To win, you need to focus on the downstream. Increasingly, you will find that is where the majority of the competitive action (between brands) occurs. It is also here that there are so many neglected opportunities for differentiation.
Niraj Dawar is a professor at the Ivey Business School (Canada and Hong Kong) and a renowned marketing strategist. He works with senior leadership in global companies and has executed assignments for BMW, HSBC, Microsoft, Cadbury, L’Oreal, and McCain, as well as with start-ups in the biotech and information space. His publications have appeared in the Harvard Business Review, the M.I.T. Sloan Management Review and in leading academic journals. Recently, he authored the book titled ‘Tilt: Shifting Your Strategy from Products to Customers’.
In conversation with exchange4media’s Abhinn Shreshtha, Professor Dawar speaks about why organisations need to shift their focus from product-centric activities to consumer-centric activities to stay ahead.
Q. How exactly does a company realign its focus to concentrate more on the downstream (consumer-centric activities)? What should be the starting point?
The starting point comes by asking the question “Why do our customers buy from us?”, which should then lead into the question, “Why are the people not buying from us?” What this does is generate a discussion within the organisation on how to reduce the costs and risks for the consumer.
Before brands start asking these questions, it is also important that they map the entire consumer cycle – all the way from discovery of the product or brand to the actual consumption. It is only then that they can figure out the risks and costs involved at every step.
Q. How does an organisation maintain the balance between the upstream (product-centric) and the downstream activities?
Before I answer this question, it’s important to understand that I am not saying products have become unimportant. Products are still important in the game. To be able to play, you need to have good products. To stay relevant, you need to have some level of innovation so that you can keep pace with the changes in the industry.
However, to win you need to focus on the downstream. Increasingly, you will find that is where the majority of the competitive action (between brands) occurs. It is also here that there are so many neglected opportunities for differentiation. So, I think that is where the focus should be.
Q. Indian companies are usually very RoI-driven. They like facts and numbers. When it comes to measuring consumer satisfaction or engagement, it is not always possible to have access to hard data. Do you think this is a stumbling block to adoption of the ‘Tilt’ philosophy?
It’s a chicken and egg problem. People don’t have data on the downstream because they have been too focussed on the upstream. But you cannot look for your keys in a place just because there is light; you have to look for them where you have lost them. So, you have to shed light on the downstream in order to understand it. In other words, if there are no measures, then you have to find measures or develop ones that help you to understand how well your downstream activities are doing.
Q. You have spoken about how brands should start thinking beyond what their core competencies are. Does this mean that the age of specialisation is over?
Absolutely. I think that is the message of the entire book. We are focussing too narrowly on the product side. We need to broaden our outlook and concentrate more on the customer interaction and their needs. When you engage with your customers, you will realise how many opportunities are available to you.
Q. What about a smaller brand that has innovative products, but might lack on market reach or credibility of a larger player? You had cited the example of how Gillette has become the de facto standard in its particular field, despite other players making innovative products...
The question is about having limited resources and allocation of these resources. I think many companies that develop good products fail to recognise that they are not just in the business of creating better products, but also in the business of building markets for these products. Also, most of the time, the process of building a better market costs ten times more than building a better product.
Because companies don’t recognise these things often enough, they do not understand the value of building a brand or reducing risks to the consumer. This is the basic problem.
Q. Where does e-commerce fit into the whole business scenario as you see it?
E-commerce has certain built-in advantages. For one, it reduces risk for consumers. It also allows sellers to track buyer behaviour. You can track which products they browsed, how much they buy when offered a discount, etc. So, it is a great way to understand the customer. Amazon is a great example of a company that does not sell better products, but uses e-commerce to sell products better.