Apple iPhone 7 and Status Quo Resistance

A game that has emerged within the consumer tech industry is predicting development trends for the next generation of popular products. Will the next Samsung Galaxy have a larger screen? Weigh less? Include marked improvement in camera capabilities? This speculation and more is repeated for any product yet to hit the market, especially successful ones.

It was Apple’s turn to take center stage of new product reveal this week. The company unveiled the iPhone 7 nearly two years to the day that it first presented iPhone 6. Surprisingly, opinions about the new iPhone had more to do with product design than its price (starting at $649 for iPhone 7 and $769 for iPhone 7 Plus). While some design features like the dual camera lenses (one wide-angle and one telephoto) were widely lauded, others were questioned and even ridiculed. The feature ridiculed most was one not included in the design: headphone jacks. No more headphones tethered to a phone. Instead, iPhone 7 features wireless, rechargeable AirPods. One pair is included with the product, and they retail for $169 if bought separately.

Change for Good?

Let’s face it- a smartphone without wired headphones is a feature many of us might struggle to wrap our arms around at first. A user who is shall we say, organizationally challenged, could easily misplace their AirPods. Change sparks uncertainty, fear, and even mockery as evidenced by some of the reaction to iPhone 7 on social media (see a few examples below).

Is elimination of the headphone jack in the iPhone 7 meaningful innovation? Or, is it change for the sake of change? Will the new feature add value to the user experience. Or, is it more of a design feat driven by internal decisions at Apple instead of users’ needs and wants?

Status Quo Resistance

A recent study of US iPhone owners found 51% are interested in upgrading their iPhone to the latest model (although the study was conducted prior to unveiling of iPhone 7). This finding suggests people are open to upgrading if they can be persuaded to make the commitment to the latest iPhone. The decision whether to adopt this product is no different than it is for any other purchase decision. It comes down to a marketer’s ability to shake up the status quo. Will prospective buyers be convinced that upgrading to iPhone 7 will result in a better, more satisfying smartphone experience? If yes, owners could be open to upgrading. If the answer is no or don’t know, the safe course of action is to stand pat and keep their current phone.

The marketing challenge of overcoming status quo resistance reminds me of an often-told story about a family holiday meal. Three generations were gathered in the kitchen preparing the meal. As the mother cuts off the end of a ham before placing it in the pan, her daughter asks why she always cuts off the end of the ham. The mother’s response was “I cut off the end because that’s what my mother always did.” She was in the kitchen, too, so the question was posed why she always cut off the end of the ham. Her response? “I cut off the end of the ham because my mother always cut off the end of the ham.” Fortunately, the family matriarch was also in attendance, so the younger generations asked her the same question. She revealed the secret: “I cut off the end of the ham because my baking pan is too small for the ham to fit.”

What does this story have to do with the Apple iPhone 7 or any other new product? It is reflective of consumer behavior. Many people do what they always do, perhaps even influenced by the behavior of a parent or friend. The behavior becomes rote; we continue it without evaluation of whether it is optimal. Better alternatives could exist, but hey, that would entail change and do we want to deal with the hassle of change?

I recall times when Facebook made significant changes to its user interface. Some of my friends proclaimed “I don’t like the new Facebook, so I’m out of here.” And they were… for a few days. Then, they overcame status quo resistance and adapted to Facebook’s new look. While there is a difference between adapting to a free online service and a smartphone costing hundreds of dollars, the underlying force of resistance is the same.

Time Will Tell

Time (and sales) will tell whether innovations in the latest iPhone resonate with consumers. Some skeptics have been waiting for Apple to fall on its face in the five-plus years since Steve Jobs stepped away from the company. It could happen with the iPhone 7. Or, we could be looking back in a few years laughing at ourselves for the times we walked around with white wires hanging from our ears.

