Why We Won’t Be Riding the Wave

Google receives accolades regularly as one of the world’s most innovative companies. But even a strong brand and a knack for developing new services does not make a company immune from product failures. Google signaled defeat this week when it announced it would no longer develop Google Wave as a stand-alone application. The real-time communication and collaboration service had a loyal following, but one that was too small for Google to continue supporting it as part of its product portfolio.

As I learned of Google’s decision, my immediate reaction was “I’m not surprised.” I am leading students in a Product Management course through the book Made to Stick by Chip Heath and Dan Heath. This bestselling book examines why some ideas “stick” or are adopted and others are not. The difference is not necessarily in the quality of the idea, but it is in the messaging that communicates an idea to the audience for which it is intended.

Two of the six traits of a sticky idea are noticeably absent in Google Wave: simple and concrete. A simple idea is one that can be expressed succinctly yet contains a meaning that is consistent. I am unsure whether “real time collaboration” is a core message that got through to the masses. And, the invitation program used by Google to introduce the Wave may have appealed to some people, but it left the uninvited in the dark about the service. A concrete idea removes abstraction and presents it in an easy to understand format. Until reading Wave’s obituary yesterday in Fast Company, I was unable to tell anyone what it was because I did not know myself!

Wave is not the first failure Google has had, and it likely will not be the last. Sure, having a powerful brand gives a company a leg up when introducing new products. Consumers are more likely to acknowledge a new product’s existence and perhaps even consider trying it when it is the sibling of brands that they trust and know. That benefit was not enough in Google Wave’s case, nor was the innovative nature of the service.

The story of Google Wave should serve as a reminder that regardless of a brand’s strength and product uniqueness, if the benefit to consumers is not articulated in simple and concrete terms it is vulnerable. The question “what’s in it for me?” has to be answered clearly if consumers are expected to change their behavior and adopt a new product.

Bad News as a Catalyst for Change

Bad news is usually not good for business. The saying “there’s no such thing as bad publicity” may apply to entertainers and other personalities who benefit from keeping their names in front of the public… even if it is because of an arrest or embarrassing actions. But, most brands do not benefit from their names being associated with negative events or news.

A recent example of bad publicity that impacted an entire group of businesses was an ESPN “Outside the Lines” story about the food safety concerns at major league sports venues. The bottom line was that the vast majority of foodservice locations at sports venues have been cited for violations when inspected. After watching the story, one wonders if people singing “Take Me Out to the Ballgame” should omit any lines about buying peanuts, Cracker Jacks, or any other items from a stadium foodservice operator. When it comes to food, there is most certainly such a thing as bad publicity!

Is there marketing opportunity in bad news? Yes, and marketers must seize the chance to turn lemons into lemonade. The news does not have to be publicized as it was in the case of the sports foodservice industry to be actionable. Internal information that shows an increase in customer complaints, a rise in the number of lost customers, or lower profits are examples of events that could be a catalyst for change.

In the case of sports foodservice, the ESPN exposé should serve as a call for companies to review all aspects of their operations including hiring, training, food preparation processes, and the quality of products offered by their suppliers. Instead of a defensive, withdrawn response to questions about product safety like the responses given by foodservice companies Aramark and Centerplate in the “Outside the Lines” story, the more appropriate response is “what can we do to deliver a better experience to our customers?” Sports venues have expanded their foodservice options to more upscale (and higher profit margin) fare, but their efforts may be more fruitful with a focus on a quality, consistent, and healthy experience for their patrons.

When bad news visits, embrace it as an invitation for change. It will not leave until the conditions that brought into your life in the first place are addressed.

The Meaning of the Music Industry’s Sales Song

Many young people become enamored with music during their teenage years. They listen to songs intently and seek to decipher meanings or messages they believe are contained in the lyrics. That description fits many of my friends and me in the early 1980s. We were eager to take away something substantive from the songs we heard. Sometimes we could, and sometimes, well it was harder!

Fast forward to 2010, the adolescent experience of learning from music can be extended to businesses learning from the music industry. A recent article appearing on FastCompany.com painted an interesting contrast about the state of music in the United States. On one hand, data shown in the article reflects a woeful state for music sales. Annual sales volume is less than half of dollar sales 10 years ago when adjusted for inflation. Such a dramatic slide in sales would usually trigger red flags that product interest is waning, but we know better. The article leads with a quote from Tom Silverman, a music industry executive, who says “More people are engaged with music than ever before.” His view is based on the our options for consuming music today without paying for it (Pandora, iTunes, and Internet radio, to name a few legal options).

