Posts Tagged ‘best-practice’

Music Is Free–Let It Loose… and Reap the Benefits. PART II

March 11, 2011

This is what the Grateful Dead’s sound system looked like in 1973, from an article in Rolling Stone entitled A New Life for the Dead: Jerry Garcia is Checking Cash Flow Charts.

The Dead was a growing enterprise as the scale of this, their very own sound system in 1973 indicates. The ballroom days are long gone now.

It was a monster — state-of-the-art in those days. This hippie band was really taking off even then, as the 1960’s, the decade of their birth was now long gone. The Woodstock Festival in 1969 showed the world that rock music had an enormous audience and in 1973 that potential was becoming realized. The music business was now a big, big business!

The ballroom scene that featured multi-night engagements in small intimate halls with capacities of up to a thousand or so, described in Part I, was over. The capacity of these venues was not enough to sustain the escalating costs and fees of touring artists any more.

And we all know that things were to get bigger yet.

What is clear, as the last posting suggested, is that the Dead were riding the wave… and were now in control of their business and destiny. Consciously or not, they were also creating best practice marketing, building an ever-larger base of community support and demand for their product – improvised music that reflected the moment, the connection with a co-creating audience, that was different each and every night.

If we rewind just a couple of years earlier back to 1969, I can share how it looked on the ground as some of this was developing. Imagine we are at Boston’s top rock club, the Boston Tea Party, formerly The Ark, a venue that could hold an audience of 1,500 or thereabouts. It’s New Year’s Eve 1969/70 and strangely enough, the Dead are playing in Boston, instead of their home base in San Francisco. What a way to end that action packed decade.

I am helping the band’s road crew load in. Lot’s of gear to move, and extra hands help. There is one fellow that stands out. He is dressed in western gear with a couple of leather bandoliers strung across his chest, looking like a space-age cowboy outlaw. Instead of bullets, however, the bandoliers are filled with little bottles of liquid, containing what I do not know.

Introducing, The Bear, aka Augustus Stanley Owsley, the Dead’s sound guy and from what I could see, much, much more. He is overseeing the PA system he designed, making sure everything is unloaded safely, placed where it needed to be and in the process of getting hooked up properly.

I had met Bear before and was nervous at first. His reputation preceded him and I knew he was very, very smart. Plus I was just a teenager and Owsley (let alone the whole band) were in their mid-twenties at least and much older than I was, so it was easy to feel intimidated. I was around grown ups, legends already thanks to Tom Wolfe’s Electric Kool-Aid Acid Test, numerous articles in the early version of Rolling Stone, and Herb Greene’s iconic photos.

But Bear was cool. Maybe because I was helping out, I don’t know for sure, but I found he was very approachable and very friendly… he also exuded an air of authority, confidence and hipness just by his being. He didn’t need to talk too much.

The Sony 770 Portable Tape Recorder was state of art in the late '60s and as Owsley told me, a triumph of miniaturization. Check out the soundboard tapes from the era and you can hear just how good these machines... and the band were!

Two things I also noticed as we loaded in and set up for this New Year’s run. First, Owsley was carrying around, I remember this clearly, a couple of state-of-the-art Sony, I think they were Model 770, portable reel-to-reel tape decks. He used them to record each and every show right from a stage-side hook up.

They were sleek, portable devices, Sony’s top-of-the-line decks. The way Owsley talked about them, their bass response, wow and flutter and other such features, these machines were a triumph of miniaturization. I remember the price too. I lusted after one but the price was way out of reach, something like $800, which was a small fortune in those days.

The second thing I noticed happened right before show time. The Dead always took sound seriously and their monitor system, the speakers placed on stage so they could hear each other play, was very important to them.

I gather this was one of Owsley’s PA responsibilities and he would always reveal himself to the crowd as he adjusted things at the soundboard by the stage. He would bring one of those Sony tape decks (or two) down with him and plug them in to a junction box type of device.

Then something funny would happen. Every once in a while a fan would go up to him with a tape machine and ask if they could patch in. And it usually happened in one of two ways… some would ask nicely. And you could see it, if they did he would smile and help patch some of them in.

Others would demand this opportunity. These folks would be ignored. The pushier they got the more he ignored them, and at a certain point a burly member of the road crew would wander by and “gently” escort this individual away, without the sought after connection made.

What did it all mean?

Looking back, I now realize what I was seeing. This was an early version of band-accepted tape sharing at close range. And Jerry wasn’t the guy, nor was Phil or other band members. And it wasn’t the road crew either. At this point in time it was Mr. Bear himself.

At the time I didn’t understand what I was experiencing exactly, except that this was something different. After all no other band that I was aware of tolerated in any way, shape or form, fans taping “their” shows like this right off the soundboard, ever. Club maybe… fans, no way.

Whether it was by intent or lucky accident, now I know I was seeing what today marketers call Positioning in action.

Winning Hearts and Minds…

In simple English, Positioning is all about addressing the questions “How Are You Different?” and  “Why Should I Care?” in a clear and direct manner that cuts through the filters we all employ to drown out the marketing “noise” we are all exposed to each and every day. It is the key that opens the door to a customer/company/product relationship and a community interaction.

Differentiation is the “Mind” element of Positioning, and the Dead were different in all respects, including the music, which, since it was improvised, was indeed different each and every night.

The “Heart” side in this case is the connection audiences had and still have with the band’s music, the feeling it created in millions of fans all over the world that listened to and loved it then and do to this very day.

Sharing, whether by design or accident, supercharged this connection, this sense of Belonging and Community that are cornerstones to effective use of Social Media today.

The Dead, somehow found a way to position themselves to win both the Hearts and Minds of the people, and I saw it begin to happen right in front of me, in a hall that maybe held 1,500 folks with the person at the center of the whole thing, a couple of feet away.

That’s what Positioning is all about. It is not a battle as many think, but connecting in human terms the mental and emotional connections we have with people, with information, with products and services we let in through our filters and then, in the end, act on.

No box here!!! Courtesy of NASA.

We have all heard the expression, supposedly coined by Apple’s Steve Jobs, “In the box, out of the box doesn’t matter because, actually there is no box.” From what I can tell, Owsley had nothing to do with boxes and the results of how this helped drive the ever-expanding Grateful Dead community at that time, speaks for itself.

Luck, accident, invention? Conscious, strategic intent? Who can say? It was so long ago after all. However, there were real things going on. And one thing is sure, today we have the opportunity with the luxury of 20/20 hindsight to identify goodness where we find it, and the Dead is fertile soil that offers useful info, even marketing information that we can use today. Who knew? Now we do.

Music Is Free–Let It Loose… and Reap the Benefits. PART 1

December 3, 2010

Intro: Back to the Future

I recently tee’d up final group projects for my Principles of Marketing classes this semester. Since I started doing classes in 2002, I have had students attack the music industry and break up into teams that represent major or independent record labels with the goal to create marketing strategies to grow their business from these two perspectives.

This is no small feat when you consider that the music industry was disrupted by peer-to-peer and other technologies that have empowered listeners with capabilities to distribute and secure music for FREE, and it committed suicide by suing customers and refusing to adapt. Who could have predicted in 2002 that a computer company, Apple, would operate the most successful legal digital distribution system, iTunes? Extraordinary!

How do you compete against FREE?, and make money at the same time?, is the knotty challenge, and there could be no conversation about this in class without taking a look at the visionary band that understood it all so long ago, and built a business and marketing model that made it happen, and happen on a grand scale.

