The Value of Condoms!

So there you are, marketing manager for a condom manufacturer and wondering what your value proposition is going to be. The rules of this particular game are already fairly well set. Emotional value reigns. When it comes to these matters, consumers want a brand they can trust, witness the dominant mindshare held by the likes of Durex, Ansell and Trojan. A price value proposition is always going to be a challenging one, because if they are cheap can we be sure that they are up to the job!

But what about the performance value option – could we argue that ours are the best in the business. No we are not thinking about that kind of performance ….. but rather contemplating the claim that we have the first fully virus-proof product on the market. Now that is a compelling claim and one that would lend itself to a premium pricing position as well! In fact, a Chinese company, Safedom is already there having produced a product that tests better than its big name rivals though its claims have yet to be verified by international bodies.

But rather than exploiting this performance lead, Safedom is looking to partner with a well-known brand to give is products a global presence. Recognition there perhaps that building mindshare is a long slow process. And in another interesting twist, the company’s segmentation strategy has been to target women who make up four fifths of its customer base. So while its rivals like to go with names like ‘Magnum’ (is that a pistol in our pocket …..) and ‘Performa’, its brand names include ‘Beautiful Girl’ and ‘Green Lemon’. Plaudits there for a novel strategy focusing on female health benefits.

Watch This!

The television industry is a really good example of the dynamics of modern marketing strategy. Not that long ago TV manufacturing had become a largely commodity business – the cathode ray tube was the primary technology and intense competition between large retailers had driven down margins to tiny levels. Then along came a disruptive technology – liquid crystal display (LCD) and large size, flat panel TVs hit our shops, tempting us to spend much more and upgrade our home entertainment systems. Good news for everyone you might think but not so fast!!

Yes the demand for flat screen products has been huge. In 2011, the world’s consumers spent $115 billion on flat screen TVs and a further $110 billion worth of screens has gone into smartphones, tablets and so on. But as recent research shows, none of the companies that make LCD panels are actually making any money from the activity (economist.com). Between 2004 and 2010, the industry suffered cumulative losses of $13 billion and that includes top firms like Samsung, LG and Sharp. In fact, Sony is about to lose money on its television business for the 8^th consecutive year and currently loses $80 on every TV it sells.

So manufacturers will complain about intense price competition and falling demand but what this case really shows is how difficult it is to win with a performance value proposition in some industries. Companies will sweat about improving picture quality or adding interactive features but the reality is that all TVs are good, cheap and do similar things. As the good people over at Apple have shown, it is not just about how the product performs. Pull the emotional levers and you will find the margins are much juicier.