- December 22, 2024
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Lou Lasday: STREET SMART MARKETING
Give More by Offering Less
You can actually give your customers, your clients and your company more, by giving your customers and clients less!
In a complete twist to the generally accepted business mantra of "kill them with service" comes the new playfully named "naked solutions" profit-making strategy expressed by professor James Anderson of Northwestern University's Kellogg School of Management.
The thinking calls for examining every single phase and every single internal and external cost in your total delivery of product or service. It requires a total walk through of activity to identify and capture each dollar of pass-though cost; everything from staff to stamps. Nothing is too small. Everything must be accounted for.
The naked cost
The basic thrust is to arm yourself with detailed, accurate insight into your actual real cost structure. The object is to cut unwanted, unneeded or under-appreciated ancillary benefits to prudently reduce your end pricing.
An equally important goal would be to set in motion a plan to contain your future structure. In either event, the resulting level of service or benefit inherent to the product or service provided is stripped of extras, or made naked of free but costly add-ons.
The thinking is admittedly counter intuitive to Marketing 101 strategies. It may not be appropriate for absolutely every professional service or Gulf Coast enterprise. Still, less-is-more marketing can unlock previously unrealized profit.
American Marketing Association contributing editor Bob Donath believes that every entrepreneur should at least consider this reconfigured dynamic if your particular enterprise could benefit even a portion or a single segment of your audience.
If you buy into this concept of giving more by giving less, your task is to surgically trim your value proposition and reduce your costs by cutting nonessential features and benefits to several customers. Instead, give them just what they really want at a lower price without product or service frills. If handled properly, you're likely to catch your chief competitors off guard.
Your surgical strike
Here's how right-sizing value and price can bring a new profit advantage for supplier and consumer alike. Slimming down to serve specific segmented niches can boost profit when your cost reductions outpace your price reductions. Eureka! That's just what you're looking for.
Field market research, simple customer surveys and my absolute favorite strategic corporate initiative, M.B.W.A. (management by walking around) can help you identify segments of no-frills buyers willing to forego service enhancements in return for holding down prices.
Be especially attentive to firms or major prospects who are not your clients or customers at the present time. They could become a profitable source of new business. And because you'll be selling to your new customers at lower pricing, your competitors will be watching what you do. They might well conclude that those people are too unprofitable to pursue. They won't realize that by giving less you may be profiting more. That's a good thing.
Segment your market
Those marketers stuck in the middle between the Gulf Coast's bottom-feeders and the top shelf competitors - that's most players in your category - will become widespread because they haven't segmented the marketplace wisely and identified the value-defined niches they most profitably serve.
The trick is in knowing which of your featured offerings, particularly the ones expensive to provide, enough customers will be willing to give up in return for a lower price - but not a price so low that it erodes operating profit.
A precise costing system
Everyday working conversations along with deep thought between the operations side of your brain and the marketing side of your brain are essential for right sizing your pricing. Not all companies will have easily identifiable or sizeable "naked solutions" for customer segments. Nor do all firms possess the operation savvy to cut costs surgically or the marketing discipline to find the management determination to orchestrate a less-is-more strategy. For those Gulf Coast firms that do possess that combination, this new age opportunity could be enormous.
Lou Lasday, an independent marketing advisor residing on Longboat Key, He can be reached at [email protected].