Embrace the Possibilities of Change

I am a lifelong baseball fan. It was my favorite sport growing up, and today I eagerly countdown the days until spring training camps open for MLB teams. It means two things: 1) baseball season is coming and 2) it will bring spring weather with it! MLB has taken its share of lumps in recent years in the court of public opinion. Prodigious home run totals by Mark McGwire, Barry Bonds, and Sammy Sosa were tarnished by allegations of performance enhancing drug usage. And, the sport has lost favor among young people as they have gravitated toward other sports and interests that are more fast-paced than the plodding flow of a baseball game.

Weighing Changes to the MLB Product

Major League Baseball is at a pivotal crossroads. The business of MLB is doing quite well, thank you, with robust revenues from media contracts and sponsorship deals. However, fan relationships with MLB are somewhat tenuous. We have many options for entertainment, including some that do not involve sports and do not require leaving home to venture to a stadium for several hours.

The position that MLB finds itself in has prompted new commissioner Rob Manfred to explore ways to streamline the game consumption experience and pack more action into it. Among the changes proposed by MLB are:

Speeding up the pace of game play– One of the criticisms of baseball has always been the slow pace of play relative to other sports. This difference is magnified in a world in which we allow ourselves little down time- we multitask, watch top 10 plays of the day, and gather sports news 140 characters at a time. MLB experimented with rules changes to speed up play in the Arizona Fall League including a no-pitch intentional walk (rather than throwing four balls on purpose to walk a batter), maximum 2:30 break between innings as well as during a pitching change, and no more than three “timeouts” per team during a game.
Increase offense by reducing size of the strike zone– Scoring has decreased steadily since an all-time high of 5.14 runs per game in 2000. Last season, MLB games averaged 4.07 runs per game, the lowest since 1982. The league-wide strike-out rate was the highest ever and the walk rate was the lowest since 1968. One reasons blamed for the decline in runs scored is an expanding strike zone. A review of strike zones in MLB found the average strike zone expanded from 436 square inches in 2008 to 475 square inches in 2014. MLB rules committee will monitor the size of the strike zone in 2015 and consider making changes beginning with the 2016 season.

No rules changes have been made yet for any of the product elements mentioned. But, give MLB credit for acknowledging that issues exist and taking steps to evaluate how to make the product more exciting for fans.

What can be Learned from MLB about Product Marketing

Marketers can benefit from the situation that MLB is currently facing. Specifically, three steps that MLB has taken that could ultimately lead to a better product are:

Acknowledge flaws– Some of the business metrics for MLB suggest all is well, but leadership is savvy enough to see that flaws exist in the product. When a business is unable or unwilling to acknowledge its weaknesses, there is little chance they will be overcome.
Learn from others– If your business is falling short in some way when it comes to delivering the best customer experience and you acknowledge it, a useful first step can be to observe how others have dealt with similar issues. In the case of MLB, it has borrowed practices from the NFL and NBA to incorporate video review of uncertain umpire calls and the pace of play experiments. Sometimes, you can even go outside your industry or category to learn from other firms’ successes in improving the customer experience.
Don’t assume– While there has been much talk about pace of play diminishing the MLB consumption experience, it may not be the culprit when it comes to turning off prospective baseball fans. It has been pointed out that the length of NFL and college football games have increased, yet the popularity of those sports is as high as ever. If MLB focused all of its product improvement efforts on speeding up the game because they thought that is what mattered to people, it would have overlooked the decreasing run scoring trend. One of the easiest traps we fall into as marketers is a false belief that we understand what is happening in the market and know what our customers want because of our experience. Simply put- don’t make assumptions!

Will MLB implement changes that it has been floating? The brand has one other characteristic that is somewhat unique; baseball is a sport steeped in tradition. Change may be hard to sell to traditionalist fans. But, given that businesses operate in environments that are ever changing, it is incumbent on all marketers to embrace the possibilities of change.

Marketing Lessons Learned from Burger King

Experience can be a valuable source of learning, whether it is from our own experiences or observing the decisions and actions of others. Two news stories I read last week, both about Burger King, reinforced one of the most important lessons a marketer can learn. I was somewhat surprised because BK has made its share of missteps in recent years and has fought to remain relevant in the quick service burger category. So what was the lesson? It was simple yet powerful: Listen. Listen to what others are saying about you as well as listen to what is going on in the world around you.

