About a year ago, I read a great book by Niraj Dawar, Professor at the Ivey Business School, Canada and a renowned marketing strategy expert. The book was Tilt: Shifting Your Strategy from Products to Customers.
In Tilt, Professor Dawar argued that, over time, sustainable competitive advantages would be found not in the technical superiority of products but in interactions with customers. Therefore, businesses that would tilt their centre of gravity from upstream activities (activities relating to production and products) to downstream activities (activities relating to customers) would be able to create sustainable competitive advantage and gain from it.
The strategic changes that are involved in the “Tilt” from upstream to downstream include:
- The customer, rather than the factory, becomes the core of the business.
- The central strategic question changes from “How much more can we sell?” to “Why do customers buy from us?” and “What else does the customer need?”
- Businesses now need to focus on how to reduce customers’ costs and risks.
- Competitive advantage can be gained by managing the flow of information in marketplace networks.
- Competitive advantage can be gained by using marketing to convince customers that particular criteria (which happen to favour your products) should be used to determine purchasing decisions.
Tilt is a book I would highly recommend and I was delighted when I saw and read a great article in HBR written by Professor Dawar and Charan K. Bagga, also of the Ivey Business School, entitled ‘A Better Way to Map Brand Strategy.’
In the article, Professors Dawar and Bagga point out that marketers have always had to juggle two seemingly contradictory goals: making their brands distinctive and making them central in their category. Given this dichotomy, it was critical for marketers to striking the right balance between centrality and distinctiveness because a company’s choices would influence not just how the brand would be perceived, but how much of it would be sold and at what price—and, ultimately, how profitable it would be.
According to Professors Dawar and Bagga, ‘the problem is that there are no tools available to get this balance right. Traditionally, companies have analysed brand positioning and business performance separately: To locate gaps in the market and gauge how people feel about their brands, marketers have used perceptual positioning maps, which typically represent consumers’ perceptions of brands or products on opposing dimensions, such as budget versus premium or spicy versus mild. To assess performance, they have used a different set of strategic tools that map or measure brands on yardsticks such as market share, growth rate, and profitability.’
In the article, the professors present a new approach called the centrality-distinctiveness (C-D) map, which is possibly ‘the first tool that allows companies to directly connect a brand’s position on a perceptual map with business outcomes such as sales and price. Using the tool, managers can determine a desired market position, make resource allocation and brand strategy decisions, track performance against competitors over time, and evaluate strategy on the basis of results. In the process, they will find that centrality and distinctiveness need not be contradictory goals; companies may choose to pursue both—and benefit substantially.’
This is an important article and I would recommend all marketers to read it here.
Tilt section from John Gibbs, Amazon.com.
Visual courtesy: https://www.flickr.com/photos/mil8/