Category: Product Strategy

Being Late Can be Offset by Being Great

Google playing catch up? An odd statement to make about a company that has been lauded consistently over the past decade as one of the most innovative firms in the world. However, that is exactly what Google is doing when it comes to its new Google Play Music service. The monthly subscription service gives users access to millions of songs. Custom playlists and stations, unlimited skipping, and use across multiple devices are features of the service. Sound familiar? Pandora, Spotify, Slacker, Rdio, and Rhapsody are in the game already. Google has to convince music listeners that its new service beats the status quo and that they should modify their listening behaviors and adopt Google Play Music.

It’s OK to be Fashionably Late
Can late-to-market firms succeed in hyper-competitive categories like online music services? The answer is a resounding “yes.” Being first or early to market only assures you notoriety to say you were a pioneer. It certainly does not guarantee success. Otherwise, I would be writing this post on my Commodore 64 computer. Late entrants often benefit by being able to learn from the missteps of pioneers. And, for newer product categories the task of building consumer demand for the product has been borne by competitors that entered earlier. In the case of Google Play Music, the aforementioned competitors along with Apple have transformed how people consume music. Google does not have to convince people that they should listen to music online, only that they should develop a preference for Google’s service.

Answer the Ultimate Question
The failure rate for new products is very high, with estimates being that 80 to 90 percent of all new products do not make it in the marketplace. Thus, the odds are stacked against a new entrant like Google Play Music. This enormous risk is mitigated by Google’s brand equity. If you or I were launching a start-up music service we would likely be prime candidates to be added to the failure rate statistic. However, the launch of Google Play Music as a brand extension in the Google Play platform (which is itself an extension of the Google brand) gives it a level of credibility that most new products must work for years to attain.

For Google Play Music or any other product to succeed, the ultimate question of “what’s in it for me?” must be answered. Customers have to understand how they will benefit from using a product or service. In this case, it is the seamless experience of using Google Play Music along with the suite of Google products. Personally, I am an avid music streamer- I love listening to music while I work. I am giving Google Play Music a try as I write this post (Craig Chaquico’s Acoustic Planet being the album of choice). In the end, I will adopt Google Music Play if I perceive the benefits of the service being superior to Spotify or Pandora. Is it more convenient to access? Is the user interface experience preferred?

Google is a great brand but not a perfect one. It has had its share of product failures over the years, and there is no assurance Google Play Music will succeed. But, if it should fail it will not be due to the order in which it appeared on the market. Similarly, if you are exploring a business opportunity do not automatically be dissuaded if established competitors are present. They exist because no better alternatives have been introduced to the market. That could all change if your offering successfully answers the WIIFM question among your target market.

Forbes.com – “Google Continues to Play Catch-Up with ‘All Access’ Music Service as Critics Sound Off”

“Put Bacon on It” as Product Strategy?

I saw a commercial for KFC’s “new” menu item, the Cheesy Bacon Bowl. The message in the commercial provided a paradox for the role of product strategy in a business. KFC has offered bowl menu items for some time; the innovation that makes Cheesy Bacon Bowl new to market is the addition of bacon. KFC’s brand extension could be interpreted as either marketing genius or an example of what is wrong with product management today.

The genius behind the Cheesy Bacon Bowl is enhancing customer value by adding a proven feature to a product. In this case, it is as simple as adding bacon. The tagline of the commercial – “everything tastes better with bacon” – contains a reminder for marketers that the best products are those that people value for what they do, or in this case for how they taste. Adding bacon does not require investments in R&D and test marketing; there is very little risk involved.

So, what is wrong with “put bacon on it” as a product development strategy? It is symptomatic of the lack of risk taking that is needed to bring truly great innovations to market. It is a safe, but unimaginative approach to developing new offerings for customers. And, depending on how such a minor innovation is marketed, it may not be taken seriously by buyers. Does a Cheesy Bacon Bowl meet a need that has gone unmet or underserved in the market? Probably not. Yet, KFC will spend heavily to market a product that essentially exists already in the market but has one new ingredient added.

Is “put bacon on it” a viable product strategy to drive business growth? It is possible that a product can be transformed by the change or addition of a component or feature if it delivers new value to customers. But, most great products are not the result of adding bacon; they are new solutions for customers that require greater and risk to develop.

Fighting Customer Fatigue

If you ever were a student of marketing, you learned about the product life cycle. The PLC includes stages of introduction, growth, maturity, and decline- yes, that product life cycle. And, you probably learned about the characteristics associated with each stage. For example, the growth stage is characterized by increased competition as new entrants enter the market and a need to achieve brand differentiation. Hey, that sounds just like what is going on in the daily deals category. Groupon established itself as the dominant brand, and its rapid success attracted a slew of websites with a similar deal-of-the-day concept.

Evidence is appearing that should alarm daily deals marketers like Groupon: traffic on their websites is decreasing. Groupon’s site traffic last week was down 25% compared to early June, and it had its first ever month-over-month traffic decline in July. The drop in Groupon website traffic can be attributed to the large number of options consumers have for daily deals. At some point, “in-box fatigue” sets in and the daily email offers become part of the message clutter that is our lives as consumers.

Marketers can learn many lessons from the daily deals category and Groupon in particular. First, early entry into a market can be advantageous but does not guarantee success. Being first is not as important as being unique. Second, if a business idea is easy to imitate as the daily deals concept has been, it is critical to differentiate in a way that rises above the clutter. Whether it is choice, convenience, service, or some other benefit, creating relevance to customers is essential. Ask Facebook, it has ended Facebook Deals less than a year after it launched. It was nothing more than another feature on Facebook. Farmville is unique; another daily deal offer is not!

