Posts Tagged ‘consumer’

The Tesla Model S… Marketing and Innovation Together Means Stunning Success.

April 9, 2012

Even though the tepid response to current all-electric vehicles like the Chevy Volt and Nissan Leaf indicate otherwise.

Here is quick review of the state of electric vehicles, as of Spring 2012…

“General Motors has temporarily suspended production of the plug-in electric Chevy Volt because of low sales. Nissan’s all-electric Leaf is struggling in the market. A number of start-up electric vehicle and battery companies have folded. And the federal government has slowed its multibillion-dollar program of support for advanced technology vehicles in the face of market setbacks and heavy political criticism.” – NY Times, The Electric Car Unplugged, March 24, 2012

A number of years ago, a friend turned me on to a quote by Peter Drucker that goes something like this… “The two drivers of business growth are Innovation and… Marketing.” This got to me and is a big reason I chose to get in the game of marketing way back when.

At our core, we are a big fan of “new stuff.” We love the challenge of taking new ideas to market, of creating or exploiting demand for products people don’t even know they want, need or love yet.

You Say You Got a Revolution!

In this regard, today is a feast for marketers with a taste for taking innovation on. That’s because we are living in a period of radical change powered by exponential growth of a variety of enabling capabilities. The most notable example perhaps is Moore’s Law and how the number of transistors on a chip have been doubling every 18-months since 1965. Starting gradually, almost flat, after enough doubling, the curve starts to climb and then goes like an elevator straight up if this compounding effect can be maintained.

There are a number of other enabling technologies entering this supercharged phase simultaneously including Bandwidth, Storage and Information creation itself as indicated by the Digital Universe Study conducted by IDC in association with storage leader EMC will attest.

The Potential of Innovation: A Vacuum Effect That Pulls Innovation Forward

Add it all up and we are living in a revolutionary period that is driving the Potential of Innovation, on the grandest scale.

What do we mean here by Potential of Innovation? Simply put, it’s when a Capability has entered the latter or steepest phase of the exponential growth, and the deployment or Utilization of this potential is lagging well behind, as the chart above indicates.

Over the years I have heard technologists describe this gap as a vacuum, a vacuum that by its very nature must be filled… and from what I can tell, the best of what fills this empty space can be boiled down to vision, creativity and innovation.

One company that to us most exemplifies these characteristics is Tesla Motors and most especially the Model S, their new vehicle that is now gearing up for production. With over 7,000 advance orders already on the books for this gorgeous pure electric vehicle, we believe the Tesla S will be a game changer and the first vehicle to truly fulfill the promise of widespread adoption of a car that is not powered in any way by the internal combustion engine, New York Times notwithstanding.

Here’s why?

Again and again we hear about energy efficiency and “green values” relative to the environment and planet we all live in. There is no doubt there is a much higher level of consciousness than ever before. The only problem is, although we may expect or want companies to be good environmental citizens and follow best practices, we as consumers don’t necessarily want to pay extra for it. And for all the talk about energy-efficient cars, the reason we don’t have them now is that customers traditionally follow the money… lower gas prices means we accept the status quo, high prices mean that we cut back. In other words we cut down consumption when fuel cost is high, but invariably resort to our old gas guzzling ways when prices go down with no real alterations made to efficiency standards.

Electric Vehicles: Niche Category…

What this means is that true electric cars appeal by definition to the niche we call Early Adopters, who are into energy efficiency and green tech because they believe in it and are quite willing to pay extra and buy before anyone else to support this belief. And Hybrids? These vehicles aren’t disruptive in any way except that they get good and often great gas mileage. They do prove however there is an audience for energy-efficient products.

This is what makes what Tesla is doing very interesting.

Tesla’s first car the Roadster has been on the market for a couple of years and has sold, if the public account is accurate, around 10,000 vehicles at $100,000 each. These cars are not only pure electric, they are also a very fast, super premium product. In other words, the Roadster is a high performance (0 to 60 miles per hour in 3.6 seconds) sports car that can perform in a league with a Ferrari or a Porsche, that just happens to be electric.

As far as markets go, this is an extremely limited audience by any measure. However, the Roadster is a clever first step from a strategic marketing perspective, as it begins to alter the accepted perception that electric cars by definition don’t measure up to those powered by internal combustion engines.

One of the other objections to electric vehicles overall is that they necessitate new driving habits and expectations that American car buyers have been slow to accept, if at all. The perception is that electric cars are slow, don’t drive as well, cost more than they are worth, and what’s worse, make driving a structured activity posing the risk that the batteries may run out of juice mid trip. This is not a recipe for wide-spread adoption in the US market, certainly.

You can see this reality playing out right now with the Chevy Volt:

“Volt offers the fuel efficiency and forward-thinking you’d expect from Chevrolet.”

The Volt has a range of approximately 35 miles, when the gasoline powered generation system kicks in, so drivers don’t have to worry about getting stuck. It doesn’t look bad, but politics notwithstanding, with a pure electric range of 35 miles a charge, it is compromised and production has stopped, at least for now.

“the new car. 100% electric. zero gas. zero tailpipe.”

And then there is the Nissan Leaf.

The Leaf looks funny, and with a range of 65 miles seems too complex and different for the mainstream car buyer. Again, this is a compromised driving experience, something only an early adopter electric car buyer could and would love.

