Posts Tagged ‘disruptive technology’

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.

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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!