We have just closed a wonderful year of 2007. Today is a new year as well as another sequential episode in our daily business. At the beginning of 2008, we should reflect on what the experience in 2007 has taught us. We should also prepare for new and greater challenges in 2008. Last week, I have elaborated in my marketing outlook for Indonesia in 2008 that marketers must be aware of eight traps that can set a price war. They must also understand the eight trends that will strategically influence the marketing landscape of companies in 2008.
In navigating our marketing efforts, we must always start by scanning our business landscape, which consists of the change, competitors, customers, and the company itself. The change can be driven by technology, political-legal, social-cultural, economy, and market changes. I strongly suggest that all marketers conduct a rigorous analysis annually and quarterly as needed. I am sure they will unearth many valuable insights. These insights will become the source of many creative inspirations and ideas.
Why creativity?
Creativity is all about combining old elements in new ways for a better result, thus becoming more effective and efficient. From an economic point of view, creativity is a form of capital. From a marketing point of view it is the same idea. From the creative marketing strategy framework, you can be creative in all the nine marketing elements. Starting from STP (segmentation, targeting, positioning), DMS (differentiation, marketing mix, selling), and BSP (brand, service, process).
Segmentation, for instance, is about viewing your market creatively. Differentiation is about combining the content, context, and enabler of your offering to your customers. The context part is obviously a very creative process and can really create the strong pillar for your differentiation. We always need differentiation to avoid from the commodity trap in marketing.
If you sell oranges and so do another 10 people down your lane, what is the chance someone will buy oranges from you? If you have nothing different from the others, you are simply a commodity. As we know, the differentiation must be significant for the consumers for them to choose you. Can you differentiate fruits? Sure you can! It is not as easy as it seems, but it is possible. You can even differentiate sugar and coffee! These are proven in Dole, Del Monte, Gulaku, and Starbucks.
Once you avoid the commodity trap and leverage your brand high enough you can even charge a premium price for it. So, there is really no sustainable reason for marketers to get stuck in a price war. Sometimes after the industry proves to provide an interesting margin and the barriers to enter are not immense, more players are attracted to enter. And for many other reasons, price wars do occur. This is a fact in many markets in many countries. So we must also face the reality that most marketers will be involved in a price war at some point in their business, and it's never too early to prepare.
What can we learn from a price war situation? I see that the price war phenomenon is a classic situation which traps players to compete in an unhealthy way. In order to survive and win the marketing game in 2008, marketers should avoid entering a price war. Why should we avoid it? We all know how price wars can hurt companies’ profit margins in the short run and even brands in the long run. No matter where you are in ASEAN, this is a common fact.
When companies engage in a price war, they simplify the approach in winning the competition by lowering prices. As the competition becomes more intense and players are involved price wars, the importance of marketing will grow even greater. Marketing is a strategic business concept where companies must lay out their strategy, tactic, and value (STV) from a marketing framework. If marketers can implement a creative 4C marketing landscape model and a creative STV model, I am certain they will build a powerful and proven marketing sense for their company.
A price war should not be simply a matter of responding to a competitor's aggressive price move with one of your own. Once the industry experiences a price war, the challenge is actually shifting from focusing on low price products and more on creativity. If it is unavoidable, fighting it with an arsenal of weapons beyond just price cuts themselves is more of an option. Here is where creativity plays a focal point. As it is hard to copycat, creativity is what makes a strong differentiation. Combined with a correct positioning and a strong brand, companies can build ground for escaping from any challenge. To wrap things up, I envision that the marketing challenges in 2008 for ASEAN marketers is strongly focused on being creative to escape from the commodity trap and price wars. Happy New Year! Welcome 2008 with an enormous creative color!
by : Hermawan Kartajaya
In navigating our marketing efforts, we must always start by scanning our business landscape, which consists of the change, competitors, customers, and the company itself. The change can be driven by technology, political-legal, social-cultural, economy, and market changes. I strongly suggest that all marketers conduct a rigorous analysis annually and quarterly as needed. I am sure they will unearth many valuable insights. These insights will become the source of many creative inspirations and ideas.
Why creativity?
Creativity is all about combining old elements in new ways for a better result, thus becoming more effective and efficient. From an economic point of view, creativity is a form of capital. From a marketing point of view it is the same idea. From the creative marketing strategy framework, you can be creative in all the nine marketing elements. Starting from STP (segmentation, targeting, positioning), DMS (differentiation, marketing mix, selling), and BSP (brand, service, process).
Segmentation, for instance, is about viewing your market creatively. Differentiation is about combining the content, context, and enabler of your offering to your customers. The context part is obviously a very creative process and can really create the strong pillar for your differentiation. We always need differentiation to avoid from the commodity trap in marketing.
If you sell oranges and so do another 10 people down your lane, what is the chance someone will buy oranges from you? If you have nothing different from the others, you are simply a commodity. As we know, the differentiation must be significant for the consumers for them to choose you. Can you differentiate fruits? Sure you can! It is not as easy as it seems, but it is possible. You can even differentiate sugar and coffee! These are proven in Dole, Del Monte, Gulaku, and Starbucks.
Once you avoid the commodity trap and leverage your brand high enough you can even charge a premium price for it. So, there is really no sustainable reason for marketers to get stuck in a price war. Sometimes after the industry proves to provide an interesting margin and the barriers to enter are not immense, more players are attracted to enter. And for many other reasons, price wars do occur. This is a fact in many markets in many countries. So we must also face the reality that most marketers will be involved in a price war at some point in their business, and it's never too early to prepare.
What can we learn from a price war situation? I see that the price war phenomenon is a classic situation which traps players to compete in an unhealthy way. In order to survive and win the marketing game in 2008, marketers should avoid entering a price war. Why should we avoid it? We all know how price wars can hurt companies’ profit margins in the short run and even brands in the long run. No matter where you are in ASEAN, this is a common fact.
When companies engage in a price war, they simplify the approach in winning the competition by lowering prices. As the competition becomes more intense and players are involved price wars, the importance of marketing will grow even greater. Marketing is a strategic business concept where companies must lay out their strategy, tactic, and value (STV) from a marketing framework. If marketers can implement a creative 4C marketing landscape model and a creative STV model, I am certain they will build a powerful and proven marketing sense for their company.
A price war should not be simply a matter of responding to a competitor's aggressive price move with one of your own. Once the industry experiences a price war, the challenge is actually shifting from focusing on low price products and more on creativity. If it is unavoidable, fighting it with an arsenal of weapons beyond just price cuts themselves is more of an option. Here is where creativity plays a focal point. As it is hard to copycat, creativity is what makes a strong differentiation. Combined with a correct positioning and a strong brand, companies can build ground for escaping from any challenge. To wrap things up, I envision that the marketing challenges in 2008 for ASEAN marketers is strongly focused on being creative to escape from the commodity trap and price wars. Happy New Year! Welcome 2008 with an enormous creative color!
by : Hermawan Kartajaya
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