I watched the BBC’s New Troubleshooter programme this week, in which Digby Jones advises the dehumidifier manufacturer Ebac. There were some very useful insights into a number of OM issues – project management, process layout and flow, and organisational culture in particular. But what has got me thinking the most was how Ebac was going to position it’s new chest freezer business in the marketplace.
In the programme, Digby and Ebac’s MD went to see a brand consultant in order to try to understand the market and who the customer would be. What emerged is that a chest freezer is a “generic product” with very few distinguishing features. So, from what we could learn from the rest of the programme, Ebac had plenty of order qualifiers – most notably reliability and cost – but no obvious order winners. Except maybe ‘perceived quality’ (see page 38).
This is what interested me. It seems that perceived quality is hugely important in markets where products cannot be differentiated on other quality characteristics and manufacturers are able to deliver almost identical levels of reliability, speed, cost and flexibility. Given that there are none of these objective, ‘measurable’ differences between offers, firms can only compete inside each consumer’s head. And it is in these markets that marketing is particularly important. Ironically in Ebac’s case, the brand consultant was not much help in advising them how to go about marketing their freezer.
To illustrate the argument above, here’s another example. In their home markets, lagers such as Stella Artois and Peroni are standard beers. But in the UK, through advertising and marketing, they have been elevated to the status of premium beers. On most other order winning criteria they are no different to UK brands, their premium price derives from their perceived quality.