… Or Mainstream?

The Tesla S is clearly different.

Tesla Model S: Another Vehicle Entirely…

As you can see it’s beautiful. I’d put it next to a Lexus, Mercedes or Infiniti anytime. It also boasts great performance for a luxury sedan (0 to 60 in 5.6 seconds), can go up to 300 miles on one charge, and because the drive train is all-electric, it opens up cabin space and also lowers the center of gravity for a great driving experience. In other words Tesla S is great luxury sedan designed from the ground up that is electric and not the other way around.

In fact, most drivers can get back and forth to work for a week on one charge.

Marketing is a Key Enabler

The question now is, how can we position this vehicle so that the mainstream car buyer get’s it?  As it turns out Marketing has a set of tools that can help us figure it out.

Here is the current positioning from an outside looking in point of view:

Tesla is beautiful luxury car that performs better than any other sedan on the market, including Mercedes, Lexus or Infiniti. It (base model) costs $50,000 gets up to 300 miles a charge, costs a few hundred dollars a year to run and is all-electric.

This can be reflected in Tesla’s own taglines:

  • Performance for the 21st Century
  • Electric from the Ground Up
  • Zero Emissions. Zero Compromises.

Not bad…

The issue here is these core positioning tag lines are not connected directly, and the umbrella line of “Performance for the 21st Century” forces us to define what that means to us. And since there is no “Mainstreet” context for reference,  the “Electric from the Ground Up” with “Zero Emissions and Zero Compromises” then is clearly focused to Early Adopters, which is fine except that it misdirects the overall value proposition away from the mainstream audience and dilutes the position that is inherent to the product to engage the larger “Majority” audience and therefore fulfill its true sales potential.

Positioning for Success

Let’s use our double vector model to break this apart and see what we can do re-position the Tesla Model S for even greater success.

Vector #1: Luxury Sedans

In this case, the Market Alternative is Luxury Cars.

The singular “value vector” in red comes down to best luxury performance in a world dominated by leading brands such as Lexus, Mercedes and Infiniti among others.

With a gorgeous bottom to top design with acceleration from 0-60 in 5.3 seconds and amazing handling, the Tesla S can clearly outperform its gas-powered luxury sedan counterparts.

Vector #2: Electric Cars.

As we can see, there are some stunning differences especially related to design, but here we are looking for a more logical or mental key difference, and what really sticks out is the range. Model S gets up to 300 miles a charge, the others not even close. The Volt goes so far as to integrate a gasoline powered generator that kicks in after 30 miles, but that is an obvious compromise. Tesla does not compromise here. This is where Tesla’s no compromise position noted above obviously comes from.

“X” Marks THE Position… Where Differentiation Matters

Add the two up and Tesla can now make a statement like this:

Add it all up: The Tesla S is designed from the ground up to be a beautiful luxury sedan that just happens to be all-electric. And because we make no compromises, Tesla S not only outperforms any gas-powered sedan in terms of pick up and handling, it also gets up to 300 miles a charge so you drive everyday and never fill up at the pumps again.

Now let’s revisit our tag lines:

Nissan Leaf boils it down this way – “the new car. 100% electric. zero gas. zero tailpipe.”

Chevy Volt – “Volt offers the fuel efficiency and forward-thinking you’d expect from Chevrolet.”

Tesla Model S – THE Luxury driving experience with no compromises, no emissions and up to 300 miles per charge.

Bottom Line: Now, what car do you want to buy? And I am not just directing this question to Early Adopters, who will validate the product, but mainstream car buyers who will elevate this 21st Century Silicon Valley startup into a real player on the auto manufacturing stage with a product category that for the moment at least, is given up as lost.

Marketing and Innovation: Where Everything IS Possible

On one level this is monumental achievement, but for someone like Tesla’s Elon Musk, whose other company SpaceX actually launches stuff into orbit around the earth, this is a manageable task. Tesla clearly demonstrates that when marketing and innovation come together, everything is possible.

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.

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.

iPhone 4 Static: Does “Fuzzy” Reception Kill the Golden Goose?

July 14, 2010

There has been a lot of media noise over the past week or so about the “antenna/reception issue” on the new iPhone 4.

This is exactly the kind of thing the precipitates the boundary between Early Adopter and Early Majority on the Product Adoption Lifecycle.

Early Adopters are willing to put up with a host of issues that may arise in order to get their hands on the new product as soon as possible. If there is a bug or two, which is often the case with a new version, so be it. Being one of the first to have such a device more than makes up for any inconvenience, which in many cases is expected.

Mainstream Early Majority buyers on the other hand, are a different breed. They don’t like experiments or issues. They want a “baked” product that works as expected.

As we have discussed in the past, they buy when their peers or friends buy, and they naturally gravitate to the category leader. They want the “one” and reward leadership by being willing to pay a premium for it. If there is an issue in the early phases… they do what comes naturally. They wait until everything is sorted out!

Consumer Reports Downgrades iPhone 4

Apple’s initial public position is the issue is a software issue, and a fix is on the way. Yesterday (July 13, 2010), as reported in the Wall Street Journal and other publications around the world, Consumer Reports reported that the problem is intrinsic to the design and amounts to a hardware issue that apparently can be fixed with a piece of duct tape in the right place. In response they downgraded their rating of this “hot” product to “not recommended.”

