into the album stacked on top of it (invariably damaging “Sister Morphine”); Atlantic Records threatened to sue Braun for all the damage. Braun came up with the solution; pull down the zipper before the album was shipped — then it would dent only the label. Braun never did figure out how to keep Sticky Fingers from scratching other album covers.
You can brand anything!
While this story may be interesting, it proves that you can brand pretty much anything. I can think of no more than 4 or 5 rock and roll groups that actually have logos even today, not to mention memorable, influential ones. But this is true for most products and services. Few are meaningful let alone memorable. But it doesn’t take a rocket scientist or marketing guru to create a brand. All you need is honesty, creativity and a viable, interesting product. A good brand creates attraction and tells a story that’s worth telling. A good brand “takes a risk” in the story it tells.
Think about your own company, product or service. Whet male’s it interesting? How can you be brutally honest in the way you communicate its meaningfulness? How can you visually communicate this in a creative way? And just like that…. You have your brand!
 Thanks goes to the web site: for providing their fabulous historical input and to our subscriber Tim for his idea for a retrospect on the Stones logo.