Marketing - Developing Market Intelligence

"Time Spent on reconnaissance is seldom wasted" - Sun Tzu in Art of War

In today’s competitive world, a firm cannot build a long term competitive advantage based on products, procedures or technology. Competitive advantage is built on intellectual capital. Competitors cannot copy a firm’s information or knowledge capability. Thus the firm’s information content constitutes as its chief competitive advantage.

Marketing department has the responsibility to collect data that is scattered across the organization in several databases, records, plans, files and the heads of its employees. Marketing department must channel all this data into meaningful information and present it to various decision makers to enable them to make the right decisions. (or atleast help the top management to take informed decisions)

Data mining however is a complex task. Advent of database software and data analysis tools has made data mining somewhat easier. But to use these tools one needs to know what information to search for?

Answer for this question is tricky as it varies from industry to industry. However commonsense approach would start with asking:

• What information do we need in order to make better decisions?
• Where can we get that required information?

Answers to above question will help to identify most of the internal sources of information. Often the required information regarding market trends, customer needs, business environment, company environment, business cycles etc. are available in customer related databases - sales, purchase orders, contracts, proposals etc. Selecting a data mining and analysis tools will help extract this information from the existing data.

In addition, marketing department also needs to collect information from outside the organization to know about customer behavior, competition, market trends, business environment, etc. Getting this external information is very difficult but not impossible. To begin with, one needs to identify the sources of information. To help identify the sources of information, one can begin with asking:

• What are the sources of information do you get regularly?
• What are the public sources of information you get on regular basis? ( trade magazines & reports)
• What special topics of interest would you like to receive on regular basis?
• What market research would you like to have (that you currently don’t) ?

From my experience in semiconductors and software world, It is easy to answer the above questions - as I know the trade magazines, journals, market research reports and I know what market research to be done. The difficult task is to get that piece of information that I know that I need but that information is what I don't have: namely information regarding business environment, competition, customers, partners and suppliers.

Business Environment

Business environment plays a huge role in the success or failure of small high tech firms. Small firms do not have the capacity to influence the markets or drive the technology standards - so it is imperative for small firms to correctly read the current and future business environment.

For example, a company developing WiMax solutions should have a very good understanding of the future standards, government regulations, customer needs, competition, supplier’s ability and collaborator's motives. Any mistake will lead to failure in the market. For small firms failure means the end of its existence.

Business environment can be further broken down to:

• Market/Customer Trends
• Technology Trends
• Political/Regulatory Trends

Information regarding these trends are often unknown and is subject to speculation. Conducting a targeted market research will help identify these trends - but the costs may be prohibitive for small firms. The best alternative in such cases is to rely on market mavens or gurus for guidance, or collect opinions of industry veterans/captains or even get opinions from employees including middle managers & front-line employees. Often front-line employees have a better understanding of the market/customer trends than the top management.

Jerry Taylor, Former CEO of IDT Inc. used to invite a randomly selected employee for lunch to learn from them. Herb Keller, CEO & founder of Southwest Airlines encourages managers to work as front-line staff to enable them to learn from other employees. These are just a few examples - but often many firms fail to capture the knowledge which resides in their employee’s head.

Customer Information
Firms need continuous information about customers, competitors and collaborators - 3Cs.

Customer information can be summarized as:

• Who are the customers?
• What do our customers need?
• What do our customers want?
• What are the objectives of our customer?
• Who are involved in the buying decision?
• Who makes the final buying decision?
• How customer makes the buying decision?
• When and where do customers prefer to buy?

In addition to the above, for Business to business transactions, additional information has to be gathered:

• Who are the customers of our customer?
• What market segments to our customer cater to?
• What is our customer’s product road map?
• What is the financial position or market share of our customer?
• Who is the competition to our customer?
• What are the technical capabilities of our customer?

Often sales people know the answers for these questions. Therefore marketing should ask the relevant questions to salespeople (sales representative, salesmen etc.) and collect the information. Over a period of time, these answers will reveal customer/market trends and customer behavior. A detailed analysis will result in a customer model which can be used in developing future marketing strategy.

In addition, SEC filings and customer web sites provide a rich source of information. Researching customer’s SEC filings, reading their website, scanning trade magazines, publications etc. will yield a lot of valuable information. This however is not an easy task. One has to spend considerable resources to get it done.

Collaborator Information

Collaborators are the key players involved in day-to-day operations but they are outside to the firm. These include: Suppliers, sales representatives, distributors, logistics agencies, marketing agencies, recruitment agencies etc.

Collaborators for a particular firm work in a specific area and they will have an in-depth knowledge of the market. For example, supplier of package material for Open-Silicon is also a supplier to Xilinx, so they will have a better understanding of ASIC market trends. Collecting market intelligence from collaborators is thus invaluable. However, this is often ignored as firms are busy doing other things.

