Essential components of SLM
Essential components of SLM
SLM consists of a series of elements that expand and are operationalised, as illustrated in Table 8.1. Each of these elements will be explained and explored in the following sections.
| Marketing orientation | Market immersion | Credibility | Aidmheil (faith in the product) |
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Marketing orientation
At the core of SLM is the need for a marketing orientation that places the clients needs and wants at the forefront of the product or service s development, rather than developing a product or service then attempting to find a market for it.
Without this orientation, SLM does not exist, even if some parts of the SLM marketing tool-kit are in use. Simply using niche-specific advertising or street level sales promotion is not enough to call yourself a SLM marketer. For it to be a true SLM marketing exercise, the whole of the marketing tool-kit needs to be being used, not just the easy bits.
1. Marketing activities
The first determinant of SLM marketing orientation is whether the organisation concerned actually engages in marketing activities identified with the marketing concept. The marketing concept is the whole-of-organisation approach to business, based on the principle of satisfying client needs within the boundaries of the organisation s objectives and capacities . In contrast, other approaches to business, such as a sales concept, start with a product and then attempt to find a willing buyer for it.
An organisation that has the marketing concept as its key orientation will develop marketing as an integral part of all aspects of the product or service. Marketing is not left to any specific group but is part of the culture of the entire organisation.
Since marketing is a total business concept, it is not necessary for SLM marketers to have clearly defined organisational structures that are responsible for the firm s marketing. In other words, they do not need to have a marketing manager or marketing division to be engaged in marketing. In fact, many firms that dismiss the need for marketing often adopt a marketing orientation and associated activities without recognising them for what they are.
An organisation focused on determining and satisfying the needs and wants of its target customers, rather than producing only what it wants to produce, is able to develop a long-term focus of profitability through its market orientation. Giving the public what they want, when they want it, at a price that they can afford (and the business can sustain) is a faster path to short-, medium- and long- term success than producing a product and hoping the public wants to buy it.
With SLM, the advantage of the intra-niche target focus is that the organisation has a propensity to develop products for people who are similar in nature to the producers , thereby automatically leading to a market orientation. However, this does not negate the need for customer focus (rather than production orientation) in the development of products to service the market niche, as the producer walks a fine line between producing for the niche and producing for themselves .
The easiest test to determine real marketing orientation is to ask:
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Is the innovator prepared to modify the product or service on the suggestions of others, without feeling that integrity is compromised?
Obviously, a willingness to respond to the needs of the customer and the market indicates a greater propensity for market orientation.
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In May 1997 two young Americans, Adam Smith and Brett Canfield, then employed as programmers at game publisher Wizards of the Coast, were delayed on their way to an early morning meeting and consequently missed their usual morning coffee. In an attempt to keep awake they tried extra strong mints in lieu of coffee. From this incident the idea of portable, convenient and tasty caffeine emerged.
After a year of development and the accumulation of a major debt, Penguin Caffeinated Mints hit the market. Penguin Mints combine premium natural peppermint with caffeine to provide an energy boost without the inconvenience of having to make, buy or drink a cup of coffee. Convenient to carry and packaged 75 to the tin, three mints give the caffeine equivalent of a single espresso.
Aimed at ˜coders, clubbers, adrenaline junkies and survivors of overlong meetings everywhere , Penguin Mints rapidly attained an almost cult-like status within that niche. Interestingly, shortly before the launch of Penguin Mints,Wrigley s had introduced the Stay Alert gum. In contrast to Penguin Mints, Stay Alert lacked the positioning and credibility within the market and was a product failure.
Being a niche market product, Penguin Mints have limited distribution. One-fifth of their sales are through their website, which also provides consumers with the opportunity to post testimonials, communicate with the makers and generally give their opinion.
As a result of market feedback, iFive expanded the product line to include Penguin Lights (decaffeinated mints), Penguin Reds (caffeinated cinnamon flavour) and Chocolate Penguins (caffeinated chocolate flavoured mints). Most recent additions to the product lines have included Penguin Energy Gum, and a range of Penguin Brand Clothing.
