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December 28, 2005

Marketing Primer - How Toothbrushes Make Better Generals

Marketing is about making choices within the typical four C's affecting most business decisions - Company, Customer, Competitor, Collaborator. Things work out best when your choices align well.

Take Harley Davidson, the company. Harley has to make choices about what it's going to do with its brand. It has to decide things like who it will go after: latte drinkers or hard-core bikers. If latte drinkers, perhaps the right thing would be to show shiny new hogs with riders in the latest fashions. If hard-core bikers, then you probably want to do exactly the opposite. But, if you can get away with marketing to them differently, and not having the others find out (or find out strategically), then even disparate goals can work. Think airline pricing - vacation vs. business fares.

The other thing to figure out, from the company side, is what can we be? There are umpti-odd books on core competencies, competitive advantage, and so on that look to explore what you can do as a company versus what you cannot do. The thought being that most any company can do anything, but what can a company do well or best? So much so that it can do it better than others. Go some place where others cannot go. If you have patent protection, you've got some competitive advantage if people want your product. Without intellectual or regulatory advantage, sometimes it's just how well you're able to do something relative to others.

This speaks to the competition and the concept of a value proposition. Value is determined in the customer's mind. Price to Earnings ratio is an example. People think Google earns a P/E of around $94 (as of today), while Yahoo earns a P/E of $38. People buy Google shares at a higher price than Yahoo, not because the earnings are more than Yahoo's, but because they feel that Google's earnings are worth more than Yahoo's. They feel the stock, maybe, will climb higher, that earnings will rise faster, among other attributions.

Starting with the customer's idea of value, and business's need to recoup investment and expense, you can start to chart the relativity of value to cost.

Take a toothbrush. If it costs $2.50 and people pay $2.50, then that's the toothbrush's value. What's the value if no one buys it at $2.50? Less than $2.50. Again, value is in the customer's mind. What if I price the same toothbrush at $1.00 and no one buys it? What if I offer it for free? If no one wants it, then it has no value! Likewise, if I price the same toothbrush at $10 and someone buys it, then the value to that person is $10. Key thing for marketers to understand is how many people will buy something, in what circumstances, for how much.

If most customers value our toothbrush at $2.50 and a competitor offers a toothbrush at $2.00, what will happen? That all depends! What is the value of the competitor's toothbrush? That is, is the competitor's toothbrush one of those that's worth $10 in the customer's mind or one that's worth $0. You cannot tell just because they priced it at $2.00! If it's worth $10 to the customer, and your toothbrush is worth $2.50 to customers, then the competitor's toothbrushes will sell out before you sell even one. Likewise, if the competitor's toothbrush is worth $0 in the consumer's mind, then yours will sell out before they even sell one.

Now, these are extreme examples between very different brushes, but in the real world toothbrush competition, the stakes are higher and the similarities between values in brushes dominate the competitive landscape. It also becomes harder for the customer to determine which brush has a higher value.

Let's look at some attributes of the physical toothbrushes:
- bristle variation
- angle of the brush
- compactness of the bristles
- hard, medium, soft
- grip
- color
- head geometry
- and so on

Different customers going to the supermarket to buy a toothbrush may value these physical attributes differently. Your competitor might make a diamond shaped, compact bristle, angled brush, with serrated bristles that will appeal to 10% of the buying public. But, if your research showed that oval shaped toothbrush heads sell better than diamond, then you can make the same toothbrush as the competitor, but with more valued head geometry; therefore, a more valuable toothbrush in the customer's mind.

However, the physical attributes of a toothbrush are NOT the only attributes customers buy. Consider the following:

- Performance attributes (how long a brush will last; how "effective it is")
- Packaging
- Where on the shelf it is at the supermarket (collaborator)
- and so on.

This makes the toothbrush competition even more complicated. If you have a $2.50 valued toothbrush and the competition has a $2.00 valued toothbrush, but your brush is on the bottom shelf almost buried next to the shaving cream, and the $2.00 brush is at eye level, within easy reach, and has big arrows point to it, that $0.50 of effort the customer might make to reach your brush might not seem worth it.

However again, the process is not even that simply complicated. Factor in the following:

- Brand name (Colgate, Crest, Oral-B, and so on)
- Advertising (collaboration with supermarket)
- Word of mouth
- Dentist recommendation

If Crest goes on a rampage and advertises how other toothbrushes are more fit for canine than human toothbrushing and does it convincingly, and shows that only their new brush is really fit for humans, then, as long as everyone remembers the ad when going into the stores, and remembers it's Crest, not Colgate, that made this claim, then they can expect that you'll buy their brush over the others. Of course, they won't do this and even if they did, it would be remarkable to have people believe it en masse.

Go to your supermarket and check out the toothbrush racks. You'll see a variety of toothbrushes. Most brushes belong to the major brands. Most of the smaller brands are at the bottom or top of the shelf, far away from most strolling customers. Now, how would you pick? Is your current brush working for you, but needs a replacement? Want to ditch the standard brush and go for an electric model?

Your own thoughts about how to pick a toothbrush are cloudy enough. Toothbrush manufacturers and competitors have to think through all your value issues, juxtaposed with all the various value markers mentioned above and more for how to compete for your business. Why? Because they have to CHOOSE how they are going to compete. (I'm surprised we haven't yet seen the Sleep Number toothbrush yet, or the build your own toothbrush, but imagine they're coming... at least now that I've mentioned them)

In the Way of Go there's an entire chapter on focus versus diversification labeled Expand Focus. I've heard time and again from people saying, "I'm going to market this to everyone!" That's usually always a bad move. People value things differently. And, there often are discrenible segments of people that value things the same way. Gain a beachhead with a segment that you can really attack with your product's best value proposition first, if the numbers pencil. Cross the chasm and get into the rest of world from there.

So, how does this relate to you?

If you're a Go player, then you have to make choices between moyo or territory; influence or territory; many positions or one position; leaving aji or not. Goal: to obtain more territory ("board value") than the opponent.

If you're a politician, then you have to make choices between a clean campaign or a dirty one; anti-choice or anti-life; gun control or not; death penalty or not. Goal: to raise your value above the competitor's in the most constituents' minds.

If you're a general, then you make choices between troop levels, positioning, timing, air land or sea, time of day, among myriad others. Goal: obtain the objective at the lowest or no cost.

Brushing up on Marketing or the Way of Go should help.

Posted by wayofgo at December 28, 2005 04:44 AM

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