A Bit of Historical Perspective

In 1969 I had the great good fortune to get a job at the best rock club in town called The Boston Tea Party. How I got the engagement is the story for another posting. It was a winter weekend in January that I started and the band, a little combo from Britain, was making their debut in Boston.

For the next year and a half or so, I had what I would describe as a front-row seat to one of the most creative periods in music, at least in my lifetime. Artists I was able to see, hear and hang out with ran the gamut from Ricky Nelson, The Who, Jeff Beck and Pink Floyd to B.B. King, Rahsaan Roland Kirk, Big Mama Thornton, Eric Clapton and yes, the Grateful Dead, the band that redefined marketing for me.

Since one of my duties was to help these bands load in (up two flights of stairs!!!) and set up their gear, I would really get to know the roadies, road managers and other behind the scenes facilitator of the music, as well as the artists themselves.

The Dead were unusual even then. They were as far out as you can go… very smart and very unique, obviously. More than anyone else they embodied the “be ‘hear’ now” hippie spirit… and expressed many dimensions through the music.

Their road manager whom I got to know a bit was a fellow named Owsley, otherwise known as the Bear. Bear was also a world-famous chemist and from what I now know, an all around Renaissance man and resident genius.

Looking back I don’t know how The Dead could play sometimes, especially once Owsley had done his thing. And yes, there were moments when they really couldn’t, like the first they night they followed the The Bonzo Dog Band (another story) in the Fall of ‘69. There was no way to follow this rock and roll musical circus, which was part of the extended Monty Python family, that had the audience freaking out and running for the exits by the time they finished.

Then there were the nights, when it all came together… and the music, created on the fly just for and with the audience, transcended everything. Electrifying. So when it worked, it worked… and when it didn’t, oh well, there was always tomorrow.

Hippie’est to Highest Grossing Concert Band of All Time: An Amazing Transformation

So how did The Dead go from hippie’est of the 1960’s hippie bands, to the highest grossing concert attraction of its era well into the 1990’s?, an era of Rolling Stones, Michael Jackson dare I say Neil Diamond, another huge draw?

Leesons for us all, 40-years later!

Of course it’s the marketing!

David Meerman Scott and Brian Halligan give us great insight into this with their recent book, Marketing Lessons from The Grateful Dead. They identified the genius level marketing developed and adopted by the band… best practice and learn’able lessons that are applicable to all products today.

I will argue that what The Grateful Dead understood, perhaps intuitively at first, was the sense of community they were a part of and had the power through the music to create, nurture and grow.

A 360-degree business perspective

As you can see from this pie chart, from the article in Rolling Stone*, A New Life for the Dead: Jerry Garcia is Checking Cash Flow Charts, from way back when in the November 22, 1973 issue, they were able to see themselves not only as a concert band, but as a business from a 360 degree perspective that included concerts, importantly, but also the totality of their business. They then created a variety of companies including a record label, a sound design and production company, a travel agency and much more to support the enterprise.

Building Demand

Around & Around It Goes: More demand = Larger Halls, More Equipment, More Gigs, Larger Overhead, Bigger Organization -- Repeat

At its center or core, was the live music itself, the concerts. As it turned out, this was where when the 60’s ended and the 70’s and beyond began, the overall Dead experience could be monetized as they played bigger and bigger concert halls.

They consciously realized that since each performance was basically improvised and different, it was possible that demand for tickets could be increased, where fans would come night after night, market after market, and invite their friends to share a unique musical experience each and every time.

The other, was the understanding that the music once played was no longer theirs alone. In other words, the notes once in the air, were no longer owned by the band or anyone for that matter. This was and still is counter-intuitive, in stark contrast to how the rest of the concert/music business views it – where the music in all forms is still considered the property of the artists themselves and fans are prohibited from “capturing” it in any and all forms, except for artist-authorized versions, and of course in our memories.

Live Music Creates a Connection between Artists and Audience

In creative terms, the one thing I learned by having had the opportunity to watch bands play multiple night engagements at the Tea Party over a two-year period was see how instrumental the audience is to the creative process.

There would invariably be a night, THE night when the connection between the artist and the audience would be at a more intense level. Bands were “on”, and we the audience didn’t just passively hear the music, we actively listened and a two-way connection was made that fed off and built on each other.

These were the nights we lived for and there was no doubt that the audience was integral to the creation of that night’s music. The Dead always understood and respected this connection and surrendered control.

Who Owns It?: Let “Remarkable Content” Loose…

Knowing this also allowed them to open up the concerts themselves freely to “tapers,” die-hard fans who wanted to record a living document of the show. These tapers, were then free to share the recording with friends and other fans as well, and in doing so foster and feed a community of friends and fans, who in turn would fuel more demand for the live, real thing and so on, round and round it goes, growing all the time.

Yikes!

You would think that considering their extraordinary success, other bands, and even products and services would surrender control and follow down this road. But sadly, this has not turned out to be the case, at least not yet.

…And a Community Flourishes

Today we need to understand that music is in a way like “information is free” (to quote Stewart Brand) and by that I mean not necessarily free relative to cost, but free in terms of being un-tethered by artificial restrictions. The marketer’s way is to let it loose, let the audience control it and in doing so give them a reason to share, to connect and then experience the real thing for themselves.

As the Dead proved with music, letting it loose unleashes the marketing power of the music (information), the more compelling and in today’s terms “remarkable”, the more the demand, the audience will grow and the more opportunities to monetize the total experience will emerge.

In today’s world with tools like social media where such a strategy based on collaboration with the audience aligns perfectly with transparency and customer control, who knows how much “further” the Dead could have and would have taken it!

Part II to come: How it all worked… From What I Could See, Owsley was The Guy who made it happen.

* I wanted to acknowledge the Rolling Stone: Cover to Cover, the DVD set that includes every issue, every page of Rolling Stone from 1967 to May 2007. You can read it all, as it happened, and see music and music journalism evolve from those heady days of the late 1960’s to today. If you love the music, you will love this!

I also wanted to call out the Grateful Dead Archive now housed at the University of California in Santa Cruz. They are in the process of digitizing massive amounts of the Dead’s memorabilia and making it available to all, in the same spirit that made this all happen to begin with.

Don’t Go Away Mad… Just Go Away: A Marketer’s Perspective to the Thorny Issue of Technology & Privacy and What to Do About It Now.

November 6, 2010

Last week there was an interesting article in the October 25, 2010 Wall Street Journal, A Web Pioneer Profiles Users By Name, about a web company called RapLeaf that takes data collection and web profiling to a new level.

Privacy in the 21st Century: A Brave New World

This is one of a whole onslaught of articles in the Journal and media overall regarding the apparent erosion of privacy, information and how it is and will be used in our 21st Century world. The information that is collected about us and our behaviors and now embedded on our computers and mobile devices for “harvesting” by companies intent on delivering ever more relevant marketing to us based on our actual search, purchasing and other trackable behaviors on and offline is astounding.

As a marketer, this is a nirvana like condition… a “brave new world “ of actionable, personally relevant information. Information that can be applied to customers one-to-one, with the idea of improving response rates for our online marketing programs. Better clickthroughs on PPC (pay per click) ads and banners, more targeted and specific messages to our prospects and customers. Eureka! The proverbial pot of gold at the end of the rainbow is at hand.

…Or 1984

And the “best” part that this is done automatically. We don’t have to do anything differently, it is done for us. I don’t know about you but this almost sounds more like Big Brother and “1984” when you put it like that.

So let’s circle back to what started this off… RapLeaf. Up until now, we have been told by Google, by Facebook, by ISPs, by Telecoms and all the rest that they collect anonymous data about us.

