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Reclaiming the Business…the Conclusion or Perhaps, the Beginning

May 8, 2009

Well, the presentation took place this past Tuesday and now it’s time to review the recommendations.

There are really two distinct issues in this discussion.

(1)   How does this industry protect and grow its current business (with Wal-Mart, Target and the other superstores)? and

(2)   Should it and if it should, how does it create a sustainable business outside of this clientele?

The solution set must take into consideration these constraints or challenges:

1)      There is, and will likely be, a low frequency of purchasing houseware products multiple times

2)      These items tend to be modestly priced so spending extensively on advertising is not feasible

3)      Branding on the web is very difficult

4)      The cost of selling low priced items through the web is prohibitive ehen you factor in associated labor costs

To address these issues and constraints, a framework was offered. In order to avoid being redundant, I will simply reference the prior two posts. Please review them to get the details.

The key takeaway is that, in this framework, doing any one of the suggested steps will help the business situation but doing all of them, I believe, will produce a very dramatic and meaningful result.

The second key point in having a framework is that it creates flexibility in thinking. There is “no one size fits all” solution but that does not mean that there is no solution at all. It must be tailored and constructed based on reasoned thinking and analysis.

And it requires one more element – COURAGE.

In recessionary times, we are prone to inaction. Our confidence is shaken and we see all the other companies around us taking very limited actions to grow their business.  Each of us is no different and when faced with an environment where inaction is acceptable, we invariably find it easier to go along with the pack

The framework that was presented speaks to having the courage to move forward with a decision and action plan if one has confidence in the plan. That can only be achieved by taking all of the analytical steps outlined in detail in this blog.

So let’s go back to our issues that we raised above.

The overarching message is that when a company has ceded its client relationships to a third party (and that is what every company does when it uses distributors) and when that distributor takes advantage of the relationship, the only solution is to get the client relationship back. And in this circumstance, creativity is a requirement.

In working with the superstores, the companies must perform the necessary in-store and out-of-store research to understand what its customers need, value and appreciate and respond in the context of what it learns. It must use traditional low cost marketing tools such as public relations to create presence and branding. It must identify new promotional opportunities and collaborative marketing opportunities. It cannot and must not be held hostage by its distributors.

Because the way we communicate is changing, it is imperative that the new social media techniques are utilized to their fullest and a new additional way of connection be created. A web store won’t work for this industry for all of the reasons noted above but creating a central community for those who share the passion probably would. Determining the nature of that community would be the challenge.

The most important reason though for undertaking such an effort is simply this: Make no mistake about it. If these companies don’t undertake a new social media effort and associated community building soon, someone else will.

So there you have it.

A special thanks to all those who shared the fervor and enthusiasm in creating the solution set and, particularly to Carl, Suzy, Mitch of Raspberry Red, Yair, Steve Clark of Andover Communications and of course my wife, Annie, and son, Eli. Learning from you made this enlightening but more important than that, it made it fun. Special thanks to Karla Robertson of Shifting Gears for being a superb coach and guide.

And to Chuck Rosner of CORE (Chief Officers Reaching Excellence) and the International Housewares Association, we thank him for his love for the organization, industry and its leaders. A tip of the hat to you sir. Your leadership and commitment is inspiring and is reflective of the desire to learn that was so evident in all those that attended the session.

If anyone would like a copy of the PowerPoint or would like to discuss the session in more detail, please e-mail at david_blumenthal@msn.com or call me at 201-837-2445 and we’ll set up a time to chat.

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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 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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Growing Locally to Grow Your Business

January 11, 2009

For much of the last decade, we’ve heard about the importance of the global economy. The mantra you may have been reading is something like “grow global or you won’t grow at all.”

The Internet has certainly made that approach more viable but there is an equally meaningful perspective that warrants your consideration.

Seth Godin champions this point-of-view. He’s a best-selling author of about a dozen books on marketing or blogging and he is an original thinker. I subscribe to his blog and I do so because his thinking inspires me or it reinforces or extends my own thinking.

You likely will have noticed that my sales related posts are about becoming more related with your own customers. Seminars and referral meetings are really – at its core – about becoming more related to your own relationships. This is because for many small businesses, going global isn’t an option. They need to be effective in their own zip code.

Today’s blog from Godin presented a new twist on the art of becoming related locally. He suggests that you start your own local “newspaper.”

The way he’d go about it is to briefly interview a local business, a local student or a local political activist by phone. Get 20 households to ‘subscribe’ by giving you their email address and asking for a free subscription. You can use direct contact or flyers or speeches to get your list and then release the newspaper via e-mail twice a week. In no time at all, you’d build a mailing list and if you do it well, in not time, it would be the talk of the town.

More important, for you and your business, you will become related on a very local and personal level. You will know about people and the value they contribute to the community. You will become a source for connecting others. Most important, you will be transformed into a valuable resource associated as the source for learning about all of the wonderful things going on in your own backyard and in your community.

And that sounds like a fantastic position for you to be in and a source of strength for any local business.

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