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And in Summary…Part 2

May 3, 2009

A review of our final five lessons will help us prepare for our upcoming session on May 5th and the introduction of a framework by which we can build a vibrant consumer franchise.

Lesson 6: Draw Attention Using Traditional Approaches. Do not forgo the use of traditional techniques to build awareness just because there are new social media techniques available. Being in a technologically driven world does not mean we should discount or overlook effective traditional methods of promotion. It is very possible to create customer demand through the effective use of traditional marketing and push-pull techniques.

Lesson 7: Use Technology to Forward Your Business. Technology is never the solution in and of itself. Technology is a tool – a very effective tool for transforming the way one processes transactions on behalf of its customers or delivers products or services to them or communicates with them. Use social media to promote and support your business and build presence.

Lesson 8: Rethink…and Rethink Again. It is only natural to assume that what has made a business a success in the past will continue to allow it to be successful in the future. However, when we successfully step back from the way we have run our businesses we intuitively know that this cannot be true. Engage yourself and your colleagues to rethink the ways that you have done business and explore options to create new ways of marketing or new niches to pursue.

Lesson 9: Understand Your Value and Leverage It. The success that you have had with your most successful products is likely the result of your innovative way of uniquely addressing a consumer’s challenge. As an example, your most successful products have likely created a following. Leverage this following to create additional opportunities in building and generating new sales opportunities.

Lesson 10: Re-examine and Re-define the Business. Businesses are living beings in that they have specific cultures and DNA’s that dictate how they function. And like many living beings, in order to survive, they need to evolve.  Allow your business to change with the times and needs of your clientele.

As I prepare for the session, it has become apparent to me that this is the next appropriate stage in my own learning experience. My goal will not be to provide a “solution” but rather to stimulate a conversation whose whole hopefully will be far greater than the sum of its parts.

It should be an exciting conversation…I’ll let you know what I learn in the next post.

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And in summary…part 1

May 1, 2009

Our session to the housewares association is less than a week away. It seems appropriate to review the lessons that we have learned and the strategic underpinnings for our recommendations.

The challenge that was posed was this:

What should you do if you find your company to be one of those that now must sell its products to a handful of superstores such as Wal-Mart, Target and Bed, Bath and Beyond and these “clients” are now in a position to dictate your pricing, the way that you do business and even your margins?

Underlying this big question was a series of smaller but no less important ones:

  1. Are there alternative marketing channels that can be leveraged?
  2. Where does the social media fit into addressing this challenge?
  3. Is there a way to identify products that need to be invented and how can we test them faster and better?

With the help of several very talented, knowledgeable and experienced friends and business colleagues, we sought to develop and create a framework, if you will, for addressing these questions.

Here is a quick review of the lessons that we learned.

Lesson 1: There is Nothing New Under the Sun. What the housewares industry is experiencing now has happened to many industries before it. This is not meant to be cold comfort and it is important. It teaches us that there are historical experiences and prescribed and proven methods that can be incorporated in our plan and framework.

Lesson 2: The Only Way to Fight the Tyranny of Kings is with Creativity. When we live inside a problem, it can be very difficult to identify the way out of the problem. All is likely not lost. Brands can be reinvented through consumer franchising, where 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.

Lesson 3: Know Your Segment and Know Your Category. Those products that add value and are successful are often so because their manufacturers and marketers understand to whom they are selling. Many companies segment broadly hoping that they can earn a “small slice of a large pie.” However, all too often, the solution is realized by segmenting finely and catering to a very defined and discrete group. We learned some tried and true ways to do this.

Lesson 4: Think Beyond the Obvious. One of the easiest and most difficult exercises to do – at least by one’s self – is to challenge what one knows to be a “fact.”  We have difficulty doing this because as intelligent and educated people, we learn and we learn well. While effective for many, many circumstances, this mechanism actually works against us in addressing these issues because we naturally self-edit and discard options that. although inappropriate at a particular time, are now valid and appropriate. (This is why when brainstorming, really top flight facilitators will not allow anyone to eliminate an idea when people are putting them up for consideration). Marketplaces change. Technology eliminates one issue but generates another. These are new opportunities for inventors. There are some wonderful books on rethinking the marketplace such Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant by W. Chan Kim and Renée Mauborgne if you wish to explore this thinking in more detail.

Lesson 5: A Brand Community is a Business Strategy. Reconnecting with your customers will alter everything about your business. It will change the way your products are designed, delivered, marketed and supported. If done well, it will generate passion and excitement for you and your staff as well as for your customers. To effectively accomplish this, you will need to be vulnerable and open.