What was broken in the music industry for some time is not the consumer’s interest in music, but the long-time product kingpin: the album. Artists and music companies packaged a collection of songs in a single product, but in many cases music lovers may have had an interest in only one or two songs. Now, rather than paying $14.99 for a CD to get a few coveted songs, consumers can buy single tracks for $1.29 and get only the songs they want to pay for. So, instead of music sales being driven by what the labels want to sell (but consumers do not want to buy), the product that appeals to most buyers is the individual song.

As I read the article and thought about the transformation of product sales in the music industry, I could not help but wonder “are there other industries that suffer from an out-of-touch sales model”? Did a similar situation lead to a decline in the American automobile industry? Are lack of offering new approaches to products and distribution responsible for stagnation in the soft drink industry? It seems that opportunities exist for businesses that are willing to depart from the status quo if selling products differently will positively influence consumer acceptance. It requires listening to the music (as performed by customers) to interpret the meaning.

Let Customers Know You Care by Letting Them Know You Hear

Social media has opened new communication channels between marketers and customers. Unfortunately, too many times the traditional media mindset of “talk, talk, talk” is being applied to social media, which negates the power of social media tools to engage consumers in conversation. Mastering social media resembles the challenges marketers faced a decade ago building websites that delivered value to their target markets.

A big problem, according to eMarketer founder Geoff Ramsey, is that most marketers are uncertain how to integrate social media into their existing digital media mix of display and search advertising. In Ramsey’s view, the value of social media resides in the ability to listen to what customers and others are saying about your brand. So, a different approach to social media should be taken than the messaging used in digital advertising that is geared toward persuasion and action.

A great example of a listening opportunity using social media that has been missed (at least so far) is on the Facebook page of Baja Fresh, a quick service restaurant chain. A post by the company yesterday (July 19) is a teaser for a new Facebook coupon for Baja Fresh fans. As of this morning, 20 comments were made about the post, many of which express frustrations with Baja Fresh locations in their local area not accepting the coupons. The silence from Baja Fresh is rather noticeable; no one from the company has responded to the concerns about not being able to use coupons.

The ability to listen to customers’ praises, questions, complaints, and ideas (and respond to them) makes social media a powerful communication medium. Giving customers a voice is great, but are you prepared, as Jim Collins says, to “confront the brutal facts?” Creating social media content without evidence of listening is a return to one-way communication. I am unsure what is worse: A company’s Facebook page that is updated with new content once every few weeks, or a rather active presence with little emphasis on listening and responding to customers. The decision to use social media implies you want to hear from people who care about your brand. Let them be heard… and let them know that you hear them!

Understanding the New Consumer

The recession has had a profound impact on consumer behavior. Many studies conducted in recent months have found consumers have become more frugal, price conscious, and less brand loyal. These shifts spell trouble for marketers that are accustomed to buyer behavior following the peaks and valleys of the economy. This recession may be different; it appears that many consumers have decided to change their spending ways.

The most recent study on this issue from Deloitte titled “The New American Pantry” suggests that many consumers enjoy the challenge of saving money by using coupons, shopping for bargains, and participating in retailers’ loyalty programs. In fact, 81% of the respondents said these shopping techniques were fun! Consumers feel that they are more savvy as a result of the modified buying behavior induced by the recession, with 79% of respondents indicating they feel smarter about the way they shop.

Perhaps the most sobering finding arising from this study for brand marketers is that many consumers have regrets about their old shopping habits. The Deloitte report describes consumers’ sentiments about their pre-recession spending using words such as “remorse,” “embarrassment,” and “wasteful.” These feelings should serve as a call to brand marketers for a renewed focus on how they add value for consumers. It may not be enough to be a prestigious brand, and the perceived quality advantage national brands have enjoyed over private labels has been erased to an extent. Experience and relationship may overshadow awareness and image as marketing priorities. The key for brand marketers is to remain competitive in an environment in which brand relevance will matter more than brand image.

Marketing Daily – “Deloitte Study: Consumers Love Spending Less”

To Xfinity and Beyond: Comcast’s Branding Mistake

Brands are among the most important assets a business owns. They project an identity; they communicate meaning; they serve as the connection point in the relationship between buyers and sellers. Thus, brand name strategy is more than an important marketing decision; it has repercussions throughout a company and into the marketplace. Why do I begin with a reminder about the importance of brand names? I am at a loss to understand the rationale behind Comcast’s decision to re-brand its communication and entertainment services Xfinity.