All the developments to the product range have been the result of satisfying customer needs via client feedback. For example, Penguin Lights satisfy customers who like the taste of the mints but are wary of excess caffeine consumption, and Penguin Reds are a response to those who are looking for a convenient caffeine boost but don t necessarily like the peppermint flavour.
The novelty value of Penguin Caffeinated Mints may have helped promote the product to a wider audience (the distinctive tins are often spotted at high profile events, and the Mints have featured in media stories and have celebrity usage). It is the willingness to stay with the original market and respond to its needs, however, rather than focusing on the product alone, which sets iFive apart. [ 2]
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Market orientation also requires the entrepreneur or innovator to:
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exhibit an appreciation and understanding of the needs of current and potential customers
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use some form of systematic gathering of marketing intelligence (see below)
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have an organisation wide (or individual) response to changes in customer needs.
This means that once the needs of the market start to change, or customers wish to use the product differently, the SLM entrepreneur should both notice and adapt the product through further innovation.
2. Marketing philosophy
Marketing philosophy involves putting a consideration of customers needs at the centre of all decision-making activities. In other words, whenever people in the organisation interact with others, whether they are direct clients, suppliers or even other members of the same company, they will take both sides needs into consideration when negotiating a transaction.
Marketing as a philosophy is not confined to any specific department or division. It provides a framework for doing business in all areas and at all levels and involves a commitment to client- centred decision making.
Simple client-focused changes (for example making invoices simpler to read and understand) can have a measurable impact on the way that clients perceive the company s effectiveness. Improved perceptions and attitudes towards the company in turn translate into increased loyalty, more sales and greater profits.
It should be noted, however, that new SLM innovators and entrepreneurs often make the mistake of adopting the concept with such enthusiasm they end up being client dominated. One of the hardest parts of marketing is achieving an effective balance between the needs of the clients and the needs of the organisation.
Ultimately firms only exist, and can only survive, if they consistently make a profit. Customising all products and services to be ˜perfect for each customer is time consuming, expensive and, in most cases, unprofitable. It is clearly not in the firm s interests to go out of business, nor is it in the interests of its clients.
The key to successfully implementing the marketing philosophy within an organisation is to ask the following question before committing to any deal:
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How well can we satisfy this customer s unique needs within the limitations and boundaries of our organisation and its products?
3. Marketing intelligence
One of the requirements of market orientation is the generation of market intelligence pertaining to current and future customer needs.
Despite what some may say, marketing intelligence is not an oxymoron. It represents the ability of the individual or company to gather sufficient information to make informed marketing decisions. It can be as complex as systematic and continual market research surveys or as basic as talking to customers during sales pitches and listening to consumer feedback.
Marketing intelligence is the review and analysis of the market environment, the activities of competitors and the changing needs of the customer.
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Despite the fact that Australian market research into fast food preferences shows pizza as the preferred option (based on taste preference), the reality is that the industry continues to be dominated by the hamburger and fried chicken chains. Currently over 50% of households purchase takeaway once a week, but only 15% will purchase pizza.The reason for this appears to be the timing and the convenience factor ”hamburger and chicken chains are able to deliver instantly, but fresh pizzas take time to prepare.
Penetration into this instant fast food market was a priority of Queensland-based pizza chain Eagle Boys. Owner and Managing Director Tom Potter, a baker by training, understood not only the need of the consumer to be served fast and with a quality product, but also the technicalities involved in keeping a food product oven fresh for an extended period.
After many attempts to devise a system of hot food storage that would allow hot pizzas to be stored without any loss of flavour or quality, Eagle Boys (in conjunction with the Ozline Group) developed the Thermotech storage system. Unlike traditional systems, which use elements, humidifiers, fans and thermostats to keep already cooked food warm, the Thermotech system keeps near- cooked food at the optimum temperature (via conduction and heated glass shelves ) for up to 30 minutes, without any effect on the quality of the pizza.
