Archive for March 2009

« Strategy Insight home page
« Older Entries

Lesson 4: Think Beyond the Obvious

March 30, 2009

When it comes to finding the right market for a product, one of the most important ways to go about this is our fourth lesson, think beyond the obvious.

When I first undertook this project, one of the challenges that I immediately began to “noodle” on was how to build this housewares community. At first blush, it would seem that it would be difficult to identify a specific community for each of the products in the housewares industry. After all, when a product is sold in this industry, the consumers do not register for support or service. It is very difficult to know who purchased a product — let alone what was thought of it.

Applying our fourth lesson made this a relatively easy task.

My wife, Annie, started the process. When it comes to cooking, I consider Annie a subject matter expert. She has taken courses with some accomplished chefs and the food in our home is the best evidence that she has learned quite a bit about the art and science of baking and cooking. She also uses a fair share of gadgets.

Annie explained that in this industry KOLs and communities were everywhere.

Culinary demonstrations at Williams-Sonoma...The Food Network…Chef Central… Rachel Ray’s web site…Epicurious.com…Gourmet Magazine… The Today Show…cool new product presentations…

These are all examples of sites or media or events that cater to people who use houseware products.

Suzy, in our conversation, had mentioned that I should consider all circles of influences. In fact, she pointed out that book clubs, mom’s groups and PTA meetings frequently go off on tangents about life in the home and how to make things easier and better. Another opportunity.

Suzy also reminded me that one of the great ways to access these opportunities to promote houseware products was through the effective use of public relations, which she referred to as free media. I liked this idea because, as you may recall from one of the earlier posts, it had been noted that this industry does not allow for the investment of heavy marketing dollars to create the brand.

While all of this was exciting, there was still one more area that I felt compelled to investigate so I turned on my computer and went to google.com. In the search box, I typed in — “blogs’ and “housewares’ — with quotes around the key words. Naturally, and “obviously” one would expect there to be very few people who write passionately about housewares.

To my surprise Google returned 1,060,000 sites. That’s right, more than a million blogs! This tells us that there are large communities of people who share a fascination about houseware products. Wow! And get this — searching for “blogs and brushes” returned 1,380,000 blogs! (Author’s Note: While there are painter’s brushes and a host of other types of brushes, still many of these blogs related to houseware industry brushes. To further illustrate the point, “blogs” and “brooms”, a category that is more defined, still returned 78,200 blogs)

Suddenly, channeling this interest was very exciting. The ability to create a consumer franchise by leveraging the impact of appropriate on-line advertising, public relations, search engine optimization and web marketing did not look so daunting…

In fact, it was beginning to look so much easier.

Advertisement

Categories: Leadership, Sales, Strategic Plans, Strategy
Tags: , , , , , , , , , , , , , , , , ,

Comments: Be the first to comment

Lesson 3: Know Your Segment, Know Your Category

March 27, 2009

Since Carl had been successful in dramatizing the importance of research, analysis and creativity, the next logical step was to learn how best to perform this activity. To discover more about these techniques, I turned to Suzy who has been a Senior Vice President for many, many years at a global, multinational advertising agency.

Suzy began our conversation by emphasizing the importance of segmentation. Today, more than ever, it is important to segment finely. She explained that selling to someone who loves to create in the kitchen is simply not good enough. For what types of dishes are they specialists? Are they novices or “hard-core” pros at what they do? Are they cooks or bakers?

Once a segment has been defined, you can begin to define the key opinion leaders (KOLs). Inventing the future is always a unique challenge so asking the hard-core baker what would make things easier for them is sometimes not the best way to learn what to invent. Suzy recommended that when interviewing these KOLs, one should try to get them to complain. Ask them what frustrates them in the process and delve deeply. (Is it the rolling pin? The surface?) These types of questions can create great opportunities.

We began to explore more deeply the other elements that go into understanding the target market segment. Suzy explained that a meaningful market research program will discuss the sentimental and emotional aspects that are so integral  to the design and marketing of the product.

Suzy classified this effort in the context of ethnography. Ethnography is founded on the idea that a system’s properties cannot necessarily be accurately understood independently of each other. Context is decisive and so one often needs direct, first-hand observation of daily behavior. This may lead to a discussion about the role of the family and the meaning of home. Such a process may also include participant observation. Sometimes this involves conversations with different levels of formality such as small talk to long in-depth interviews.

In our circumstance, this might mean going into several homes to observe how a housewares product is being used and in what context. While quantitative research can provide data, this type of research creates knowledge founded on intimacy, the connection between the mind and the heart and the way it is manifested in behavior. (These types of interviews are sometimes videotaped and used in campaigns to convince retailers to carry a product because of its emotional value to the consumer.)

