It has been an interesting few weeks... I met 2 business owners in the hardware industry, one selling machinery and one renting them out, both made very similar remarks about their businesses:
I sell/rent Ferrari's, my competitors sell/rent Proton Saga's (local Malaysian car brand for those not familiar), my prospects don't know how to appreciate my Ferrari, how do I sell/rent out my Ferrari, how do I know whether to invest in more Ferrari's?
Now here's the thing... as I probed further, I discovered they are not just using the analogy to explain their price or quality, they truly believed they were selling luxury items in their industry and their marketing reflected that... needless to say, their businesses were average.
Ferrari was a completely wrong analogy to use and completely wrong way to look at their industry, here is why:
Premium is NOT the same as Luxury.
In the luxury market, ie, luxury cars, couture, jewelery, etc, price is not the consideration... it's an "investment" in ego, status, feel good, look good, etc... there's no rational price tag for this market, the only ceiling is level of desire/lust and the willingness to fulfill that desire/lust.
In the premium market, it is about differences in features, benefits, quality and guarantees. For example, using the same car analogy, a premium variant will be the same car model with more bells & whistles... leather seats, better security system, better sound system, better rims, etc...
In the tools & machinery market they are in, whether it is welding machines, trucks, forklifts, cranes, etc... their target market use these tools for production, their considerations are speed, cost effectiveness, time savings, safety, skills & learning curve, manpower, breakdown & downtime, after sale service, etc... the sum total of these considerations are to fulfill the main objective of profit maximization, not to boost ego or to look good. Customers are willing to pay Ferrari sized prices IF they are able to get Ferrari sized profits in return.
Our jobs as business owners and marketers are to understand & pick the right target market (making the wrong analogy and sticking to it is the same as not understanding our target market), understand our target markets' key frustrations, come out with unique selling points to address those frustrations and use the right marketing strategies to reach our target markets with our messages.
These are the most basic steps that form the foundation of a great business.
The Familybiz Works Team
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