Although market research showed that time and convenience are the major considerations in impulse purchases of fast food, the new system solved only part of the problem. For the Thermotech system to be profitable, and to avoid unnecessary wastage, predictions were needed regarding the number and type of pizzas to be pre-cooked. Based on extensive research of the target market and previous buying patterns, the decision was made initially to limit the flavours of pizza available through the EagleXpress system to three: Hawaiian, Super Supremo and BBQ Meateor. However, due to consumer demand, the selection now includes BBQ Chicken and Bacon.
The development of the EagleXpress system demonstrates the importance of understanding core consumer needs that impact on behaviours across an entire industry (fast food). It also demonstrates the advantage that can be gained when this understanding is combined with the marketer s personal expertise in a specific aspect of that industry (in this case, food technology). Creating the technology, however, was only one part of the success.The product needed to be backed up by extensive and detailed market intelligence on specific consumer purchasing patterns. Flexibility was also required to integrate the new system into existing operations in order to allow both to operate effectively in parallel.
Currently Eagle Boys has over 80 of its 140 stores across Australia operating EagleXpress.This includes all new stores and many existing stores. EagleXpress is sold over the front counter as well as at Eagle Boys drive-through sites. Customer acceptance of EagleXpress has been high in many cases proving that customers want to be served a quality product ”fresh and fast. Stores at Eagle Boys that have promoted EagleXpress consistently have achieved levels upwards of 30 per cent of total transactions. Recent market research suggests that EagleXpress and drive- through will encourage traditional fast food consumers to trial Eagle Boys as well as purchase pizza more regularly. [ 3]
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4. Marketing research (ethnography)
The above understanding of marketing intelligence moves away from the automatic assumption of complex and/or expensive market research surveys as the default information-gathering tool. Instead it allows for the use of less traditional marketing research instruments such as ethnography .
Ethnography involves observing a community by becoming part of the community for an extended period, and is more commonly associated with disciplines such as anthropology. One of the major barriers to effective ethnographic research is community resistance and distrust of outsiders.
For an SLM entrepreneur, ethnographic research involves close and ongoing communication with the target market to determine how and where the innovation, product or service fits into the needs and wants of the community. The advantage is that the entrepreneur is already part of that community and so does not need to spend time gaining acceptance and understanding by intruding into a society.
Some considerations for product viability
SLM marketers already have the understanding of their niche culture and membership of the society they wish to study. On the downside, their level of immersion often makes it difficult to maintain the level of objectivity or detachment from the research that good business practice requires. The use of non-traditional market research techniques and the qualitative focus of ethnography, however, do not exclude quantitative data gathering for marketing intelligence.
The advantage of SLM is that it involves the marketing of innovative goods and services by members of a niche to address the needs of that niche. However, it still requires the objectivity and client focus of the traditional marketing concept and the business discipline of market orientation. The use of the marketing concept and market orientation helps focus the SLM organisation on business necessities when it is providing goods and services to meet the needs of the market niche.
It is easy to fall into the trap of developing a niche product that cannot survive in a viable format when introduced to the marketplace . By forcing focus onto the business side of the equation during the gathering of market intelligence, the needs of the niche can be better met and a viable product created to meet those needs. It is better to have a viable product that satisfies fewer needs for a longer time, than a design that meets all needs for a brief period but then goes broke, thereby leaving all of the needs unmet .
Market immersion
Market immersion refers to the degree to which the SLM marketer is part of the niche that they are attempting to penetrate with their products or services.
1. Membership of niche
As with marketing orientation, immersion is a critical element ” without actual membership of the niche, marketing activities directed towards the specific niche are not SLM. At best, these activities may be guerilla marketing, traditional market segmentation or relationship marketing, but they do not fall within the definition of the intra-niche oriented SLM concept.
2. Understanding of niche
Market immersion turns the classic marketing question of ˜What business are we in? to ˜What business am I? . The greater the involvement with the niche, the higher the understanding of the needs and wants of the niche. This in turn leads to greater opportunities for niche-specific product development. Involvement in the niche relates also to the degree to which the producer is perceived by the niche to be ˜one of them .
