Strategic Marketing Framework to print out & hang on your wall at work

I've found this framework to be immensely helpful to me throughout my career.  Particularly during those fire-fighting, short-term focused periods of work that we all experience from time to time, this framework has always helped me to reorient myself & recalibrate.     

There's a lot more to come with the framework - I'll be drilling down into the different dimensions in more detail so you can have a richer understanding for how to use it to develop robust new marketing strategies and to improve existing ones.

Please feel free to email me if you have any questions about how to put the framework to use within your business.

download framework (pdf)

Related Posts

• Akin Arikan, author of Multichannel Marketing: Metrics and Methods for On and Offline Success, "digitizes" my strategic marketing framework

Check out my favorite business books

read more

Another framework to print out and put on your wall at work

Akin Arikan, author of Multichannel Marketing: Metrics and Methods for On and Offline Success, did a beautiful job grafting a digital/web 2.0 layer onto my strategic marketing framework. (His terrific framework is just below)

 


Also, I highly recommend you read his post describing his digital marketing framework so you can get a better understand of the concepts behind it. Powerful, useful stuff.  Very nicely done, Akin!

read more

Strategic Marketing Framework to print out & hang on your wall at work

I've found this framework to be immensely helpful to me throughout my career.  Particularly during those fire-fighting, short-term focused periods of work that we all experience from time to time, this framework has always helped me to reorient myself & recalibrate.     

There's a lot more to come with the framework - I'll be drilling down into the different dimensions in more detail so you can have a richer understanding for how to use it to develop robust new marketing strategies and to improve existing ones.

Please feel free to email me if you have any questions about how to put the framework to use within your business.

download framework (pdf)

Related Posts

• Akin Arikan "digitizes" my strategic marketing framework

read more

Using segmentation to develop your marketing strategy

While there are many ways to harness the power of segmentation, one of the broadest and most valuable applications is for designing your marketing strategy – a strategy that clearly defines who you’re targeting, what you’re going to offer them, where you’re going to reach them, and how you’re going to sell them on your product & brand.

The key “superpower” of segmentation is that it enables you to take a population of consumers and group them based upon similarities they share with respect to the very attributes that you use to define your marketing strategy (i.e., who to target, what to offer them, etc.). What this means is that the segments you derive from the segmentation process will have their preferred marketing mixes already “baked into them”. Powerful stuff.


Segmentation for designing marketing strategies is a 2-step jig

Step 1: Identify “the who”

In the first step you identify “the who”. Who are those consumers in the population who have expressed interest in your product category or who have needs addressed by your product category? In this step you’re simply separating out those interested consumers from the rest of the general population.

Step 2: Identify your target segments
The second step is where things really get cooking. In step 2 you take the population of interested consumers and group them based upon their similarities with respect to “the what, why, where & how” of your product category.

In this step your goal is to identify the most attractive segments for your business to target – segments for which the following are true:

• One or more of your products meet the segment’s functional & emotional needs
• Your existing channels for selling, servicing & awareness-building align with the segment’s channel preferences and media-consumption habits
• Your product & brand positioning align with the segment’s “reasons for buying” from both a functional and emotional perspective
• You can identify the segment in a cost-effective manner
• The segment is large enough in size and profit-potential to merit investment in a distinct marketing mix

By the end of step 2, you will have identified one or more segments that:

• Are interested in one of more of your products
• Are most effectively targeted using a distinct marketing mix
• AND, are large enough to merit your investment in this distinct marketing mix

These segments will become your target segments and along with their distinct marketing mixes represent your marketing strategy. To reiterate from the intro, the beauty of this approach is that by basing part of your segmentation on similarities shared by consumers across key components of your marketing mix, the segments you derive come with their “marketing instructions” already included.



What about segments you choose not to target?
So what about segments that don’t meet enough of your targeting criteria? What should you do about them? The answer is that it depends.

For those segments large enough in size & profit potential you may consider developing new products, building out new channels, or creating communication strategies that better meet their needs and more effectively “speak to them”.

On the other hand, for those segments that are very small or that would require major retooling of your operations, extensive employee training, or significant stretching of your brand, you would likely leave to other companies to pursue.





More posts on segmentation & marketing strategy:

• What is customer segmentation?
• Segmentation and targeting
• Using the 5 W's to inform segmentation & marketing strategy
• Strategic Marketing Framework to hang on your wall
  

Great books & articles on segmentation:

• Making Segmentation work (Monitor Group)
• Market Segmentation: How to do it, how to profit from it
• Counterintuitive Marketing: Achieve Great Results Using Uncommon Sense (One of the best general marketing books with a terrific chapter on segmentation

Check out my favorite business books

read more

Using segmentation to develop your marketing strategy

While there are many ways to harness the power of segmentation, one of the broadest and most valuable applications is for designing your marketing strategy – a strategy that clearly defines who you’re targeting, what you’re going to offer them, where you’re going to reach them, and how you’re going to sell them on your product & brand.