Fair enough, perhaps. At least we are used to it and may have a cookie (sounds so innocent doesn’t it) or a beacon implanted on our computers that may identify our habits, but not our names and e-mail addresses, we are number. That is until RapLeaf. They have collected it ALL… names and e-mail addresses and other contact info along with the rest.

Although RapLeaf claims otherwise, companies or other entities such as political parties and candidates use this information for highly targeted, pinpoint marketing programs, as the example in the Journal so clearly noted. This opens up an array of questions and issues that I am sure will be a part of our national (and international) conversation for quite some time, as these capabilities grow in every increasing frequency and at a faster rate beyond the traditional checks and balances, regulations, etc., that are now woefully out of date.

However our real fear, and possible solution, a marketing one at that, is a bit different.

A Marketing Point of View

Offering users the choice of how they wish to interact with technology increases ad relevance and value. Loyalty and other incentives for user determined levels of engagement further improves performance and reduces privacy concerns.

For an example of what I mean… if today you are a member of CVS’s ExtraCare® or similar loyalty program, and you swipe your tag at point of purchase, you may receive a seasonal discount offer for say, suntan lotion in the summer after every two or three purchases you make. Basic and static, these swipes are more about information gathering and over time CVS has acquired massive amounts of information this way.

Moving forward from now, it can and will be quite different. There is the new reality, currently in the process of being built.

Every time you interact with a CVS or any other retail environment, it will be tracked. And not only can the swipes be accessed in real time, so can your overall purchase behavior and credit card info as well. Tie this in to your personal info like mobile phone number, e-mail, web and actual addresses, now a whole new level of direct interaction is possible.

Let’s say you have allergies and every Spring you buy Claritin®, for example. That e-mail offer you may get, or ppc link on your Google or Bing search, or text message in March at the beginning of allergy season may feature, you guessed it Claritin… buy two, get one free. Or if the GPS on your cell is activated, you are in a CVS store around that time and isn’t that ironic, there is that bar code on our smartphone for you guessed it, that very same offer delivered to you in real time, right at the point of sale. At some point you may be walking by a Walgreen’s and…

Fantastic! So what is the difference between the realities of Brave New World or 1984?

The Customer-Oriented Solution: Transparency, Control and Choice…

In the CVS example, you freely give your information in exchange for discounts, relevancy and other benefits in exchange. There is a clear incentive. In the other, it is done to or for you without your consent or control, as we saw in the Journal article.

What about relevance?

Clearly having relevancy defined for you, sometimes doesn’t always work as intended:

  • Remember that baby present you purchased for your niece or nephew a while back? Isn’t it weird to have sponsored links for baby carriages and disposable diapers follow you around, even if your kids are off to college, or you never had any?
  • Or if you do have kids. One way or another they have figured out how to work around the parental controls and now you are getting all kinds of e-mails, and links to crazy sites you would never visit in a million years. Ooops.

We know that one of the hallmarks of Web X.0 and the Inbound Marketing trend is control, customer control. Transparency in being up front and offering choice supports this reality. Permission as we now know it, giving your permission to engage or accept a newsletter or such, is only step one.

We argue that we need to go further. As you can see in one of our earlier blog postings Hulu Pulls a Lulu, there is a strong bottom line marketing rationale to offer customers more control, more often.

And if choice and choice were adopted side by side with the latest information processing capabilities of say a RapLeaf, we can see that even more value could be created, not less as it may appear, and in a manner that does not conflict with the issue of privacy, in fact a manner that respects it.

How is that?

Choice = Value

Remember the old axiom from Direct Marketing 101? The one that says the greatest cost and lowest return is in the initial “getting the hands raised” action. Say you spend $1 million to reach an audience of 1 million people. The cost is $1 per person, and you get a 1% response or 10,000 people act. The cost per response is $100. It’s expensive.

Now you a pool of 10,000 folks that have already acted and declared an interest in you and your product. Working that audience not only costs less, but since they are aware of you and have already expressed an interest the product or service, response rates can go up, often significantly, as the relationship develops, if you engage this very valuable audience of folks that have “raised their hands”.

One argument I have heard is that if you offer choices, you in fact limit the impact of your message to only those that act, and slash your response rates. This is valid I suppose, especially if say you trying to go viral with a compelling white paper and force readers to register first. Response rates can drop to almost zero.

The question is does it have to be either/or?

First. Using the direct response model and our technological quest for more marketing relevance, it may be true that overall response rates go down if active choice is offered, but at the same time shouldn’t the value of the response go up? If I choose to view automobile ads, or better yet, brand-specific auto ads, aren’t I self-selecting and indicating my possible interest?, and doesn’t that have higher value than just a general click through on a banner, a sponsored link on Google, or other such online device?

The next step of course is to learn if I am a potential buyer, and if so, when? But isn’t that easier to assess once our interest is established?

And if a short-term buyer I am not, could there still be longer-term value as a quote unquote lead. I may know someone, or have a child looking for a vehicle, or I may be in the market later. In other words, underneath the choice to receive information, is my customer initiated response, opening the door to develop a long-term relationship.

To continue with the car example, information and technology could add value, as an added layer on top of my choice levels. It could offer me a variety of car options using what it “knows” about me… to validate brand, type, features, and my needs, and then facilitate the most appropriate, highest value interaction with the product. This way the technology is my information partner so that I get the most relevant information, because I choose it to do so.

Re-Positioning Latest Technologies as Enablers to More Relevant Information

In this case the technology is an enabler helping me get information I want and need.

What if we don’t want and choose not to actively interact, and therefore want the technology to do it for us, to serve us messages and links that the system identifies as relevant, much in the way Google does based on our search query today?

Create a mechanism to let us choose this option.

If we want to be creative, we can even use a CVS ExtraPoints/loyalty program as a model. Imagine if incentives are in play in return for the freely given exchange of information? This recognizes and provides value in exchange for levels of privacy that in essence are “surrendered” and offers the opportunity to deepen the relationship over time, at the same time.

And of course, there will be those that won’t, don’t or can’t respond. That may be the subject of another posting.

Let’s take this approach to another hot spot that has received a lot of attention relative to its privacy policies lately, Facebook, the 800-lb super gorilla of social networks.

Under Mark Zuckerberg’s leadership, Facebook has consistently attempted to stretch the privacy envelope in order, it appears, to monetize as marketing intelligence, the deep, deep profiles, Likes, Friends and other information it has on it’s users. Again and again we have seen sudden changes to privacy controls and policies, and more feature introductions like the ill-fated “Beacon” program that would have been used to create high value information that could be sold at a premium to third parties.

What has astounded me over time is:

  • how people haven’t fled the network as these initiatives were imposed, often without warning
  • how Facebook’s users have pushed back when they felt privacy envelope had stretched too far, and
  • how Facebook has responded, pulling back as it attempts to monetize the information on hand.

I would have thought users would leave… but we didn’t and apparently don’t. And the question remains, knowing that this robust info about us exists, how can Facebook marry in a cool, mutually beneficial way the information it has with marketers that still gives us as consumers control and allows us to determine the levels of relevance we want?

One simple way could be to add a profile section specifically for marketing purposes. Invite us to participate. The promise: relevant communications between companies looking to match their products to people with expressed interests with products or services of that type. The value of the interaction to all parties jumps here.

Facebook could get slicker and stickier create a platform where we get points when we click, when we share, and when we buy or act. This way the user could be recognized as an influencer driving word of mouth and/or a customer.

