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The First Step to Developing Strategy is to Know Your Market! January 2024 Edition

The Ford Files – January 2024
“The First Step to Developing Strategy is to Know Your Market!”

Dear Readers, this is an apt time for both reflection on the past as well as looking ahead to the future. My hope is that we practice what we preach from the Operations Management BOK and utilize strategic planning in our personal lives as we kick off the new year. One of the great strategic challenges I’ve noticed among my clients is the failure to adequately define WHO the customer is. It’s not just anybody who might potentially buy our product on a whim. Rather, it’s a specific niche for which demand exists, albeit it may be latent demand that we must convert to actual sales.

Some may argue that strategy starts with a product, followed by extensive marketing and sales effort to find or create demand, i.e., the market. My view is the direct opposite: decide who or what our market is, then create a product to satisfy their demand. In other words, ask what unsatisfied demand currently exists which we will be able to fulfill. Reckon I’m suggesting it’s easier to fill unmet demand rather than create demand, while noting consumers might not know what they are longing for. For example, Henry Ford once suggested that if he had asked his customers what they wanted, they would have said “faster horses.” Which is what he gave them, it just happened to be mechanized horses.

Let us review several examples of failing to recognize the market.

-       The Ford Edsel. There is so much that went wrong here: inferior quality, lousy design, overtly flamboyant advertising, a lame name, etc. This is one for the history books.

-       New Coke. Ugh. Coca-Cola, the reigning soft drink champion for almost the entire 20^th century decided it would be a clever idea to mess with success (queue up “if it ain’t broke don’t fix it!”). Their eagerness to steal customers from Pepsi led them to make a drink that tasted more like Pepsi. Guess who did not want a drink that tasted like Pepsi? Coke drinkers!

-       One of my personal favorites that I love to share in training classes is Frito Lay’s Wow chips. This was a zero fat potato chip that was made with Olestra, a fat substitute made by Proctor and Gamble, instead of fat. Three problems, the first being that Frito Lay had to pay P&G a licensing fee, which drove up the cost of a bag of chips. Junk food eaters want cheap snacks, not luxury items. The second problem was that the Olestra led to gastrointestinal issues such as cramping, gas, and diarrhea. (sidebar: I wonder if some joker in marketing came up with the name “Wow” due to the surprising side effects 😊). Lastly, the market for potato chips is not marathon runners. Most people bury their chips into sour cream or some other fatty dip, so there is no point in having a zero fat chip.

-       Playboy magazine decided to get cultured and drop their centerfold. Yep, they thought people were buying their magazine for the articles. To coin a phrase, a picture is worth a thousand words.

-       Victoria’s Secret similarly decided to get cultured and woke, enlisting models with “real figures” in lieu of the heroin chic string beans they had been using for years. But they were rejecting the business model that made them a success for decades and are struggling to recover.

-       The Dixie Chicks insulted the President of the United States and adopted an anti-war and somewhat “less than patriotic” position during a war. That’s fine and dandy, if you’re eager to insult your core audience of flag waving, truck driving, beer chugging, redneck, country western music fans.

-       Both Impossible Meat and Beyond Meat are struggling. Their early success seems to have been driven by the curiosity of whether their products would actually taste like meat. Think about this… who are they going after? People who like the taste of meat: MEAT EATERS! Plant eaters are not interested in eating something that tastes like meat (see New Coke above). So, the meat eaters tried it, decided it sucked, and went back to meat.

-       Bud Lite thought it would be a good idea to use a social media influencer promoting their product while dressed like Audrey Hepburn’s character from Breakfast at Tiffany’s. I know lots of people who drink Bud Lite, and not even one of them is going to be impressed by anyone, male or female or “other”, wearing a sleeveless cocktail dress, long black gloves, and a pearl necklace. Set aside sexuality, this is not a look that screams “beer,” much less “cheap American light beer.”

I’ll wrap this up with a notable example of recognizing the market. I had the opportunity to catch Ted Nugent in concert at a roadhouse style bar in Binghamton years ago. He made a vulgar reference to one of New York’s senators, Hillary Clinton, that I could not possibly include in this article. The crowd ROARED its approval. Uncle Ted knows his market.

Know your market! Satisfy your market! Embrace your market! And for God’s sakes, above all else, do not thumb your nose at your market!

Yours in ASCM,

Ford

Ford is here to help. If you have any follow up questions or comments, or if you or your company are facing any unresolved challenges, feel free to drop me a note at [email protected]