The key “superpower” of segmentation is that it enables you to take a population of consumers and group them based upon similarities they share with respect to the very attributes that you use to define your marketing strategy (i.e., who to target, what to offer them, etc.). What this means is that the segments you derive from the segmentation process will have their preferred marketing mixes already “baked into them”. Powerful stuff.


Segmentation for designing marketing strategies is a 2-step jig

Step 1: Identify “the who”

In the first step you identify “the who”. Who are those consumers in the population who have expressed interest in your product category or who have needs addressed by your product category? In this step you’re simply separating out those interested consumers from the rest of the general population.

Step 2: Identify your target segments
The second step is where things really get cooking. In step 2 you take the population of interested consumers and group them based upon their similarities with respect to “the what, why, where & how” of your product category.

In this step your goal is to identify the most attractive segments for your business to target – segments for which the following are true:

• One or more of your products meet the segment’s functional & emotional needs
• Your existing channels for selling, servicing & awareness-building align with the segment’s channel preferences and media-consumption habits
• Your product & brand positioning align with the segment’s “reasons for buying” from both a functional and emotional perspective
• You can identify the segment in a cost-effective manner
• The segment is large enough in size and profit-potential to merit investment in a distinct marketing mix

By the end of step 2, you will have identified one or more segments that:

• Are interested in one of more of your products
• Are most effectively targeted using a distinct marketing mix
• AND, are large enough to merit your investment in this distinct marketing mix

These segments will become your target segments and along with their distinct marketing mixes represent your marketing strategy. To reiterate from the intro, the beauty of this approach is that by basing part of your segmentation on similarities shared by consumers across key components of your marketing mix, the segments you derive come with their “marketing instructions” already included.



What about segments you choose not to target?
So what about segments that don’t meet enough of your targeting criteria? What should you do about them? The answer is that it depends.

For those segments large enough in size & profit potential you may consider developing new products, building out new channels, or creating communication strategies that better meet their needs and more effectively “speak to them”.

On the other hand, for those segments that are very small or that would require major retooling of your operations, extensive employee training, or significant stretching of your brand, you would likely leave to other companies to pursue.





More posts on segmentation & marketing strategy:

• What is customer segmentation?
• Segmentation and targeting
• Using the 5 W's to inform segmentation & marketing strategy
• Strategic Marketing Framework to hang on your wall
  

Great books & articles on segmentation:

• Making Segmentation work (PDF)
• Market Segmentation: How to do it, how to profit from it
• Counterintuitive Marketing: Achieve Great Results Using Uncommon Sense (One of the best general marketing books with a terrific chapter on segmentation

read more

"Would you like a coke with your product-sandwich?"

How many times have you been asked the above question at your local wine store?

"Huh?" you say.... okay, so maybe you weren't asked the question explicitly... instead it was embedded in the array of differently priced wines displayed throughout the shop.

For those of you who, like me, know little about wine, when was the last time you went into a wine store and bought the cheapest wine on the shelf? When was the last time you bought the most expensive wine on the shelf? My guess is that most of you can't recall the last time you did either because when you go to the wine store you "play it safe" and usually buy a wine priced "somewhere in the middle". I know I do.

Little did you realize that your local wine store was employing a product-sandwich strategy, drawing you helplessly towards that mid-priced bottle of wine! And you thought you were in control! :)


What is a Product-Sandwich Strategy?
In a nutshell, the strategy involves creating/selling a (very) high-priced version of your product so that the next price down appears more moderate in comparison. Often times this "next price down" would be considered expensive by the customer in absolute terms, but in relative terms (i.e., next to your "Rolls Royce" model) it appears reasonably priced. If implemented successfully, the net impact on your business is a boon in sales of the mid-priced version.


Why does the Product-Sandwich Strategy work?
The Product-Sandwich strategy is based on the principle that when buying an unfamiliar product or service people tend to purchase a mid-priced version of it. Why? It all comes down to risk aversion - fear of making a bad purchase and flushing money down the toilet bowl. This toilet-bowl-infused aversion is the reason we shy away from the pricey models ("How much better could that stereo possibly sound?") and reject the cheap ones ("I bet this stereo would die after a month!").


Can I use a Product-Sandwich Strategy in my business?
Businesses that sell hard-to-value goods (e.g., perfume, body lotion, wine, caskets), or whose target customers tend to be product novices are generally best suited for a Product-Sandwich strategy.

