If you read marketing textbooks (including my own), you’ll see over and over the mantra: “You must differentiate.” Marketing consultants speak in unison about the importance of focus — of defining specific sectors, specializations, demographics and geographical boundaries, and avoiding at all cost lines like “We can do it all.”
These concepts radiated through the national SMPS conference, including speaker Jason Mlicki of Rattleback in Columbus, OH. His observation — the recession has commoditized AEC services, resulting in absurdly intense competition where price becomes the primary consideration, and the competition has become so fierce that dozens (or more) are bidding small jobs, resulting in very low success rates and, when “success” occurs, the contractor or designer might hope only to eke out a starvation living, assuming the job can even pay the bills.
Mlicki and other consultants say you can solve the problem by achieving recognized expertise within a specific market area, to the point that current and potential clients are happy to pay your price, regardless of the perceived competition, because of your expertise.
These observations, undoubtedly, are valid, but of course there are variations in the theme.
For example, he cited RossTarrant Architects in Lexington, KY, as an example of a practice which gets the differentiation concept. This architect has a clear educational mandate, and this video from the practice website demonstrates the intense focus.
Fair enough. However, in the question-and-answer session, one person noted: “Isn’t it more common that educational work separates between K12 and postsecondary.” Of course, the questioner is correct — but you could argue that RossTarrant has been able to create its own differentiation (especially within the Kentucky area) as an authority on all educational levels, but just that.
A couple of other audience members raised a more significant problem with this type of focus. What happens when your primary market tanks?
“We are a small engineering firm with core expertise in the life sciences,” the questioner observed. “We survived diversifying. How do you balance need to get a core message at what you re best at, and the risk of being a one trick pony.”
In this case, the questioner answered his own question. He said the practice successfully discovered new markets in the food service area, in place of its traditional biomedical niche. Then he observed that the practice had failed to build out of its food service to more general markets from specialized bio-food services/initiatives. In other words, the practice was able to translate its specialized expertise from one market segment to another, but the differentiating feature — the specialized expertise — was more important than the overall industry category.
I wish I could give a simple, easy-to-follow answer about how to most effectively differentiate. Some general rules:
- You want to be first within your niche/category. If you see direct competition, you want a very distinguishing quality to allow your business/practice to stand out — sufficiently that quality could, effectively, result in its own niche or sub-category.
- If you want to diversify, proceed with caution. The strongest diversification case can be made where you have the internal/back-office experience and current client(s) seek you to take on the challenge. You then don’t have too much marketing risk and you have the advantage of satisfying your current clients. (You may, however, wish to create a separate brand/business identity for this diversification. In our case, for example, a client really wanted us to start a local consumer-focused renovation magazine, far away from our core business-to-business market. I set up a joint venture with its own identity and business partners and Ottawa Renovates has thrived for the past six years.)
Defining your differentiation and niche should be your first marketing priority. Take time to think about it. In many cases, the answer will be obvious — but if not, consider and evaluate your focus carefully and strategically before proceeding. This will prove, I think, to be your most important marketing decision.