Chicken Fries, Please

The first example of Burger King being attuned to the market can be found in the story behind its re-introduction of chicken fries. The menu item was pulled in 2012, but customers have not forgotten it. Tactics such as a Change.org petition, a Facebook group, and Twitter account all paid tribute to chicken fries and advocated their return to the menu. BK listened and has brought back chicken fries… albeit for a “limited time.” It would be understandable if market analysis and other tools of the trade led to the decision to eliminate chicken fries. But, BK had irrefutable evidence iin the form of customers longing, whining, begging, or otherwise demanding to bring back a product they liked. BK listened, and chicken fries are on the menu again.

Be in the Moment

A second example of BK showing why it is important to listen occurred last Monday as news broke about the death of Robin Williams. What would a burger restaurant have to do with the unexpected passing of a beloved entertainer? BK was scheduled to run a promoted trends ad for chicken fries on Twitter Monday evening. However, the real time conversations for which Twitter is known would surely be all about Robin Williams (and they were). Ads for fast food would not mesh well with public sentiment at such a delicate time. BK executives astutely arranged to pull the Twitter promotion. There would be other days to promote chicken fries; the moment was not right. Marketers must live in the moment, knowing when to seize an opportunity (such as the “blackout” during the 2013 Super Bowl) and when to defer to more important matters in the lives of their customers.

Ready to Listen?

Listening is perhaps the undervalued secret weapon in a marketer’s arsenal. The importance of solid communication skills is a given, but the focus tends to be on sending messages, not receiving them. We glorify the masterful copywriter and are in awe of the salesperson who can seemingly sell ice to Eskimos. Listening does not have the glamour of writing or presenting, but commitment to listening and understanding the world around us is essential for communication (and marketing) success).

Limited Time Offer: The Ultimate Tease?

Marketers have long used “limited time offer” as a tactic to create scarcity and build a sense of urgency to take action. I fondly remember seeing TV commercials as a youngster that used the call to action of “order before midnight tonight” to get the cassette or 8-track (it has been a while since I was a kid) at the low, low price. At the time, it baffled me why that particular call was used, especially since it was used every time I saw the commercial! In hindsight, I get the attempt to create urgency to order before the deal is no longer available.

Baja Blast in a Bottle: Don’t Get Used To It

Memories of those TV commercials from my youth were triggered when reading about Mtn Dew’s plans for the introduction of its wildly popular Baja Blast product. Yes, Mtn Dew Baja Blast is both wildly popular and new. The popularity of the Baja Blast product has been cultivated at Taco Bell restaurants, where the flavor has been sold exclusively until now. In fact, Mtn Dew Baja Blast is number two in sales for Taco Bell, trailing only Pepsi. This month, Pepsi introduced Baja Blast in bottles and cans… but only while supplies last. Expectations are that the popularity of the product will lead to selling through of the inventory by the end of summer. So if you are a Baja Blast lover you should do two things: 1) stock up on your beverage and 2) don’t get used to having it in cans and bottles because when it is gone, it is gone.

That’s not Nice

Before we accuse Pepsi of teasing customers or suggesting it is not playing nice by dangling Baja Blast in front of consumers for only a brief period, there is a strategy behind the product’s timing. Two statistics make a compelling argument for the Baja Blast summer promotion:

75% of Baja Blast fans say its availability is the number one reason they visit Taco Bell
Only 40% of Mtn Dew consumers are aware of the Baja Blast flavor

These stats taken together suggest a huge opportunity exists for Pepsi and even greater one for Taco Bell if more exposure is created for Baja Blast among the 60% of Mtn Dew customers that do not know about it. Building awareness and interest in Baja Blast through retail channels during the limited time offer could transfer to Taco Bell visits later in order to meet demand for the flavor. So, instead of calling out Pepsi as a tease for stirring excitement for Mtn Dew Baja Blast only to take it away, a tip of the hat may be in order for the creative means used to build interest for the brand as well as for its partner, Taco Bell.