• Think selling perfume to people who don't know the difference between eau de toilette and the water in their toilets.
  
• Or selling car oil to someone who doesn't happen to have a name embroidered on his shirt.

Make sure customers are made aware of the range of price points
One critical success factor for any product sandwich strategy is to ensure that your customers are aware of the different price points of your products, most notably your high-priced version. It is this awareness that leads your customers to view the mid-priced products as the mid-priced products, and hence the "safe, yet reasonable choice".


What do you think?
Have you ever employed a product-sandwich or similar such strategy? If so, how successful was it? What did you learn? What worked? What didn't work?

What ethical issues, if any, does this bring up for you? Do you view this as psychological manipulation or just good, plain marketing strategy?

Please share your experiences, comments, thoughts or questions.






Additional info sources on Product-Sandwich strategy & the psychology behind it

• Dan Gilbert's presentation at the TED Conference (podcast)
  

• Stumbling on Happiness (Dan Gilbert's great follow-up book to his TED talk)

• Yes!: 50 Scientifically Proven Ways to Be Persuasive

• Influence: The Psychology of Persuasion (Collins Business Essentials)

• Nudge: Improving Decisions About Health, Wealth, and Happiness

...and for those who really hate wine stores & happen to have iPhones

• Reviews of iPhone wine apps
  

read more

"Would you like a coke with your product-sandwich?"

How many times have you been asked the above question at your local wine store?

"Huh?" you say.... okay, so maybe you weren't asked the question explicitly... instead it was embedded in the array of differently priced wines displayed throughout the shop.

For those of you who, like me, know little about wine, when was the last time you went into a wine store and bought the cheapest wine on the shelf? When was the last time you bought the most expensive wine on the shelf? My guess is that most of you can't recall the last time you did either because when you go to the wine store you "play it safe" and usually buy a wine priced "somewhere in the middle". I know I do.

Little did you realize that your local wine store was employing a product-sandwich strategy, drawing you helplessly towards that mid-priced bottle of wine! And you thought you were in control! :)


What is a Product-Sandwich Strategy?
In a nutshell, the strategy involves creating/selling a (very) high-priced version of your product so that the next price down appears more moderate in comparison. Often times this "next price down" would be considered expensive by the customer in absolute terms, but in relative terms (i.e., next to your "Rolls Royce" model) it appears reasonably priced. If implemented successfully, the net impact on your business is a boon in sales of the mid-priced version.


Why does the Product-Sandwich Strategy work?
The Product-Sandwich strategy is based on the principle that when buying an unfamiliar product or service people tend to purchase a mid-priced version of it. Why? It all comes down to risk aversion - fear of making a bad purchase and flushing money down the toilet bowl. This toilet-bowl-infused aversion is the reason we shy away from the pricey models ("How much better could that stereo possibly sound?") and reject the cheap ones ("I bet this stereo would die after a month!").


Can I use a Product-Sandwich Strategy in my business?
Businesses that sell hard-to-value goods (e.g., perfume, body lotion, wine, caskets), or whose target customers tend to be product novices are generally best suited for a Product-Sandwich strategy.

• Think selling perfume to people who don't know the difference between eau de toilette and the water in their toilets.
  
• Or selling car oil to someone who doesn't happen to have a name embroidered on his shirt.

Make sure customers are made aware of the range of price points
One critical success factor for any product sandwich strategy is to ensure that your customers are aware of the different price points of your products, most notably your high-priced version. It is this awareness that leads your customers to view the mid-priced products as the mid-priced products, and hence the "safe, yet reasonable choice".


What do you think?
Have you ever employed a product-sandwich or similar such strategy? If so, how successful was it? What did you learn? What worked? What didn't work?

What ethical issues, if any, does this bring up for you? Do you view this as psychological manipulation or just good, plain marketing strategy?

Please share your experiences, comments, thoughts or questions.






Additional info sources on Product-Sandwich strategy & the psychology behind it

• Dan Gilbert's presentation at the TED Conference (podcast)
  

• Stumbling on Happiness (Dan Gilbert's great follow-up book to his TED talk)

• Yes!: 50 Scientifically Proven Ways to Be Persuasive

• Influence: The Psychology of Persuasion (Collins Business Essentials)

• Nudge: Improving Decisions About Health, Wealth, and Happiness

...and for those who really hate wine stores & happen to have iPhones

• Reviews of iPhone wine apps
  

read more

Grow or die! Product fertilizer to grow your top line

Apologies on the overly dramatic, “please-read-me!” title. I figured I’d jump into the pool with the rest of the bloggers attempting to get the attention of the 1.6 billion of you bouncing around the virtual world.

