Philip Kotler said that "Marketing is the engine that drives business." We agree, but in too many companies that engine is not working well.

It is our position that every company must have a Chief Marketing Officer (CMO) to assure that "Marketing...drives business." However, that does not presume that this position is a full-time job. In fact, according to a recent Equation Research Study, 72% of CEOs say their company does not have a CMO.

We assume that means no one occupies the position by title, full-time. That does not mitigate the need for the function. Read this month's white paper to understand how we propose to solve this dilemma.

Recently, a number of so-called "gurus" have posited that "postioning" and "differentiation" are dead. They have either suggested that everything is a commodity, in which case you need to drive down costs, or it's not about the "stuff," it's about the "relationship" between the customer and the product/service. There's nothing inherently wrong with either of those two constructs, but they do not lead us to believe that "positioning" or "differentiation" are dead concepts.

In any market (though we all tend to remember it in tough times), it pays to keep costs down. The easiest way to do that is to make sure that you do not add costs that do not add value for your customer (Lean Thinking). Too many companies believe they offer a "value-add" product or service, which they can't seem to sell at a higher price. Could it be that there is no value-add going on, just a cost-add?

And who said the "relationship" between your customer and your product/service (as viewed by the customer) is not part of your positioning or differentiation? To claim that differentiation or positioning is something you do to a product or service is to forget the definition of positioning provided by the creators of the concept: Positioning is not something you do to the product or service, it is something you do to the mind of the customer/prospect. How else can you create a relationship?

In a recent article by Jeffrey Pfeffer in Business 2.0, we were reminded of the power of focused differentiation. Professor Pfeffer reminded us that, "It's better to be a great company in a crummy business than a poorly managed one in a great business." Two examples that come to mind immediately, Wal-Mart and Southwest Airlines. Two stellar performers over the last several decades in industries (airlines and retailing) where most players don't make any money because the margins are supposedly too thin.

While Wal-Mart is not a store for everyone, it does what it does well. (And 50% of all Americans walk through a Wal-Mart at least once each month.) Sam Walton's relentless pursuit of cost-removal that did not add value for his customers, helped him create a valuable, profitable company. Similarly, Southwest Airlines is not an airline for everyone, but their relentless pursuit of keeping planes flying (rather than at the gate) has provided their customers only the value they need, want, and demand, while Southwest makes a tidy profit in an industry that loses billions.

Professor Pfeffer postulates that one of the reasons why margins suffer is because too many companies try to do the same thing their competitors do ... just "better." He blames the tyranny of "benchmarking" for driving this behavior. (We concur and we'll have more to say about that in a future Update.) It's easier to "copy" and believe you have "improved," than to truly differentiate in a way that is valuable to the customer.

The continued commoditization of products and services should cause even the most stubborn observer to conclude that doing the same thing and believing it is "better" doesn't work. The road to success is to be different in a way your customers find valuable. The unfortunate reality is that this can also be the road to failure, because in trying to be different, you may miss completely. The most likely cause of this mistake is to fail to "think like a customer," and rather believe the "customer thinks like you."

It's easier to copy and believe you are better than to be different in a way that is valuable. We have espoused for years the need to focus on What the customer is buying. If you concentrate on what you are selling, most everything is a commodity. If you focus on what the customer is buying, almost nothing needs to be a commodity.

Understand What the customer can buy from you they can't buy elsewhere, and then position your product or service based on that and you will find what we know to be true, differentiation and positioning are not dead.

To learn more about how to "think like your customer" rather than just trust that the "customer thinks like you," read for the first time, or re-read Bayard Bookman's (bayard@customermfg.com) white paper, Think Like Your Customer, by clicking on the link below.

As discussed in the brief article above, many people feel that their products and services are being forced into a commodity position. Again, if you look at what you are selling, most "stuff" is a commodity. However, if you look at what the customer is buying, most everything is not really a commodity.

An example of this today is in the laptop computer business. While not quite as cut-throat as the desktop market, it is generally a thin-margin, highly price competitive market. Except of course for Acer's red laptops: the Ferrari 3000 and 3200. They are priced about 30% higher than a comparable laptop (comparable is a relative term now isn't it?) with similar features (except the one that counts).

If you look at what is being sold ... a laptop with certain performance features ... there is no justification for the 30% higher price. If you look at what is being bought (a Ferrari red laptop), then clearly the value justifies the price, since Acer is contiually "sold out" of these popular models.

For a reminder of the difference between what you are selling (What #1) and what the customer is buying (What #s 2 & 3) read for the first time, or re-read Jeff Krawitz's (jkrawitz@customermfg.com) article, Building A Customer Oriented Business, by clicking the link below.

We have been asked by several clients over the years where they can get practical, useful information on "how to" in marketing/sales without hiring us (or anyone else) as consultants. Historically that has been a problem as most of the "how to," if it existed at all, was buried in long books, or in public seminars and workshops. The Internet has changed that.

A new site has recently been launched that sells very low priced, useful, practical, and immediately downloadable ebooks on the "how to" for various marketing and sales issues. This also includes customer service and management "stuff" as well. We believe you'll find good information there, and that the site will continue to add useful content. The ebooks get to the point and tell you "what to" and "how to."

These are not electronic versions of "in print" books, but rather ebooks specifically written for the marketing or sales practitioner. You can visit it by clicking the link below.

We appreciate any feedback you can provide to help us make sure these Updates give you value each month. Feel free to respond to this e-mail with any comments or suggestions for future topics or ways we can make these Customer Manufacturing Updates more valuable to you.

Thank you for your interest, and if we can provide any additional assistance in sales, marketing, strategy, or innovation to help you increase your sales, let us know.

Our mission is to help you improve the performance of your System to Manufacture Customers^®.

email: mgooze@customermfg.com

phone: 408.987.0140

web: http://www.customermanufacturing.com