In our last post before Tuesday’s session we’ll review the remaining lessons that we learned.

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Lesson 10: Re-examine and re-define the business

April 24, 2009

Exhibit B in our discussion…www.dailycandy.com

Daily Candy – at least according to their web site – is “a free daily e-mail from the front lines of fashion, food, and fun. Sign up to get the scoop on hot new restaurants, designers, secret nooks, and charming diversions in your city and beyond.”

Visit the site. You’ll find it a bit overwhelming. There are editions according to where you live. There are also sections organized by what you are looking for – beauty, travel, house, food and culture.

Daily Candy is selling its women readers a way of life and hopefully, a better life.  And it’s doing it by communicating with them every day.

From a business perspective, they have taken a vertical, fashion, and delved very deeply into it. Like the RealAge site, Daily Candy is building a deep relationship which will afford them the opportunities to sell a wide range of products and services.

And like RealAge, there is really more going on here. By becoming the source for all things fashion related, these sites, with their readers’ permissions, have a license to communicate – and promote – and sell.

By building loyalty, these sites are creating a captive audience. This audience returns again and again, and more often than not, someone is buying an item or complimentary item to something that the person already owns.

The important takeaway is that while the models that we are very familiar with may not work for the housewares industry, there are many others and others being created daily that will work.

The lesson of dailycandy.com and RealAge (and Yelp, a site that reviews locations, clubs, stores, etc) is that in certain circumstances a traditional web store model will not work. However, other models like the ones that build deep relationships about specific focused areas of interest can.

Bottom lining this…we need to expand our view as what business we are in, who our customer is and what we are truly selling. Doing so will allow us to identify new vistas of opportunities.

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Lesson 9: Understand Your Constraints and Leverage Them

April 21, 2009

When it comes to pragmatic marketing, Mitch Rothschild is the smartest person I know. He runs a marketing and sales company called Raspberry Red. His company has built a site, www.vitals.com, where consumers can check up on their doctors. This site provides consumers with the tools to investigate the backgrounds of physicians and make intelligent, informed decisions about which doctor to choose.

But here’s the cool thing.

According to Quantcast.com, an independent site that measures the characteristics of websites, “Vitals.com is a top 5,000 site that reaches over 1.4 million people monthly, of which 1.3 million (94%) are in the U.S. The site attracts a more educated, middle aged, fairly wealthy, slightly female slanted group.”

No bad for a site that’s slightly over a year old.

Mitch’s gift is that he’s sensible, focused and devotes himself to first understanding the constraints of the marketplace, before applying his know-how to a solution.

He cut right to the heart of the matter when I posed our challenge to him.

The biggest problem, Mitch explained, was that these houseware items are low cost. In completing any purchasing transaction, one should expect a cost of $40 per transaction. Housewares tend to be inexpensive so these transactional related costs cannot be built in and absorbed. Besides, it is very difficult to build a brand on the web.

Mitch then pointed me in a different direction.

You may have heard of a company called RealAge. They provide an online test. This “test” asks 150 or so questions about your personal habits, lifestyle and family history. Based on your responses, the company provides to you – via your e-mail address which you enter — your “biological age” and then makes recommendations on how you can get “younger.” Some of the suggestions are simple – eat a better breakfast, take a multivitamin – stuff like that.

Most important, the test is interesting and people like to take it. After all isn’t everybody intrigued by the analysis and the possibilities. Well, maybe not everybody. However…

More than 27 million people have taken the test. That’s a lot of people…and a lot of data.

How does RealAge make money? While its suggestions are non-medical, it really is selling better living through medications. It is acquiring priceless data that most drug companies could never be successful in getting from prospective patients. If a RealAge visitor becomes a member, his or her data goes placed into a marketing database.

To promote their site, RealAge employs a “hub,” Dr. Mehmet Oz of Oprah fame, as a spokesperson. His message complements RealAge’s – you too can change.

According to the New York Times who did a detailed story on RealAge, companies like Pfizer, Novartis and GlaxoSmithKline parse this data and target their products with a laser like focus to prospective consumers. (RealAge provides only the e-mail address and its site policy acknowledges that it shares data with third parties who can help fulfill its mission of “better living.”)  Because of this wealth of data, these pharma companies can target a specific demographic pretty easily, such as overweight smokers who are male between 45 and 50 and get depressed. The companies then send out e-mail advertisements that present the possibility of a treatment that can make a life-changing difference. Tthe e-mail recipient can then choose whether to investigate further.