More Choice = More Relevance = More Value

In return there could be an interaction where we are actually offered a dynamic menu of advertising choices based on our profiles and technology where we then get to choose (raise hands) for relevant products with a higher likelihood of interest.

By the way, couldn’t this type of thing work with Google too?

With such a mechanism, Google could engage with us when certain potential buying patterns emerge with our queries. Kind of a super Pay Per Click.  “Are you looking to buy… a car “ type of dialog could help Google serve up even more relevant links based on an actual declared interest. This could even have an impact on organic search as well, where a simple added interaction would help Google fine tune their search results to truly match our needs immediately and over time.

Couple this with the semantic web capabilities coming up and this enhanced search capability could add even more value to search, which could help offset inevitable maturity of the product.

And yes, choice does apply to YouTube, Hulu and so many others. Give us choice and the value of our information and interactions increase and privacy recedes to the background, as long as it is treated with respect, which includes transparency and security. Under these circumstances, a RapLeaf offering may not be so intrusive after all.

One last thing… please talk to us in plain language. Have you seen the electronic terms and conditions for say Apple’s App Store? The basic agreement is 55 screens long. Who reads this? Not us mere lay folk.

Maybe we need to agree in the form in legalese, but give us a one-pager in every day language please. And if you make an update to the terms, give us the bullet’ized version summarizing changes in plain language again. Then when we agree, especially if it is in relation to control, transparency and such, we know what we are doing, and as such have added the value of conscious choice to the action, which adds true marketing value to the relationship overall.

Doing Good… Is it Good Marketing?, Good Business?… or Just Crazy?

September 9, 2010

Knights Apparel is paying its workers in the Dominican Republic three and half times the going rate. Can they thrive when their shirts cost 20% more to produce than everyone else?

  • Introduction
  • Investing in better working conditions and worker salaries in Dominican Republic so that product costs are higher than the competition… are they crazy?
  • Why it can work… applying marketing principles to counter the drive to lower prices and commoditize the product
  • How “doing good” can be good business

Introduction

One of my roles is marketing professor at a great college in Boston. A foundation of all of my courses is to have students comb traditional and online media to find and share marketing-related stories in each and every class. There are a number of reasons for this including the fact that business is dynamic and literally evolving on a minute by minute basis sometimes, a fact that no textbook, at least in the print format, can ever keep up with.

What this means for me as a teacher is that I have to “eat the dog food” as well, if I am to keep up, let alone lead such a research-based activity in a classroom.

So it is that earlier this summer I came across an article in the New York Times last month by Steven Greenhouse, Factory Defies Sweatshop Label, but Can It Thrive?

I was very excited when I read the article and have not been able to get it out of my mind since. This is because contrary to the implication that “doing good” cannot lead to business success as implied by the question “Can It Thrive?” in the headline, when looked at it through a marketing strategy and positioning lens, we can easily see it is very likely this business can and will survive, thrive and perhaps be a model that other more well known consumer brands can and should adopt.

Lowering Costs Drives Business, Doesn’t It?

No, I am not trying to buck the research that typically asserts doing good for its own sake does not necessarily move customers or prospects to act and buy a product or service. There was much discussion a few years back about “green” business initiatives and would customers pay extra for them, and if so how much. Was Green enough on it’s own to drive a marketing program and deliver results?

Perhaps not.

We may have, want and maybe even expect a “green sensibility”, but we see again and again that when it gets to the pocketbook, we don’t want to pay more, at least too much more. We may penalize a product for say a lack of “green-ness” but we don’t necessarily reward them for it either.

In this mindset, the negativity implied in “Can It Thrive?” may make some sense.

The answer however, is far different from a strategic marketing perspective when doing good is positioned as added value.

First a little background.

Introducing Knights Apparel

The company in question is Knights Apparel, based in Spartanburg, South Carolina. Knights is, according to the article, “the leading supplier of college-logo apparel to American universities, according to the Collegiate Licensing Company.” The factory discussed in the article is in the Dominican Republic and produces high quality, college/university logo’d t-shirts for sale under the Alta Gracia label in campus bookstores across the US. The cost of the actual shirt is $4.80 with a wholesale price of $8 and retail cost of up to $18.

What is unusual here is that Knights pays workers a living wage. Where other factories may pay workers $147 a month in often harsh working conditions, the lucky workers at this factory earn $500 a month, up to 3 and a half times more. Not only this, workers are allowed to unionize and work in a clean, friendly, modern and safe environment, which is unheard of at most factory locations.

Shirts of this quality which may cost others $4 to produce, costs Knights $4.80, a 20% premium, so there is an added cost.

Sounds crazy, doesn’t it? Whereas in today’s globalized manufacturing world companies are on a constant quest for countries and workers where they can pay ever lower wages and cut overhead costs in order to maximize profits and value to investors, here is a company bucking the trend and going in the opposite direction.

Plus if the research is to be believed, what customer in their right mind will pay a higher price for a commodity item like a T-shirt?

We do, and we do it all the time.

Positioning Can Be Used to Support Different Business Strategies

It comes down to positioning, brands and value. Using the product adoption lifecycle for a model, we can see the following:

The Early Majority supports leadership and works like a herd… if my friends and peers do it, so will I. And not only that, this audience will pay a premium for a leading product, for its perceived value. This is where brands come in and why they can be very successful. If my friends see value in Nike, so will I. And yes, we all know that cool little swoosh will cost me more, sometimes much more.

To the Late Majority, a t-shirt, is a t-shirt, is a t-shirt. Lowest price wins their purchase. And if we can get a branded shirt at a lowest price in say a discount store, we are not fools, we will buy it. But if it costs more, forget it. Cost, lowest cost is more important to here.

The game here is added value. If Alta Gracia shirts were focusing distribution on say Wal-Mart or other discount channel, the strategy would fail. Pennies matter to the cost of the product, and the higher production cost would not be able to play out in this arena.

But as we read, Knights strategy is to not play in that space. In fact, they are reverse positioning themselves to play in the Early Majority segment, and quite cleverly.

Reverse Positioning For Added Value

Here’s how.

1. The shirt is a high quality shirt. The facility is not manufacturing a commodity quality, no label generic t-shirt.
This alone is not enough.

2. Alta Gracia has not yet built awareness and value for itself as a stand-alone brand, although apparently there will be point of sale merchandising in college bookstores to raise awareness.
However, by providing the academic market with college/university branded product, they in effect are partnering with colleges and univerisites to offer a high quality, high value, co-branded product.

3. Students (and therefore their parents) are known to care about social concerns and they do support with their wallets.
These customers will pay a premium for products that they consider to fair traded, if the value is clear and the cost is in line.

Have you checked out the price for a Nike T-Shirt lately? Alta Garcia’s wholesale and retail pricing is well in line with other high value branded t-shirt products that can often cost $20 or more.

Add it all up and Knights has done its work to strategically position this product right where it needs to be, so it can, and I will argue almost certainly will meet its social and business objectives.

Does “Doing Good” Make Sense?

Are there lessons here for the Nike and Reebok’s of the world, whose logos have high brand value in their own right?

It seems like they have a choice.

A few years ago, Nike and others (remember Kathy Lee Gifford’s clothing line?) were slammed by the media, and customers for simply the appearance of allowing sweatshop conditions in some of their out-sourced, off-shore factory operations. They felt the pain of lost sales and as a result developed and imposed higher standards and better working conditions over time since then.

Left to balancing the quest for higher profits against the public’s expectation of social responsibility, it seems likely this kind of back and forth may continue. Companies will try to cut costs all they can, and consumers will respond if it appears they have crossed some ill-defined line and gone too far. At what is too far?