The advantages of market immersion are:
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Market immersion is valuable for developing understanding of the needs of the market (by being part of the market and through ethnographic observational techniques).
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The intimate understanding of the norms and values of the niche gained by being a member of this segment allows for greater creativity in developing marketing strategies and tactics. SLM marketers know how far to push the boundaries of acceptability within the niche before becoming irrelevant, unfocused or unacceptable to the norms of the market. Those who try to understand what is appropriate based on external observation often miss the point entirely and are not respected or valued by the target market. Nowhere is this more prominent than in the marketing of products to teenagers.
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As exemplified in markets related to specialist sports goods (such as skateboarding or snowboarding), immersion and market membership increase the inherent credibility of the SLM manufacturer or producer.
Being ˜one of us also lends support during the critical testing phases for new products, as the entrepreneur can self-test and recruit skilled testers at a lower cost than an outsider company would incur. Initial testing, prior to the general release of products, by potential users of the product can often lead to design improvements, suggestions and potential intra-niche endorsement.
Credibility
Credibility is the quality of being perceived as believable, trustworthy and a recognised expert in your area. It is often seen in the marketing literature as an element of relationship marketing that needs to be developed over transactional histories, with clinically planned ˜credibility moments to develop an artificial relationship structure. Credibility in relationship marketing is seen as the inherent believability of the intention of a company at a given point in time. For entrepreneurs, innovators and SLM marketers, credibility is the lifeblood of the initial contact and sales pitch. Without credibility, access to investors, sales, promotional and distribution networks is impossible .
The entrepreneurial SLM marketer needs to present a credible solution to the market needs, and that first contact credibility comes from a combination of source credibility and street credibility. The difference between source and street credibility is based on the extent to which the market will see the SLM marketer as ˜one of them rather than as a celebrity endorser.
1. Source credibility
Source credibility is the extent to which the consumer sees the entrepreneurial innovator (source) as having relevant knowledge, skills or experience and trusts them to be unbiased , objective and impartial in their dealings.
Traditional marketing approaches, in particular, relationship marketing, are of inherent value to the SLM orientated marketer. Three areas of relationship marketing are of specific interest:
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Business reputation .The estimation of the reliability and consistency of the firm over time with respect to performance, and repeat performance, of a promised activity.
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Trust . The perceived credibility and benevolence of the organisation, and the degree to which the individual can rely on the exchange partner with the confidence that the partner will act in a fair manner.
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Credibility . In the context of trust, credibility relates to objective credibility or the believability of the organisation s intention to perform the promised action.
SLM relies heavily on these concepts, given that the SLM company is engaged in transactions with members of its own community and market niche. Levels of trust associated with intra-niche focused organisations are expected to be greater than those associated with ˜outsider organisations which enter the niche by intrusion and imitation . Membership of the community gives a higher initial credibility and trust level.
Business reputation and the tools of relationship marketing are still relevant and assist in converting this level of trust by association into business goodwill. With this credibility, however, comes increased expectations to perform and higher penalties for failure. In addition, expectations of ethical dealings and sensitivity to niche cultural values are also higher, so failure to maintain niche credibility results in the company being seen as having ˜sold out its niche membership.
Commercial exploitation of goods or services designed to meet the needs of the market can be acceptable as long as the organisation or entrepreneurial innovator remains loyal to the core values of the community. In the open -source computing communities, for example, software developers are expected to make their source code available to the community as part of the expectations of servicing this niche market. Should the developer patent a process or develop a closed-source product, they are perceived to have ˜sold out . Charging for the software, however, is an acceptable practice if the source code remains open to the public domain.
2. Street credibility
Street credibility relates to the credibility gained as a consequence of membership of the market niche. It is the marketer s reputation outside of his or her commercial transactions ”that is, reputation developed within the niche through active membership of the niche and which exists outside of the business context. Street credibility is a nebulous concept, positioned somewhere between the firm s reputation and brand image and the personal reputation of the business owner.
