|
|
How can you differentiate your company in a competitive market?
Why would anyone buy from your company over the next localization service provider? In this three-part series on LSP differentiation, we will look at how to establish whether your company stands apart from the rest (or not) and what you can do about it once you know. Such is today’s business environment that we spend most of our time conducting business and very little time considering the strategic direction of the business. At GALA we’ve become familiar with the client’s refrain of “you all look the same, and you all say the same things.” Also the informal vendor ‘Differentiation Survey’ survey conducted by Serge Gladkoff earlier this year clearly showed that many vendors thought they had the ”best translators, quality and service.” We cannot all be equal. Certainly we are not all perceived as being equal by clients, seeing as the reasons given for the award of business vary from client to client and from bid to bid. Rarely is the difference only one of price. So how can we do better at focusing our business where our skills and experience are valued by our current and potential clients while standing out from the legion of other LSPs? My aim in this short series of articles is to help you answer this question for yourself. The marketer’s folly: a few graphs and a box grid? Figure 1: Tool or snake oil? There is a view, in some parts, that marketers and their wares are indistinguishable from the apocryphal snake-oil salesman. This is a bit harsh, but then some marketing consultants seem to put more effort into promoting their latest tool or their next book rather than the application of valid techniques to live market situations for the benefit of the client’s business. Indeed, marketing tools are like any other tool – the results depend on both how the tool is used, and how well the insights gained are applied. The Boston Box, the SWOT analysis, etc. are just useful tools to focus analysis on an aspect of your business activity that could benefit from some disciplined scrutiny. Actually doing something with the output is what takes real discipline, and what will inevitably provide real results. As Sun Tzu wrote, “The enlightened ruler lays his plans well ahead; the good general cultivates his resources.” Or to put this into modern terms, any business leader would do well to understand the terrain, the culture and geography of their business environment before any sudden new incursion. The most successful will also exploit any and all resources and techniques they can lay their hands on. I hope that the simple techniques used in these articles (and also discussed previously at the GALA 2010 conference in Prague) will help you analyze your own business terrain and situation; what you do with the result is down to you. On a personal note, I fully accept that I am neither Richard Branson nor David Ogilvy, but these techniques have proved very useful to both many of my clients and my own business over the years. One thing is for sure: the results never fail to keep you humble. Tool number one: the product lifecycle All products and services tend to follow a predictable lifecycle curve. The value of the market and the length of cycle will vary from market to market. As a general rule, significant investment is required when the market is young to bring a product to market and create any sort of traction. Being first and being early is no guarantee of success. Until recently, companies like Sun and Compaq were major players in the computer hardware market, but who now remembers DEC, ICL, and Unisys? Whether it is the motor car, the mobile phone or translation, a market generally starts small and at some point takes off, expanding from a niche market (brick sized mobile phones and city traders) to a mass market where product volumes grow rapidly, unit costs start to fall while barriers to entry drop. Once a market matures and the product or service becomes widely available from a variety of suppliers, buyers start to view the product as a commodity and prices drop rapidly, as do vendor margins. Competition increases dramatically as supply starts to match demand and the market starts to segment, since not everyone can maintain the pace and investment. At this point, a few companies start to dominate, using financial muscle and/or by developing international reach, while others focus on a particular market specialty such as medical translation or software localization. Figure 2: Not an option! What is clear is that – with finite resources – not every company can compete at every level across the whole market. Sooner or later some stark choices have to be made. This applies whether you are Henry Ford or Joe Smith. How does knowing that all markets follow the same lifecycle help? It can help you to anticipate the market direction and plan for the inevitable margin reductions and dilution of any product advantages you once had in the early stages of your particular market. For example, I remember back in the mid to late 90s there was really only one Arabic and one Chinese localization supplier in London that could handle any regular demand. In both cases the service was poor and expensive. Needless to say, these suppliers were swamped with demand and therefore were very dismissive of our frequent pleas for service improvement. The result, as you might guess, was that we were highly motivated to find internal and external alternatives. Compare that to the Arabic and Chinese supply situation that we experience today. You don’t have to be Albert Einstein to work out what happened to the revenue and margin of the two suppliers I referred to. One is defunct and the other struggles on as far as I know, but without the benefit of our business. The market for Arabic and Chinese is now very different in terms of both supply and demand. The market has evolved in line with the lifecycle curve. Figure 3: Translation is a widely available commodity from a myriad of suppliers, and barriers to entry are low. MT is currently seen as a specialist service, available from limited sources, and the costs of market entry are high. When assessing your company’s position relative to the maturity of your market, a useful exercise is to look at the products and services you offer and try to position them on the red curve. When doing this, ask yourself the following questions:
If your answers are along the lines of the following:
...then you are operating in a maturing market. If your answers are:
…then lucky you. Make hay while you can but start reducing your costs and sharpening your act as competition is on the way, and not necessarily from the usual suspects. It makes good sense to try to identify new market opportunities for growth where competition – and hence supply – are low or the market is not well-served, while diverting cash from your services to mature markets to fund development and promotion of a more attractive offer. Both Apple and Dyson are brands that have been particularly effective in this pursuit. Using revenue from Mac sales, Apple has applied its superior design skills and deep understanding of human psychology to develop first the iPod and then the iPhone. Now, at first glance, many observers would say that the portable music-player and cellular phone markets were already well–served by large and active brands such as Sony, Microsoft and Nokia to name but a few. However, Apple could see that both these markets were global, growing and potentially huge. One of the things they spotted that the others didn’t was that both these devices were potentially mass-market, lifestyle accessories rather than ever more complicated technical, feature-filled gadgets just for the techno-literate business person in the phone market and grungy youth in the mp3 market. Indeed in many ways they saw these two sectors as one and the same market. Whatever business you are in and regardless of the stage of evolution, your market will follow this curve. Plan for the obvious challenges and be on the look out to exploit the weakness or complacency of others. Of course many other unpredictable forces, apart from the competition, act to affect any market. These forces drive change, and change always creates opportunities for the quick and the brave. In Part Two of this series we will take a deeper look at analyzing these forces using another tool; the Market Audit or SWOT. Like the mythical Janus it requires us to look two ways at once. Firstly to look outwards and establish what is going on in our target market; what forces are at work and how they are likely to distort our world. Secondly, to look inwards to establish how well we are prepared to either exploit emerging market opportunities or counter rising threats. A final word from Sun Tzu, “...what enables the wise sovereign and the good general to strike and conquer, and achieve things beyond the reach of ordinary men is foreknowledge.” Part 2In the first installment of this series, I discussed how to identify your market offer on the product lifecycle curve and how it can be used to improve strategic planning. In Part Two, we’ll look at two other tools – PESTEL and SWOT – that facilitate disciplined scrutiny and help you figure out your market position… as well as how to make your company stand out from the legion of other language service providers. Figure 1: Just because an economist – skinny or otherwise – says it is over, does not mean that everyone’s problems are solved and the glory days are back! To kick off Part Two of this three-part series, let me begin by asking ask you two questions: “Why have the global recession and the perilous state of the world economy been foremost in our thoughts over recent months?” “Why do we worry about the valuation of the Chinese Yuan or the strength of the Euro against the US dollar?” Your answer to these two straightforward questions is probably along the lines that both the global economy and exchange rates have a direct impact on the demand for our services and our ability to make a reasonable profit. And you’re right – all business entrepreneurs, managers and marketers should keep a watchful eye on market forces. External forces over which we have no control can have a daily impact on what both we and our potential clients do. The PESTEL Forces As you might expect, marketers have a helpful acronym to categorize the forces that can have an impact on any market. PESTEL stands for:
In general, consumer brands will be particularly interested in economic and demographic factors when targeting new product opportunities while the issue of governmental regulation will figure high up on the list of financial services companies concerns. Translation and localization market forces While the translation and localization industry is a relatively small one, we have to adopt a wider view than most industries, as ours is an industry which is highly dependent on the global economy and globalization in general. The forces that motivate and encourage multinational companies to enter foreign markets and invest in localization can certainly be impacted by PESTEL forces which in turn have a trickle-down effect on companies in our industry. There is no time or space here to go through a detailed analysis of all the forces that act on our market. For me, the key has always been to take a wide view and then focus on those forces that represent the biggest potential impact. Some will be short term issues like interest rates; others will be longer term such as how to respond to the growing significance of the BRIC economies. You need to consider what is relevant to your individual target market(s) and what you hope to achieve. As a representative of GALA, I recently gave a presentation to the ATC’s London conference on some of the key market forces at play, which I have summarized below. There are many others to choose from, such as “Crowd or Community sourcing” and workflow technology, but here are the four which I feel will have wide-reaching impact on our market.
Time to SWOT (Strengths, Weaknesses, Opportunities, Threats) It may look a bit dated and dog-eared but the good old SWOT analysis is a good way to help understand your market position, identify market threats and opportunities and hence help define how to evolve your business strategy to remain competitive. A SWOT requires you to take a look at your business and market from two different perspectives:
The following diagram is an illustration of the sort of questions to consider.