Author and marketing consultant Al Ries recently wrote a column in which he questions the wisdom of Comcast’s strategy. I do not always agree with Ries because his views often seem too simplistic and based on not much more than a “that won’t work” justification. In this case, I could not agree more with Ries’ assessment that Comcast not only adopted a bad brand name, it is following an unnecessary path. The main flaw in Comcast’s strategy is that it is marketing a brand, not a category. In Ries’ view, a firm’s priority should be to market with an objective of product category dominance. Ries uses McDonald’s, Chick-fil-A, and DirectTV as examples of brands that have honed their message so that they are known for a specific product category. The Xfinity brand offers little in the way of communicating such category strength.

Critics of Al Ries criticize him for being anti-line extension, and he has certainly opined against brand extensions over the years. However, in this case, Ries has correctly called out Comcast for a branding decision that does not seem to have legs underneath it. It will be an expensive process to re-brand, and Comcast is putting a great deal of faith in consumers that they will recognize, understand, and care about the Xfinity brand.

Ad Age – “Comcast Needs a New Strategy, Not a New Brand”

Online Coupons Can Reward Sellers, Too

Consumers have increased their use of coupons as a way to stretch buying power. The use of coupons has been aided in part by the ease of distributing coupon offers through digital channels. Yes, coupons benefit buyers by enabling them to save money, but payoffs from coupons extend to the sellers that offer them according to the Online Shopper Intelligence study. Findings from the recent study revealed that 57% of online shoppers that made a purchase online would not have made the purchase had they not had a coupon they received online.

It is not surprising that coupons might influence consumers’ decision to buy. A rather unexpected outcome from online coupons is that consumers apparently are willing to spend more money when they use a coupon. In the same study, the average amount spent by consumers with a coupon was $216 compared to $122 for shoppers that did not have a coupon. The upside of the expense a marketer incurs to offer an incentive to buyers may be rewards that come in the form of a higher dollar transaction.

The potential payoffs of online coupons suggest three situations to leverage through digital coupon distribution:

1. Attract new customers – Buyers conducting searches using general product category keywords may be unaware of individual brands. Reaching first-time buyers with online offers is a way to introduce them to your brand with reduced risk to them.

2. Gain competitive advantage – Placing coupons online is a wise strategy given their importance to many buyers. Make access to coupons easier for buyers and more rewarding for you by PPC and SEO strategies that bring attention to online coupon offers. Connecting couponing with search marketing strategies is a way to set a brand apart from competitors that have a less integrated approach to their digital marketing campaigns.

3. Influence product sales – Whether the aim is to introduce new products, sell complementary products, or achieve a higher average transaction, results from the recent Online Shopper Intelligence study suggest coupons empower consumers to spend. A strategic approach to couponing should be adopted. Rather than simply giving consumers a price break in the hopes they will buy, structure coupon offers to achieve broader marketing objectives. Some examples: a) offering a discount for buying multiple items can influence unit sales, b) offering a discount on an item when a complementary item is bought at regular price stimulates sales of both items, and c) mining your customer database to appeal to customers who have not bought in a specified time period can be done efficiently in an attempt to bring them back into the fold.

Adoption of online coupons has a long way to go to match the impact of coupons delivered through traditional media. But, many online shoppers seek coupons when making purchases; why not meet their need and possibly be rewarded by higher spending and brand loyalty?

Compete.com – “Coupons Are Good for the Bottom Line”

Borrowing Brain Power for Innovation

It has been said that innovation is the lifeblood of a business. A company can leverage new products, services, or ideas in order to reach new customers, increase market reach, and grow profits. Appreciating the impact innovation can have on an organization is easy; establishing a culture that values and encourages innovation is often the challenge. Even significant investments in R&D and market research cannot guarantee that innovations will succeed… or if they will even come to fruition. Given the formidable obstacles to innovation, businesses are increasingly willing to use non-traditional methods to develop new ideas.

One approach to innovation that has gained notoriety is crowdsourcing, enlisting a community of customers or other interested persons to hatch ideas that could result in new products. Crowdsourcing has even been used to develop advertising campaigns such as the Doritos commercials that appeared during this year’s Super Bowl. The use of crowdsourcing reminds me of a quote by Woodrow Wilson who said, “I not only use all the brains that I have, but all that I can borrow.” Why not tap into the insight, inspiration, and expertise of other people to develop new ideas?

A recent crowdsourcing project intended to identify innovation opportunities was conducted by Starbucks. Its Betacup Challenge sought ideas to reduce the environmental impact of Starbucks’ iconic to-go cups. Entries vied for a piece of the $20,000 prize money Starbucks offered. The result was 430 ideas submitted online that generated more than 5,000 ratings and 13,000 comments from website visitors. While many ideas dealt with design changes for disposable cups, the grand prize winner had an idea that did not involve disposable cups at all. The winning idea focused on a rewards-based program for customers with reusable cups.

