By Charles Alvarez , Contributor, the Price of Business Show. * Sponsored
In their famous book, Positioning, by Al Reis and Jack Trout, the authors explain that the way how you are positioned in the hearts and minds of your customers and potential customers determines your success or failure in competitive markets more than any other single factor.
Dr. Theodore Levitt, Dean of the Harvard Business School, in his book The Marketing Imagination, wrote that your most valuable asset is, “How you are known to your customers, your reputation in the market.” Your reputation is a value that people will pay for.
Whenever you read about a company with one million dollars worth of assets selling for ten million dollars, you are witnessing an example of how valuable a reputation can be. The extra nine million dollars is officially called “good will.” That extra payment for good will means that the name of the company is so valuable that the purchaser is willing to pay a significant premium for the company because of its reputation in the marketplace.
What Others Say
It is estimated that fully 84% of purchase decisions today are based on word of mouth, or how other people talk about your products and services amongst themselves. The whole purpose of advertising is to get people to try your products or services initially with the hope that they will be so satisfied that they will buy again and tell others.
Dr. Robert Cialdini, in his book Influence, explains that “social proof” is a major influence factor determining whether or not people buy or don’t buy from you. The most important part of social proof is the perceived similarity of the person recommending the product to the person hearing the recommendation. For example, if you are an executive and you learn that “other executives” rate a product or service highly, you will be more influenced to try it that if you heard that “doctors” or “lawyers” had used it and approved of it.
Successful companies give a lot of thought to the way they want customers to think and talk about them. They organize all of their marketing and selling activities around generating and creating a perception in the mind of the prospect that leads to purchases and repurchases.
What Words Do You Own?
Professor Leon Festinger of Harvard developed a concept that he called “attribution theory” to explain how people make decisions and come to conclusions. He found that people usually think in terms of a phrase or even a single word when they think of a particular product or service. Whatever this word happens to be has an inordinate impact on their decision to buy or not to buy.
For example, IBM means “excellence.” MacDonald’s means “convenience.” Nordstrom’s means “service.” Federal Express owns the word “dependability” in overnight delivery. Deliberately or accidentally, each product or service develops a reputation that positions it against its competitors. What is yours?
Choose Your Words Carefully
Reis and Trout suggest that you select the word or words that you want to own in the mind of your market and then do everything possible to seize and take control of those words, defending them against all comers.
Mercedes owns the words “Quality Engineering.” BMW owns the words “The Ultimate Driving Machine.” Dominos Pizza owns the words “Fast Delivery.” In every case, they have built their success on creating and maintaining this perception in the minds of their customer markets.
Sponsored by the Price of Business, on Bloomberg’s home in Houston, TX