Is this Issue an iPhone Killer?

We doubt it. Remember the first iPhone launch? I had a client who waited in line (actually he had his assistant do it) for hours and hours to get his hands on one. And then for almost a week, he literally pranced around the office showing the device off. He was in heaven. And then, weeks later Apple dropped the price a couple of hundred bucks!

The joy quickly turned to fury and anger. He knew the price would inevitably drop but didn’t expect to blind-sided by such a move for many months. Suddenly his joy didn’t seem like such a good deal. He was right too. Ah the perils of Early Adopter-hood!

To it’s credit, Apple quickly got the message too, and quite smartly offered these early buyers $100 Apple Gift Cards, and the smile quickly returned to my boss’s face.  Just what he wanted, another trip to the Apple Store!

Bottom line. He expected such a move, but later. And Apple acted, after the problem blew up. In the end, sales kept taking off and we know the rest.

It Comes with the Territory

In many ways the situation is similar here. Early Adopters know this kind of thing happens .

We also fully expect Apple will fix the problem. It’s intrinsic to the brand. Other computer makers often force customers to put up with “known issues.” Unlike these more “commodity”-like companies, Apple is premium brand, and we fully expect the problem will be fixed to Consumer Reports’ satisfaction.

Once this happens, Consumer Reports, which in general was quite positive about the device overall, will recommend the product again. The brand connection with customers will be strengthened as consumers worldwide see that the Apple stands by it’s products as expected and the Early Majority will jump in once the dust settles.

Now if they would just open up the iPhone in the US to other carriers!!!!!

Marketing The New Gillette Pro Glide: From a Positioning Perspective, Is this The Best A Man Can Get?

July 11, 2010

Today we will explore how we can use positioning best practice to engage the full range of the product adoption lifecycle simultaneously in order to:

  1. Capture the larger Early Majority segment
  2. Extend the reach to the Late Majority/Commodity buyer at the same time
  3. Provide a compelling value proposition and pathway to convert many of these commodity customers into more profitable premium buyers
  4. Lift the whole product category.

I have to admit it. When it comes to Gillette razors, I am a classic early adopter. I just have to get their latest and greatest right away. Why?

Maybe it goes back to when I was a kid. I remember watching my dad shave in amazement morning after morning. Such an arcane process that never seemed to change: shaking up his can of Foamy and slathering that creamy stuff all over his face. And then the razor. The heavy chrome handle that would pop open by turning a knob on the bottom. Slide in a Super Blue from the special dispenser, twist the handle closed and then let the shave begin. When completed he’d sprinkle Aqua Velva on his hands and slap it on. Done!

I also remember feeling his face. He had a heavy, scratchy beard, something I inherited. After the shave, his face felt smooth as glass.

Is it any wonder that at 10, I desperately wanted to shave too. Dad would always say, no rush, no rush. It really isn’t fun. And if you don’t do it right… ouch. I remember those little dabs or two of toilet paper on his face to staunch the bleeding on a bad day.

As you can see, there is deep connection I have with the process and the Gillette brand that transcends the actual experience itself and sets me up as a classic Early Adopter in this category.

In this light I recently found myself excited when Gillette announced that it’s latest and greatest Fusion Pro Glide System featuring 5 thinner blades with a special low resistance coating and a suspension system that would eliminate that pesky tug and pull. I couldn’t wait. My excitement mounted as the launch day, June 8, 2010 approached.

Needless to say, I got one right away and the product does not disappoint. It’s awesome! It really feels like the razor is literally gliding as I shave, and afterwards my face, well it feels smooth as “glass,” even smoother than my Dad’s.

The Right Message for the Wrong Audience?

Now regarding the marketing… Yes, it’s slick, it’s integrated… And it’s old hat. Not to say that this is bad. Or not effective, at least as far as it goes. After all, the previous flagship blade in the Gillette line, Fusion with its Turbo style imagery, was the most popular razor in the world. But is there more?

Here is a screen capture of Gillette’s today.

As you can see, in the current state, the message is all about the product and its features and the primary message is turning Shaving into Gliding. As an Early Adopter, see arrow, I am sold. And in truth, it didn’t matter what the claim or message, I was sold even before the blades hit the market.

It All Comes Down to Connecting the Dots

The goal in positioning is to connect dots and answer questions for the customer, not pose them. And as we have learned from Apple and other marketing virtuoso’s, linier time as far as the Product Adoption Lifecycle goes is often a self-imposed obstacle. So why wait if you don’t have to, especially when there is so much at stake on a global scale?

With this in mind, and stepping outside of my Early Adopter mindset, what do we see with Gillette’s Fusion Pro Glide?

Product Lifecycle: A Quick Review

Just to make sure we are all on the same page, here is the famous Product Lifecycle bell curve made famous in Geoffrey Moore’s landmark book Crossing the Chasm.

Early Adopters like me love a product and it’s features. We are not price sensitive and are always on a quest, in this case, for a better shave. We have to have the latest and greatest right away.

However, Early and Late Majority buyers, where the heart of the lifecycle (and greatest profits) resides, have no interest in product features.

The Early Majority is concerned with “what does the product do for me” coupled with market leadership and peer adoption. If my friends buy, so will I. These buyers are also willing to pay a premium for the acknowledged leader.

The Late Majority is concerned about price… getting the product for the lowest price. They also don’t want to be bothered with the rest.

