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Competing
Against Price
By Michael Alan Hamlin
Octobeber 6, 2003
Like airplane crashes, corporate failures generally
don't happen as a result of one catastrophic event. Rather, a series
a failures - often minor individually - that is either ignored or
goes unrecognized leads to fatal crises. However, it's not infrequent
that outside observers see the failure in the making. And even when
the well-meaning few - most often loyal customers complaining the
company no longer values their business and devoted contrarians
within the firm - take the trouble to warn the organization of danger
they are ignored, or worse.
Such companies, according to international marketing
and sales consultant John A. Caslione, are "Dead Companies
Walking." He adapted the term from Tom Hank's The Green Mile.
In the movie, Hank's character was a prison guard who supervised
death row inmates. Whenever a condemned inmate was moved from or
to a cell, guards would shout out, "Dead Man Walking!"
to warn others to stay clear. Since convicted felons awaiting a
death sentence have little to lose from striking or even killing
a careless guard, the warning was taken very seriously.
Companies that fail to acknowledge and deal with such
things as changing marketplaces, increasing competition, and evolving
regulatory environments can quickly become Dead Companies Walking.
They are still alive, but the end is near. As in the case of Dead
Men Walking, warnings are shouted out - to employees, suppliers,
and creditors - by analysts, journalists, and other observers that
the Dead Company Walking doesn't have much to lose by stiffing them,
and so they better watch out for themselves.
I can't help but think of companies and industries
- and they are found in both developing and developed countries
- that decry liberalization and increased competition while doing
nothing to improve themselves, as Dead Companies Walking. Of course,
it doesn't have to be this way. Caslione specializes in helping
companies that don't want to become Dead Companies Walking address
the new challenges inherent in global competition, and identify
new opportunities in the global marketplace.
Speaking before about 50 local and multinational executives
last week, Caslione discussed new rules and tools for competing
against price in today's discount-driven environment, a topic which
is on the mind of every executive, regardless of industry, in these
unusual times. He offered seven rules to help insulate an organization
from price competition which his clients - including such well-known
names as ABB, HP, IBM, Johnson & Johnson, and Rockwell International
- have implemented with his assistance.
The first of those rules is "Define or Redefine
Your 'Total Value Proposition.'" For Caslione, a Total Value
Proposition has two components: value-added, and added value. By
value-added, he refers to natural extensions from a company's products
and services, such as reminding a customer that the next 5,000 km
checkup on his automobile is approaching. Value-added, after all,
usually doesn't mean complex. Added-value refers to building more
oomph into a product or service, such as an extended warranty.
Caslione's second rule is "Fanatical Focus."
He believes that most companies that have tried have never really
been very good at being all things to all people, and now, that
it's impossible anyway. Companies achieve focus through market segmentation,
market targeting, and product positioning. Market segmentation involves
developing a deep understanding of the market, and the different
potential customer profiles of which it is composed. Targeting a
market is the process by which the company decides which segment
it wants to go after. Generally, there are primary and secondary
targets. Finally, positioning has to do with communicating the product
or service in a way that appeals to the target segments.
Caslione's third rule is "Intensive Utilization
of Cross-Functional Resources in the Business Development Cycle."
He argues that most business-to-business relationships are managed
at one point, the one between the account manager and his or her
primary customer contact. That makes the organization, Caslione
says, extremely vulnerable as well as limited in its ability to
interact with the customer. To address that liability, an organization
should have multiple touch points with its customers, including
at the top.
Rule 4 has some particular appeal. Caslione advocates
going after competitors in two ways, by attacking their best accounts
and recruiting their top people. That can be scary. Rule 5 is "Investment
in Professional Development and Performance Analysis." Caslione
says we can't expect people to perform unless they've been provided
the tools to do so. And Rule 6, "Master Multi-Channel Marketing,"
involves communicating regularly and effectively by carefully leveraging
new and old communication channels concurrently.
Caslione's seventh rule, "Launch and Re-Launch
Products with Gusto," has to do with creating excitement. If
the company isn't excited about what it's offering the marketplace,
how excited can potential customers be?
Like most really meaningful insights, Caslione's are straight-forward.
Perhaps that's why they are so easily ignored. And why there are
so many Dead Companies Walking around.
(Michael Alan Hamlin is the managing
director of consultancy TeamAsia and the author of three books on
Asian economies and companies. His latest book is Marketing Asian
Places, of which he is a co-author (Wiley, 2001). Write him at mahamlin@teamasia.com.).
Copyright © 2003 Michael Alan
Hamlin. All Rights Reserved.
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