The True Value of Value-Priced Product Lines

A marketer’s dream is to achieve healthy profit margins on every product sold. The fundamental customer value equation of benefits received compared to costs to acquire and consume suggests increasing value is as simple as either adding benefits or reducing costs. Product positioning can follow one of these two routes, focusing on either value via a benefit provided (e.g., quality, craftsmanship, performance, or image) or cost (e.g., low price or extended payment terms). In order to succeed in staking a distinctive position for value proposition and positioning, it seems inevitable that a decision must be made to focus either on benefits or costs. What if I told you it may be necessary to deliver value through more benefits and lower costs?

Wendy’s Split Personality

One brand that realizes a need to offer value in the forms of benefit focus and cost focus is Wendy’s. The quick service restaurant chain is locked in a battle not only with direct competition from burger chains like McDonald’s and Burger King, but gains by Taco Bell and Subway are an additional threat to business. Wendy’s has experienced modest store sales increases, but management is concerned about sluggish sales of its value menu. Wendy’s was a leader in establishing the value-priced category more than a decade ago, but it has been eclipsed by McDonald’s in appealing to the taste buds of price-sensitive diners. At the same time, Wendy’s has worked diligently to carve out a brand position of quality and premium products that can command higher price points. Can Wendy’s be an upscale burger brand and a value-priced brand at the same time? Not only can it, but Wendy’s must be both.

The Benefits of Multi-Segment Targeting

Positioning a brand to appeal to two different market segments seems to run counter to admonitions to focus and not try to be all things to all people. However, there are compelling reasons to develop separate product lines for upscale and value markets:
  1. Captures greater sales potential – There are sales to be had in both upscale and value markets. A decision to focus on one segment only is a choice to forego revenue opportunities. In Wendy’s case, it is not a great price distance between the premium-priced fast food burger and the value offering. Thus, the brand position is not compromised by selling products at different price points.
  2. Can bring new customers to the brand – Value priced offerings can be viewed as a form of sampling. They can be a way to bring customers into your business to try your products. If they are strictly buying on low price, you have something that appeals to their needs. If they can be up-sold, the value line has served to build brand credibility and opens the door to extending the relationship by selling more profitable products.
  3. It is a competitive necessity – Sometimes, offering a downscale product line may not be a desirable decision, but lack of a value-priced line could put a brand at a competitive disadvantage. In Wendy’s case, it may be tempting to say “forget the value menu- let McDonald’s have those customers and focus on the upscale market.” Nice concept, but it could create a disastrous scenario in which customers switch to a brand that offers greater choice.

There’s the Beef

The above points support a brand segmenting the market to appeal to value conscious buyers as well as tapping more profitable opportunities by offering products that have benefits valued by buyers. I like how Wendy’s has its value menu positioned as “Right Price Right Size.” This approach is not strictly about low price; consumers concerned about calorie intake would perceive value in this product line for reasons other than low price points. Therein is the key consideration: Multi-segment targeting is not about high price and low price; it answers the buyer’s question “what’s in it for me?” Reality is that one product line cannot appeal to diverse customer needs. It is OK to take a brand downstream to serve price conscious buyers… to a point. If brand credibility can be maintained, moving into lower priced markets can be a way to find new customers and fend off competition.

Shipping Seals the Customer Experience

A great deal of emphasis is placed on the customer journey in creating experiences that add value and influence satisfaction judgments. The customer journey refers to the different steps and touch points that go into a consumption experience. Design of physical spaces, employee staffing and training, and  consistency across offline, online, and mobile channels are three considerations that can determine the quality of the customer experience. However, there is one other touch point that occurs post-purchase that can make or break a positive evaluation of a consumption experience: Shipping.

Segmented Market for Shipping
Recent studies of 750 consumers and 62 major retailers by Exolevel revealed different segments in terms of how shipping is valued by consumers. Among the findings that suggest shipping can be marketed differently to various segments are that:

  • 81% of consumers said it is important for retailers to give shoppers choice of of customer pick-up or delivery regardless of payment form
  • 56% of retailers offer different fulfillment options (e.g., ship or pick-up)
  • 24% of consumers said it was important for retailers to offer same-day delivery. Among those who value same-day delivery, 30% were willing to pay $5-10 and 19% would pay $11-20 for the service.
  • 26% of retailers currently offer same-day delivery
  • 25% of consumers would be willing to wait up to two weeks for a product if there is no delivery fee.