Positioning to Win for Maximum Impact

As we all know, Proctor and Gamble, Gillette’s parent company, is a brand and marketing powerhouse. And Gillette is an established market leader in the razor space and has been so for decades.

This means that a big part what it takes to capture and exploit the Early Majority is in place already with brand leadership and millions of satisfied users around the globe.

In it’s current state, you can see that the current product messaging is actually talking to Early Adopters, NOT the Majorities. The marketing question is, is this it for now, or is there more we can do to exploit the new Fusion Pro Glide product?

If we look at positioning best practice, the answer is yes!

Here’s a structural model of how this can work (by segment):

1. Early Majority

A. Leadership
These buyers appreciate and will pay a premium for the leading product in the category, making this is a clear sweet spot for this particular product now.

As mentioned earlier, the key to effective positioning here is connecting the “what’s in it for me?” question in the clearest terms possible that yields maximum results. In this case, Gillette has opted for a “Turn Shaving Into Gliding” message, which begs the question, “What does Gliding mean?” It glides, perhaps, but so what? What does Gliding do for me?

And yet buried deep in the current presentation, there is an answer… all the wonderful product features, YouTube videos, NASCAR endorsements, and Dream Job promotions are designed, perhaps indirectly to support the message that Fusion Pro Glide delivers “Gillette’s most comfortable shave ever.”

That’s what Early Majority buyers looking for. Now we get it! The big benefit, the compelling reason to buy. It was there, but buried by the Gliding message. All we need to do is call this message out front and center. And if you want to be slick about it, again from the current messaging, add… “Guaranteed.”

Roll it all up, here is what’s in it for the Early Majority buyer. Pro Glide Fusion is: Gillette’s most comfortable shave ever. Guaranteed.


B. Peer Influence
The next element to drive this segment is peer influence. “Do my friends have it, and do they like it. If so, I want one!” This is where endorsements fit. Gillette is a master of professional endorsements and has been so for decades. Today it’s in the form of NASCAR personalities and the “Young Guns” Challenge.

Even more interestingly perhaps is Gillette has begun to masterfully use social networks to get the “every man” endorsements that most likely will be more important as a marketing activity moving forward.  It takes a lot of guts to surrender control, which is essential for authenticity to address “Do guys like “me” use it, love it, etc.”

This is where Early Adopters come in. If we love the product, we are natural advocates and influencers, and can be one of these authentic  guys “like me” who heartily recommend the product to our “Johnny come lately” friends. What we need is some help or incentives to voice our feelings. In other words a promotion.

Example:
Right now men are invited to vote for their favorite “NASCAR “Young Gun.” The winning driver gets to donate $10,000 to their favorite charity. What do we get? How about adding a Win Blades for Life! premium? This could be for the vote if the person registers. And if we are looking for real endorsements by real men, it could be for submitting the funniest Pro Glide testimonial. And the prize, along with the charity donation could be presented to the winner at say, a NASCAR event.

2. Late Majority

Research I found seems to indicate support my Dad’s feelings about shaving. It is a necessary evil, something we have to do due for social conventions, but inconvenient at best. This attitude sets up commodity-style, low-price “just get it over with” thinking.

As it stands, Gillette has a dizzying array of lower cost blades and razors from earlier category leaders Fusion and Mach 3 to a whole slew of disposables. “Dizzying” is the operative word. Extremely complex.

What we need here is a clear roadmap of products, perhaps broken down into 1. blades and 2. disposables from Good to Better and Pro Glide in the role of BEST… with a blade price of “lowest” to “more” to “most” expensive. Your Choice.

And since Fusion Pro Glides fit in millions of Fusion handles already in the market, it is easy to slip in a free blade and coupon for later purchase in the package to engage these established buyers and get them into the pipeline.  We have to assume this is in the works already.

3. The Best A Man Can Get: Positioned for Growth Across the Lifecycle

If we go back to Gillette’s core brand, we can see we have the platform we need to cut across the whole razor line… “the best a man can get.” I was surprised to see that it is still alive and core… embedded right in the logo treatment itself. As one would expect with a brand of this caliber, it was like seeing an old friend. Powerful indeed.

This offers up a value platform with the opportunity to move customers up the ladder from “cheap” to Better and Best products and from a commodity buyer to a premium one. I call this Marketing JuJitsu. Here is where positioning focused on costs per shave and other metrics commodity buyers think about can come into play to demonstrate brand value to the these buyers too.

Example:
Let’s assume we can get two-weeks of shaves out of one Fusion Pro Glide blade. (Note: I have gotten up to four weeks, even with my heavy beard). Two weeks of comfortable shaves at $3 per blade equals approximately $.21 per shave. Let’s assume you can buy a disposable for $.20 per razor that safely delivers a shave, or two. Now the value proposition to this segment can be turned around to something like…

“For just pennies extra a day you can move up to Gillette’s closest, most comfortable shave. Take the challenge to see and feel the difference for yourself. Low(est) cost and most comfort from Gillette… The Best A Man Can Get.”

Here is what the structure looks like all together with above.

As you can see, now we have a Strategic Framework capable of positioning Fusion Pro Glide in multiple segments across the Lifecycle simultaneously under the Best A Man Can Get Brand Platform:

  1. Early Adopter with Glide
  2. Early Majority with Comfort
  3. Convert Early Adopters to Influencers building on incentives and promotions
  4. Create simple and understandable tiers of lower cost products for Late Majority
  5. Drive a Cost per Shave Value Message and convert Commodity into Premium buyers


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.