In addition, a firm also needs to collect information about their collaborators - their reliability, ability to serve you as a customer/partner, their real motives, their pricing structure to you as customer, their pricing to your competitors etc. This helps in choosing the right partner, getting a competitive price from suppliers, and delivering better value to your customer.

Competitor Information

Firms need accurate information about their competitors. The company’s main competitor is the one most like itself: Competition has the same set of suppliers, sells to the same target market, has a similar business model and uses a similar marketing mix.

Firms must also keep an eye on distant or category competitors. For example, Open-Silicon must watch out for developments in firms which make & sell FPGA and Structured ASIC as these are category competitors - and can replace standard cell ASICs. Another example which people can relate to: Software consulting firm Infosys can face potential competition from Oracle in their financial consulting space if Oracle develops a standardized banking software.

To begin with, a firm must have a clear understanding of the objectives, strategies, strengths & weaknesses and competition response of their competitors. The following questions may serve as guidelines for better understanding:

Objectives:

• Is the competitor pursuing profitability? Or Market Share? Or Technology Leadership?
• Is the competitor taking aggressive steps to win our market share?

Strategies:

• How does our competitor win: better prices? Better service? Better technology? Better quality?
• What is their long term & short term strategy?

Strengths & Weakness:

• In what areas is our competitor stronger than us?
• What weakness of our competitor we can exploit to win customers?

Response:

• How will our competitor respond to if we raise or lower our price?
• How will our competitor respond to our marketing/promotion campaign?
• How will our competition respond to changes on our product offerings?

Collecting competitive intelligence is an ongoing task. There are numerous ways to collect competitive intelligence:

• Scan magazines, papers, journals, websites etc.
• Scan competitor’s website for: organizational structure, hiring patterns, company policies, financial disclosures etc.
• Hire current or past employees of the competitor.
• Survey the collaborators/partners/suppliers of your competitors
• Reverse engineer or do in-depth analysis of your competitors offering
• Hire mystery shoppers who will buy competitor’s products/service to help you learn from it
• Collect information from your employees

Office of Market Intelligence

Collecting market intelligence on Business environment, competition, customer & collaborators is a tough and time consuming process. Data has to be collected in advance, analyzed and the information is decimated to top management in timely manner. Only then market intelligence will add value to a firm.

Taking a clue from the military - firms are establishing an Office of Market Intelligence within the marketing department. The aim of this office is to define information needs, prepare research instruments, collect data, analyze data, evaluating its quality and decimate information to decision makers. In addition, the office is also responsible for developing and maintaining marketing decision support system. Marketing decision support system is a coordinated collection of data, systems, tools and techniques for collecting and analyzing data which forms as basis for future marketing actions.

Firms use statistical models, regression analysis, conjoint analysis, factor analysis, cluster analysis and other statistical analysis to develop marketing models for different market segments, to set prices, sales forecast, plan advertising and promotional campaigns.

Closing thoughts

In an era where competition is ruthless and marketing is war, collecting market intelligence is absolutely indispensable. Creating the Office of Market Intelligence with a clear mandate and objectives is essential. Top management and other decision makers will find the information provided to them by the office of market intelligence invaluable - thus enable them to make informed decisions.

Branding on a tight budget

As a marketing professional, I want to clear the myth that effective branding needs big budgets. While it is true that the most valuable brands such as Coca-Cola, McDonalds, Intel etc, have built their brands through a high profile campaigns. Their deep pockets enabled them to bankroll multi-million dollar advertising, marketing and promotional campaigns which were well executed for several decades. These companies have essentially bought their way to customer's hearts and minds. Apart from the dollars, these companies had brilliant marketing people, solid products and services which fulfilled the brand's promise to customers. Fortunately for rest of us, it is good to know that money alone is not enough to build a good brand.

I believe that there are several value add components - both tangible & intangible, that can build memoriable - lasting brands.

For those who do not have the dollars to build a marque brand, there are few "sweat" steps to build a lasting brand value.

Step-1: Brand Discovery

Start with the questions: Who are we? and what do we stand for? Why did we start this business in the first place? What is that we can provide to customers that our competitors cannot? Why do our customers buy from us? Does our customer's enjoy doing business with us?

Answers to these questions help the firm position itself internally. Every employee of the firm should have a clear idea of the firm's market positioning statement. (see my earlier blog "Position before you communicate") This exercise will result in capturing the "Brand Essence" that contains key elements such as target markets and the respective value proposition, an official company description, statements which convey the brand promise in a few memoriable words, and the visual elements which serve as brand identity.

Step-2: Run a reality check

The brand self discovery in step one must be verified. Hold meetings with customers, prospects, partners (and competitors if possible). In particular check the following:

• Do customers agree with your assessment of the unique value you provide to them?
• Are you stepping on any other brand toes?
• Do you have a truly distinctive and memorable brand concept here?

Run the brand essence past a few insightful members of your "kitchen cabinet" (top management, mentors, consultants etc) to help ensure quality of the brand essence.