Three customer segments emerge from these results:

  • Any way fulfillment – These buyers want the same flexibility for delivery that they enjoy in the shopping process (can shop in-store, online, or via an app). They want similar leeway in the final step of the customer journey.
  • Immediate fulfillment – Nearly one-fourth of shoppers value same-day delivery, and many of them are willing to pay a premium for that service. Marketing same-day delivery as value added convenience or offering free same-day delivery for purchases over a certain amount are two tactics that could support offering this amenity to the segment of customers interested in it.
  • Value fulfillment -Evidence points to existence of a segment whose value judgments can be perceived by free shipping given that 25% of shoppers surveyed are willing to wait for up to two weeks for a shipment if it meant paying no shipping costs. This segment prefers to put dollar expenditures into product purchase and accepts a trade off between price paid and speed of delivery.
Wrap Up the Customer Experience
Considerations for shipping strategies often key on two factors: 1) Costs and 2) Competition. While these variables are important and should not be ignored, what is missing from consideration? Or, should I say who is missing? The customer. Findings from the Exolevel consumer survey reveals that buyers are not homogeneous when it comes to their desires and expectations for shipping. Just as customers have different motivations and needs for the products they buy from you, they also differ in how they evaluate shipping in their overall experience with your business. Use shipping strategically to effectively wrap up a positive customer experience. Don’t let a satisfactory customer journey be derailed at the end because shipping options are inflexible or inconvenient.

 

Tapping into Passion from the Past

“The past is never dead. It’s not even past.”

– William Faulkner, Requiem for a Nun (1950)
This quote is very poignant to me. My father clipped it from a newspaper article and taped to his lamp. I never asked him why he had done so, but in my mind I knew the answer. It spoke to him about the memory of my older sister (who died at age 6, four years before I was born) and my mother (who passed away in 1980 after a brutal bout with brain cancer). I can visualize that clipping taped to his lamp vividly even though it has been almost 15 years since I last laid eyes on it. 
I was reminded of this quote last week, albeit in a very different context. A family outing to take in the musical performance Video Games Live turned out to be more than a stellar performance by the Nashville Symphony Orchestra. The performance was a multimedia entertainment experience featuring music from video games. Video game fans from children to Baby Boomers were treated to an eclectic collection of music that was a gamer’s paradise! The evening reinforced the notion that the past is not even past.
Game not Over
The sold-out symphony hall was into the show. In a way, I was surprised by the excitement and energy that I observed among the crowd. My expectations were responses to the effect of “hey, I remember that game.” Instead, each number was greeted with a raucous reaction. It was obvious that people were doing more than walking down Memory Lane; the music connected them with their experiences of playing those games. It was not a nostalgic evening as that would suggest revisiting something from the past that had lost relevance or popularity.
Connect with Emotions
So what does my experience at Video Games Live have to do with marketing? The takeaway is that emotions connect people with brands and products. Facts, figures, and statistics make for compelling rational appeals, but they are not very powerful for building liking and preference (i.e., emotion-based states). For video games, the emotions developed can link players to memories of childhood interests, hanging out with college roommates. Today, the gaming experience has broadened to making connections with strangers while playing online. The point is that video games were an important part of the self-identity of many attendees at the concert. 
Marketers should look for ways to go beyond selling what products can do for customers and emphasize telling what products have done to customers. This shift is about moving marketing efforts from being about information (what the product does) to transformation (what the product does for me). I enjoyed watching the reactions of people seated around us when the orchestra began playing another song. The joy, excitement, and love of the music and games for which they were the soundtracks was very evident.
Product features and their benefits evolve as innovation occurs, but the emotional associations people have with a product’s role in their lives is more permanent. In other words, “the past is never dead, it’s not even past.” Look to find and nurture the emotional connections people have with your product.

Where in the World Are Your Customers?

Every once in a while I find myself experiencing a “wow” moment. The scope of it is usually small, but I am amazed by something I see occurring in the world around me. I had one of those “wow” moments a few days ago. I opened my Facebook feed to see what was happening. As I read the first four posts it struck me that the topics and perspectives of the posters read like they were in four very different worlds. I don’t want to quote the posters, but the tone of their posts went like this:

  • Empathy for other people who were experiencing disappointment
  • Disdain for how some people mistreat others in their personal relationships
  • Sarcasm toward a situation that was perceived unfair and biased against one party
  • Unbridled joy and love for being able to spend time with someone special

These events sound like activity occurring in four very different places, but we know too well that it is from the same world but at different moments in people’s lives. We experience these emotions… just not all at the same time!