Toyota and Tiger… Brand Collapse or Rebirth or Both?

March 25, 2010

We have all heard the news…. 8+ million Toyota automobiles are recalled due to a variety of malfunctions; and everything and more than we wanted to know about the many loves of Dobie Gillis… oops, I mean Tiger Woods.

Toyota, a brand synonymous with quality and reliability for decades appears to be imploding right before our eyes. Their war room/siege mentality, ready to rebut “any and all” negative customer comments strategy does not resonate with the public or in any way appear authentic. Whether it’s the floor mats, the gas pedal or of course, customer error, yes, the company is sorry, so sorry for injury or death. Software, hardware issues? Apparently Toyota can’t replicate some of these problems, therefore it appears they do not exist, or isn’t it our fault anyway?

And does this calm our fears?, and support the brand promise of quality and reliability?

I don’t know about you, but I feel a deep and shocking sense of uncertainty with Toyota’s response. And I own two Camry’s, although of a vintage before these apparently unstable “drive-by-wire” electronic technologies we adopted. Yikes!

Talk about a brand conflict, reliability versus uncertainty.

This is a huge problem for Toyota. And a major inconvenience at best for customers worldwide. We have to bring our cars in for a fix we aren’t sure will solve the problem. Oh, and now what about the resale value of these cars? Toyota was noted for high resale value… who wants to buy a used and potentially unsafe Toyota now at any price? Not me! You?

And if that isn’t enough, Toyota appears to be diddling. You can sense it, and as some of their internal e-mails we hear about attest, their approach is to delay, stall and of course, minimize the cost of the damage.

Their ads add insult to injury. “Thanks for sticking by us,” they intone… and to “thank you, we are offering incentives like 0% financing so you can buy a new one.”

Just what I want! Even though you, Toyota can’t replicate them, these issues may still exist. People have died, cars have very publically careened out of control for who knows why, and resale value at least for now has gone down the tubes. And to top it all off, I have to suffer the inconvenience to bring in my car to get a fix that may or may not take care of the problem, and you thank me by trying to sell me a new car!

This is outrageous and insulting. Add it all up and what this says to me is that Toyota has lost touch with the power of their brand. And such moves like these are damaging it, perhaps permanently.

Tiger has a similar problem. Although perhaps not on the same scale as Toyota, he is a very public, well known brand, like it or not, and a multinational one at that. For many people Tiger is golf itself and a $ multi-billion corporation burnished with a champion’s glow…. He and his handlers positioned him as a problem-solving icon able to take on and beat any challenge that may come his way. Until now.

We now know this is may, I repeat may, be limited to the golf course and in the “perception is reality” world of brand recognition, but certainly not in real life.

I will argue that Tiger’s final lot as a brand is not yet set in the public mind. Yes, he is certainly human, a junk yard dog perhaps, but is this unusual? And yes, a number of high profile sponsors like Gillette and Accenture have pulled away.

Questions still linger that if answered authentically and humanly, could likely restore his brand image to be even more powerful than before.

Here’s how.

Tiger himself proclaimed at his highly staged news conference a few weeks ago that he thought he was above it all and could behave as he wished… that the rules the rest of us follow didn’t apply to him.

He also told us that he understands the hurt he has caused and the error of his ways and that he will do what it takes to be a better person. Great stagecraft!, and positioning…. I am working hard to be a better person. Who can throw the first stone with such a revelation?

So that is where we are.

Two powerful brands under attack, one disintegrating right before our eyes, the other, a work in progress, the jury still out. What kind of marketing thinking and strategy could be applied to turn these brand conflicts around?

Let’s look at Toyota first.

Toyota’s issue is that they appear to be self-absorbed and cheap, focused on cost containment and damage control, going so far as to lay the blame on those pesky customers that are us.

This is not the time for that type of non-marketing approach by an automobile company. Audi famously blamed their customers in the 80’s for cars that apparently shifted into gear on their own. They had to change the names of their models and literally re-build demand for their vehicles from scratch, a costly process that took them out of the game for years.

In this case, assuming Toyota is doing everything in its power to solve the issues, known and unknown, the company needs to remember that it’s the brand connection and it’s relationship with customers that matters most. That is where real long term value is.

I am not privy to the details but over time, the value of the Toyota brand, as the perhaps soon to be world’s former #1 auto maker, has to be in the $ hundreds of billions, or even more.

From an integrated, marketing to win perspective, Toyota needs to take a two-pronged, pedal to the metal communications approach:

1. Reassuring the public that the cars are safe, and

2. Acknowledging customers’ inconvenience and uncertainty along with the hassles of bringing cars to the shop entails.

In other words, they need to be bold in terms of solutions, it will cost, and the investment is worth it!

As far as reassurance is concerned, good news or bad, in today’s instant, social media world, transparency is essential. Customers need to be in the loop to see for ourselves what the company is doing to make us safe again.

It easy today to take us the labs and testing grounds, give us Q&A and other access to the engineers and scientists, etc. Let us see that no stone is being left unturned and at the same time show us the operational excellence the company is famous for, in action.

