• Product business vs. marketing business
I just talked to my twins on the phone.
I don’t hear from them too often, and see them even less, because for the past three years they’ve been earning their living by playing bagpipes in China.
That’s right. Bagpipes. China. Earning a living.
During our conversation, John (or was it Aragorn) mentioned the difference between “product business” and “marketing business.”
“Marketing business is based mostly on your marketing efforts,” he said. “Product business is based mostly on your product.”
Of course, all business requires some degree of each, but I could see his point.
To illustrate it, he compared Starbucks with Tim Horton’s.
“Starbucks is a marketing business. They’re not selling coffee, they’re selling a coffee gourmet experience. When the recession hit, people weren’t willing to pay so much for a mere experience, and their sales went down. Tim Horton’s, on the other hand, sells coffee. And while they’ve been hit like everyone else, it hasn’t been to the same degree.”
It’s true. Advertisers and marketers often forget that the product, if not being all-important, is at least very important. An old, and possibly apocryphal advertising story tells of a client who presents the ad man with two identical dollar bills. “Tell me why I should buy this one instead of the other one,” he demands in a challenge of marketing ability.
Whether true or not, it’s bullshit. The actual worth of a product is a large part of its sales potential. During flush times, consumers are more willing to spend, and bad products along with products depending on a particular perception can do well. But when money gets tight, consumers automatically move to the products that deliver the best value. Note — I’m not saying to the highest quality products, as these can be out of reach, but to the products that present the best balance between quality and cost.
In other words, they turn to product businesses over and above marketing businesses.
Now all I have to do is figure out whether bagpipe players in China are a product business or a marketing business.
Best of luck, John and Aragorn. Nice hearing from you.
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See Chuck Nyren's "King of Madison Avenue," about the new Ogilvy biography.