Disclaimer: this post might seem really obvious to people from a marketing background but having come from an engineering/manufacturing background, I know this isn’t applied as universally as it should be so marketers, jump to the challenge at the end, engineers, stick around and read my cautionary tale!
We’ve been doing a lot of case learning in class so I’m going to try presenting in that manner… At university some friends and I started an engineering consulting company (3GEngineering.com.au) which picked up project work, mostly in the robotics/automation fields, for companies that wanted new or extended functionality for in-house products that they didn’t have the expertise (or time) to do themselves.
It was really good fun, we got involved with a bunch of interesting projects, from prototyping cars to robotic inspection units and a whole bunch in between. But it was project work, things might be busy for a month or two on a job then nothing for half a year, so a couple of years ago we decided to try our hands at an online store. Steady retail sales would augment the cyclical nature of project work (or so the theory went).
So we had a meeting to figure out what we wanted to sell. Both guys were building houses at the time and being engineers, lighting was a key component of the build. In cupboard LED strips, under-bench lighting, recessed wall floods, we were deep into it. For those that haven’t been bitten by the “Mmm Shiny!” bug this is a very expensive pastime, in the order of a coke addiction but at least with something to show for it at the end (which isn’t an eroded septum).
Being the resourceful gents that we were we got some quotes locally and then, after recovering from the pricing shock, went online and found what we wanted, sourced direct from China for a third of the cost. After getting hold of some samples to QA we settled on 2 suppliers and bought enough lighting gear to illuminate a small town. Installation commenced and I can modestly say, it all looked brilliant (no pun intended). Lots of people commented and several asked to be hooked up and so we thought, “Ah ha! Here’s our retail store product.”
So we setup Brightify.com.au to import the gear and onsell to home users and tradesmen. We found a point of differentiation: if you buy it yourself from china, you have to cut it to length and solder it up yourself, with ours you specify the length and we prep it for you so all you have to do is remove the stick tape on the back and press it against the wall. And we were pleased with ourselves. All in all, about $20k invested in stock bought plus setting up the website and time and effort.
18 months later: 3 sales totaling just over $1000.
Somewhat underwhelming is probably being a tad generous… 3G’s was still rocking along so Brightify just got pushed into the ‘too-hard’ basket and we focused on other things where we knew what was wrong and were motivated to fix it. So during this weeks marketing class our lecturer presented us with two models for value creation which really resonated with me.
The first was the Traditional Physical Process Sequence which looks something like:
Basically it can be summarized as: get your product -> find someone to sell it to.
It’s been a successful model, historically it’s how a lot of stuff has been sold but the killer for this model is choice. It works really well when people don’t have a choice (because you’re the only widget seller in the area and they need a widget) but with the globalization of the marketplace and the internet giving us access to a range of sellers, like us with the LED lights, the buyer is no longer constrained by geography (there are exceptions to this, say where it’s more expensive to ship them than to buy them locally). And choice means that people generally won’t just “make-do” with a product that doesn’t meet their needs (especially if it’s an expensive product) because they can get something that suits them better.
So the model that marketing is pushing the rest of the process chain towards is this one:
This one is more like: figure out who you want to sell your product to -> find out what they want -> make it and sell it to them.
In my mind, the big difference is that the second process is driven by the consumers wants and needs, not the product. The product is just the vehicle. It’s a big perspective shift for someone who’s always been product driven but this is the kind of culture you want to build into a company that makes consumer goods, particularly ones that are susceptible to trends/fads.
So back to the Brightify story. We assume that our customers (tradesmen, DIY-ers) want our product but we have no real evidence that they do. We also treat them all the same (ie: we haven’t segmented our customer market) so we have no idea how to advertise our product effectively to each specific market. So right now I’m looking at this and cringing inwardly and wondering how I could have been so oblivious but to their credit, the other owners have looked at this and said “Looks good in theory, but we’ll believe it when we see the results. We’ll pony up another 10k for you to have another go at it. Show us that your MBA has taught you something”
So that’s my challenge: I’ve got $10k to take what we have already at brightify and in in 12 months, build turnover to $100k. Any suggestions on what to do next?
What Tim Learned at Business School 