And as far as customer inconvenience is concerned, Toyota needs to honor the value of our time, let alone the anxiety we feel, and understand it in the context of brand value as well.

Once understood, the company then needs to then honor us with something tangible. That means, Toyota if you are listening, setting up drive in check stations for all post 2002 cars and then, give us something in return like a free oil change or service, something of value that honestly recognizes the value of our time and our loyalty. Giving to receive is the operative principle here.

I can tell you now, that a great deal on a new Toyota feels cynical and indeed is NOT it! And if they were clever, perhaps Toyota could partner up with say a Sirius/XM or other outside entity and offer a free 3-month subscription or something like that… because “you care… care about us, your valued customers!”

On the Tiger front.

His solution is a bit more under his personal control, but no less impactful. He can no longer claim the cover of privacy to be left alone… the genie is out of the bottle and won’t fit back in. And yes, just like the Wizard of Oz, we now have peered at the man behind the curtain, and see all too well that he is human like the rest of us.

Now that Tiger is off the pedestal and the announcement has been made that he will indeed play at the upcoming Masters Tournament, it comes to two things again:

1. His performance on the course, and

2. His performance on the course.

What do I mean?

On one level, we will expect him to play well and perhaps even win. He is to many, Golf after all. But we also expect that he has learned from his self-induced embarrassment, that he is, in fact, in the process of becoming that better person. This means that no, we don’t necessarily want him to be more approachable, but we need to know he can perform in this “better,” more realistic and human manner.

So how does this play out?

First, that he handles the catcalls, the embarrassing hoots, questions and other assorted unscripted realities that will inevitably come his way with humor and poise. That he not dodge but roll with it in a manner befitting a champion. In other words, the focus and drive (no pun intended!) that has made him the champion he is, also extends to his personal improvement, and that he is a winner here too.

If he does a Brat Pack-type, moody thing and wrap a club or two around a tree or smash a camera, punch someone out or otherwise behave poorly, or that he sets up an impenetrable barrier so no one can get near and utter a bad word, he will be positioned by his own actions as an arrogant “bad person” which will forever tarnish the best golfer, iconic status that he has already achieved.

If you don’t believe me, remember 2004 presidential candidate Senator John Kerry? Like him or hate him, that wishy-washy answer he gave at the Grand Canyon regarding whether he would change his vote for sending troops to Iraq, knowing the original premise of “Weapons of Mass Destruction” was inaccurate, forever labeled him as… well you know, a Flip Flopper, irrespective of his many impressive achievements.

The jury is still out on this one, at least for the moment. One thing is certain, the embarrassment and hurt will fade over time, but the position he takes and fosters in the public eye through his next set of actions will stick, and the choice in the end will be his. So what will it be, great golfer and jerk, or very human champ for the ages. What would you choose?

And I will guess that if Tiger does take the high road and shows us he has or is mastering his demons like he has mastered his sport, will Accenture, Gillette and other more lucrative sponsorships be far behind? It is clear that the “championship, do anything image” would be more real this time, and well earned to boot.

Move forward Toyota… Go get ‘em Tiger!

Starbucks… Back to the same old Grind???

December 17, 2009

Recently Starbucks launched its VIA Instant Coffee product, for $1 a packet or cup. When I first heard about it, I thought they were crazy! Here you have a true category creator, in this case premium coffee, coming up with what to many is a downscale, basically commodity type of product. Look at it this way, currently you can get a 20 ounce cup (“venti”) for over $2 today in the Boston area where I live, or you can get a cup of instant (Nescafe and even Tasters’ Choice) for pennies.

Is there a difference in taste? You bet. Then does this mean that Starbucks is lowering its standards?, in essence looking to capture that “cup of joe” on the run crowd?, probably not, at least directly for a $1 a packet.

To most of us Starbucks means affordable luxury, infinite choices, the third-place on top of home and office, “Venti” and “Grande” instead of large and jumbo, rich flavored beverages, etc. How does this square with a product category that we associate as bland, chemically adulterated, “instant” coffee…

The danger here is if we associate VIA as an instant coffee product. If it comes down to price, it is very expensive. And if it is not positioned strategically, then the “instant” product can take the Starbucks brand down a notch or two. Talk about a potentially very dangerous brand conflict in the works!

If customers begin to associate a premium brand with a commodity product, the risks are:

  1. elevating the commodity product while at the same time lowering your brand value, and/or
  2. trying to swim upstream and justify an off the charts price against other much cheaper products in the, in this case, instant coffee category.

A mis-fire and at best the product will fail with worse consequences possible if people sense that brand is deteriorating and losing value.  Talk about high risk and high stakes.

And Starbucks has muffed it before.

Remember how in their zeal to speed up service they mechanized the bar drink process in order to serve more customers more efficiently? They reduced the hand crafted nature of the beverage and role of the barrista. This opened the door for potent “new” competitors such as Dunkin Donuts and even McDonald’s to leverage mechanical processes and also offer such beverages, enter the premium category and take market share.

Add to this that the company has taken what appears from the outside to be a passive marketing posture these past few years with flattening sales to boot, and I wondered how they could pull this off.

Glad to say, Starbucks did it… and did it with superb marketing intelligence!

You could see this high level of marketing thinking in the launch itself.

If you are a Starbucks fan you may remember that this past fall they had VIA tastings in each store as part of the rollout. The interesting thing was what they tasted VIA against. My initial thought was that they would taste against Instant Coffee to show how much better (hopefully!) it was.