A Limited Time Offer Like No Other

A final distinction between the introduction of Mtn Dew Baja Blast in bottles and cans compared to the typical limited time offer is the marketing resources being committed to it. A typical limited time offer for CPGs often relies mainly on point-of-purchase materials and in-store promotions. Mtn Dew produced a video featuring product endorsers Dale Earnhardt, Jr., Danny Davis, and Paul Rodriguez. Such efforts are usually reserved for product launches that are needed to survive long term. Not only is long term success not needed for the Baja Blast retail introduction, it is not even desired. This situation is different- Pepsi protected the exclusivity of Baja Blast for Taco Bell while at the same time potentially boosting excitement for the Mtn Dew brand… even if only for the summer.

Source: Ad Age- Mtn Dew Breaks Baja Blast Out of Taco Bell

What Does It Mean to Innovate with Discipline?

Photo by Phillie Casablanca/Flickr
(under Creative Commons License)

I came across a very interesting post on the Reveries blog this week about how Lego let innovation both drive the company and almost drive it into the ground. The post was discussing a review of a book about Lego, Brick by Brick, that chronicles how the company embraced theories of innovation with disastrous results. Lego rebounded by realizing that the growth mantra espoused in B-schools and corporate board rooms is not the only way to go. A return to a focus on committed customers and not chasing trends in the toy market brought Lego back from the brink of bankruptcy. The Lego story has a happy ending, but this mega-brand had lost its way at one point.

What Went Wrong?
The forces that contributed to Lego’s troubles are not surprising. Technology developments changed the toy industry as well as how young people engage in play. So, it was reasonable to think a firm would adapt to changes in the external marketing environment. If toys were going high tech, shouldn’t Lego be developing more technology-intensive toys? The video game generation is highly stimulated and has a short attention span, so developing more pre-constructed toys would address the potential threat of being irrelevant to young people who did not want to spend hours on a building project. Lego was wrong on both counts. The company was characterized as “innovating without discipline.” Generally, innovation is looked at favorably, an essential endeavor to fuel growth. But, it went horribly wrong for Lego.

The Alternative
The Lego story captured my attention for two reasons. First, it was a reminder that even the most astute companies can get it wrong when it comes to pursuing growth. Being wrong is a forgivable sin as long as you learn from it. Lego learned its lesson well. Second, conventional wisdom is not necessarily the strategy of choice. Disciplined innovation for Lego is adding new value to its passionate brand community made up of Lego lovers of all ages. One of the missteps Lego made was to follow the toy industry definition of the target market: Young males.

Innovate on your terms, not the industry norms. Lego regained its focus and brought new products to market that appealed to its customer base rather than continuing to chase prospective customers with products that did not always deliver against the Lego brand promise. While the external environment should not be ignored, keep your customers and brand advocates at the center of all innovation decisions.

Quality is Taco Bell’s Newest Ingredient

Product quality is a key ingredient for marketing success. When customers judge you as having high quality products or services they are more likely to buy, pay more than comparable offerings, and tell others about their experiences with your brand. The benefits of being positioned high quality are clear; how to successfully arrive at that place is more elusive.

Brands that aspire to ratchet up their quality associations should look to Yum! Brands’ Taco Bell for inspiration. Taco Bell has competed effectively in the quick-service restaurant category by being positioned as a low-priced brand. The tradeoff for being perceived as low priced is that quality perceptions are lower. After all, is it realistic that we can get high quality and pay low prices?

Fortunately, brand associations are not permanent; they can be reshaped and image redefined. Taco Bell has used a new product line to shift quality perceptions. Its Cantina Bell menu, created by celebrity chef Lorena Garcia, touts premium ingredients and creative recipes that make for high quality products. The positioning for the Cantina Bell menu is a distinctively upscale move for Taco Bell.