Step-3: Brand Expression

In this step, you should be able to define the look and feel of the brand message you want to convey.

To distill the "look" of your brand and its visual identity you probably have to work with qualified creative professionals in corporate image/graphic design. To save time and money, pull together visual samples from competitors and any other companies whose branding you like or admire. Having some parameters in mind is preferable to starting with a blank piece of paper—and much more cost-effective.

Typical deliverables in this step are:

• Trademark search and filing
• A company logo
• Official tag line and business identity system
• A firm sense of company reputation
• Any indicated revisions for strengthening the brand concept.

Do a reality check before the final implementation.

• Do you have a truly distinctive and memorable brand concept here?
• Does it convey our company’s personality?
• Are we stepping on any other brand toes? (Avoid any brand infringement)

Again get feedback from few insightful members of your "kitchen cabinet". Use caution, however, in managing the feedback during the approval loop to avoid "death by review"

Step-4: Brand Execution

In this step you have the task of bringing the brand image to your customers.

In steps 1-3, You’ve got the look for the brand, but the "feel" is something you and your organization must create on your own. It’s the total experience of your company:

• The way the phone is answered,
• How products or services are delivered,
• Your quality/service philosophies, your approach to the sales process,
• The style of communication, the value placed on people.

All these "expressions of your brand" are extension of the work you do in steps 1 and 2, and they are just as vital, if not more so, than your brand’s graphic packaging. Also important is ensuring "brand discipline" for advertising, marketing, Web site and other media/channels.

During this step, brand elements extended consistently to signage, Web site, print collateral, trade show display, product packaging, etc. Detailed plans for communicating the brand to employees, customers and other stakeholders are developed and implemented.

Step-5: Brand Forward

If you and your team devote quality time and rigorous attention to solidifying this "framework," you will have built your brand to a level that some firms spend hundreds of thousands of dollars to reach. You can employ a scalable, just-in-time approach to developing the communications and collateral materials that will carry your brand proudly into the marketplace.

The caveats here are clarity, conviction and compelling execution. Also, try to avoid "branding-by-committee," which may be potentially more problematic than no branding at all.

Step-6: Brand Investment

Are there times when you should spend big bucks on branding? Absolutely—particularly when there is a strategic case to be made for capturing dominant market share or dramatically increasing market capitalization.

Yet, branding at any price is not a silver bullet for overcoming market challenges and achieving success. It’s got to be built on technologies, products and services that provide outstanding value to customers over the long haul.

As much as anything, branding is a discipline applied to every aspect of your business. Here’s what I tell: To change the way people think about your company, first change the way your company thinks about itself.

Effective e-mail Marketing

E-Mail works great for niche services or new services that can be marketed to the current customers. If the new services are an extension to the existing serives, then email marketing is a great way to generate customer interest and create the right environment for the actual sales pitch.

To do this, One needs to implement an email marketing campaign using the permission-based email marketing service. Note the importance of permission-based email, sending an unsolicited
e-mail is a sure-fire way to earn your customer’s ire & is counter productive.

The best plan is to implement an email direct mail campaign to your current customers who are currently not buying the new service from you but are buying similar service from others. Offer them a good deal on the new service, which is better and offers more, for a bit more money.
This the upgrade will be beneficial to your current customers but the trick will be to communicate this is in attractive and well-written emails that explain the benefits of the new service levels. My advice on how to plan and implement such an email marketing campaign?

1. Segment customers in our database so you send out customized emails that speaks directly to the individual customers situation. That is if they are buying service X and you want them to also buy service Y, send a different email then if they were buying service A and you want them to also buy service B.
   
   
2. Offer the current customers a special lower price on the new service, which is valid with a year agreement. The discount is based on the principle of lower cost of customer acquisition, and the savings is passed on the customer. This builds a better relationship with the customer.
   
   
3. Think through the best and likely most beneficial upgrade/upsell path for each current account type and group of customers. This upgrade path idea should be thought through very thoroughly.
   
   
4. Send out an email to only part of a segment, track results such as click through rates and how many actually buy the service, modify the message if needed, then send out to another batch. I'd hate to send a message out to all customers will account type X and then determine that the message had some flaws.
   For example, send out a message to a random 10% of a segment. Measure the results. If needed, adjust the email, send to another random 10% of the segment. Measure the results. Do it again. Pick the most effective email and send the rest of the segment. Repeat with each segment.
   
   
5. Possibly send out more than one email. Start by sending out one email which talks about one new/additional service. If there are multiple services, that can be mentioned in a subsequent email after the initial pitch. Although there are several new services/Products, One should be very focused in the emails to just have each customer upgrade one step up from where they are now. If you choose to put we put all the services/products in the email, it will confuse and clutter up your customer and will fail to win the customer’s mindshare. Do not clutter these emails with too much information.

Lastly, use an email management software such as Outlook organizer that makes things easier to manage and work with if basic email software like MS Outlook or Lotus Notes does not meet the requirement.