But instead they did something completely different… they tasted and literally positioned VIA against Starbucks brewed coffee itself and used Instant to define convenience, not the category.

I will argue that this was a stroke of marketing genius. Here’s why.

  1. They redefined the instant coffee category into Blue Ocean, uncontested territory, from a low price/commodity play to convenience… take it anywhere.
  2. Instead of trying to push up market in the instant coffee category ($1/cup price for a product costing in the pennies), they pushed down in the brewed category (Starbucks flavor for $1/cup).

Roll it all up and with VIA now you can now have a cup of Starbucks you can take or have almost anywhere for a buck! Sounds good to me, and tastes good too! Apply marketing at this level to the company overall, well Happy Days may indeed be back at Starbucks again.

HULU Contemplates a Lulu

December 6, 2009

OK. This harkens back to those internet “go-go” days of the late 90s – get first-mover advantage and scale and the money will follow. Sounds like the script for the movie Field of Dreams… “build a better product and the customers will come,” which as a marketer often working in the tech sector, is a line I hear all too often.

If what I just read in Business Week (“HULU’s Tough Choices”, Dec. 7, 2009) is any indication, HULU, the very popular free video streaming site with 40 million downloads per month (second only to You Tube) has run up a $35 million annual loss and is suffering just such a fate as the web bubble did.

HULU is not just an ordinary site. Funded in part by NBC, Fox and ABC, HULU was the film/video industry’s response to the technological disruption of FREE that had obliterated the music industry and with the prevalence of cheap bandwidth and storage, was heading it’s way. They saw how the music industry not only lost control of the new now dominant digital distribution channels but also found itself rendered obsolete, and did not wish to suffer the same fate.

One of the experiments put forward was HULU and lo and behold, I can get yesterday’s episode of 30 Rock and all sorts of video and film content on demand (1,700 titles) playable on my computer any time I want. And with WiFi-enabled LCD flat screens upon us, let alone the ever easier ability to integrate TVs into our home networks, this free content on your HiDef TV is nearly a reality. Or is it?

If the Business Week article is to be believed, the era of premium content at HULU is upon us. In other words, content we will have to pay for. And what is to be the price for this content? Your premium cable service!

Wow! Let me see if I have this right. Here comes this disruptive force of free streaming video content sponsored by the broadcast and film industry. It’s ad supported model is not really sustainable, at least right now. So yes, those happy days of free content appear to be coming to an end. And now the industry in its wisdom is telling us we may have to pay, and the way we will pay is in support of the what were soon to be disintermediated cable TV interests!

I mean after all, do we need cable anymore if a thriving online channel is delivering this content through our medium of choice through our server, versus the cable box? I guess the cable industry saw the handwriting on the wall too and isn’t about to go quietly into the night.

We could spend all day trying to figure this out. Is the Comcast acquisition of Universal (and NBC) from GE a factor in this equation? I will leave this to others to decipher.

My beat is marketing, and the question on the marketing side is, is this the best you can do, HULU? You have built a brand, you have scale, you have content and now you want to punt, snatching defeat from the jaws of victory while the experiment is in process? What a waste for you and the viewers who love you, and if my students are any indication, many do.

We all know that it is one thing to point out problems, another to pose solutions. Marketing is all about solutions, so let’s see what we can come up to get HULU out of this mess, knowing their ad model as currently in play isn’t sustainable.

Recommendation #1.
Up the value of the advertising.

How so?

As I see it from the outside, HULU has been a pioneer of offering choice to visitors? Watch the long ad and see the show uninterrupted… or choose the shorter ads sprinkled throughout. This is a great start.

How about going further and offer viewers even more choice? Offer a menu of ads by type and even product. Let the viewer self-select their ads of interest.

You can be high or low tech about it too. Low tech… base the ad offerings by the show, or if you want to be more slick, apply behavioral information to narrow down the choices based on each visitor’s clicking habits.

How does this improve value?

  1. You are empowering your viewers with more, not less control
  2. Ads are more relevant as a result
  3. And in doing so, viewers actually act and “raise their hands,” which direct marketers know is the most costly and difficult part of the customer acquisition process

What this means is that response and conversion rates should be higher and I will argue in the absence of evidence either way, at least worthy of testing. And should indeed response/conversion rates improve, the value of the advertising will go up and command a higher premium.

And one other point. Advertisers could be charged based on actual visitor selection and or performance. If viewers don’t click, they don’t pay. And when visitors do engage, they pay more. Integrate some interactive promotions and calls to action for those that do select and powerful interactions can take place.

Recommendation #2:
HULU Ju Jitsu

I see HULU as more than a platform for streaming video… free streaming video on demand. I call it a Network of One. It is our own personal Video network, programmed by us just the way we want it, with the content we love, when we want it and hopefully soon, where we want it too.

The motor that has driven it’s success to date as the second most visited source of streaming video content is the fact that it is free. Don’t kill it! Use it! Since Fox, NBC and ABC are principals, create premium content that bring fans closer to the shows, films and actors they love with interviews, webcasts, blogs, tweets, contests, and even closer interactions and behind the scenes access. Create opportunities and other reasons to join fan clubs and other communities and pay for the privilege based on the degree of proximity and interaction.