Where Are Your Customers?
As I reflected on this snapshot of my friends’ lives, I could not help but see parallels with buyer-seller relationships in marketing. Marketers gravitate toward lumping customers together in a target market based on shared characteristics (e.g., age, gender, geographic location). There are benefits to analyzing customers to uncover similarities. However, these surface level characteristics are not complete pictures of customers. In addition to state-of-being characteristics, we must consider customers’ state of mind- what are they feeling? What are they going through in their lives? Answers to these questions move us to group customers into segments by seeing them as individuals. As an educator, I find myself asking the state-of-mind questions about my students. Sure, they have similarities in terms of age, field of study, and geography, but each one has challenges, joys, and disappointments that often do not show up in their outward conduct. I know that I can serve them better if I understand what they are up against.

Aggregate and Differentiate
The takeaway of this post is not a call to abandon traditional target marketing tactics. Aggregation creates efficiency in communicating with and serving customers. Rather, complement aggregation with individualization by listening for cues about customers’ state of mind. The most effective means of doing this is through the sales force’s contact with customers and prospects. Similarly, service employees in a call center can gather such information through their interactions with customers. Social media is another channel for listening, both what people are saying about your company and products as well as what is on their mind in general.

Marketing is about meeting the needs of customers. We cannot lose sight of the fact that needs do not exist because of our personal characteristics like how much education we have or how much money we earn (aggregate characteristics); our needs arise from our unique life situations. The challenge for marketers is to be prepared to listen as customers reveal their state of mind.

Create Unexpected Moments

Everyone likes surprises, good ones that is. They are unexpected occurrences that can lift spirits and even change lives. A surprise does not have to be the latter to have impact. Sure, if today I won the $40 million Powerball jackpot that would be a surprise and would be life changing. But, surprises that we are more likely to encounter are small in scope yet can have a significant impact on us long term. Marketers should be on the lookout for opportunities to create unexpected moments for customers by what they say and do.

Consistency Breeds Certainty
In a world where we often script our words and actions meticulously to create consistent experiences, unexpected moments can be scary because they deviate from the unified message that we believe builds brands. Consistency is valued because:

  • It creates control – Nothing can go wrong if we have policies, procedures, and responses for virtually any situation that arises, can it?
  • It reduces uncertainty – Employees and customers have a better idea of what to expect when the service encounter follows a rather rigid, scripted sequence of steps and actions.
  • It reinforces a brand’s promise – A scripted service experience delivered consistently over time is simply execution against we come to expect from brands. For example, one of the most anticipated moments when dining at Chick-fil-A (besides eating delicious food) is to hear two words uttered by the server when handing my order to me after I thank her: “My pleasure.” It is part of the script, but I believe that the server and Chick-fil-A feel it is their pleasure to have me as a customer.

Consistency is a valued trait for a brand to possess, but it can have a negative connotation: Boring. If customer experiences are delivered with mechanical-like precision, is there a risk of not connecting with customers on an emotional level?


The Power of the Unexpected
Scripting customer experiences to build consistency and brand promise is not a bad thing, but can it be balanced by injecting unexpected moments in the process. The most poignant unexpected moment I have had as a consumer occurred 15 years ago, but it was so memorable that I am sharing it with you today as an example of the impact an unexpected moment can have. My family was having lunch at Wendy’s in my hometown of West Point, Mississippi. The service encounter began as you would expect, following the script of placing an order, paying, and waiting for food. What happened next was unexpected- As the counter employee handed my order to me she said “Thank you. See you tomorrow.” Her statement stopped me in my tracks! It was so far off-script that I did not know what to say. I giggled, thanked her, and went on my way. I was not going to be in town “tomorrow,” but if I had been I may have gone back to Wendy’s at her suggestion.

I felt a bit strange describing this incident as the most poignant unexpected moment I have experienced as a consumer. After all, the statement “see you tomorrow” hardly stacks up against unexpected moments that  companies like Zappos and Nordstrom that are renowned for their service have been known to create for customers. The effect it has had on me is that it has permeated my work as a marketer and educator. How can I create unexpected moments for those I serve to enhance the value of their interactions with me?