Crowdsourcing product innovation may not be a replacement for product managers, R&D departments, and market research, but it certainly brings a fresh perspective to the ideation process. Growth in any organization can be stymied by myopic thinking that comes from personnel being too close to issues and too familiar with “what can’t be done.” Starbucks did the right thing by pitching this innovation question to a broad community. Will the ideas generated in the Betacup Challenge ever be implemented? That answer is yet to be determined. More importantly, the quantity (and probably quality) of ideas from which Starbucks can pursue innovations are greater because it acknowledged it does not have all of the answers when it comes to reducing the company’s environmental impact.

Fast Company – “Winner of Starbucks’ Coffee Cup Challenge Isn’t a Coffee Cup”

Use Celebrity Endorsers to Engage, not Impress

Celebrity endorsers have been used for decades by advertisers seeking to benefit from the familiarity and likeability of athletes, entertainers, or other famous people. Often, marketers do not fully leverage their association with celebrities. For example, ads in which the endorser is merely pictured or otherwise does not engage the audience with the story behind his or her association with the brand misses an opportunity to connect with the audience. A memorable example I once saw was an ad in a marketing trade magazine several years for a mailing list service that featured NFL Hall of Famer Joe Montana. His picture was in the ad, and while he flashed a nice smile it never was clear what his connection was to the product. I never knew Joe Montana was a mailing list expert (but he is a marketing expert if he could get a company to pay him to endorse the product!).

In contrast, I like the approach used by Unilever to integrate celebrity endorsers into its campaign for Dove Men+Care skin care line. The company has enlisted Major League Baseball personalities such as St. Louis Cardinals slugger Albert Pujols, New York Yankees pitcher Andy Pettitte, and Yankees manager Joe Girardi in a video series. The “Journey to Comfort” campaign will feature 90-second videos as well as longer clips featuring the baseball stars (see a Pujols video here). A sweepstakes is part of the campaign, too, with the grand prize being a meeting with Pujols and watching him take batting practice.

Dove’s “Journey to Comfort” campaign is not guaranteed to move the sales needle, but then again no campaign has that capability. What the campaign does guarantee is a glimpse into the lives of three baseball heroes. The endorsers share personal experiences and stories in the videos that will allow fans to see a different side than the baseball accomplishments for which Pujols, Pettitte, and Girardi are known. A video campaign like the one Dove is conducting has the potential to effectively target men through their interest in baseball, getting their attention with the access to three well-known MLB personalities. The campaign sells Dove Men+Care in a subtle manner, connecting the brand to the lives of men via the MLB endorsers. And, it is a stronger customer relationship to the brand that will ultimately positively impact sales.

Marketing Daily – “Dove Links with MLB Figures for Videos, Sweeps”

Don’t Be Afraid to Go Downscale

One of the most significant effects of the recession has been consumers scaling back purchases in many ways, including trading down to purchase lower priced brands. It is an alternative to eliminating purchase of a certain product altogether. Serving customers in downscale segments has always been a delicate situation for marketers. On one hand, the potential to generate revenue from customers that may not be able to afford a company’s core brands can be reached through value priced offerings. On the other hand, a foray into value segments could have a negative impact on image perceptions of the core brand. A common strategy for managing this dilemma is to create a separate brand identity to distance the lower priced brand from the core brand. But, this approach diminishes the ability to leverage the strength of the core brand.

Coach is a brand that has enjoyed a brand positioning as a luxury lifestyle brand, the very type of brand that was vulnerable to consumers forgoing it for a lower priced alternative. What made Coach particularly vulnerable was that its core product, handbags, is more of a discretionary purchase, meaning that consumers might postpone buying a Coach handbag or trade down to another brand. Its response to the recession: tackle the shift in consumer behavior head-on with a line of lower priced handbags. Coach’s Poppy Collection carries an average price of about $200 compared to more upscale products priced at $400 and higher.

Is there a risk to a brand like Coach to entering lower priced markets? Yes, although some people would argue that a $200 handbag is not exactly a value priced offering! A branding strategy that isolates lower priced products to a certain line or group like the Poppy Collection is a way to protect core brand associations while enjoying the benefits of tapping into Coach’s brand equity. It is a matter of practicality versus pride; strong sentiment to “protect” a brand may steer strategy away from entering lower priced markets, but practicality recognizes that consumer behavior has undergone a distinct change. Product development should be guided by meeting customers’ needs, and at a time when the psyche of the consumer is still fragile that means exploring options in downscale markets that meet consumers where they are.

Marketing Daily – “Coach Makes Big Gains on Small Prices”