So what does this have to do with our challenge…visit the RealAge site and stay tuned…

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Lesson 7: Use Technology to Forward Your Business

April 12, 2009

We’ve laid the foundation for our solution by discussing numerous disciplines which will be incorporated for re-establishing marketing and sales control within our housewares industry, The remaining area for us to explore is technology.

As is always the case, technology is never the solution in and of itself. Rather, technology is a tool – a very effective tool for transforming the way one processes transactions on behalf of its customers or delivers products or services to them or communicates with them.

In recent months – and although it feels longer than that – it really is months -we have been exposed to a new use of technology, a tool called Twitter. Twitter takes texting to another level. This service allows people to send and read “micro-blogs” or “tweets” of up to 140 characters. That’s about the same length as one of the sentence in this paragraph. Here’s a quick overview.

People who use twitter a re called “tweeters.” They set up free accounts on Twitter and post these very short blurbs. Anyone with Internet access can log on and see these “tweets.” The difference though is this. People can elect to have these tweets sent to their cell phones, mobile devices or computers.

How can one sentence of posting make such a difference? Consider this report from the April 8th New York Times and reporter Ellen Barry.

“A crowd of more than 10,000 young Moldovans materialized seemingly out of nowhere on Tuesday to protest against Moldova‘s Communist leadership, ransacking government buildings and clashing with the police.

The sea of young people reflected the deep generation gap that has developed in Moldova, and the protesters used their generation’s tools, gathering the crowd by enlisting text-messaging, Facebook and Twitter the social messaging network.

The protesters created their own searchable tag on Twitter (ed. note: thus allowing you to look up links that are tagged with one or more subjects), rallying Moldovans to join and propelling events in this small former Soviet state onto a Twitter list of newly popular topics, so people around the world could keep track.

By Tuesday night, the seat of government had been badly battered and scores of people had been injured. But riot police had regained control of the president’s offices and Parliament Wednesday.

After hundreds of firsthand accounts flooded onto the Internet via Twitter, Internet service in Chisinau, the capital, was abruptly cut off.”

If political revolutions can be initiated, how can a business one be started?

On the site Read Write Web, http://www.readwriteweb.com/archives/zappos_twitter.php) you can learn how Zappos, the Internet shoe retailer is using social media to forward its business.

There are literally more than a 100 Zappos employees with twitter windows open waiting to respond to customer service questions.

Here’s a short sample from today’s Zappos Twitter site. I’ve slightly modified each name and removed the links so as to be sensitive to the identities of the individuals since I am using this for a different purpose.

  • @samdeck I want to apologize for your hold time. We’re here for you 24/7 1-800-927-7671. Have an awesome day!!! about 2 hours ago from web in reply to samdeck
  • @onfiref I apologize for the confusion, but which shoes do you need a picture of? Let us know or call us 1-800-927-7671 about 2 hours ago from web
  • @Glorial congrats! We look forward to meeting you! about 21 hours ago from web
  • @mkntz we did upgrade you to next-business day shipping for free on your order! You should receive it 4/14/09 at the latest. about 21 hours ago from web
  • @hinia I would be happy to answer your question. There is no tax when shipping to California from Zappos. 2:30 PM Apr 10th from web

This is customer service in 2009!

Zappos though is also intent on building a community. There’s a dedicated site where you’ll find all of the twittering Zappos employees who tweet about what they are working on and interesting resources on and off the Zappos site. There’s an employee leader board that shows who’s on twitter an dhow many followers they have.

There’s also a page that aggregates all of the public mentions of Zappos. And Zappos has also set up pages for those who rave about the company and its products.

Want to know more about how to use Twitter in your business? Do a Google search on “twitter” and “business”…

Ah, technology as a tool…

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Lesson 6: Draw Attention Using Traditional Approaches Too

April 6, 2009

Suzy’s discussion reaffirmed an initial component that may be critical to an overall solution to our challenge. She had stated at the close of the conversation, that public relations might be an integral element for developing the consumer franchise for these housewares company.

One of the marketing people that I have relied on over the years is Steve Clark. Steves the head of Andover Communications, a PR/Marketing firm specializing in product and service promotion, editorial and creative solutions and event planning, specifically for small businesses. That was important because the prices of the products in this industry necessitates a more limited promotional budget.

Building a presence for clients is something Steve is very comfortable doing. He views his role this way – the goal is to get the customers to ask the store why it doesn’t have a particular product in stock.