Fight fatigue by striving to maintain energy in your brand. Let fatigue claim competitors as its victims. Continuously ask the question “how can we better, different, or unique?”

USA Today – “Websites Selling Daily Deals Lose Luster”

Another Tale of "Differentiate or Die"

News that Microsoft may discontinue its Zune music player may be denied by the company, but it seems to be only a matter of time before it will happen. Launched in 2006 as a competitor to Apple’s iPod, Zune has done little to derail the iPod’s dominance. Microsoft faced an uphill battle given that iPod was established as the dominant music player in the market, but it is too easy to chalk the failure of Zune to being a late market entrant.

Portable music player is not the first category that Microsoft entered late; the company was far behind Nintendo and Sony entering the video game console category. It would seem that Microsoft faced a more daunting challenge taking on two entrenched brands, both with loyal customers. And, there were times when it looked like the Xbox could ultimately face a fate similar to the one Zune is staring at today.

However, Xbox has solidified itself as a force in video games. According to data from NPD Group for the period March 2010 to February 2011, Microsoft’s Xbox 360 had 38.3% share of the 18 million video game consoles sold. Microsoft’s share was just behind Nintendo Wii (38.6%) and Sony PlayStation 3 (23.1%). Microsoft’s market share jumped 12 percentage points in the past year, taking most of its gain from Nintendo (down 11.6 percentage points).

What is the difference between Zune and Xbox 360? Borrowing my favorite marketing book title, it is another case of “differentiate or die.” Zune has never successfully differentiated itself as being unique or superior to iPod. Granted, Microsoft faced an uphill battle given iPod’s icon status as a lifestyle brand. But, Apple successfully used marketing to get to that point. In contrast, marketing for Zune did not resonate with consumers.

Microsoft faced a similar uphill battle competing against Wii and PS3 yet has proven to be a formidable competitor in the video game category. The difference- Xbox has been able to differentiate itself from Wii and PS3. Its Kinect sensor, inspired by the motion-activated gaming experience of the Wii, has been popular with existing Xbox players and attracted new users. And, Xbox Live enhances the gaming experience by letting players connect with friends and fellow gaming enthusiasts online.

Being late to market is not a liability, it is an excuse. Failure to deliver a differentiated experience compared to the status quo is the real issue that dooms most failed products. “Differentiate or die” is not just a clever book title; it is a mantra by which marketers should live when it comes to developing product strategy.

Product Strategy: Keep it Simple, Be Great

Two of my favorite hobbies are eating and running, with the latter a pursuit that allows me to practice the former! So, I had an interest in checking out a new reality show on NBC, America’s Next Great Restaurant. The show will feature 10 aspiring restaurateurs who will compete to be selected for funding to open locations in New York, Minneapolis, and Los Angeles. The series debut narrowed an initial field of 21 hopefuls to the 10 contestants that will compete to secure investment capital. The judges/investors include celebrity chefs Bobby Flay and Curtis Stone, Chipotle founder Steve Ells, and Miami restaurateur Lorena Garcia.

A major marketing lesson, coming under the category of “What Not to Do” was delivered by the first person to present to the judges. Her idea was for a restaurant she called What’s Good, with a focus on organic and healthy dishes. The concept was interesting, but her description of the product offering doomed any chance of being considered for investment. A sample menu showed page after page of different items- it screamed of a nightmare to manage! Judges gave the contestant feedback about their concerns about the menu complexity, then gave her the bad news that they would not be investing in What’s Good.

Many of the great brands today succeed because of their simplicity in their product offerings. It is not unusual for a business to have an extensive product portfolio, but usually it evolves over a long period of time. Start on a small scale, gain acceptance and traction in the market, and expand what you can do for customers as they buy into your value proposition. Perhaps one reason Chipotle’s Steve Ells was critical of the elaborate menu ideas for What’s Good is that his restaurant thrives with a menu that features essentially two types of products: burritos and tacos. Are there other dishes and items Chipotle could offer within the category of Mexican food? Sure, but it has chosen to focus on being great at serving burritos and tacos.

The lesson is not new, but it is as relevant as ever- follow the edict of Jim Collins and be great at one thing, better than any competitor could ever hope to be.

Can Any Smartphone Competitor Upset the Apple Cart?

Apple is enjoying tremendous customer loyalty among users of the iPhone. A Crowd Science report reveals 82% of iPhone customers have indicated loyalty to the brand for their next phone purchase. Moreover, 40% of Blackberry customers, Apple’s chief rival in smartphones, expressed a desire to switch to the iPhone with their next purchase. That figure towers over the 14% of non-Blackberry customers surveyed who indicated a desire to switch to Blackberry. The Crowd Science survey figures, coupled with the astounding sales performance of Apple’s new 3G iPhone (1 million units in the first week on the market), suggest Apple’s momentum in smartphones will be difficult to stop.

Can anything derail Apple at this point? Many consumers have been deterred by the high price of the iPhone. But, with models as low as $99 today, price is less of an obstacle. The exclusive partnership with AT&T is more of a challenge to overcome. Consumers that are either locked in to contracts with other carriers, have concerns about AT&T service quality, or have loyalties to their current carrier remain elusive customers for Apple. How long will the exclusive arrangement with AT&T last? The deal is lucrative for Apple, and strong sales of the iPhone suggest it is not a major impediment to customer acquisition.

In the long run Apple must expand its distribution beyond a single carrier if it intends to become the dominant smartphone brand. For all of the hype and attention the iPhone garners, Apple is third in global smartphone market share behind Nokia and Blackberry. Apple may be a niche player in the personal computer market, but it dominates the portable music category. Now, it may be driving it toward achieving dominance in the smartphone category, too.

Marketing Daily – “Carrier, Pricing Leave iPhone Slightly Vulnerable”