| Product companies seek to
become market-share leaders. To do this, they look to launch
and manage a portfolio of differentiated products that have
specific features most appealing to a specific target audience
for a reasonable (but as high as possible) price.
According to the famous and widely accepted PIMS (Profit
Impact of Marketing Strategies) study, profit increases
with market share. So, of course, product companies (and
sometimes those that are marketing professional services)
seek market share as a core strategic objective.
The jackpot situation for a product company is to
- Uncover an unmet market need for a product within its
capability to develop and market
- Make that product unique or as much as possible unlike
products already available in the market
- Launch the product with a strong marketing and branding
campaign, supported by market research, that shapes the
“personality” and appeal of the product so
it can gain market share as quickly and aggressively as
possible
- Develop the product to be difficult to imitate, also
difficult to imitate quickly, thus keeping its hold on
this profitable market for as long as possible
That is the widely accepted model of product marketing taught
in many business schools and advocated by many management
and marketing consulting firms. Therefore, when presented
with a new business plan or product offering, we classically
trained business types are programmed to ask questions such
as these:
Unfortunately, the above business model and questions do not
usually apply to professional services firms. What
many of us know and learned from respected business thinkers
about market research, launching new services, branding,
and differentiation can become an Achilles heel if applied
to our service firms.
How can following such (seemingly) solid business thinking
hurt us?
Consider the following scenario: a business consultant
trained in classical “business and marketing strategy”
tries to help a would-be entrepreneur to start a business
that will succeed financially and grow.
Here is how their conversation might develop:
Consultant: Nice to meet
you. I am looking forward to discussing your potential new
business venture. What kind of business are you thinking
of starting?
Entrepreneur: Glad to meet
you, too. I’m a lawyer (or accountant or consultant
or engineer—this story applies to all) and have been
for 20 years at well-known law firms and want to make a
go of it with a few other partners of mine. I’m going
to start my own law firm in Boston.
Consultant: Great. I’m
going to ask you a few questions to help you evaluate the
viability and potential of your new business and help you
with your marketing strategy. Ready?
Entrepreneur: As I’m
new to professional services marketing, I’m looking
forward to it. Fire away.
Consultant: What’s
the size of the market?
Entrepreneur: I have no idea,
don’t plan to find out, and probably won’t because
it’s not really important. Suffice it to say, there’s
enough business for me to start a firm and grow it.
Consultant: OK. Well, do
you know what amount of market share you plan to grab for
your firm?
Entrepreneur: Not a clue,
but I’m guessing it will be, for some years at least,
less than 1%.
Consultant: Very well. Are there other companies serving
this market?
Entrepreneur: Yes, and for
the most part, they serve it quite well.
Consultant: How will the
services you offer be unique and differentiated?
Entrepreneur: They won’t.
I’ll offer pretty much the same core professional
services as other firms. I’ll focus on my specialties
and those of my several partners who will be starting with
me: intellectual property, mergers and acquisitions, and
insurance law.
Consultant: I see. What kind
of market research will you undertake so you can position
your firm and professional services in the right way against
the competition?
Entrepreneur: No market research.
We’ll not be focusing outwardly on market opinions
to help us determine what people are “looking for”
in a firm. If we try to be anything but ourselves, we’ll
come off as insincere and we don’t want to do that.
What we do in the daily course of working will shout louder
than what we say, anyway. We’ll simply be ourselves,
try to communicate that in our marketing materials and brand
message, and then dedicate ourselves to living up to our
service promises consistently.
Consultant: So you won’t
be using any market research to shape your brand image and
professional services branding strategy?
Entrepreneur: Nobody likes
politicians who survey their constituency and only then
develop policies because one idea or another is popular
at the time. People want sincerity and conviction from their
elected officials, not vacillation. The same is true of
professional service providers like lawyers. We may, however,
survey our clients formally to make sure they’re satisfied
with the services they receive from us and, based on the
survey results, tweak how we operate to best serve them.
Consultant: Can you undercut
your competition in terms of price to steal market share?
Entrepreneur: No, and we
wouldn’t want to. Our services are high quality, our
people are high quality, and you get what you pay for. It’s
likely we’ll charge high fees.
Consultant: If your business
works and you generate a certain amount of market share,
what will prevent other firms from offering services similar
to yours and trying to steal your clients?
Entrepreneur: Nothing will
prevent other firms from offering such services or trying
to steal our clients. What we will do to keep them as clients
is to retain our best employees so we do great work, manage
our expenses appropriately, and strive to meet and exceed
client expectations every day.
Consultant: Good luck. (They’ll
never make it.)
The consultant probably would not feel very positive about
the prospects for this new business. Every core business
question s/he was taught to ask was not only not answered
the way she expected but was also contradicted. Surely this
person’s new law firm can’t succeed….
Yet consider the following from the prospective client’s
point of view:
- Do you really want a lawyer who is too “different”
from all the other lawyers, or do you just want a really
good one who’s experienced, honest, trustworthy,
and consistent?
-
Do you really want to work with the lowest price (cheapest)
lawyer?
-
Do you really want to work with a law firm that changes
the firm’s personality and message depending on market
trend surveys?
-
Even if you’re a good-sized business, do you need
to work with the largest law firm in the city, or just a
team of competent lawyers at a firm that can reliably do
the work you need to get done?
So, when you consider both your business strategy and your
professional services marketing strategy, consider that
what you may have learned (and what your advisers learned)
in business school may not always apply.
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