All of this knowledge is valuable in so many contexts but none may be more important than this.

Understanding your product and the context within which it is valued allows you to know your product category and once you do, you can develop line extensions across multiple dimensions such as the target segment or whether your product is a time saver, problem solver or part of a suite of solutions that integrate with one another.

When you are very clear about this aspect, you are now ready to begin to build your consumer franchise…which will be the subject of our next post.

Categories: Leadership, Sales, Strategic Plans, Strategy
Tags: , , , , , , , , , , , , , , , , , ,

Comments: Be the first to comment

Lesson 2: The Only Way to Fight the Tyranny of Kings is with Creativity

March 23, 2009

Carl had exposed an interesting point to consider. If indeed this situation had occurred before, there probably would be some lessons to be learned in how these challenges were met in the past.

The solution, he explained, lies in creating a consumer franchise, a brand that is powerful enough to necessitate that the retailers seek your product out and put you in a position where negotiation is from strength. In consumer franchising, the goal is to communicate distinctive brand attributes, develop and reinforce brand identity that is consistent with the image of the brand, build long-term brand preference, encourage repeat purchase and long-term patronage, and engage active consumer involvement.

Put simply, if you are operating in a commodity category, you must bring something unique to the party.

There is, however, significant complexity in our particular challenge. In the housewares industry, there is a low frequency of purchasing items, that is, unlike other items, people do not purchase them again and again or very often. This attribute does not allow for the investment of heavy marketing dollars to create the brand.

Given that constraint, how can a housewares company develop their brand?

According to Carl, one of the most important elements is communication at the point of purchase. There are many factors, including packaging and color that can make the difference in getting consumers to try a product. He referred to this as the “sell-in” effort. (More definitively speaking, sell-in typically means how well one has been able to get the product into stores. Sell-through refers to how well the stores have been able to get the product into the hands of consumers.)

To be successful here, one must apply the greatest levels of creativity. He then offered a few insightful examples.

To sell a purse mirror for women, his company developed an end of aisle spinner that had mirrors placed on all sides. It proved effective because his target market, women who wanted to have a mirror available at all times to see how they were presenting themselves, would catch their reflection as they passed the display. They would stop, pause, and then notice the purse mirrors. Getting them to notice the product was the key first step in making the sale.

With corn brooms, his company took the unusual step of displaying it upside down, which was not how brooms were usually displayed, and again, would catch the attention of the consumer. By adding a distinctive angle to the handle, the product was further distinguished.

To achieve these distinctions and to create a unique selling proposition, one must look at each item separately and develop the element that makes it unique and impactful.  Should the design be simple? Can you “dress it in a tuxedo” and make it feel more upscale? What would make the difference to the consumer?

This means that inventing the product is only the beginning of the effort. The next step is to dissect the use of the product.

  • Visit stores and analyze how comparable products are displayed.
  • Who buys them?
  • Which displays and packages made the person stop?
  • Define the profile of the person who stopped at the display.
  • Ask them what caused them to stop.
  • Find out the process that they went through in making the buying decision.
  • Once the product has been bought, ask them why.
  • Be curious and creative in discovering why your products are worth buying.

Carl closed our discussion with a very interesting story.

A long time ago, Carl’s team was tasked with the responsibility of selling toothbrushes. The division had been losing significant money. To learn more about his targeted consumers’ motivations, Carl arranged for a focus group with a local dental clinic. The focus group members were asked why they were choosing certain toothbrushes and the answers he received were about the size of the brush head (husbands had larger mouths than wives and children required smaller toothbrush surfaces) and that some brushes were harder than others.

Valuable information…

The participants were then led into a room and on the wall of the room was a display of every possible toothbrush on the market at that time. The participants were then told that as a reward, they could select toothbrushes for their families.

After selecting their toothbrush reward, the participants were then led into another room and asked why they had selected these particular toothbrushes.

Their answer most often…color!

It seems that at this particular time there were only four colors available in the toothbrush industry. Carl and his team learned that even though it was never mentioned as a factor in the focus groups, color was deemed to be the most important attribute. Armed with this information, his team began to produce toothbrushes in 24 colors! The net result the product, which was a losing venture a year earlier, became a source of substantial profitable revenue within a year.

Carl had illustrated his point – creativity and research on an item by item basis was critical in establishing a brand and challenging leverage.

Categories: Leadership, Sales, Strategic Plans, Strategy
Tags: , , , , , , , , , , , , , , , , , , , , ,

Comments: Be the first to comment

Have we seen this challenge before?