The Unexpected Connects
The takeaway is not that you should chuck your scripted customer experiences. They play a role in satisfying customers and defining your brand. Instead, be open to the unexpected; do something that is beyond the norm that will impact customers. Two weeks ago, I took one of our cars to a local tire store to have a leaky tire repaired. When the work was finished, I pulled out my wallet to pay only to hear “no charge.” The tires were not bought there, but there is a great chance that the next set will! I left that business feeling like they cared about me, not just my money. The expected is just that- expected. Look to create unexpected moments to strengthen connections between customers and your brand.

Avoiding Death and Taxes

It is said that in life two things are certain: Death and taxes. While that axiom plays out for people, businesses can shield themselves from both. Tax avoidance practices of American corporations was the focus of Congressional hearings last week. I’m a marketer, not an accountant, so we will set aside the taxes issue and focus on brand “death.” Brands can live in perpetuity, not inherently susceptible to aging or deterioration. However, brands can and do die. A list published by 24/7 Wall St. predicts the demise of 10 brands in the coming year. The list is provocative but likely will prove not be very accurate. The veracity of the list is not the issue; thinking about the contributing factors to a brand’s demise is worth the effort, however.

At Death’s Door?
The current list by 24/7 Wall St. contains some surprises and some brands whose vulnerability is not news:

  1. JCPenney
  2. Leap Wireless
  3. LivingSocial
  4. Martha Stewart Living magazine
  5. Mitsubishi Motors
  6. Nook
  7. Olympus
  8. Road & Track magazine
  9. Volvo
  10. WNBA 

There is a difference between a brand in difficulty and a brand in decline- JCPenney is experiencing difficulties as its “fair and square pricing” model failed to catch on and the company is reverting to a heavy promotion schedule to appeal to customers. In contrast, brands like Living Social and Nook are fighting for their lives as entrenched competitors make it difficult to maintain market share and successfully differentiate their brand. Of the 10 brands on this list, I see LivingSocial and Nook as the most vulnerable.

The Brand Deathwatch Checklist
The list of brands predicted to die in the next year is insightful because it forces us to ask what factors make a brand susceptible to becoming endangered. Here are three factors that stand out:

  1. Business model is outdated – Martha Stewart Living and Road & Track find themselves on the list largely because the traditional magazine publishing industry has been turned on its head. Digital distribution and the availability of free information coupled with costs to produce a print product are serious blows.
  2. Competition is formidable – Brands can become endangered when competition is fierce in terms of power or number. Nook and its parent Barnes & Noble are reeling under the weight of Amazon and Apple. The market leverage and profitability that these companies have enjoyed make it difficult for a firm with less resources to do battle. LivingSocial is threatened by the sheer number of competitors- major brands like Groupon all the way down to a sea of local market deal sites. 
  3. Lack of differentiation – This factor can make any brand vulnerable to competition and becoming irrelevant in customers’ minds. Without a clear point of difference that is valued by consumers, brands are living on borrowed time. At best, they become commodities.

Don’t Write Them Off Yet
The 24/7 Wall St. list is interesting and provocative, but it is not necessarily a harbinger of what is in store for these brands. The 2012 list of 10 dying brands correctly predicted the demise of three: MetroPCS, Current TV, and Suzuki. A fourth brand, Research in Motion, retired its name in favor of its product brand, Blackberry. The other six brands still are kicking. Brands have been known to come back from the brink of extinction, and some of the brands on the list could gain new energy. Their fate depends on how the three factors on the “brand deathwatch checklist” play out.

Make Sure the Price is Right

Marketers like to think that the benefits delivered by their products or services will stand up as adequate justification for price. I, too, subscribe to that belief; a product that offers great value in terms of benefits to the buyer should never have to apologize for price. But, the reality is that many consumers are price conscious, and they will do what is best for their financial situation. Brand loyalty could be vulnerable in this situation. Buyers might be willing to accept a trade-off of slightly less quality or performance in return for spending less money.

Price Sensitivity is High
While indicators in the financial markets suggest that good times are back on Wall Street, there is less optimism that the same is happening on Main Street. According to a recent consumer survey done by Parago, price is a major concern when shopping for products. Among the findings of the survey were:

  • 42% of people surveyed said they have less purchasing power this year compared to 2012
  • 74% indicated they are more sensitive to price this year
  • 80% said they look for deals including rebates, deals, and lowest prices (69% last year)

In summary, price is a big issue, so much so that 81% said they would travel 5-10 minutes of their way to get a $10 rebate on a $50 purchase.