Peel off some percentage of 40 million for tiered service and subscription packages that supplement the free streaming content, and some interesting numbers come into play. 1% of 40 million is 400,000 prospective customers. Find reasons to get them to pay up to say $100 per year for something special above the free content… well you get the idea.

For one thing, HULU is no longer operating at a deficit. Up the percentages… every .1% is 40,000 customers afterall, and the return can be even more radical. Personally, I would love the opportunity to win a lunch with Tina Fey, a comedic genius if there ever was one.

The “Bucks” Ends Here…

June 10, 2008

One of the core principles of our 5 Laws at Marketing 2.0 Win is the Law of Process = Chaos. What this principle says is in simple terms is that process in the service of strategy is a good thing, however if it is the driver or central organizing principle of a company’s marketing or in this case public face, take care, take very good care.

We can see this playing out on a grande scale right in front of our eyes with coffee giant Starbucks. After an incredible run of phenomenal growth on a global scale, we see the symptoms… declining stock price and unhappy investors clamoring for relief, bringing visionary Howard Schultz back into the CEO role at the company. His self proclaimed goal… to help the company get back to its core… the coffee/community experience that in today’s Starbucks’ corporatized environment seems lost.

How? Howard himself gave us a couple of examples… of this disconnection: fresh-locked packaging, where you can’t smell the product anymore. And “goof proof” espresso machines. Machines that make it simple and fast to “build” a specialty drink, while put a wall between the customer and barrista and taking the artistry out of the drink making process.

I agree with that these are customer disconnects. But do they disconnect with the brand that Starbucks is?, enough so, so as to flatten sales in existing stores, like we have seen with Wal Mart, Dell and others?

In this case I am going to argue the answer is NO. The issue is not a brand conflict here.

Yes, these changes matter to some degree… but they are fixable and incremental issues, touch points that need to be aligned, indeed, but not a commodity-busting strategy that they really need to fix the problem.

You can see this in action in the Got a Great Idea/Tell Us, community function that now is front and center on their web site. I love the concept. Surrender control and open up the floor for your customers to offer their insights and then respond back, with action.

Some popular customer generated ideas… Free WiFi, a Loyalty card (buy 10/get one free) and others are incremental ideas… and sound hardly new or radical. My advice… implement them. However, don’t expect they will turn the tide.

The real issue is that the Starbucks concept is now approaching the mature phase of the product lifecycle, as these ideas so clearly demonstrate. The reality is that the Starbuck’s concept is now a commodity, which in fact the company with its “goof proof” drink making process helped bring about. This means that price, lower price and greater non-differentiated competition are the business drivers.

Look at it this way. MacDonald’s is now rolling out espresso/specialty drinks. Dunkin Donuts, one of the big winners in the Starbuck’s phenomenon, has been offering these lower cost specialty drinks for the past couple of years. Soon enough it seems every fast food chain will offer them. So now what?

Let’s take a closer look at Dunkin Donuts, because here is where the solution lay. At the outset, I admit it, I am a Starbuck’s regular. It is not my favorite, but with locations it seems at every corner nationwide, Starbucks delivers a consistent and premium product that meets my expectations almost every time.

Last week I offered to make the office coffee run, and one of my colleagues ordered not a Starbuck’s but a Dunkin Donuts coffee, medium vanilla. It was then that my mind was blown.

We know that Dunkin is not a premium coffee but a more everyday product, a blend I am told of Arabica and other less expensive coffees. It is a lower wholesale cost, more generic product. But when I saw the price for the cup at Dunkin which was $1.79 or in essence $.10 less that a similar size Starbuck’s, I was floored… generic product at a premium price! The folks at Dunkin must be smiling all the way to the bank! Thank you Starbuck’s!!!

So Starbuck’s is in an interesting position… its premium product is being attacked by generic products and commoditized… forced to concede on price or lose customers, because as we know, you can get a specialty drink anywhere… for less!

What is Starbucks to do?

Howard Schultz, if you read this… incremental, process-oriented activities focused on your existing customers are good but in fact cannibalizing, because these kinds of activities are pulling revenues from your existing audience. I will argue that the way forward in this case is to reposition Starbucks and counterattack to build market share.

In other words, Loyalty is important, but it comes at a cost and won’t drive growth. Look at it this way, “free WiFi” and “buy 10 get one free” are tactics and I will argue not nearly enough. Nor is “watch the barrista” or “smell the coffee.” Although appropriate, these tactics do not a growth strategy make.

Just as Dunkin and others offer what we can argue is an inferior product at a better price thanks to you, Starbucks now needs to execute a jujitsu strategy and show consumers in simple and clear terms the added value of their premium product over the competition. This is a classic re-positioning strategy.

So… ladies and gentlemen, the drum roll please… time for the Pepsi… ooops, the Starbuck’s challenge. Put your product up against the competition in “blind” tastings and build a campaign around it… Wow! This really is better!

As it stands, an espresso is an espresso is an espresso, and it will stay that way until Starbucks does something about it. That time, I will argue, especially if I was an investor and I am not, is NOW. And by doing so, the company can carve out MacD’s and Dunkin customers who in fact are ready to appreciate the difference premium makes. The key is to connect the dots positioning wise and make it clear to them what this difference is where the rubber meets the road, and for Starbucks that is in what is a better tasting cup of coffee every time.