March 20, 2009

“David, there is nothing new under the sun.”

And with that brief message, my mentor Carl, shared the first lesson about this challenging issue.

I am very fortunate to have Carl as my mentor. Besides being blessed with remarkable business acumen and a wealth of experience leading companies and divisions in the food, electronics, housewares and fashion industries, Carl possesses the most important traits that a mentor must have. He is a very giving person with a strong desire to share, better others and educate.

Carl went on to explain that in the 1940’s and 1950’s, the food industry experienced the very same issues that these houseware companies are going through now. When his mother shopped at the local grocer,  he made the decision about what brands she could be purchasing. Choices were limited. Yet, less than a generation when his wife shopped, she was the one who chose the brands.

What had occurred in the intervening years was a change in how food was sold. The grocer of the past was replaced by the retailer. This new brand of retailer stopped being a merchant and became more of a landlord. In reality, he was selling space and his “tenants” were the products that he sold.  Those who paid more for their position and location received more favorable space.

To compete, the supermarket owner had to leverage a different kind of appeal, one of better selection and lower price. Their key measure was the return on investment against cost per square foot. Their goal was to stock the floor with products that gave them the best return.

There were some exceptions and those retailers although new at what they were doing, learned about these exceptions very quickly. There were certain items that, even if they didn’t meet the ROI criteria, still had to be carried in the store. If these staples were not in the store, the consumer would have to go to another store. If the consumer did, the storeowner risked the possibility that the consumer would begin to shop in another place for not only those staples but for other items as well.

Sounds familiar, huh? A large store model replacing the mom and pop stores and more items competing for the attention of the consumer. The retailer controls the space and influences price and margins. Customers flock to these stores for convenience and better price.

So the first lesson then was that there is historical precedence to this dramatic change. In our next post, we’ll learn about the methods that Carl used to meet this challenge in the very same industry that our housewares executives are working.

Categories: Leadership, Sales, Strategic Plans, Strategy
Tags: , , , , , , ,

Comments: 2 Comments

Branding and Gaining Control of Your Business in the Age of Twitter

March 19, 2009

Today, I received a really provocative and interesting challenge. A business that makes kitchen gadgets has lost its leverage with its customers and wants to know how to get that leverage back.

The kitchen gadget industry is really quite interesting. Inventors create and design products. These gadgets need to solve a problem and be very easy to use. Once they have created a prototype and tested it with some audiences, these inventors then take their products overseas to be manufactured. Some of these inventing companies protect their products with patents and sometimes they don’t because the patent will not afford them enough protection to prevent others from copying their products with minor alterations in design.

But now, the business environment is even worse for these companies.

It wasn’t that long ago that the inventing companies could sell these products to lots and lots of stores. But then the industry began to consolidate. Soon, it became apparent that if you wanted to sell to your target market, the only way to do that was to sell these products through superstores like Wal-Mart, Target and Bed, Bath and Beyond.

This is a problem though for these companies. Because these distribution channels are so large and dominate the marketplace, these department and superstores can dictate the margins and the way these products go to market. The inventing companies must tolerate and accommodate the requests made of them because upsetting one of these large companies could doom the product.

The question that was posed to me today was how to help these companies build a presence so that alternative channels for identifying products that need to be invented can be identified, products and related concepts could be tested faster and better, and alternate marketing channels could be developed.

This seemed particularly fascinating to me so I agreed to take this on.

Here’s my plan.

I think that this is a serious and meaningful strategic question for our times so I’ve decided to be public about it and write about it in this blog.

I am also identifying and approaching a cross-section of friends and colleagues to provide insight. They include one of the fellows accountable for building communities for a large software developer, a PR firm, a specialist in search engine optimization and web site development, my mentor who is an expert at identifying market targets, a senior advertising exec at large advertising company, my son who is one of the founders of TeenTechBlog www.teentechblog, my wife who is a stellar teacher and master chef… and you.

I would like to invite you to join me in this research. If you are interested, please e-mail me at david_blumenthal@msn.com. I plan on speaking on this topic in six weeks and if you assist me, I will share my session with you.

The journey promises to be a lot of fun.

Categories: Sales, Strategic Plans
Tags: , , , , , , , , , , , , ,

Comments: Be the first to comment

Technical Support is Never Just an Expense

March 12, 2009

Over the last two days, I’ve been engaged in a very upsetting conversation about technical support.