How to Make Sure Price is Right
Findings from the Parago Shopper Behavior Survey would seem to suggest that price should take on greater prominence in marketing a product or service. Resist the temptation to chuck other strategies in order to adopt a price-friendly position. Price, like other marketing decisions, must be made with regard to the customer segment being served. Most businesses have different groups of customers in terms of their relationship state. Some customers are devoted and very loyal; brand switching is not an option to them. Other customers either buy infrequently or simply are deal prone- price is a more important criterion in their decision-making process.

If we simplify the customer base to two groups, more loyal and less loyal, we can begin to differentiate pricing strategy to appeal to each segment:

  • More Loyal Customers – This segment may be loyal to your brand, but they still are likely paying attention to price. Although their loyalty means they are not necessarily going to drop you for a competitor when the first attractive deal comes along, but they may opt to curtail their purchases. Buying less frequently or in smaller quantities could be their way of compromising between their affinity for your brand and affinity for the money in their wallet. Reward loyal customers by giving them incentives for buying. If you have a loyalty program in which customers accrue points for purchases, offer special days or times when double points can be earned. Regardless of the tactic used, the aim is to convey appreciation for their loyalty and encourage them to  buy.
  • Less Loyal Customers – The purchase motivations of this segment are pretty clear- price matters. For this segment, creating brand preference via price will be crucial. Rather than running blanket price-based promotions that target a mass audience, consider segmenting your database to identify buyers based on recency and frequency of purchase. Look for customers who have “fallen away,” not having made a purchase for the last six months, for example. I recall an instance in which this tactic worked on me very effectively. I received a postcard from Papa John’s saying something to the effect of “We’ve missed you- you have not ordered in a while.” The message included a discount; I cannot remember the exact amount of discount but it does not matter- obviously it worked because I ordered  that night!

Feel Their Pain
The biggest mistake that can be made when it comes to pricing is being oblivious or indifferent toward your customers’ concerns about price. Yes, your product may have exceptional value, but if consumers feel their money may be better spent even if having to accept slightly less value from a competing offering, they will do it. When the recession of 2008 hit with full force, marketers across many different industries responded adeptly by rolling out value priced offerings of their products. The message was clear: “We feel your pain.” Such a move freed customers from having to make choices about whether to buy or not buy because of price- they now had options while being able to remain brand loyal.

Three-fourths of all shoppers are more sensitive to price today not because it is a fun sport- they are worried about how to best stretch their dollars. Feel their pain and be there for them by segmenting pricing strategies to appeal to customers across the relationship continuum.

Marketing Profs – Consumer Price Sensitivity and Deal Seeking Up in 2013

Who Owns Your Brand? Not You

One of my favorite quotes about brands comes from John Stuart, former chairman of Quaker Oats. He said “If this business were to be split up, I would be glad to take the brands, trademarks and goodwill and you could have all the bricks and mortar – and I would fare better than you.” In other words, the really valuable asset that is owned is the brand. I share this quote with students in my Promotion class early in the course to make a point about the importance of brands. After all, that is what we are “promoting” when using promotion tactics- building a brand by attempting to create awareness, build associations, achieve preference, or influence purchase.

It’s Not Yours
John Stuart’s legendary quote about the power of brands is poignant, but unfortunately it is misguided. His statement suggests the marketer owns the brands. Of course, the firm has legal rights to using the brand’s name and marks. But, who really owns the brand? The world around you, namely your customers and product users. One dimension of a brand is that it is an image, which is a collection of perceptions. Where do those perceptions reside? In the minds of customers and others. Another dimension of a brand is that it is an experience, an interactive consumption engagement. Who is the central figure? The customer, without whom there is no experience. Finally, a brand is also a relationship- no customers, no relationships, and no brand. So, three out of four dimensions of a brand (image, experience,and relationship) are customer owned.  If you don’t believe me, just ask the marketers responsible for Nutella.