Simply put, we need to scrutinize and analyze our company strengths and weaknesses against a specific market opportunity while taking into account the forces acting on the market – for example, the economy, government regulation and competitive activity (PESTEL). In terms of approaching this sort of analysis I would also recommend the following:
Here are two practical air travel examples that I used when speaking on this topic at the GALA 2010 Prague conference. Obviously they are not exhaustive and are rather general, but then I don’t yet run an airline. United
Virgin
Post SWOT: What’s next? So let’s assume that you have carried out an exhaustive and detailed SWOT on your software localization services in the high-tech market of North America, for example. I expect that you will have identified some of the following:
If you have done this properly, I guarantee that you will be both pleasantly surprised and scared witless in equal measure. To paraphrase Gordon Gecko of Wall Street fame, “Paranoia (in marketing) is good!” In preparation for Part Three of the series, try doing a SWOT analysis for the three competitors you come up against all the time and for the one that has just recently appeared. If you don’t know who your competitors are, try Googling your equivalent of “software localization high-tech North America” and see what search results you get. In the next and final installment we will be looking at differentiators and sustainable competitive advantage. You can only do this if you have a good handle on your target customer’s needs, the competition and your own strengths and weaknesses. Remember: paranoia is good! Part 3What is it exactly that differentiates you from the translation agency or localization services vendor next door? In this third and final part of our series on LSP differentiation, we get down to the nitty-gritty and learn where your marketing focus really should be. In this third and final installment of my series on LSP differentiation, I look at how to measure differentiators against client needs. Assuming you’ve done your homework from Part Two and have completed a SWOT analysis of your organization, we’ll move forward and look at how those strengths and weaknesses mesh with your target market’s needs. To illuminate the next set of exercises, I’ll use a fictitious LSP that is representative of many GALA member companies. An Example of a Typical LSP and Its Key Strengths Let’s assume that we are an Italian-based translation vendor, specializing in the medical devices market. Here is a list of what we might have identified as our top five key strengths:
Sounds pretty impressive as it stands, right? But this is only an internal perspective. The next step is to identify what the potential client’s needs and wants are. Establishing Client Needs An essential part of identifying your company’s key differentiators is to identify first your clients’ needs. Your sales people or front line project managers are normally good resources for getting input on client needs. Ask yourself what questions clients regularly ask when you are pitching or bidding for business. (There is always more to it than just cost per word and turnaround time, although both of these will be factors.) If you have just lost a sale, then there is no better time to reconfirm needs and decision criteria. Put yourself in the position of a buyer. What would you want to know about a vendor before you put your future career prospects in their hands? An Example of Typical Client Needs Let’s stick with the medical devices market example. The client’s main needs might include:
Admittedly, this is a simple example, but still representative of the difference in perspective you might expect. It is worth remembering that while we might be trying to sell the client some translation (Italian in this case), the client’s real objective is not to buy translation, but to effectively distribute and sell their product (medical devices in this case) in their target country. Translation is just one step in the go-to-market plan. Table Stakes versus Client Value Our next step in identifying key differentiators is to understand what the client values from our extensive list of (perceived) strengths. The above two lists are deliberately short, since this exercise focuses on the most important attributes and needs, respectively. If you have taken the trouble to analyze your strengths and weaknesses, however, you will typically have compiled a list of perhaps 20 or 30 strengths. Similarly, many a client RFP has an exhaustive list of irritating but necessary questions, which these days often include extensive questioning on social (and ethical) responsibility, as well as on financial history and such statistics as the number of offices and employees. You’ll be able to respond favourably to these questions by enumerating your strengths, but the vast majority of these items will be considered table stakes. In the translation business these are things like qualified translators, TMs, and workflow systems. Arguably, the aim of both the LSP and its customer is the same in this aptly named vendor/client dating game: both parties have checklists they want to complete. The client, after checking off their lists, will disregard the majority of items so that only the outstanding attributes remain. Ideally, this makes the ultimate selection decision easier and more value-based. For the LSP, it is critical to separate the table stakes (i.e., disposable strengths) from what is really valued by the client. For each client need in your list, decide whether it is valued, or is just a table stake. As per the table below, enter ‘Yes’ or ‘No’ into column 2, and score each item from 1-10 in column 3, using 10 to identify something most highly prized by the client – a potential deal winner. A table stake should be scored less than 5. A score of 1 would be given for a strength almost every vendor had (for example, qualified project managers, TMs, or ISO 9000).