Although the new product line launch occurred less than three months ago, the impact Cantina Bell has had on Taco Bell’s brand image is significant. The YouGov BrandIndex, which measures consumer quality perceptions daily and tracks over time, reveals that Taco Bell’s efforts to enhance menu quality has paid off in more positive quality perceptions. Noteworthy gains made by Taco Bell since launching Cantina Bell menu include:

Positive movement in brand quality score from 14.4 to a high of 25.9 in late September
Closed a six-point gap with industry average; Taco Bell’s score now at or slightly above industry score

Quality scores are influenced by two factors, observed an executive with YouGov:

Communication – Advertising influenced perceptions
In-store Experience – Confirms perceptions when quality expectations are met

These two factors remind me of one of my favorite sayings about products and marketing: “You can put lipstick on a pig, but it is still a pig.” The lipstick is the brand communications, messaging used to shift brand perceptions. Message content has to be real (i.e., quality must actually be improved) and relevant (claims made matter to customers).

Taco Bell has discovered a powerful ingredient that has the potential to attract customers and reposition its brand as a quality offering in its industry. Your brand’s quality is not a permanent condition. If you want to improve it, consider adding ingredients needed to enhance the quality recipe.

Nation’s Restaurant News: “Research: Cantina Bell Boosts Taco Bell’s Image among Consumers”

Great Content Key to Gannett Paywalls

Newspaper publisher Gannett made news itself this week by announcing that it will implement paywalls, or subscription-based sites, for its 80 local newspapers. Gannett’s flagship brand, USA Today, will still be free online. For the local papers, website visitors will be able to access five to 15 articles monthly for free. After that, a subscription will be needed to download content.

The decision to erect paywalls by Gannett is bold. In a time when economic uncertainty remains among consumers and free information is abundant on the Internet, shifting to a pay-for-use model may seem risky. Gannett looks to success of national papers The Wall Street Journal and The New York Times, which have “metered access” in place- giving away some content but restricting access to most articles to subscribers. Transitioning to a subscription-based model entails a trade-off of creating subscription revenues versus devaluing the newspapers’ online reach (and appeal to advertisers) as fewer page impressions will occur when unlimited free access ends.

Can Gannett’s subscription-based model succeed? Sure it can. But, one condition must be satisfied… and it is a biggie. The content that Gannett previously gave away must have sufficient value to justify readers paying for it. Two attributes that can be at odds with one another, depth and timeliness, will be important for Gannett’s local products to contain. Quality journalism in the form of long-form feature stories as well as content exclusive to online subscribers are two ways to enhance depth of information. At the same time, subscribers will expect a pay site to offer up-to-date news in an environment in which “developing story” and “breaking news” are reported hourly in broadcast media.

Whether migration to a subscription-based model works for Gannett will come down to a simple marketing tenet: Product value must justify the selling price. The key to success is not so much persuading readers to accept a pay model (although that will be important) as delivering great content that people will pay to have.

Digiday – “Gannett’s Paywall Gamble”

A Toaster’s Perspective on Customer Experience

I returned recently from another memorable family vacation in Canada. We visited Niagara Falls and Toronto as well as made our first trip to Ottawa. All three cities offered fun and entertainment, but those stops were merely warm-ups for the highlight of the trip: a visit with my 87-year-old aunt in Granby, Quebec, located 50 miles southeast of Montreal. Aunt Marcelle truly is inspirational- she possesses a combination of beauty, grace, charm, and intellect that makes her one of a kind.

Aunt Marcelle has something else that is unique: A toaster that gives a refresher course in designing customer experience. It is not just any toaster; it is a shiny, silver 50-year-old Sunbeam model that I am pretty sure could be used as an anchor for a small boat when its toasting days are over. Yes, I said a 50-year-old toaster. Marcelle said it has needed only one repair during that time which cost $20. Each morning, I found myself marveling at the toaster as it performed its sole function. What made the toaster even more remarkable was its simplicity- there were no buttons, levers, or switches. Plug it in, drop in bread, and let the magic begin! The finished product was nearly perfect toast- browned but not burned.