Anyhow, you’re probably familiar with the phrase, “whatever stops growing eventually dies”. And, while I don’t subscribe to this black & white, morbid declaration, we all know that when it comes to your business, growth is essential.

So in the spirit of doing my little part to help get our economy back on its feet, I’ve decided to write a series of brief articles about different growth drivers (tools, frameworks) you can use to grow your products & your business, and perhaps even add a few inches to your height. So let’s get started…


Growth driver #1: develop different versions of your product to suit different usage scenarios

Take mustard. Yes, mustard.

You’re at a baseball game with some friends. Perhaps you’ve enjoyed a few beers. You head out to one of the fine stadium restrooms to reduce your inner-bladder pressure, and you decide to pick up a hotdog on your way back to your seat. Guldens, right? The perfect neon-yellow goo to spread on your ‘dog. No questions asked. Right place, right time. Guldens all the way.

Flash forward 2 months. You find yourself at a very formal cocktail party. Pinkies out, fancy degrees flying about, drinks you would otherwise never drink, people doing their best to inject British-inflexions. You make your way over to the hors d'oeuvre table and sample a selection of finely smoked meats. Grey Poupon, anyone? Again, no questions asked. Right place, right time. It’s a Grey Poupon moment.

(sorry, I just couldn't help but include the most classic Grey Poupon commercial ever produced. enjoy!)



Let's put aside the mustard and put growth driver #1 to work for you:
1. Make a list of the different situations in which your product or service is used (or needed).

2. For each scenario you’ve identified, jot down those characteristics or dimensions that make it different from the other scenarios on your list. Characteristics could include the physical environment, the people you’re with, your main objective at the time you use the product, your main reason for needing the product, the time of year, the activity you’re engaged in at the time you need the product, etc.

3. For each scenario ask yourself what changes you could make to your service in order to provide greater value to your customers given the unique characteristics of the situation.

Examples could include adding complementary services, increasing or decreasing the performance level of certain features or dimensions, adding or eliminating certain features, making changes to physical dimensions of the product, etc. Whatever you come up with, it should be dictated by the unique needs of your customer under the given scenario.

Real-world examples of growth driver #1. Different versions of the product for different usage occasions.

• Candles: For romantic dinners, for keeping the bugs away when camping, for festive holidays, for scenting the air, for birthdays.
• Travel insurance: For safaris, for ski trips, for family vacations, for cruises, for long-stay trips, for international trips.
• Suits: For hot climates, for formal events, for casual events, for outdoor events, for weddings, for funerals.

What other examples can you think of? Please share them with us in your comments.

Happy growing!

-------

Additional posts that discuss growth strategies:

• Innoviation via other worlds: a tool for generating powerful ideas for your business
• Enhance your innovation by tapping your product's value-creation web

Great books that discuss scenario-based product innovation:

• Marketing Imagination, New, Expanded Edition 

• The Entrepreneurial Mindset: Strategies for Continuously Creating Opportunity in an Age of Uncertainty

• What Customers Want: Using Outcome-Driven Innovation to Create Breakthrough Products and Services
  

read more

Grow or die! Product fertilizer to grow your top line

Apologies on the overly dramatic, “please-read-me!” title. I figured I’d jump into the pool with the rest of the bloggers attempting to get the attention of the 1.6 billion of you bouncing around the virtual world.

Anyhow, you’re probably familiar with the phrase, “whatever stops growing eventually dies”. And, while I don’t subscribe to this black & white, morbid declaration, we all know that when it comes to your business, growth is essential.

So in the spirit of doing my little part to help get our economy back on its feet, I’ve decided to write a series of brief articles about different growth drivers (tools, frameworks) you can use to grow your products & your business, and perhaps even add a few inches to your height. So let’s get started…


Growth driver #1: develop different versions of your product to suit different usage scenarios

Take mustard. Yes, mustard.

You’re at a baseball game with some friends. Perhaps you’ve enjoyed a few beers. You head out to one of the fine stadium restrooms to reduce your inner-bladder pressure, and you decide to pick up a hotdog on your way back to your seat. Guldens, right? The perfect neon-yellow goo to spread on your ‘dog. No questions asked. Right place, right time. Guldens all the way.

Flash forward 2 months. You find yourself at a very formal cocktail party. Pinkies out, fancy degrees flying about, drinks you would otherwise never drink, people doing their best to inject British-inflexions. You make your way over to the hors d'oeuvre table and sample a selection of finely smoked meats. Grey Poupon, anyone? Again, no questions asked. Right place, right time. It’s a Grey Poupon moment.

(sorry, I just couldn't help but include the most classic Grey Poupon commercial ever produced. enjoy!)