Consider how much value a client might place on a vendor who has worked with all three of the medical device brands mentioned, compared to another LSP who had only worked with one minor player. The process is subjective, but you start to get the feel for the relative value certain strengths may have in the eyes of the client. Work through your list of 20-30 client needs, applying the scoring method above. Discuss it with colleagues, partners, and existing clients. Try to be as objective as possible during this process. Strengths, Differentiators, and Competitive Advantage We can now get right down to the nitty-gritty of determining whether a company might have any differentiation or competitive advantage in the eyes of the client. Now is the time for brutal honesty with yourself – you might kid yourself, but you can bet it won’t wash with the client unless you can substantiate it. This is basically a 3-step process in its own right. See the example below. Step 1 – For each of your identified strengths, rate their value to the client in column A. Refer to your client needs analysis as you go. From the overall list, one or two strengths will stand out among a leading group of four or five. If they don’t, then your company is either the market leader, with competitive advantage coming out of your ears, or you’re in big trouble. Take my example, illustrated in the table below.
This table demonstrates how you might assess your LSP’s strengths. During this evaluation you might ask yourself questions like how valuable ten years of experience are in this market niche. The answer is: far better than five or two years, but it is all relative to the competition in your market. For instance, if I am the only medical device translator in Italy, then my ability to beat the competition is comparatively very high, but if there are five others—forget it. In the latter case, my medical device experience is only a table stake. From the point of view of the client, strength number two has real value. It suggests that the company has a deeper knowledge of how these devices are used. The principals could be members of local medical device associations and could have access to local clinicians, with the benefits that such connections might bring. Messaging and Substantiation This nicely brings me to the subject of substantiation. The whole point of this exercise has been to distill key company/service differentiators. Once differentiators have been clearly identified they should rapidly become the heart and soul of company marketing communications. Embodied into well-crafted messaging, they will be splashed all over marketing materials, websites, and advertising, not to mention littering every proposal and sales pitch. But, and this is an important but, any claim must be substantiated by specific details and evidence. Clearly verifiable facts or ‘proof points’ should be written for each differentiator or claim. It is no good claiming that you have the best quality control if you cannot provide your ISO9001-2000 certificate or similar support for your claim. Something like ‘Extensive medical devices glossary database' is just begging for more detail – how many terms, in how many languages, for how many different categories of medical devices, etc. And Finally... Establishing and maintaining any sort of differentiation or competitive advantage is going to be a challenge in any market. Today’s differentiator is tomorrow’s table stake. Marketing, and your marketing positioning, are things you need to keep refining, updating, and renewing regularly. And it’s not just your messaging that needs to be well-honed; you also need to be at the top of your game when it comes to executing your marketing campaigns. As economic conditions and markets evolve, so must the strategies employed by LSPs to stand out in the crowd and capture clients. In these articles we have looked at analyzing, defining, and understanding our differentiation. However, there is nothing passive about marketing – differentiation can and must be created. In our industry service innovation – creating a new service or suite of services is one area where we all have the opportunity to create something new, different, and appealing to the ever widening market. But that, as they say, is another story! Gordon is an Anglo-Scot, living in London and Spain. He has more than 27 years of experience in successful international sales and marketing, consulting, and business management. He has worked for corporations such as BAe, EMI, GEC, and Digital Equipment in Europe and the US. Gordon has been actively involved in the communications localization business since 1995 and regularly publishes papers on international marketing and global communication. He is an active member and supporter of GALA. He is presently a partner, board member, and Vice-president of Sales and Marketing at online marketing and advertising localization specialist Wordbank, based in London and Denver. ------- Gordon is an Anglo-Scot, living in London and Spain. He has more than 27 years of experience in successful international sales and marketing, consulting and business management, having worked for corporations such as BAe, EMI, GEC and Digital Equipment in Europe and the US. Gordon has been actively involved in the communications localization business since 1995 and regularly publishes papers on international marketing and global communication. He is an active member of GALA and was closely involved in driving the development of a marketing and marcom plan for GALA. He is presently a partner, board member and Vice-president of Sales and Marketing at communications and advertising localization specialist Wordbank, based in London and Denver. You can find Gordon's latest blog posts at: http://transcreationblog.net/
Published - September 2010
This article was originally published
in GALAxy newsletter:
www.gala-global.org/GALAxy-newsletter.html
E-mail this article to your colleague! Need more translation jobs? Click here! Translation agencies are welcome to register here - Free! Freelance translators are welcome to register here - Free! |
|
|
Legal Disclaimer Site Map |