Hartford Business Journal

www.HartfordBusiness.com April 10, 2017 • Hartford Business Journal 21 BIZ BOOKS How to ensure market-share fights don't destroy a business "I f You're in a Dogfight, Become a Cat — Strategies for Long-Term Growth" by Leonard Sherman (Columbia Business School Publish- ing, $29.95). Dogfights in business occur and recur because businesses doggedly pursue mar- ket share in product segments that consum- ers view as undifferentiated. In attempts to maintain or grow bragging rights in com- moditized products, they actually throw money away and watch ROI decline. Sherman addresses the "why" of mar- ket-share dogma: Managers believe they must "compete aggressively to protect their core business." This results in the constant introduction of minimally-incremental, high-margin product improvements, many of which have no cost-benefit value in the eyes of consumers. By protecting their turf, they ignore other turf. Case on-point: General Motors lost over $20 billion in the European car mar- ket since 2000 while its market share there eroded over 10 points. GM finally decided it had lost the dogfight and sold its European operations to PSA Group, owner of the Peugeot brand. While PSA Group "won," it bought a severely wounded dog. Ford Motor, on the other hand, adopted a "cattitude" approach to the European mar- ket. It hunted for prey (i.e. identified what was missing) and shifted production to small commercial vehicles and autos that could be built on existing American platforms. Then there are other markets where cat- titude has disrupted everything because old dogs failed to learn new tricks. Disrupter "cats" use technology in their hunt to merge con- venience, options and price. Online shopping has turned bricks-and-mortar retailers into money-losing tail-chasers. Digital photog- raphy killed film; it's ironic that Kodak shelved its digital program because film was so profitable — it's that "protect the core business" thing. Uber and Lyft changed the personal transportation industry. While sustaining long-term growth and profitability may be difficult, Sherman believes both can be achieved by focusing strategy on three imperatives: 1. "Continuous innovation — not for its own sake, but to deliver … 2. Meaningful differentiation — rec- ognized and valued by consumers, enabled by … 3. Business alignment — where all cor- porate capabilities, resources, incen- tives, and business culture and process- es are aligned to support a company's strategic intent." Using the product life cycle (introduction, growth, maturi- ty, decline) analogy, he believes that continual new product launches whose growth offsets the declining sales of aging products keeps a business' life cycle in the growth cycle. When looking at the imperatives, note "meaning- ful differentiation — recog- nized and valued by cus- tomers." Just because you can create a new product or add things to an existing product, doesn't mean you should. Bells and whistles become profits only if the customer sees their utility and will pay for it. Example: Some refrigerator manufac- turers are so enamored with technology that they're introducing display screens that will use Wi-Fi to access cable TV pro- gramming, streaming videos and music, and synch emails, contacts, calendars, etc., from smartphones. Others are focused more on the basic functionality of the refrig- erator by moving water dispensers to the inside of the door, and developing specialty cooling compartments. A refrigerator should last at least 10 years, while technology ages in dog years. Are consumers willing to pay for a "smart refrigerator" when they know the technol- ogy will be outdated in a few years? Sherman also puts branding into the mix when it comes to meaningful differen- tiation. He cites two examples: 1. Remem- ber "New Coke"? Coca-Cola replaced its classic formulation and spent big bucks on marketing the "New Coke." Customers liter- ally weren't buying it. 2. In the smartphone industry, Samsung (before its battery fias- co) touted the many technical advantages of its phones versus the iPhone. Apple con- sistently reinforced the user experience, seamless integration with other Apple products and its apps. The iPhone holds a market share advantage over Samsung, and over the years incorporated many of the fea- tures introduced by "first movers." The Bottom Line: Cats always find a way to take advantage of dogs wedded to an out- dated business model. n Jim Pawlak is a nationally syndicated book reviewer. Jim Pawlak THE RAINMAKER Keys to successful advertising and PR By Ken Cook A dvertising and public relations (PR) are two important components in any com- pany's positioning and sales efforts. So, how do you define them, how do they work together, and when is the best time to use them? Start with clarity — you need to be clear on who you are and what you are trying to communicate. Unless you know your mes- sage, the means doesn't matter. The primary message needs to be a clear defini- tion of what makes you unique to the customers and pros- pects you are trying to reach. This is the foundation for your brand position. Once that is known, you can use advertising and PR to communi- cate your brand mes- sage and broadcast your successes. The chal- lenge lies with knowing when to use each. Advertising is when a company pays to cre- ate awareness, generate brand recognition, and generate revenue in specific circumstanc- es. Advertising to generate revenue is best in business-to-consumer situations (e.g., holiday sales, weekly promotions, etc.). However, in business-to-business environments you may be disappointed if you look to advertising to generate immediate revenues. In business to business it's best to consider advertising as a longer-term investment promoting awareness and brand recognition. PR is unpaid promotion of who you are and what makes you unique. Hopefully your brand position has definable characteristics that illustrate your success. With PR you commu- nicate and broadcast your success. Effective PR tactics are many. Social media platforms are at the top of the list. And with any form of social media, the goal is to build your list. Get as many followers as possible, and communicate with them with consistency. Don't neglect the often forgotten practice of press releases — write them well, get them to the right people, and work them with the right people. How does your story fit into their needs? You should become an authority, or the "go-to" person for your industry. Use articles, e-newsletters, blogs, LinkedIn postings, etc. to share information (and demonstrate your expertise). Be consistent in getting informa- tion out to your lists. When media is looking for input, position yourself to be quoted. Establish relationships with local, regional, industry specific and national media outlets, more specifically the editors. Let them know what you know, and that you are available as a source for informa- tion and expertise. The most important element that makes advertising and PR effective is employees. Their activities on a daily basis define the brand because the employees are who the customers interact with and react to. Your brand provides the values your com- pany embodies, the value you deliver, and what makes you unique. This is the clarity of mes- saging your advertising and PR communicates. These brand elements are also what employees need to embrace and practice every day. The goal with any marketing effort is to establish a leadership position. Leadership positioning is based on what others say about you. Employees' daily practices define what others say about you. Therefore, when employ- ees embody the brand, the customers succeed because of it, and you establish leadership posi- tioning by broadcasting those successes. Use PR to establish credibility and a brand position. Use advertising to generate aware- ness and a brand position. Lastly, from a marketing point of view, think of PR as the medium to communicate the brand's foundation and infrastructure. Think of advertising as the paint and trim. n Ken Cook is the co-founder of How to Who and co-author of "How to WHO: Selling Personified," a book and program on build- ing business through relationships. Learn more at www.howtowho.com. Ken Cook ▶ ▶ Dogfights in business occur and recur because businesses doggedly pursue market share in product segments that consumers view as undifferentiated. ▶ ▶ The most important element that makes advertising and PR effective is employees. Their activities on a daily basis define the brand because the employees are who the customers interact with and react to.

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