Let's put aside the mustard and put growth driver #1 to work for you:
1. Make a list of the different situations in which your product or service is used (or needed).

2. For each scenario you’ve identified, jot down those characteristics or dimensions that make it different from the other scenarios on your list. Characteristics could include the physical environment, the people you’re with, your main objective at the time you use the product, your main reason for needing the product, the time of year, the activity you’re engaged in at the time you need the product, etc.

3. For each scenario ask yourself what changes you could make to your service in order to provide greater value to your customers given the unique characteristics of the situation.

Examples could include adding complementary services, increasing or decreasing the performance level of certain features or dimensions, adding or eliminating certain features, making changes to physical dimensions of the product, etc. Whatever you come up with, it should be dictated by the unique needs of your customer under the given scenario.

Real-world examples of growth driver #1. Different versions of the product for different usage occasions.

• Candles: For romantic dinners, for keeping the bugs away when camping, for festive holidays, for scenting the air, for birthdays.
• Travel insurance: For safaris, for ski trips, for family vacations, for cruises, for long-stay trips, for international trips.
• Suits: For hot climates, for formal events, for casual events, for outdoor events, for weddings, for funerals.

What other examples can you think of? Please share them with us in your comments.

Happy growing!

-------

Additional posts that discuss growth strategies:

• Innoviation via other worlds: a tool for generating powerful ideas for your business
• Enhance your innovation by tapping your product's value-creation web

Great books that discuss scenario-based product innovation:

• Marketing Imagination, New, Expanded Edition 

• The Entrepreneurial Mindset: Strategies for Continuously Creating Opportunity in an Age of Uncertainty

• What Customers Want: Using Outcome-Driven Innovation to Create Breakthrough Products and Services
  

read more

How to unleash the power of context and turbo-charge your marketing

There are few more powerful insights you can generate than learning the main contexts in which demand for your product/product category arises. Having such knowledge will allow you to elevate your marketing and develop deeper, more profitable relationships with your customers.

------------

Step 1: identify the most frequent demand contexts
The first step in unleashing the power of context is to identify the different contexts in which demand for your product is triggered. Think of yourself as a detective attempting to answer the questions:

• Under what situations do people become interested in my product?
  
• What triggers their interest in my product? (Events, changing circumstances, etc.)
  

In sleuthing your way to an answer, you may find that there is a series of events that take place before demand is sparked. You will also likely learn that there are several distinct demand contexts for your product, some of which will occur with far greater frequency than others.

Your key objective in step 1 is to assemble a list of those demand contexts that account for at least 75%-80% of total demand for your product/product category.


Step 2: ask the 6 power-questions to elevate your marketing strategy
For each of the most frequently occurring demand contexts for your product, ask the below six questions:

1) How can I tweak or reconfigure my product to better meet the consumer need in the given context?

2) Are there complementary products or services I should consider offering, whether though my company or a partner?

3) How might I adjust my pricing to better reflect the value provided by my product within the given context?

4) How can I more effectively communicate & position the value provided by my product within the given context? Is there specific imagery, tonality & language I should use in my marketing communication?

5) Are there any changes I should make from a channel perspective, whether it be my channels for building awareness, for selling, or for servicing customers?

6) How can I detect when demand has been triggered for this given context? Can I actually identify these people with some degree of certainty? (Dig deep to answer this crucial question. There is almost always a way)
(Note that some of the questions may not be pertinent for certain product categories and demand contexts)


Let's make this pop! with a brief real-world example

Product du jour: Cars

Step 1: identify the most frequent demand contexts for cars
-The lease is expiring on the existing car
-The price of gasoline jumps and the person owns a gas-guzzler**
-The car is old & worn out (tail pipe tickling the pavement, etc.)
-The car died & resuscitating it would cost a whole lot of money
-The person is moving from the City to the ‘Burbs

Step 2: ask the 6 power-questions for each frequently-occurring demand context for cars
**Below I've answered the questions for the demand context in which the price of gasoline jumps and the person owns a gas-guzzler

1) How might we tweak our cars to better meet the needs of the owners of gas-guzzlers?
We could develop a fuel-efficient car or one that could run on cheaper types of fuel (given the long R&D cycle for new models, auto companies are always best suited to have such a model either always available for sale or one that can easily be ramped up for production)

2) Are there complementary products or services we should consider offering, whether though our company or a partner?
We could develop services or partnerships that would cheapen the price of gas - e.g., partner with credit card companies to develop attractive cash-back rewards on gasoline purchases

3) How might we adjust our pricing to better reflect the value that our cars provide to owners of gas-guzzlers?
Consumers who are feeling increasing pain at the gas pump are likely willing to pay more for a car that will significantly reduce their “gas pains”... Then again attempting consumer-level pricing can be tricky and a risky move from a brand perspective (not to mention the current distribution structure for cars does not readily lend itself to such a pricing strategy).

