Insights on Strategy
A Monthly Newsletter published by
Strategy Development Group, Inc. October, 2002
It's Not Always Just the Product
Many product or service driven companies believe that the only way to compete
in their market is to offer the best product or service. If you are in
"high tech", it's the latest software release, chip design or product
feature. If you're in fashion, it might be the most outstanding designs,
fabrications, or artwork. In other words, if you're product driven, then put all
of your resources into the product. You might ask, so what's so bad about that?
If by concentrating my efforts and delivering an outstanding device or garment,
won't I have a competitive advantage? Maybe yes, but more likely, it won't be
enough.
Let's consider the apparel industry as a case in point. Most apparel
manufacturers will agree that the product is of primary importance. It might be
the styling, the fit, wear-ability, value, selection or some combination. At the
fashion end, styling becomes more dominant. For private label manufacturers, it
might be value. Ask any business owner: "What's most important?"
You'll hear "product".
But if everyone is focusing on product, how do you stand out? Do you become more
creative? Do you work harder? Many have taken that route, but it is a hard route
to go. Trying harder didn't work for Avis and it most likely won't work for you.
What is often forgotten is that there are other ways of competing that can be
just as effective and without as much effort. Maybe it's the way you sell or
distribute the product. Maybe it's a special niche you can respond to. Maybe
it's the way you manufacture or the way you use technology. You will soon
discover that there are many other areas that are important to your customer
that if exploited can give you a competitive advantage with a lot less effort.
One of my apparel clients, Baby Lulu, has done just that. A recognized label in
better infant, toddler and children's clothing, Baby Lulu works hard at
differentiating itself beyond the styling its national brand is well known for.
First, it protects its unique styling by developing and manufacturing its own
fabrics, an unusual practice for that product category. But consumers love the
look and feel of Baby Lulu clothing which helps maintain its loyal following.
A key part of its market strategy is to focus almost exclusively on boutiques
and specialty stores. In order to compete with larger department stores and
discounters, these boutiques must bring a higher level of service and
exclusivity to its customers, and Baby Lulu aggressively supports that effort
though its use of technology in market research and consumer services. It does
that by investing heavily in the Internet, which addresses the needs of the
consumer and supports the competitiveness of the retailer. The consumer benefits
by having access to Baby Lulu's entire line of clothing and the retailer
benefits by gaining sales it would not have gotten otherwise sInc.e Baby Lulu
only sells its products through the retail channel. By communicating directly
with the consumer via the Internet, Baby Lulu can also more quickly project
buying trends and keep retailers abreast of its most popular styles.
Technology is not only limited to the marketing area. Technology is also heavily
used in the design and production areas. Baby Lulu is probably one of the few if
not the only specialty store suppliers that employs automated cutting. Most
manufacturers look for production efficiency by going "narrow and
deep" in their product lines. Baby Lulu, in order to maintain variety in
styling, has chosen to become the most efficient small lot manufacturer both in
the United States and abroad by using technology for process improvement.
Baby Lulu also believes strongly in aggressively managing its independent sales
agents by providing market research data, sales tools, customer service support
and specific sales goals by season for each of its accounts. Baby Lulu
constantly surveys its customers and sales agents to make sure its customers are
getting the attention and service they expect.
What has set Baby Lulu apart from its competition has always been its
exceptional fabrics and styling. But Baby Lulu knows that product alone will not
sustain its competitive edge. Through constant development of its retail
distribution channel and innovative uses of technology in both its marketing and
operational areas, Baby Lulu believes it can remain a leader in its niche
market.
A powerful business strategy must be more than great product, great execution,
or great service. It must be balanced with other qualities or attributes your
customers expect now or may demand in the future and that will give them a
reason to do business with you.
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