Is there a business value to a more pro-active posture like the one taken by Knights?

Costco Thinks So

As it turns out, there is a best practice we can look at here as well courtesy of Costco, the leader in the warehouse store category, outlined in a 2005 article in the New York Times, How Costco Became the Anti Wal-Mart.

For many years Costco has been a leader in the retail industry paying its workers “liveable” salaries well in excess of those paid by another leader, Wal Mart (and others) where associate salaries are pegged to the Minimum Wage.

At the same time Costco’s management has been under pressure to lower employee costs, something that Costco’s management has resisted. As noted in the article, one analyst even complained that with Costco “it is better to be an employee or a customer than a shareholder.”

Why then does Costco resist this pressure?

Costco has found that fairly compensated employees are loyal, honest and stay with the company longer. Churn is down, retention high, training costs reduced, and productivity enhanced. Throw in that Costco’s affluent customer base appreciates that lower costs do not come at employee expense, well we get the idea, there is a monetary benefit.

As Costco’s CEO Jim Sinegal put it, “This is not altruistic, this is good business.”

Sound familiar?

Our marketing model shows that companies can do good, quantify its value, serve customers and in the deliver more value to customers, if they live in the right place on the Product Adoption Lifecycle.

The Marketing Lesson of the Product Lifecycle… You Can Choose Where You Live

Then think of the transformative impact this has on the actual workers. One of the workers at Alta Gracia put it this way, “We never had the opportunity to make wages like this before. I feel blessed.” Feel good now?

Here is the recipe that adds value and re- or reverse positions Alta Gracia T-Shirts from a commodity to value product:

1.    The higher quality of the product itself

2.    “Borrowed” Brand Value that leverages the affinity of the College/University

3.    Added Value of a Good Deed that in fact is also doing “Good Business”

4.    Opportunity to build Alta Gracia as a stand alone brand recognized by students

5.    Natural brand extensions to other intersecting markets (parents, etc)

6.    Other affinities, such as sports, music and others can build on model

Add it all up and it means higher value, the kind of higher value customers are willing to pay a premium for.

Brand Repair: BP’s Environmental and PR Crisis… Should BP Continue It’s $50 Million Ad Campaign?, or Throw in the Marketing Towel Until the Oil Flow is Stopped?

June 18, 2010

Summary:

The Situation
– It’s Ugly by Definition
– A Clear Marketing Choice: Open It Up, Pay BIG Cash or Wait?

21st Century Marketing Mandate: No One Said It Was Easy
– Surrender Messaging Control or Perish
– Let the Public In To See, To Share, To Act

Marketing To Win: Three Steps to Protect the Long Terms Value of the Brand
1. Surrender Control
2. Act
3. Align the Company and the Public’s Desire to Stop the Spill and Clean Up the Mess as Quickly and Safely as Possible (And Prevent Future Mishaps)

Conclusion
– Opening it Up Protects the Brand
– Controlling the Message: The Cost is Too High

In Control Means Marketing Out of Control!

Marketing 2.0 Win is never shy about taking on the big business challenges… the one’s that keep executive teams awake at night. And if ever an executive is up all night these days it has to be Tony Hayward, CEO of BP, recently dubbed the “most hated man in the world!”

It seems that every move, every comment he makes… and everything he doesn’t say just makes this catastrophic situation worse and makes public and policy makers alike more and more angry, upset and distrustful as we are all impacted by this terrible crisis.

What is also clear is that the marketing and communications are out of their control, the brand polluted, perhaps permanently as reflected in their current stock price which many, except perhaps current stockholders, feel is quite justified and hasn’t really been punished enough.

Our job isn’t to get into the how and wherefores of this mess. It exists.

What is clear is their “crisis management” strategy, apparently designed by PR firms and lawyers to minimize losses and protect BP’s image culminating to date in their $50 million what I call “Mea Culpa” ad campaign, hasn’t, can’t and won’t work.

This posting is inspired by an article that came out last week in the Wall Street journal entitled BP Rolling Out New Ads Aimed at Repairing Image that questioned the wisdom of this strategy. The last line in the article in particular caught my attention.

A quote was attributed by the author Suzanne Vranica to Chris Gidez, U.S. Director of Crisis Communications at Hill & Knowlton NY, a Unit of WPP, who is quoted as saying: “Until the leak is stopped, no amount of advertising or PR will help,” in particular caught my attention.

Is This True?, and the Best BP Can and Should Do?

Our position is perhaps not.

But to make it so, BP needs to make a fundamental change.

In thinking about this, we come back again to Jet Blue and former CEO David Neelman and his response to the Valentine’s Day Storm of 2007 that was the catalyst for a very public and embarrassing system wide melt down that left many passengers stranded with no means of getting to their final destination, for in some cases many days.

Crisis Marketing: A Customer-Centric Response

Let’s be clear at the outset. I do not mean to suggest that this business crisis that involved perhaps tens of thousands of inconvenienced travelers is in any way on the same scale as this one, that has involved loss of life, livelihoods and loss of irreplaceable environments, let alone cost to clean up.

What I want to focus on here is Neelman’s response itself.

Watching it even now I am struck by his authenticity. You can see the circles under his eyes, he stutters a bit, his presentation is clearly not scripted or smooth.

And not only does he apologize, he also tees up a set of actions including what became Jet Blue’s Travelers’ Bill of Rights, an industry first. What’s more he didn’t wait for the Government to legislate consumer protection. Jet Blue acted because from their customer-centric of view, it was the right thing to do irrespective of cost, and in fact a cost of doing business.

You also see and hear a CEO that truly is connected to his brand. He understands the connection of his company with his customers, and its long-term value. He gets it and clearly, as CEO dealing with a crisis, is prepared to have his organization pull out all the stops to make the changes required to solve the problem and earn customer trust again as Job #1.

We got it too, and have come back to what is a better Jet Blue.

The Gulf Spill: Command and Control Messaging Will Lead to Long Term and Costly Brand Attack

Now let’s circle back to our current situation. What we see here is a carefully crafted, command and control marketing program, telling us the story as BP itself sees it.

What we also see is a company on the hook for potentially $ billions in liabilities apparently trying to limit the damage.

On the positive side, we also see a company who although they may have promised regulators what it couldn’t deliver in terms of environmental protection, and perhaps it even “misled” regulators as to it capabilities to prevent a disaster like this, is clearly pulling out all the stops it knows to come up with solution. I see a company making it up as they go. I see a company trying, perhaps clumsily. Could it be any other way?

We see a carefully crafted brand disintegrating before our eyes. The public is angry and upset. Leaders appear ineffective and out of touch, and ready to “kick some ass” to demonstrate their power.

The stakes are incredibly high and BP finds itself is perceived as defensive, untrustworthy and unable to get out of its own way especially relative to its image and prestige.

What is now clear is the less transparent they are, the more they hinder journalist and public access, and the more they try to push its version of the message out “there”, the worse it is getting for BP.

Right now the marketing advantage is with the anti-BP forces, who make more noise and have more visibility, more friends, and a louder marketing voice. Fear and anger trump crafted messaging here and will do so until BP surrenders message control.

Here is How Marketing Can Help… Transparency is Essential

BP needs to open the gates, to let us in on the action, and let us see what is happening for ourselves. They have to realize that we need to see the whole thing.

The company must also be real, and show its human side above and beyond just Tony Hayward. It must listen without hindrance or defense, knowing full well that what it may hear won’t be flattering or pretty, at least for a while. Talk about thankless.

