Do Business Well

New market leaders know the importance of building a larger than-life market presence.

The Discipline of Market Leaders talked about the value proposition—the notion that as long as a company provides the best cost, best product, or best solution, it will catch customers‘ attention. Though that idea certainly held true when only a handful of market leaders had distinguished themselves, today, offering the best cost, best product, or best solution has become par for the course. Why would customers settle for anything less than the best— whether it is in price, product, or solution—when suppliers are fighting one another to provide all of them? The fact is that unique value propositions such as Wal-Mart’s “Always the low price” are simply no longer unique (think of Target Stores, Inc.’s, or Costco Companies, Inc.’s, essentially identical claims). Likewise, McDonald’s isn’t the only place that offers a dependable hamburger experience, while Nike, Inc., isn’t the only athletic shoe positioned _as the best product. In the technology field, it is hard to find a vendor today that doesn’t claim to be a best-solutions company.

So, while having a powerful value proposition is still the essential first part of building a larger-than-life market presence, it certainly isn’t the only part. But because it is indispensable, the value proposition had better be clear, concise, and compelling. There are two acid tests that market leaders apply.

The first I call the billboard test. Ask managers to offer ten or fifteen words that they feel capture the essence of why customers choose their product. Think about it as a testimonial that could be put on a billboard.

Simple as this may seem, it is a task that many managers find difficult. But if they can do it, ask them what their current customers would say if they saw that billboard. If they would not say, “Yes, that is precisely why I do business with you,” you may not be in synch with their expectations.

Finally, imagine that you replaced your own name on the billboard with your competitor’s; would the message suddenly seem strange and jarring to your customers? If so, your value proposition is distinctive. If not—that is, if your rival’s name is interchangeable with your own—your message lacks distinction and therefore won’t provide a compelling reason for customers to stick with you. It is particularly easy to fail this last part of the test—which is to say that a lot of managers continue to be more confident than correct in their analyses of their product’s appeal.

The second test, a variation on the first, applies to industrial products or more complex consumer purchases. I call it the elevator test. If you were riding an elevator with a prospective customer who asked you why he or she should do business with you, could you make your case in the sixty-second-or-so ride? If not, your value proposition may not be succinct, or you may not thoroughly understand what is vital to the customer. (Of course, as many a seasoned salesperson will tell you, it may be wiser not to attempt an answer even if you have one. Deferring the discussion until after you’ve learned more about the customer’s requirements and priorities would be a more prudent course of action than trying to rush through a hurriedly prepared sales pitch.)

With a solid value proposition in place, the question is, what next sets market leaders apart? The answer: They stand out among all those claiming to be the best because they work hard at being different as well as best. Wal-Mart does so by turning its greeters and the folksiness of its staff into a point of distinction. Target runs clever, eye-catching ads that accomplish the same effect. Costco’s difference is based on the stores’ atmosphere, which resembles an old-fashioned local market where customers can always discover an unexpected bargain or treat. All three retailers know that customers buy the sizzle as much as the steak. They all realize that the right packaging can make otherwise similar goods appear to be anything but. So the second part of building a strong market presence is to enhance a product’s or service’s core features and give it qualities that make it stand out among its peers.

Importantly, market presence comprises more than advertising. It is equal to the sum total of impressions that shape a customer’s perceptions about a product or supplier. As Wal-Mart and Costco know, creating an enticing, out-of-the-ordinary shopping experience is key. In effect, every point of contact with customers or prospects potentially turns into a point of distinction. Consider the subtle differences in the ways companies field customer service calls. Such nuances can account for major differences in customers‘ satisfaction.

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