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Friday, June 01, 2007

Marketing and the market

At lunch at the Sales and Marketing Awards for the Ottawa-Carleton Home Builders' Association, I had an insightful and enlightening conversation with the local general manager of a mutli-city building supply business. the company serves markets throughout Canada and the U.S. (Reflecting the fact that I did not indicate I would use the information from the conversation in any published forum, it is right that I not disclose any identifying information about the person speaking with me.)

He said the business thrived in the U.S. (and oversees) for many years when the Canadian dollar was much lower than the U.S. currency, and it could beat local competitors easily on price. And he said the business thrived in Ottawa and other booming markets a few years ago when, because of its manufacturing capacity, it could maintain delivery schedules while competitors were building order backlogs -- and delays.

In both of these circumstance, the company didn't need to 'market' itself -- allowing that its product quality is comparable to the competition and the company engages in business with good organization and ethics.

But what happens when the market slows, and delivery time is not an issue for the competitors? Or the currency advantage is lost, so pricing is essentially the same as competing products of the same quality.

It is, the company decided, time to market itself -- and it engaged (on recommendation) the advice of a local advertising/marketing agency -- whose representatives coincidentally were at our table as well.

"Marketing is important now because we have to differentiate our product; create a brand, create demand and awareness," the building supply manager told me. "We know that, but we aren't used to this whole world."

Fortunately the company appears to have chosen wisely for its agency -- one with experience in the field, and good understanding of the realities of business-to-business and business-to-consumer marketing. "We look at the demographics of the market -- your current clients -- and see who they are," the marketing agency representative told me. "Then we figure which media to use to draw attention to others fitting the same profile."

The agency is well aware of the importance of repeating advertising; and of the profound and important change in the use of the Internet. "If we see the market includes older clients, we will suggest a combination of Internet and traditional media," the agency person told me. "If it is younger, we might recommend only the Internet."

I told the building supply person and the agency people I am well aware of the importance of online advertising, though our business primarily earns its revenue from conventional print media. In fact, I'll be at the Future of Online Advertising conference in New York this time next week (and blogging from there).

The building supply person asked my opinions, knowing that I published the association's internal newsletter. I explained that one of the best things you can do is get involved directly in relevant associations -- in fact his major competitor had a senior position in the OCHBA's executive recently. Personal relations and connections are vitally important and these are best developed within the association context.

Perhaps the best evidence of the validity of that point was the fact that my table-mates earned several awards for their marketing work; and we (without forcing the matter) were happy to exchange business cards for very realistic future business relationships; in other words, I may have a couple of very valuable new clients from this get-together.

What can I conclude from the experience? You don't need to market when your competitive advantage is so great that it is obvious and clear to anyone with half a brain. You do need to market when your product or service, within the framework of competitive options, is really not that much different or better (at least objectively). The marketing process -- the creative 'connecting' and relationship/brand building exercise -- creates the extra value that allows you to thrive despite commoditization and competition.

And it never hurts, in business-to-business marketing, to join relevant associations and attend their marketing awards lunches!

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