If BP can become more open, if it gives the public, for example, direct access to its daily briefings, where heaven forbid, anyone, even you or I can ask questions to its engineers and other experts, it will get an audience. Over time this can in fact turn down the heat on the ever building and rightful frustration and anger. The key if is… if the forum is authentic and real.

This is just the beginning.

BP can take us behind the scenes and give us a view in real time of the what I gather must be extraordinary measures they are taking to get this under control… both the ones that work and don’t, warts and all as they happen. It doesn’t have to cost either. There are plenty of journalism students, perhaps even a Walker Evans or two, who would be happy to help!

By showing (not just telling) us how the people of BP that live on the Gulf are affected just like the rest of us, we are then connected as human beings, and aligned to the same objective, getting the spill stopped, and the mess cleaned up.

The political and “who pays what” elements, important as they are, lose their potency as messages and can then recede to secondary story status.

And for Part B. Then Act in the Interests of People Effected…

One suggestion. Perhaps BP creates a Gulf Crisis SWOT Squad, specifically available to help individuals and families get the help they need immediately. Instant help, NO red tape.

BP could perhaps even build a partnership with say a Wal Mart, one of the unsung heroes of Katrina, and other businesses so that individuals affected can get supplies, rent and other necessities NOW when they need them, as the other details gets sorted out.

Perhaps this could be seeded by what’s left from the ill-fated $50 million ad buy?

BP. Let us see for ourselves that you as a company in fact understand the human cost of your actions and about solving the problem, and ironically enough, about your brand that you invested so heavily in.

Show us that we matter, no matter what the cost. That we are worth it… and that your brand is too. After all it is customers that make the brand, any brand come alive.

This is what it means to be a responsible brand. Not just build it and market it in good times, but to be it… to do its best, to meet public need as best as it can in bad.

Brands Are Living Entities That Require Action to Restore in a Crisis

And if history is any guide, those courageous companies that take this posture find themselves in a stronger position once the dust settles. That’s because they have shown through action that the promise of the brand, the connection of the product its audience is real, and we as customers tend to reward those that do so over the long haul.

That is the lesson Jet Blue. And so far, BP has no clue.

Waiting It Out Is Too LATE, and Cash Is NOT King…

BP needs to show us that yes it’s a company, a huge multi-national one at that, but as such it is run by and operated by human beings.

This massive mistake was not caused by a robot or a machine… And its time BP let go of controlling the situation and wake up to marketing in the 21st century, I hope they do so soon…

And we can assure you Mr. Hayward, once you do, you will be able to get some sleep again!

It might not happen overnight, but access, dialog, transparency and truth trump the noise of fear and anger each and every time, over time. Give us these things so we can all get aligned with the ultimate goals and you will protect and enhance the brand, the people and the company that is BP.

Pay now or later… doesn’t matter, you will pay. But by letting go of control, by understanding and investing in people not ad campaigns, you will win in a marketing sense and in ways that may seem unimaginable today, as the payoff.

Post Script

As we got ready to post this, we find that BP has been sent a letter signed by members of the US Congress with a demand (request?) for BP to set up a $20 billion victim compensation fund, held in escrow and executed by a 3rd party. This has been underscored by President Obama today (June 16, 2010) in a personal meeting with Tony Woodward at the White House.

From a marketing perspective, how much more interesting and powerful would this be if BP had gotten ahead of things and set up such a fund under its control without political prompting?

Now that others have led the charge for such a program, what may not be so good for BP is having independent 3rd party in charge.

If not positioned correctly and I can see no reason yet why it would be, BP could now be put in a place of not only being the villain causing irreparable harm but now they are on the hook to pay the bills, and then get no brand “credit.” Terrible and costly.

This is a razors’ edge they walk! One thing for certain, just waiting for the crisis to end to begin re-building the brand is not a strategy for success. And 20th Century/Command and Control Communications will not work.

Like it or not we are all in it with you, and there is much you can do now to get us all focused on real solutions to this mess, but you have to let us in without restriction.

Otherwise, you will be an object of contempt that could take generations to fix and will cost your company and its investors more than you can imagine. It’s your choice Mr. Woodward and BP.

Marketing Misfire. Nexus One… Looks Like a Great Phone to Me! The Real Battle Was Positioning and Google Missed It.

May 13, 2010

Summary:

1. The Situation

  • What’s at Stake
  • Product Features
  • Current Positioning

2. Analysis

  • What’s Right?
  • What’s Wrong

3. Recommendations

  • Connecting the Marketing Dots
  • A 5-Step Plan: What can Google do about it.

Introduction

Recently, before the (in)famous lost iPhone debacle, Apple indirectly made another announcement of perhaps greater import relative to this already proven game changing device, the iPhone. It appears that at long last, Apple is making the big move to create a version capable of running on other carriers, in this case industry-leading Verizon.

As earlier postings on marketing to win attest, Apple needed to make this move or else risk having the product marginalized to niche status if they stayed on ATT exclusively. The risk is magnified especially since Google’s robust mobile, open source  operating system Android in tandem with other devices, notably manufactured by NHT, opens up the market above and beyond any one carrier.

And to make matters worse, it appeared that Google along with manufacturer NHT would be the tools of this destruction with the much heralded launch of it’s Google-branded Nexus One smartphone. Nexus One was designed to be platform-agnostic and besides featuring Android, it exploded the existing sales channel model traditionally controlled by the carriers, and sold direct to customers online through Google itself.

And if that wasn’t enough, customers were also offered both locked and unlocked versions of the device. If you wanted to purchase a subsidized version with a two-year contract, there was a T-Mobile version ready to rock for under $200, and a Verizon-ready model was going to roll this spring as well. Radical indeed.

Before we dive into what was wrong marketing-wise, remember there is much at stake for Google and perhaps NHT as well.

The smartphone is in fact a mobile computing platform and apps that run on these devices are, if I read the tea leaves correctly, potentially disruptive to Google’s online search-based ad model, especially as these platforms take off. I mean who needs search if in fact the app chosen already defines a clear area of interest as defined by the user?

This means that it is well worth Google’s time, talent, management attention and dollars to get in the game and win a real piece of the action, no matter what it takes. Otherwise others (re: Apple) will be in the driver’s seat. Android is one piece. An “iPhone killer” device, a Nexus One… another.

The Good: Feature by Feature… Nexus One Looked Like a Winner!

And what Google/NHT have done on the product level looks real good to me. The more you look at the features of Nexus One next to an iPhone, the better it looks.

It boasts a variety of powerful features including:

  • megapixel camera with a flash, versus the megapixel without flash on the iPhone 3GS,
  • the battery is removable and replaceable, iPhone’s is not,
  • there is a micro SD slot to add up to 32-gigabytes of memory, where with the iPhone, what you buy is what you get
  • apps run simultaneously on Nexus One which the iPhone is famously unable to do at this time
  • and we all know about iPhone’s inability to run applications developed on Adobe’s ubiquitous Flash platform, Nexus One of course runs Flash apps.

Plus Nexus One is the only smartphone to boast the Google nameplate, which is one of the world’s most recognized brands known for leadership in innovation. Add it all up on the product front, this is the good stuff!

The Bad: Positioning Is Where Google Falls Down

Alas, where this all is falling short is in the marketing and positioning arena, which is so essential for success in products of this class.

If there is one lesson we all need to remember and it seems we always forget, it is that product features do not a mainstream marketing strategy make!!!! We were taught this by Geoffrey Moore in his landmark book Crossing the Chasm.