As a follow up to verify that a client’s technical issues were resolved, an employee discovered that from the client’s perspective, one remained open. When that issue was reported to senior support management by the employee who had contacted the client, it was greeted with an e-mail response that the issue had been closed a month earlier and an attachment with a copy of the resolution. The employee responded that the issue was, at least in the mind of the client, still open and a request was made to contact the client once again.

The manager balked saying that the job of the team was to close issues and once an issue had been closed, it was the responsibility of the client to speak with his colleagues and discover the resolution so no additional call would be made.

While this issue was being brought to the attention of departmental leadership by the employee, a lead developer weighed in on a different matter. He explained that there is always a consequence of adding features and functionality. When we add features, he explained, the software becomes more complex and the clients invariably ask more questions and support is further challenged.

More on the conclusion of the story in a moment, but first, an important digression.

All of our clients have choices. If we are simply and only measuring closed calls, our measurements are insufficient. Closed calls do not lead to client retention. Client satisfaction does.

I spoke with a colleague at a very large company and asked him what his company measures. Their measures include days elapsed until there is a solution and top ten call generators. They expect a spike in tech support calls when they release a new product but the top ten call generators tell them what they need to fix to reduce the call volume. Incidentally, the costs associated with addressing these “top tens” are charged back to the group that made the product. That’s one way to make sure that they get addressed.

A percentage of customers are also called every day to verify issues are resolved. They also count numbers of calls per support-paying customers. They view these customers as their best and most important customers.

One of his most interesting insights was that his company is moving to do all support in live chat. He noted that Google and Amazon already do all of their support via e-mail. This allows these companies to track the issues and the conversations with much greater ease and accuracy.

His company, however, is moving to live chat. Live chat provides the benefit of tracking the conversations and topics but keeps the human dimension in place. Sounds like a forward thinking approach.

Now back to our story…

With no place to go on this issue, the employee contacted the client and shared the documented resolution with him. Turns out closing the issue was premature. The proposed solution did not work as expected and the issue needed to be reopened. The client was right.

As to the developer, he was reminded that without releasing enhancements periodically, the software would become stale and the company would lose clients and share. Additionally, when clients learn that enhancements are being made to a product, the will begin to suggest additional way to make the software even better. This, by the way, is usually a good thing.

Technical support is not an expense. Done right, the client experience is enhanced. Market share grows and the business booms.

In these challenging economic times, it’s a lesson worth revisiting again and again.

Categories: Hiring, Leadership, Strategy
Tags: , , , , , , , , , , , , , ,

Comments: Be the first to comment

Talented Rookies or Experienced Pros?

March 8, 2009

One of the ongoing debates in many organizations is whether to hire young, unproven talent and develop them or engage experienced, savvy but more highly salaried professionals. There is an answer, and of course, it is that it depends on the situation.

Personnel should always be hired based on the requirements of the job. Here are many of the factors to consider:

  • Is the work time sensitive?
  • Is the work very important and can mistakes be tolerated?
  • Is the work highly technical requiring an experienced mind?
  • Is the management talent available to guide and train less experienced staff?
  • Does the client for whom this work is being performed have an expectation that it will be performed correctly the very first time?
  • Will the individual performing the work have to exercise political savvy in performing the work?

You’ve no doubt noticed that one of the factors not included is cost. This is because it often costs more to have a less experienced and lower salaried person perform the work. Less experienced staff often will need to try multiple times to get it done correctly. Oftentimes, they will need management guidance every step of the way.

When I started my first company, Flash Creative Management, I thought that hiring bright, young people was the way to go. Flash was a service based business specializing in strategy development, business process redesign, and software development to support the client’s strategies and processes. My thinking was that I’d have a greater profit margin between what we would charge the client and what we were paying the staff.

Within a few years, it became very clear that for Flash, this was not the right approach. Our clients were willing to pay a premium dollar for important services done right the first time. And they wanted dramatic results.

Less skilled talent had lower salaries but the cost of rework, management time and – this is very important – the hit to the brand we were trying to develop — were significant.

When we shifted to more “expensive” and experienced staff, our business’ growth accelerated dramatically.

So “situationally” speaking —

If the work is either very important, highly technical or does not allow for errors or is time sensitive or requires political savvy, go for the proven and experienced talent. It will prove to be a very prudent approach that will save you money.

There is a place for young talent as well. They will perform very admirably in an environment where fresh ideas are required. However, it is equally important in order for them to be successful, that a nurturing and supportive environment that is comfortable with experimentation be in place. Management needs to be patient and be willing to guide and train extensively.

Categories: Hiring, Leadership, Strategy
Tags: , , , , , , , , , , , , ,

Comments: Be the first to comment

« Older Entries
%d bloggers like this: