Peter Drucker once said “A company has only two truly fundamental functions: marketing and innovation. Marketing and innovation create results, all other functions are costs.” As a creative version of this, the marketing guru Peter Sutherland created the concept “innervation” as the complement or alternative to innovation. Innervation is about influencing how your prospective buyers see your brand and the product or service you offer, ie what’s normally called marketing.
In a world where product development and technological innovation tend to become more and more expensive – since there is always a competitor coming up with a new and even better product – innervation is much more cost-effective and long-term way to gain a competitive advantage. It will take time to get your prospective customers to think that you represent the qualities you want to be associated with, and which should also be relevant to their purchasing decisions. But once you have established your position through consistent communication, it is difficult for competitors to take over what your brand represents in the customer’s world of associations. Think about Volvo Cars and safety as an example. Volvo has been seen as the safest car in the world since they introduced the three-point safety belt in 1959. And even if there (possibly) are even safer cars today, Volvo still owns that position.
The most interesting thing about both Drucker’s and Sutherland’s insights, however, is how this can be used to influence how we earn more money. What we as buyers experience as “a good offer” lies in the equation “what I perceive I get” divided by “what it costs”. If we can use innervation to increase the perceived value of a product or service, we should therefore also be able to charge a premium price. Since we have not changed the technical specification or replaced components, the only cost we have is the investment in marketing. With wise and relevant marketing efforts, the cost and revenue analysis for such an investment look truly attractive.
Sometimes it is as simple as how something is presented and what it is related or anchored to. A classic example is the Nespresso capsule. Compared to brewing coffee in the usual way, the price of the Nespresso capsule (6-7 SEK) is outrageously expensive. But compared to buying coffee at Espresso House or Starbucks, which Nespresso use as an anchor in their communication, paying 6 SEK for a cup of coffee is a bargain. The question of how we should measure the value of marketing should therefore not be answered primarily by measuring how much more we sell, but rather by seeing what the willingness to pay looks like – and thus how much more profitable we sell.
If you want to learn more about Rory’s thoughts on innervation and the perceived value, done miss this fantastic TED Talk: https://www.youtube.com/watch?v=iueVZJVEmEs&t=29s
And if you want to discuss how to build a truly sales-driving brand, reach out to ulf.vanselius@comprend.com