4) How can we more effectively communicate & position the value provided by our cars to owners of gas-guzzlers? Is there specific imagery, tonality & language we should use in our marketing communication?
We could position our cars as “fuel-smart” alternatives that could save them thousands of dollars, which could be put towards more enjoyable things than gasoline, such as a much-needed vacation in the Caribbean(!)

5) Are there any considerations we should make from a channel perspective, whether it be our channels for building awareness, selling, or servicing?
(Response not included to maintain brevity)

6) How can we detect when this demand trigger has been fired? Can we identify the owners of gas-guzzlers during a spike in gas prices?
Knowledge of rising gas prices is a layup - CNN & our local gas stations would make any major rise in gas prices abundantly clear. And, there are a number of ways to identify owners of “gas-guzzlers” with fairly good precision, starting with identifying the geographic distribution of SUV sales & SUV dealerships.


Your assignment
1) Select one of your products or services – especially one that you believe has the most “improvement potential” & could provide the most upside for your business.

2) With a pad & pen in hand, walk the product through Step #1. Also, ask colleagues and friends & family to complete Step #1. And, hold a brainstorming session if timing & calendars permit. (I’ve always found the collective IQ of a good group to be far greater than any one individual flying solo)

3) Take each of your top demand contexts and run through Step #2. For this step it is particularly valuable to hold a brainstorming session or two, as the collective brainpower of your colleagues in this step can be the difference between a $1mm idea and a $10mm idea.

4) Share your experience with us here on the blog, including any interesting things you learned from the process and, of course, any successes you have to-date.


A note on business strategy & demand context
In a future post I’ll be writing about the role that the demand contexts of your product should play in (re)designing your business strategy. Depending upon a number of factors including the economics of your business and the positioning of your brand, there are likely certain demand contexts that you would want to focus your efforts upon. More to come on this, so stay tuned...

And, as always, please feel free to leave a comment, question or shout-out.

Sources: car demand contexts based upon 2005 study by the American International Automobile Dealers (AIADA).

read more

Your pricing and marketing strategy should be influenced by your customer's reference point

We love to think of ourselves as rational, objective beings. And yet endless scientific studies indicate that we are anything but... context, the framing of information, and cues can have a profound influence upon how we view the world, and the decisions that we make...



Let's start with a fun warm-up exercise!
Real quick - what animal is displayed in the picture to the right?

(make a mental note of what you think and then scroll down for the answer)






















The answer is... drum roll please... there are two answers in fact. The picture is most certainly of a rabbit. But the picture is also of a duck. Can you see both of them?

For the majority of you who are seeing this optical illusion for the first time, I would guess that you saw a rabbit when you looked at the picture. Why? Thumper. The picture of Bambi's pal sitting at the top of this post alongside a carrot acted as a "cue", priming the "rabbit neurons" in your brain, and shaping your perception in the process. (Had I shown you a picture of Daffy Duck instead of Thumper, many of you would have seen a duck, not a rabbit. Sorry, Daffy.)



But what do "rabbit-ducks" have to do with marketing & pricing?
Simple. To be a successful marketer, it is critical that you develop an adeptness for identifying consumer contexts & reference points, as these factors strongly influence consumer perception, behavior, and price sensitivity. Of course, identification alone is not enough - you must use such insights as key inputs into your overall marketing strategy.

So to use a silly, "Thumpereqsue" example, if you know that people are bringing a "bunny-loving" lens to your restaurant because Bambi is playing at the movie theater next door, you might not want to offer wild rabbit as one of your dinner specials.


"Doug, can I interest you in tush warmers?"
Let's bring the concept of consumer context & reference points a little closer to home with an example that many of us can relate to: the old "car-options" strategy utilized successfully by thousands of car salespeople every day... it goes like this: if you're purchasing a big-ticket item (e.g., a new car, an expensive vacation, a new suit, etc.), you're more likely to also purchase lower-priced "options" or 'add-ons' than if you were offered these same items at a later date.

(hypothetical scene of me in a showroom purchasing a new car)
"Doug, how about we add those tush warmers to the car?... only $250 per seat... you know how chilly leather seats can get in New York during the winter..."

"Sounds good, Mr. Salesperson... what's an extra $500 when I'm already spending $XX,XXX on the car?"

Now instead imagine Mr. Salesperson offering me the same "warmers" for my new car 2 weeks after I've driven it off the lot. Even if he could have them installed without my having to lift a finger, I would likely balk at the offer.