The other morning, I was watching the Today show, To my surprise, Matt, Meredith, Al and what seemed like the entire Today Show staff, were all wrapped in the SnuggieTM blanket. That’s the blanket with sleeves. The Today Show team was marveling at how great, warm and comfortable it was. Watching them discuss the product was absolutely fascinating. (By the way, the entire segment was just over two minutes long!)

Talk about using a “hub” for gaining a market presence…

And all I could think of was, some PR firm had really truly earned their fees. They had leveraged an infomercial which uses direct response advertising to create a market for very simple invention and then got several minutes on nationwide priime time television haveing their product promoted across the country.

And incidentally, the Snuggie is not only sold on the web. It’s also available at Target, Bed Bath and Beyond and Walgreen’s – the very same stores that our housewares companies have their products.

The lesson here is clear.

Being in a technologically driven world does not mean we should discount traditional methods of promotion. It is very possible to create customer demand through the effective use of traditional marketing and push-pull techniques.

Steve shared with me one of his own experiences. About ten years ago, Steve represented a client that created eyewear for those who spend a lot of time in front of the computer. The eyewear was branded and was designed to reduce eye fatigue. Andover was effective in creating patient demand so that prospects felt a need to go to their local optometrist and ask for the product by name.

To further cement its appeal, he arranged for a local television station to interview the company at a trade show where they were demonstrating the product. The presence of TV cameras at a booth added cache and credibility to the company and helped accelerate the results that they achieved.

Consumer attention though requires critical mass and often this solution involves unique packaging, placement and promotion to create two of the elements necessary for a successful buzz — exposure and credibility.

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Lesson 5: A Brand Community is a Business Strategy

April 2, 2009

As fate would have it, April 2009’s Harvard Business Review presents an article titled “Getting Brand Communities Right.” The article written by Susan Fournier and Lara Lee highlights seven ideas that are important to our analysis. I’ve summarized them here. To purchase this fascinating article so that you can read it in its entirety, click here.

(1)    A brand community is no longer a marketing strategy. It is a business strategy. To be most successful, allow your brand community be a high-level strategy that supports all of your business goals. Communicating with the community allows your business activities to take on new meaning and reflect the needs of those you wish to have as customers.

(2)    A brand community exists to serve the people in it. The authors state that if you meet the needs of the individuals within the community, you will in fact be meeting the needs of the business. Here’s the challenge. All businesses like to control the products they sell, the conversations they have and how they are perceived. Being effective here though means being vulnerable, not all-knowing and committed to addressing a need – rather than building your brand. Now, here’s the payoff. You just might discover an unmet need not related to your opportunity but one that keeps people very related to your business.

(3)    Engineer the community and the brand will follow. There is a science to engineering a community. Typically, people try to build communities around pools. These are individuals united by share values or goals (such as Republicans or Democrats). The authors explain that the relationships these pools form are limited and suggest that Web affiliations based on strong one-to-one connections (the example they use is a Cancer Survivors Network) is the catalyst that creates an engaging energy that sustains the community. The last element is to build a web community around hubs, individuals whom the community admires and is related to. Hooking up with such an individual will again drive passion.

(4)    Smart companies embrace the conflicts that make communities thrive. The natural reaction when one hears a complaint is to address it or squelch it. But in order to be an “in” group you need an “out” group. (Think Apple vs. PC, Coke vs. Pepsi). Strengthen the conflict and you strengthen the community.

(5)    Communities are strongest when everyone plays a role. The best metaphor that I could think of for this principle was the physical neighborhood within which that I live. What gives a neighborhood color, charm and notoriety are the characters within it. Each contributes to the fabric. Allowing people to be diverse in their thinking, types of support and nature makes the community engaging. To see a full list of roles, check out the article.

(6)    Online networks are just one tool, not a community. On-line networks re not enough to create a community. Communities grow from traditional approaches as well. Companies build communities using advertisements, celebrity spokespeople (“hub”), social interaction, entertainment, expert advice, packaging…and on and on.

(7)    Of and by the people, companies defy managerial control. Much like your physical community, to thrive, an on-line community can’t be controlled. Yes, it can be supported and nurtured…but not controlled. Supporting and nurturing may be done with scripts that articulate behavior guidelines  and those that encourage appropriate behavior in a particular setting. In fact, you can create settings that have different rules and allowed behaviors.

The plan for addressing our challenge incorporates these rules. Still there is more analysis to be done.

Stay tuned…

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