Nutella Knows… Now
Nutella has been sold in the United States for more than 25 years. The hazelnut spread enjoys a committed fan community. Two Americans living in Italy, Sara Rosso and MichelleFabio, created World Nutella Day, a website that celebrates the product that they love. On February 5 of this year, the 7th annual World Nutella Day was observed. However, the future of World Nutella Day was uncertain when Rosso and Fabio received a letter from Ferrero, Nutella’s corporate owner, demanding they cease and desist use of the Nutella brand assets. Rosso took to her blog to let the Nutella fan community know about the action. Response was swift and condemning of Ferrero’s stance. The company backpedaled and said that after reaching out to Rosso a “positive conclusion” was reached. The company’s explanation for the threat of legal action was that “the case arose from a routine brand defense procedure…” triggered by alleged misuse of the Nutella brand on the World Nutella Day site. The legal explanation did not necessarily win over Nutella lovers, but the legal department was doing what it is charged with managing- the one dimension of the brand that Ferrero actually owns.

As one reads the events that unfolded in this situation the immediate thought is how many brands would love to have advocates so passionate that they start websites and create brand holidays? Nutella is fortunate to have built a passionate brand community (World Nutella Day has more than 40,000 likes on Facebook). You may own the legal rights to your brand, but understand your territorial dominance ends there. Customers, the community, and others interacting with your brand own the rest of it. This external domination of your brand is why it is crucial to be involved in building community. You do not have to own it, just as World Nutella Day is not corporately owned. But, you want to be an engaged member- it is your brand, after all (sort of).

Ad Age – Nutella Day Likely to Survive Unscathed

The Side Benefits of Crowdsourcing

Crowdsourcing has become a popular business practice. The ease of connecting with people via social media enables an organization to turn to its tribe of followers for solutions or inspiration. New product ideas, customer service issues, and marketing input are three examples of how marketers use crowdsourcing to tap the wisdom of the crowds. One of the most effective crowdsourcing campaigns in recent years has been Doritos’ Crash the Super Bowl contest. For the past seven years, Frito-Lay has challenged the public to submit Doritos commercials to air during the Super Bowl. Five finalists are picked, giving the winners (often upstart ad agencies) tremendous exposure and modest financial rewards. The payoff for Doritos has been successful commercials, in part because they are vetted by the public via a fan vote for the contest prior to the Super Bowl.
A Maverick Idea for Crowdsourcing
The latest example of using crowdsourcing to meet a marketing need comes from the NBA’s Dallas Mavericks. Owner Mark Cuban, known for being innovative and a maverick in his own right, recently took to his blog to call on fans to help design the team’s next uniform. Specifically, Cuban wants to debut new uniforms for the 2015-2016 season. Between now and May 31, he wants people to post their ideas for the next uniforms on his blog. Here are some details of Cuban’s call for action:
  • All submissions immediately become property of the team
  • A winner may be picked from the submissions
  • Winner will receive $1000 and possibly some free Mavs tickets
  • Of course, the winner receives bragging rights for having his/her design chosen

Is Mark Cuban being a cheapskate for offering a measly $1000 to the winner… and there might not even be a winner? Some people think so, contending that if a professional designer was hired the fee would likely be six figures. But, judging by most comments posted on Cuban’s blog (nearly 900 so far including many contest submissions) many Mavs fans have no problem with the conditions of the contest.

Promotion and Engagement are Side Benefits
The obvious benefit of crowdsourcing is innovation. Ideas for new value are generated, often by the very people who use or are served by the company or product. Generating multiple ideas is good; generating those ideas from users and customers is great. Another benefit can be realized from crowdsourcing as evidenced by the Dallas Mavericks example: Promotion. In this case, there is not much going on with the Dallas Mavericks these days- the team missed the NBA playoffs this season. The uniform design challenge is a way to stir interest in the team during an otherwise quiet time.
More importantly, crowdsourcing provides a platform for engaging customers and other members of a brand community. Asking people for their input gives them a voice, making them feel valued. I read several of the comments to Cuban’s post that contained contest submissions. Many people apologetically began by saying “I am not a good artist but…” yet uploaded their ideas for new uniforms. Many people included the acronym “MFFL” in their posts (“Mavericks Fan for Life”), providing a clear indication of their relationship status with the brand. For this segment of a brand’s community, crowdsourcing is powerful because it makes these people feel like they are part of the organization. Their involvement is sought to innovate on the brand’s behalf.
Cuban concludes his blog post about the contest by saying “let’s see what you got.” I’m with him- I cannot wait to see the quantity and quality of ideas submitted in the coming days. Regardless of whether the eventual next uniform design comes directly from the community submissions or indirectly influence a hired designer’s work, Mark Cuban’s crowdsouring call will likely be deemed a success.

 

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”