The toaster did more than make breakfast; it was a reminder about the importance of simplicity when designing customer experience. Inclusion of features in a product or service often occurs because the capability exists to develop them along with a belief that customers would value the features. The result sometimes is over-engineered products that may be less convenient to use and more prone to failure compared to a product with a more simplistic design. Also, a trend toward developing products that multi-task leads to the possibility of negatively impacting customer experience if customers perceive that tradeoffs in quality or ease of use exist.

The familiar KISS method (Keep It Simple, Stupid!) comes to mind as I reflect on Aunt Marcelle’s classic toaster. Customers do not want to be dazzled with the capability of a product or service as much as they want to enjoy the benefits of how it adds value to their lives. For some people, simplicity has a connotation with being unsophisticated. If that is the case, I am content to have unsophisticated interactions with companies and brands that can simplify the experience of using their products or services.

Make Product Design a Fantasy

An often repeated saying in marketing is that “customers do not buy products; they buy benefits.” In other words, we are interested in a product not for what it does, but rather we are interested for what it can do for us. Yet, marketers often get bogged down in the design and production of products, and the desires of the customer often are overlooked. In their book Creating Breakthrough Products, Jonathan Cagan and Craig Vogel call for a different approach to product development when they say “form and function should follow fantasy.” This view requires a customer-centered approach to designing products.

Fantasy is an emotional state that can be felt through more satisfying experiences with a product. The question a marketer should ask is how well do products under his or her watch help customers fulfill their fantasies? Also, what tweaks can be made to make a product more capable of delivering a meaningful customer experience? These questions came to mind as the National Hockey League prepares for its All-Star Game weekend in Raleigh, North Carolina beginning tomorrow.

All-Star games in professional sports are exhibitions that feature top players but generally uninspiring play. And, there is little innovation in the design of the product as it is usually a game that pits all-star teams made up of players from a league’s two conferences (e.g., Eastern vs. Western Conference, American League vs. National League). The NHL sought to spark interest in this year’s All-Star Game by foregoing the East vs. West format in favor of selecting teams like a fan might draft a fantasy hockey team. A captain and two alternate captains for each team will draft from a pool of players selected to play in the game. Friday night’s player draft will perhaps be the highlight of the weekend, adding intrigue to the game itself on Sunday.

We must remember that doing things a certain way because that is how they have been done always is not a recipe for marketing success. Customers may prefer another way, one that adds more value to the products or service you offer. Invite your customers to share their fantasies, and then develop form and function to help them realize their fantasies.

Chevy Volt is Spark Needed by New GM

General Motors proudly unveiled the Chevrolet Volt hybrid vehicle this week, first to an audience of mainly ex-GM owners and then to a a gathering of media and analysts. The look of a proud parent was impossible to miss at these events, and why not- the Volt can tout an estimated highway MPG rating of 230. This staggering figure changes the game in hybrid vehicles. Toyota Prius, the current market leader, can get only about 1/4 of the Volt’s mileage performance. The Volt’s price tag of $35,000-40,000 makes it less than a slam dunk success when it hits the market in 2010, but its launch is critical to GM’s success going forward. The impressive mileage performance of the Volt sends a signal that GM is capable of producing innovative new products.

The coming out parties for the Chevy Volt signal intentions for change at GM. CEO Fritz Henderson says the company will put consumers first; the meeting with ex-customers before holding the media event was symbolic of the goal to focus more on consumers. Greater effort will be made to get consumer feedback, according to Henderson. Let’s not get too crazy about that statement; that is what marketing is about, after all. At least we should credit GM for adopting the right mindset.

Henderson also discussed marketing strategy. The corporate GM brand will be downplayed as most resources will be directed toward the four remaining GM brands (Chevrolet, Cadillac, Buick, and GM) and the various models that are subbrands of the four brands. This move is appropriate. There is not a great deal to be gained by promoting the GM brand today. It carries a great deal of negative baggage. Greater consumer interest will likely exist for the different GM nameplates, not the parent brand. Focusing marketing efforts on the four brands allows GM to reach customers at the level where they are evaluating choices, at the brand level.

Marketing Daily – “General Motors Addresses Consumers First”