Street credibility has been defined as a command of the styles associated with urban youngsters who are respected by their contemporaries. In SLM, street credibility exists in a broader context than merely that of urban youth. It represents an intra- niche or intra-industry reputation that is developed separately from business reputation. Street credibility is a mixture of personal and corporate reputation, peer and target group respect and recognition, as well as recognised technical expertise, market knowledge and understanding of the industry. It brings together elements of consumer-focused measures such as market mavenism and expertise, and celebrity endorsement factors (for example, Tiger Woods endorsing golf products provides expertise, trustworthiness and target market empathy in the area).
The street credibility of entrepreneurs and innovators within their own community is established through their reputation within the market, rather than their business dealings. The development of street credibility may be associated with expertise in the niche market, either through experience, understanding or demonstrated predictive ability in determining or assessing trends in the marketplace.
Street credibility is unlike corporate reputation or goodwill in that it cannot be purchased or manufactured. Attempts to artificially construct ˜street cred are often cited as guerilla marketing. Guerilla marketing focuses on grass roots campaigning, creating a ˜street feel for a corporate product within the target niche. The difference between guerilla marketing and SLM is that guerilla marketing is intrusion-based marketing, whereby the organisation enters the niche and then mimics or ˜borrows imagery and icons associated with the target market in an attempt to associate their product with the niche. Although this approach may have certain levels of success, many campaigns fail because the target market feels manipulated, used, condescended to or offended by a seemingly blatant attempt to buy credibility and respect. SLM differs in that it gains its street credibility from genuinely being part of the grass roots movements that are targeted by guerilla marketers.
Development of the product within the niche also lends the credibility needed to develop products through co-production ownership. Intra-niche product testing and development is not always part of the SLM approach, but when it does occur it increases the sense of community and niche ownership of the product. The street credibility of the company is acquired through their business and non-business reputation within the target market. By incorporating the niche into the product design and production phases, the street credibility of the product is also increased.
Street credibility is easily damaged or lost if the external success of the product is perceived to be the result of the entrepreneur ˜selling out their niche. An essential element of street credibility is adhering to the norms of the community and remaining focused on meeting the needs of the market as the product, service or company expands.
Many SLM marketers experience indirect pressure to abandon their intra-niche focus once they have begun to address markets outside of their core niche. The importance of maintaining the focus on the values that created the success in the first place cannot be overlooked. Although many SLM firms will feel pressure exerted from outside influences, the decision to change to an extra-niche focus needs to be weighed against the loss of the street credibility within the core niche. Also, if the product has been successful in other markets beyond the primary niche, consider whether the change is really needed. For example, if people from outside of the skateboarding markets purchase Converse All-Star boots because they want to mimic membership of the target niche, then the boots do not need to be changed for the new markets. To do so would destroy their appeal to all segments.
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Airwalk Shoes was developed in 1986 to service the sport shoe needs of the skateboarding, snowboarding, surfing and BMX market segments.
Designers were recruited from within the ranks of the intended end-users ”that is, skateboarders were developing shoes for other skateboarders.This gave the company an insight into the needs of their target niche.
Airwalk integrated their product development with market coproduction by having end-users of the product involved in the design and testing process, and providing suggestions and solutions to design problems.
In addition, selective recruitment of niche members respected for their product knowledge (shoes) and product-related skills (skateboarding) also led to greater source and street credibility for Airwalk.The process used a low-level celebrity endorsement approach for the organisation by transferring the credibility of the skateboarders to the organisation, not through endorsement of the products, but through endorsement of the organisation.The endorsement for the company s credibility came from the designers involvement in the market niche, and the organisation s depth of market immersion.
Aidmheil (see below) and the notions of passion and enthusiasm are also clearly present in the Airwalk organisation. In fact, their website specifies that ˜somewhere at the core of every journey there is passion, soul and heart , and this is the prerequisite for consideration for any Airwalk sponsorship.