"Thanks for the offer, Mr. Salesperson, but I think I'm all set. Love the new car, by the way. Thanks again for all your help"

Same tush warmers. Different context, different reference points, and different willingness to make a purchase.

In the first scenario I was in "open-wallet" mode. In the second scenario I was not. In the first scenario my reference point for the tush warmers was the several thousand dollar new car that I was in the process of buying. In the second scenario my reference point might have been an outrageous electric bill that I had paid only moments before the salesman made his offer.


Jelly belly's popcorn-flavored channel & pricing strategy
Jelly belly, a leader in the jellybean industry, provides us with a good example of a company that leveraged its knowledge of consumer reference points to develop a channel strategy that enabled it to charge premium prices for its jellybeans.

Instead of selling its jellybeans through traditional candy outlets, Jelly Belly made the conscious decision to sell them at specialty and gift stores, where sweets alternatives included higher-priced items such as gourmet chocolates and fruit baskets.

Since the reference points of people shopping at gift stores were these higher-priced sweets and not other jellybeans, Jelly Belly could price its 'beans at a substantial premium to other 'beans and still provide a cheaper sweets alternative for the gift-store shoppers.

Same jellybeans. Different context, different reference points, different price sensitivity.


How do I start applying these concepts?
Leveraging your insights around consumer context & reference points can turbo-charge the performance of your business by providing you with the means to significantly improve your marketing & pricing strategy.

The first step in this powerful process is to generate deep insights around your target customer's context & reference points. Below I have supplied some initial questions to get you started:

insights around customer context
What are the most common contexts in which your target customers [develop a need for | search for & learn about | compare & purchase | install | use & maintain | repurchase] your product or service?

-What do I mean by "context"? Context refers to those attributes that describe the environments of your target customers, such as: where they are - time & place. who they are they with. what they are doing. what is on their minds. their current objectives & goals. their current physiological & emotional states. get the idea?

insights around reference points
What reference points are your consumers using when they [search for & learn about | compare & purchase | use & maintain | repurchase] your service? How do these reference points impact: Their receptivity to your offering? Their openness to the price of your offering? Their experience when using your offering?

-What do I mean by "reference points"? Reference points are the points of comparison or anchors a consumer uses when assessing or experiencing your product. To use an extreme illustration, imagine two people who are given a used 2005 Toyota Corolla for free. One is a first-generation immigrant who earns $17,ooo a year, whose only mode of transport is a beat-up Yamaha motorbike. The other is a multi-millionaire who already owns 4 luxury cars. Given the two people's vastly different reference points for the free Toyota, their responses to the news about the free car will differ dramatically.

After generating insights around your target customers' contexts & reference points, you will want to explore how you can use these insights across critical aspects of your marketing strategy. In some cases how to leverage the insights will be obvious; in other cases you will have to stretch your thinking and percolate your creative juices.

In a future post I will run through some concrete examples so you can see these essential marketing concepts in action, and develop a greater understanding for how to use them in your business.

As always, I welcome your comments, thoughts, and questions.

Please feel free to email me if you have any questions about pricing and how to effectively use reference points within your business.






Related posts

• How to unleash the power of context and turbo-charge your marketing

• Product-sandwich product & pricing strategy

• Marketing & the 5 W's: why every marketer should take a journalism class

• CoNtEXT is King
  

Great books on pricing strategy

• The Strategy and Tactics of Pricing: A Guide to Growing More Profitably (4th Edition) (Pie)

Check out my favorite business books

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How your pricing and marketing strategy should be influenced by your customer's reference point

We love to think of ourselves as rational, objective beings. And yet endless scientific studies indicate that we are anything but... context, the framing of information, and cues can have a profound influence upon how we view the world, and the decisions that we make...



Let's start with a fun warm-up exercise!
Real quick - what animal is displayed in the picture to the right?

(make a mental note of what you think and then scroll down for the answer)






















The answer is... drum roll please... there are two answers in fact. The picture is most certainly of a rabbit. But the picture is also of a duck. Can you see both of them?

For the majority of you who are seeing this optical illusion for the first time, I would guess that you saw a rabbit when you looked at the picture. Why? Thumper. The picture of Bambi's pal sitting at the top of this post alongside a carrot acted as a "cue", priming the "rabbit neurons" in your brain, and shaping your perception in the process. (Had I shown you a picture of Daffy Duck instead of Thumper, many of you would have seen a duck, not a rabbit. Sorry, Daffy.)



But what do "rabbit-ducks" have to do with marketing & pricing?
Simple. To be a successful marketer, it is critical that you develop an adeptness for identifying consumer contexts & reference points, as these factors strongly influence consumer perception, behavior, and price sensitivity. Of course, identification alone is not enough - you must use such insights as key inputs into your overall marketing strategy.