Product features are great for early adopters but are not and don’t work as selling points to mainstream audiences who buy based on herd-like behavior criteria of peer adoption and market leadership.

When going mainstream, it is essential that customers get to feel that others just like them have and love the product, and then that they get to see and feel it for themselves, in order to win them over.

As far as I can tell, this is the whole deal right here on the Nexus One e-commerce and info page, the one that comes up when doing a Google or other search. Based on comments above, the positioning is off base, way off base.

From an e-commerce perspective alone, the presentation itself is simple and clean, just what we’d expect from Google.

From a positioning point of view however, what we see is a product message that by definition is focused on early adopters, not mainstream buyers. OOPS.

You can see it right away by Google tagging the device Web Meets Phone. Product features anyone? This tells us what it is, and if there was no iPhone, this may be necessary… but in an already established, hot product category, no way! Our response is so what?, isn’t that what a smartphone does? Nothing compelling there.

When we look at the rest of the Nexus One page we see the following sections, which also supports the product-focused positioning:

  • Demo
  • News
  • Already a Customer (Customer Service?)
  • Closer Look (including You Tube Channel)
  • And of course, a Buy Now button.

The question is why put the impediment of a Chasm crossing, first winning over early adopters and then mainstream buyers, in front of you when you don’t have to?

Getting the Right Message to the Right Audience

Google is a household name making a play to exploit Apple’s weaknesses and grab a piece of the mobile market. Since this is a competitive land grab type, early adopters are irrelevant here. This is a mainstream marketing move.

The criteria these consumers really care about here are leadership and referenceability. It has always been so. In other words, is the product a leader?, and do my peers have it, and love it?

Google as a brand is a leader, so customers can make the leap of faith to leadership on this level. The question is then, what do our peers think about it? Does it deliver? Is it (the product) “baked”?

Here is where the marketing for this product breaks down.

It is most likely that many potential customers don’t know anyone who has one, and what’s more, if they are interested, they can’t see it for themselves, let alone play with it and internalize the benefits of its many features. This appears to be a result of the Google-facing distribution channel. Because of this radical departure away from carriers, T-Mobile stores, the current existing carrier, don’t have them.

Re-Positioning: Connect the Dots and Take it to the Streets!

Assuming that this won’t or can’t be changed, what then? How can we get this product to the people?

How about testing then deploying some temporary pop-up stores and displays in key markets, key malls, key events, even key warehouse stores like Costco? Consumers can drop by and see, and ask the questions as well as buy… Plus such a temporary approach creates time sensitivity and urgency and also lends itself to deadline driven promotions to induce immediate buy decisions.

Segmentation

Also, so many students today use G-Mail and Google docs. What about more targeted programs, in this case engaging campus reps and offering sales incentives and scholarship-based promotions for sales results? Here is where you could play early adopter card… the rebel, be different card to build traction and gain market share.

Testimonials

One other avenue is to retool the YouTube Channel. Currently the Nexus One channel is all about product info and demos. Keep this content if you must, but also focus on customer testimonials instead. And this can be done strategically, and by that I mean seed it with some key persona or consumer types. Create some promotional incentives to drive submissions, then let it go.

There are plenty of consumer videos out there on the phone, but they are all over the place and you have to dive in to find them. They need to be connected back to the Nexus One page. And content kept on point as much as possible. This is where the incentives and promotions come in. These are necessary to create that peer support that is so essential.

Service?

Lastly, part of the fear factor that holds mainstream buyers back is service. They want and expect a tested service function. They don’t want or accept beta testing done on them. They want a fully baked whole product in place, operational and working. If not, they hold back and do what comes naturally.

They wait.

On the product/marketing side one big issue that can’t be , what happens if I am having issues? Who do I call? Where do I go? Since what is radical here is the “untethered” sales model, we have to know there is a clearly marked place we can go if we need help. Right now I have to figure it out and I don’t have a person to talk to or place to go.

Positioning is all about connecting ALL the dots and at no time is this more important than when mounting an incursion into mainstream markets with an entrenched and powerful leader.

Summary: A 5-Step Plan

To boil things down then, here is a 5-step plan to reposition the Nexus One into a viable competitor to the iPhone (note: there is still time!!!):

1. Re-position the product: Web Meets Phone positioning tag has to go. How about something like Nexus One by Google: The Smarter Phone or something like that.

  • Google. We need Google mentioned for leadership, making the phone not THE but A leading product,
  • “Smarter.” This way you create a qualitative showcase for the features to shine, but talk in the leader/market talk needed in mainstream communications

2. Narrow down to some tighter target segments,
3. Create incentives to drive and organize testimonials,
4. Take the product to the streets so customers can see, touch and buy the product from a person,
5. Re-communicate that Google is there for you relative service

Add it all up, now you have the marketing foundation to communicate a very competitive offering that can grab some market share. Now Google can add a link on the main search page for starters and they can realistically capture a portion of a % of that number to take Nexus One from failed iPhone Killer to a monster hit, with all the benefits of same!

Apple is safe. Or is it? NHT had fantastic earnings for its smartphone offerings through carriers on a global scale. NHT also has the ability to draw upon Google’s Android mobile operating system and Windows too, which will be releasing its new OS momentarily. So as Sherlock Holmes said, “Watson the game’s still afoot” but the battle for mobile superiority may be played out on another field.

Note: As I post this (May 13, 2010) Google/Android/Verizon announced sales in excess of iPhone for the first time. Stay tuned!

Message to Steve Jobs. Thanks for the iPad. Now the heavy lifting needs to begin.

February 9, 2010

As a marketer, it’s hard to stay away from Apple. The marketing has been at virtuoso levels consistently for the last decade, serving as a best practice and shining light for us all, at least until now.

The iPad was launched to great fanfare (hype perhaps?) last month Wednesday, January 27, 2010. The hype machine was in overdrive leading to what appeared to be an anti-climatic event that felt like a let down to the media frenzy that preceded it.

I had the chance to watch Steve’s keynote address recently with my Principles of Marketing class.

Here is how Apple boils it all down in their messaging and positioning for the product in their own words:

Our most advanced technology in a magical and revolutionary device at an unbelievable price…
The best way to experience the web, e-mail, photos, and video. Hands down.

For the first time in years after reading these value propositions, I asked myself, what are they are talking about? And why, oh why did they create unbelievable hype on a massive scale to deliver such a vague, “early adopter” message? I don’t get it.

Since on the surface, this just does not make sense, I thought it might be constructive to de-construct this a bit from the integrated marketing perspective and dive below the hype and superlatives to see if we can figure out what is going on here. Something is…

On the company and product side, clearly there is a lot happening. Disruptions abound, and they know it.

First, besides the overall product itself, is the A4 chip produced by Apple. I didn’t realize they had this capability, but if you look at it, should this tablet device take off and create a new category as hoped, a new chip architecture is in place… and its not Intel inside.

Apple is also we are told, undergoing a transformation. A couple of years ago, Steve Jobs eliminated “Computer” from Apple’s name to Apple, Inc. “We are now a software company,” he famously said.

This time around he took it another step further… “We are a mobile device company, the largest in the world.” Wow!

The tablet, which with its large touch screen interface, on the surface looks like an iPhone on steroids, with much of the same functionality built in. I originally dismissed the optimized iWorks part of the presentation but am now quite impressed that there is native to the iPad productivity (word processing, spreadsheet, and presentations) capability. This is no mere overgrown iPhone! The screen is large enough so we can actually see what we are doing. Will there be a touch-based Office app from Microsoft to come?