Through the higher level of involvement in the activities of the niche by members of the niche, Airwalk has gained a higher level of street credibility and source credibility than ˜outsider brands like Reebok or Nike. [ 4]
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Aidmheil (faith in the product)
Aidmheil [pronounced i m-th ell ] is a Celtic term that relates to the notion of ˜faith . It has been adopted to represent the SLM element of faith in the product, service or idea, and the passion of the innovator to see it succeed. Faith in this context is not associated with a religious or spiritual concept, rather it looks at the organisation s belief in their product, and the inherent potential for success related to this product.
1. Self belief
Entrepreneurial ventures require the businessperson to take significant risks based on limited data or uncertain projections of success. The concept of aidmheil recognises that any calculation of whether a risk is worth taking is affected by the entrepreneur s belief in the product and a measure of self confidence. Self belief is expressed in the entrepreneur s willingness to back their own ability to succeed ahead of either licensing or selling the product concept to an existing business.
2. Product belief
Product belief is the inherent faith the developer has that their product provides the optimal solution to the problem being experienced in the market. This final element of the SLM concept is often referred to in the anecdotal evidence concerning innovation, new product development and non-traditional marketing applications such as social cause marketing. Aidmheil- like states exist in cyber communities where willing users take unpaid roles of responsibility because of their passion for and belief in the cyber community. Similarly, the aidmheil motivation of programmers and contributors in major open-source projects (such as Linux) is a recognised feature of this style of communal programming.
In other cases, the aidmheil motivation may arise from a particular passion for the niche and niche product-solution, and this passion is displayed through the development and delivery of a marketable solution to a problem. Aidmheil can be seen as an internal characteristic that must come from within the SLM entrepreneur, and an externally visible trait with which the consumer can identify.
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In 1972, at a time when the Australian music product was perceived to be too expensive and inferior to the imported product, Michael Gudinski founded Mushroom Records as an avenue for managing, promoting and recording Australian artists . Armed with ˜little more than self belief and passion , Gudinski s faith in local musicians formed the basis of what was to become a major Australian success story.
Mushroom campaigned on behalf of its client base (musicians) for fairer treatment from radio stations and for greater exposure for local acts. Much of their approach to the marketing of Australian music typifies the concept of aidmheil (faith and conviction ).
Thirty years after its establishment, Mushroom Records has signed over 400 local artists and released in excess of 8000 music works, including some of the country s most successful acts (such as Kylie Minogue, Jimmy Barnes,Yothu Yindi and Kate Ceberano).
A large proportion of Gudinski s success can be attributed to timing, enthusiasm and his personal credibility in the marketplace in which he operates, but this is backed up by sound business sense. Ultimately, the enduring success of the Mushroom group of companies is due to:
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staying close to the market
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maintaining credibility with both clients and the final consumers
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staying committed to the original aim of the organisation ”to promote the Australian music industry and provide national and international exposure for Australian artists. [ 5]
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Aidmheil is divided between product faith (the inherent belief in the validity of the product as a solution to the needs of the niche) and self belief (the passion felt by the SLM marketer for the niche and the product). It touches upon the notions of passion and enthusiasm for a service, product or idea. This passion is infused into the product s branding and imagery by the actions and statements of the supporting organisation. In SLM the focus of aidmheil is often on the market niche and the benefits that can be given back to the niche community. As with street credibility, aidmheil cannot be bought or manufactured, but it can be nurtured and encouraged by supportive organisations.
Both innovators and entrepreneurs are notorious for their use of faith, both in their decisions and their products, as justification for their business activities.
[ 2] Based on personal interviews between subject and the authors. For further information see www.peppermints.com
[ 3] Based on personal interviews between subject and the authors. For further information see www.eagleboys.com.au
[ 4] Based on personal interviews between subject and the authors. For further information see www.airwalk.com
[ 5] Anon, ˜Michael Gudinski: 1999 Marketer of the Year , Professional Marketing , October/November 1999, p. 23.