So to use a silly, "Thumpereqsue" example, if you know that people are bringing a "bunny-loving" lens to your restaurant because Bambi is playing at the movie theater next door, you might not want to offer wild rabbit as one of your dinner specials.


"Doug, can I interest you in tush warmers?"
Let's bring the concept of consumer context & reference points a little closer to home with an example that many of us can relate to: the old "car-options" strategy utilized successfully by thousands of car salespeople every day... it goes like this: if you're purchasing a big-ticket item (e.g., a new car, an expensive vacation, a new suit, etc.), you're more likely to also purchase lower-priced "options" or 'add-ons' than if you were offered these same items at a later date.

(hypothetical scene of me in a showroom purchasing a new car)
"Doug, how about we add those tush warmers to the car?... only $250 per seat... you know how chilly leather seats can get in New York during the winter..."

"Sounds good, Mr. Salesperson... what's an extra $500 when I'm already spending $XX,XXX on the car?"

Now instead imagine Mr. Salesperson offering me the same "warmers" for my new car 2 weeks after I've driven it off the lot. Even if he could have them installed without my having to lift a finger, I would likely balk at the offer.

"Thanks for the offer, Mr. Salesperson, but I think I'm all set. Love the new car, by the way. Thanks again for all your help"

Same tush warmers. Different context, different reference points, and different willingness to make a purchase.

In the first scenario I was in "open-wallet" mode. In the second scenario I was not. In the first scenario my reference point for the tush warmers was the several thousand dollar new car that I was in the process of buying. In the second scenario my reference point might have been an outrageous electric bill that I had paid only moments before the salesman made his offer.


Jelly belly's popcorn-flavored channel & pricing strategy
Jelly belly, a leader in the jellybean industry, provides us with a good example of a company that leveraged its knowledge of consumer reference points to develop a channel strategy that enabled it to charge premium prices for its jellybeans.

Instead of selling its jellybeans through traditional candy outlets, Jelly Belly made the conscious decision to sell them at specialty and gift stores, where sweets alternatives included higher-priced items such as gourmet chocolates and fruit baskets.

Since the reference points of people shopping at gift stores were these higher-priced sweets and not other jellybeans, Jelly Belly could price its 'beans at a substantial premium to other 'beans and still provide a cheaper sweets alternative for the gift-store shoppers.

Same jellybeans. Different context, different reference points, different price sensitivity.


How do I start applying these concepts?
Leveraging your insights around consumer context & reference points can turbo-charge the performance of your business by providing you with the means to significantly improve your marketing & pricing strategy.

The first step in this powerful process is to generate deep insights around your target customer's context & reference points. Below I have supplied some initial questions to get you started:

insights around customer context
What are the most common contexts in which your target customers [develop a need for | search for & learn about | compare & purchase | install | use & maintain | repurchase] your product or service?

-What do I mean by "context"? Context refers to those attributes that describe the environments of your target customers, such as: where they are - time & place. who they are they with. what they are doing. what is on their minds. their current objectives & goals. their current physiological & emotional states. get the idea?

insights around reference points
What reference points are your consumers using when they [search for & learn about | compare & purchase | use & maintain | repurchase] your service? How do these reference points impact: Their receptivity to your offering? Their openness to the price of your offering? Their experience when using your offering?

-What do I mean by "reference points"? Reference points are the points of comparison or anchors a consumer uses when assessing or experiencing your product. To use an extreme illustration, imagine two people who are given a used 2005 Toyota Corolla for free. One is a first-generation immigrant who earns $17,ooo a year, whose only mode of transport is a beat-up Yamaha motorbike. The other is a multi-millionaire who already owns 4 luxury cars. Given the two people's vastly different reference points for the free Toyota, their responses to the news about the free car will differ dramatically.

After generating insights around your target customers' contexts & reference points, you will want to explore how you can use these insights across critical aspects of your marketing strategy. In some cases how to leverage the insights will be obvious; in other cases you will have to stretch your thinking and percolate your creative juices.

In a future post I will run through some concrete examples so you can see these essential marketing concepts in action, and develop a greater understanding for how to use them in your business.

As always, I welcome your comments, thoughts, and questions. 

Please feel free to email me if you have any questions about pricing and how to effectively use reference points within your business.






Related posts

• How to unleash the power of context and turbo-charge your marketing

• Product-sandwich product & pricing strategy

• Marketing & the 5 W's: why every marketer should take a journalism class

• CoNtEXT is King
  

Great books on pricing strategy

• The Strategy and Tactics of Pricing: A Guide to Growing More Profitably (4th Edition) (Pie)

read more