The multichannel trilogy

Aug 01, 2008 9:30 PM  By

You’ve probably been in this management meeting: The vice president of marketing has gathered the marketing director, catalog manager, creative director, Website manager and circulation manager.

Brand presentation is losing concentration, diffused across multiple media channels. Ongoing conflicts among the people assembled in the room provide clues regarding the underlying problem.

The Web manager and creative director are squabbling over resources, and the creative director complains that Web design consistently fails to achieve the brand and product presentation of the print efforts.

Everyone would rather stick to this argument than try to figure out — again — whose responsibility it is to handle all of the new media options. Once they determine that, how are they going to manage brand consistency and strategic focus as they add even more media options to their current promotional mix?

For comparison, let’s reflect on the days — not so long ago — when there was no Internet, no mobile marketing, no integration between mailers and social networking, and the average direct marketer dropped a new catalog every six to eight weeks. Back then, the marketing cycle — from prospect and customer analytics to tracking actual sales against plan — was tied to a specific catalog or promotion.

The process did not seem simple to us then — and it wasn’t. But looking back from today’s perspective, the cyclical nature of direct marketing gave it focus that today’s marketing efforts frequently lack.

What’s more, today’s organizations are larger, more geographically dispersed, and moving much faster, making it difficult to foster a sense of organizational commitment to the brand and message. How can organizations manage strategy and be consistent when confronted with 20 to 40 promotional offers due every month in a diverse range of media options? How do we bridge the generation gap between the people who grew up in print management and logistics and those who live in the new media channels?

The definition of brand has not changed, nor has the definition of marketing. But most of us would be lying if we would not admit to waking up in the middle of the night on a regular basis in a cold sweat over our inability to keep all the arrows pointed in the same direction.

Getting arrows in alignment is a leadership responsibility — not a management practice. It starts with the alignment between value proposition, strategy and brand. These three elements must be clearly defined, and must be designed in support of one another.

Value proposition

Michael Treacy and Fred Wiersema in 1995 released a book called The Discipline of Market Leaders, in which they introduced the concept of selecting a primary value proposition and sticking with it. The three value propositions are customer intimacy, product/process superiority, and operational efficiency.

When a company focuses on the value proposition of customer intimacy, it chooses to direct resources to the people, programs and business investments that promote strong customer relationships to increase customer value. The goal is to achieve a reputation for offering terrific service, providing rewarding experiences, and scoring high marks in customer satisfaction. When management prioritizes cash and time, they select the business activities related to service. Their customers are likely to say, “They cost a bit more than the others, but they’re worth it.” Nordstrom is a good example of the customer intimacy value proposition.

Companies that focus on the value proposition of product/process superiority direct resources to the people, programs and business investments that guarantee they will always offer the newest, hottest, most advanced products in the category. Product/process superiority companies do not worry about being copied; they’re on to the next big thing before the competition can catch up.

Their customers are likely to be early adopters and are willing to pay more for the latest and best. Chrysler exemplifies this value proposition with the innovative designs of its PT Cruiser, Crossfire and 300 series.

The operational efficiency value proposition is all about costs; how to contain them, reduce them and transform them. The intention is to leverage cost advantage into lower prices than the competition.

The operational efficiency company directs all resources to the people, programs and business activities that will lower their costs. Customers go to them because they are the cheapest — think Wal-Mart and McDonalds.

Many business leaders have looked askance at Treacy and Wiersema’s concept of value proposition. They cannot see the value of choosing just one value proposition to excel at when they could set goals to do all three well.

Value proposition does not mean choosing one proposition and failing to do the other two. Every business must meet the customers’ expectations regarding service, product/process quality, and cost competitiveness. This approach demands that in addition to delivering the minimum standard on each of the three propositions, the company selects one of the value propositions as a component of competitive advantage and differentiation.

Strategy

When business leaders develop strategy with the chosen value proposition in mind, strategic directives gain a measure of consistency from the outset. For instance, a strategic planning group in an operational efficiency company would understand that its strategic plan and directives should be primarily concerned with technology, operational improvements, and training to reduce handling and costs.

The strategic plan will influence merchants to identify opportunities for selling products less expensively than their competitors while still maintaining reasonable margins. The plan will guide marketers to develop messaging that promotes value. It will also motivate sales operations to find ways of reducing customer-related costs without dipping below the minimum standard necessary to compete in service.

Brand

A brand is the promise of an experience. It may be represented by a collection of images — including logos, trade names and product names, but a brand is representative of an idea and intended to stimulate an emotional connection. Brand responsibility continues to be relegated to the marketing department, but it should be the responsibility of the entire organization.

Brand understanding must be reinforced through strategy, resource allocation and culture. Brand commitment is conveyed to customers by the voice on the phone, the feature functionality of the Website, the clarity of the invoice, and the care with which the box was packed and shipped.

Brand identity starts with value proposition. The brand of a customer intimacy company must extend the promise of a trustworthy and rewarding relationship. Two firms embracing a customer intimacy value proposition may have different brand experiences, but they will share the brand element related to exquisite service. Likewise, operational efficiency companies will share a brand element related to low prices, and all product/process superiority companies will promise a superior product experience.

Integrating the elements of value proposition, strategy and brand provides corporate structure, and the resulting guidelines simplify management and reduce risk. Marketers must decide among the frantic buffet of media options and learn how to use those options effectively. But that work will be much easier when the arrows of the organization are all pointing in the same direction.

Andrea M. Hill is the principal of Hill Management Consulting, a Chicago-based marketing practice.

Consistency counts

Recent reports say that consumers use the Internet to price shop 17% to 20% of the time prior to placing an order. This means that consumers are not price-shopping 80% to 83% of the time.

What are these customers doing 80% to 83% of the time? They are buying from companies with which they have developed a trusting relationship. They shop where they know their expectations will be met. Customers are overwhelmed by the profusion of choices before them, and they use brand associations to make those choices less stressful.

Consistency in marketing messages is not enough. Customers must experience consistent operations and communications as well. Stand out from the crowd. Break away from the me-too environment of crowded market spaces by clearly owning one of the three positions of best customer service, best new products or lowest overall prices. — AMH