On the marketing side, it became clear that Apple understood that there was no direct competition for this ambitious, category creating product, and in response took one of those “going fishing” – everything for everybody, early adopter communication strategies that in the final analysis goes against the cardinal rule of positioning – which is to connect the dots of “what’s in it for me” for the customer versus setting it up so that he or she must figure it out for themselves.

You can see it in how they boiled down the core messaging:
Our most advanced technology in a magical and revolutionary device at an unbelievable price…
Compare this to the iPhone:

At launch:
Reinventing the phone

Today
The fastest, most powerful iPhone yet.

See the difference?

What does Magical* mean?, Revolutionary?, and what is this going to do for me, even with an “unbelievable” price?

* Note: Although it is not easy to figure out what this means on our own, lead designer Jony Ive does define “magical” quite well in one of the launch videos as “when something exceeds your ability to understand how it works, it sort of becomes magical. And that exactly what the iPad is!”

The Best way to experience the web, e-mail, photos, and video. Hands down.

Also each speaker in this very same video, especially marketing VP Phil Schiller kept on using the word “BEST”… best e-mail… best photos… best internet… best this… best that.

Hey Phil, I hate to ask what does “best” mean, and then if so, so what?

The key and unavoidable question that is the core of what positioning is all about still comes down to addressing what does this mean for me?, and at the moment I don’t know.

Nobody said this was easy…

There were kernels of marketing strength in the presentation, most especially in Jony Ive’s video presentation. As the lead designer, he is the person most intimate with the iPad and two things he said caught my attention. 1. “It just feels right to hold the internet in your hands.” 2. “I don’t change myself to fit the product, it fits me!”

These two ideas are interesting and compelling… and if, once the units are available, we physically “feel” this connection with the product, and I have no reason to suggest otherwise… well then, the iPad will be successful, perhaps very much so, in spite of this awkward positioning.

At the conclusion of the presentation Jobs argued that then when you add up the 125 million existing iTunes and App Store Customers along with the 75 million iPhone and iPod Touch install base who already know how to use the product, along with the new e-book bookstore with 5 of the major publishers on board, “we have breadth and scale required for success.”

Except this.

Even with this built in audience base in place, I will argue that there is a classic chasm to cross with this one. The product as it now stands is too big to pin down, there are too many disruptive elements, as Apple itself admits.

For example, is it an e-Book reader, and if so is it for the popular, business, educational markets?, is it a media device?, productivity tool?, something else?

Kept at this high level, wide “everything for everybody” positioning is inevitable which means we as the customers have to figure out what we want and need about this device on our own. This is dangerous and contrary to Apple’s own best practice of product launches past.

What’s more, for the past years Apple had the benefit of its latest devices having direct lineage to the iPod, which fueled adoption for new innovations.

For example, the iPod’s leadership as the dominant music player on the planet, allowed Apple to successfully launch the new at the time, arguably disruptive video iPod with just one studio on board (Disney) and a handful of titles available for sales at the iTunes store. This is nowhere near to the ecosystem the iPad now enjoys even before it is available,

Even so, the poorly endowed video-enabled iPod faced the chasm, while also living as the top of the line, world’s most popular music player at the same time. Today every studio is on board and billions of video downloads have been transacted. The chasm was “easy” to cross here.

Today, with an astounding 250 million sold to date, the iPod market appears to be saturated and sales are flat or declining. And we could argue this is not what the iPad product is at its core. It is a separate product. And positioning the iPad as a direct descendent of the iPhone, which has created a category on its own, is also not really accurate and in this case would limit its disruptive power as a category-creating product.

So the product is out there on its own, almost as a blank canvas… a remarkable product looking for relevance from the market as a whole. That is the issue.

This situation is not new for Apple. People weren’t banging down the doors for Apple to create the iPod at the outset. The market wasn’t seeking a device that could hold 1,000 songs. And if memory serves me well, It took a while to gain traction and truly took off when iTunes became Windows-compatible.

Assuming the above and we have a chasm in front of us, what now?

The market opportunities are numerous, so for the sake of brevity today, let’s look at a couple of examples to see how we could position the iPad in the e-Book space, to give us some ideas.

1. Blue Ocean: Completely Different and Compelling
Amazon’s Kindle is the original category creator and undisputed leader of the e-book market to date. The iPad with it’s color screen, robust distribution channel and access to content by the major publishers is mounting a direct assault to Amazon’s dominance and has a competitive offering no doubt. The black and white Kindle is a powerful one-shot pony and costs $250. iPad as an e-Book AND the “internet in your hand” offers so much more for $499. Does iPad demonstrate enough value to topple Amazon? Probably not… yet.

One of the drawbacks to the iPad, as with the iPhone is the inability to run multiple applications at the same time. What if… you could you could reframe the reading experience?, so that when you are reading your e-book on your iPad, you can, say, listen to music at the same time.

War and Peace, and Beethoven! With this simple added element, Apple could change the rules of the game and position iPad as the tool that transforms the reading experience:

Apple iPad… Reinvents Reading!

Such a move would force Amazon to find its way again in what could be a transformed market that by the new definition would play into iPad’s strengths, not Kindle’s, perhaps for the foreseeable future.

Now I am starting to see the potential “magic” that Jony Ive was talking about.

Bt the way, this move isn’t far off from the iPhone value proposition, which also was a category-changing device.

iPad has the extra load of category-creation, but the “reinvention” position isn’t far afield from the “different thinking” we expect from Apple.

And it making a product alternation is too much, we could go back to the keynote presentation and look at the say the games, or NY Times apps that were shown.

This positioning could then play out as:
Apple iPad… Reinvents the Newspaper
Reinvents the Video Game

2. Textbooks: Get Rid of the Heavy Load
There is another natural niche that plays into Apple’s DNA. Positioning iPad in the education space to fill a true, long held need to lighten the load of the infamous text book bag, which as I have been reminded in my professor life, can weigh many, many pounds. Good for upper body strength, perhaps, but cumbersome at best in reality.

We know that students today are online all the time and comfortable with being there. Making the switch to electronic books with these consumers, which surprisingly hasn’t really taken off to date, should and could be a non-traumatic and natural transition.

Plus, although it slipped in the 90’s when Apple all but surrendered the academic space to the Dell’s and HP’s of the world, Mac laptops today have gained significant traction on many campuses to be a leading computer device of choice by students.

We noted with interest as the rumor machine for the iPad was in full swing, that Apple was collaborating with academic institutions and textbook publishers to ensure that the product meets the needs of the academic community. Color is essential we are told. Also, students like to highlight text and take notes. Dropping in audio and video content, being able to link to current news sources, etc., could create a robust learning experience, while reducing the physical load, and we assume textbook cost.

Add it all up and iPad should have what it takes to fill a need and make a friendly conquest of a familiar beachhead market that will facilitate a quicker chasm crossing for the product overall.

Here is how it could sound, once again in “tag” talk:

Weighing only 1 ½ pounds, the Apple iPad puts Textbooks, the Internet, and More, Right in the Palm of Students’ Hands for Less than a Laptop.

To sum it all up:

1. Before we adopt the iPad, we need to touch, feel and play with this device… now! 60-days is too long a time to wait, and when it is finally available, early adopters will try it, and buy it.

2. If it indeed feels right… if we feel and get the “magic,” then iPad will be successful… over time. Keys to success will be segmenting the market and adopting a chasm/beach head focused marketing strategy with clear and compelling reasons to buy, which aren’t even close to being defined yet.

Have fun Steve!