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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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Categories: Leadership, Sales, Strategic Plans, Strategy
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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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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
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