Every ones in a while I come across some product and say why didn’t I think of this first? Equal number of times something strikes me but I think this is too obvious; someone must have done it or must be working on this already. And the third category is to find a successful product or service and exclaim – I thought of this long time back and knew this was going to be a home run. Carefully observing these ideas turned into products, we can see a couple of things that are common between them. First and foremost, most successful ideas are the simplest ones. I think that is like a prerequisite for them to be successful products. The idea being simple implies there is something that is missing from the existing market and the customer is in need of the missing element. That makes the idea simple and obvious. Second, someone with a “just do it” attitude to convert the idea into reality. These are the people with ultimate faith in their concept. The drive and passion that they bring with them separate innovators from the crowd.
World around us is full of examples of such concepts that are now cash cows worth billions. Let people rent movies online and mail it to them eliminating the store trips: Netflix. Reed Hastings brought one of the most innovative concepts to reality. It was simple because people were looking for something like this. No one liked to go to the movie store looking for a movie and come back without one of their favorites because the store didn’t have shelf space to store it or pay outrageous late fees if you were late for a few days. So Netflix came up with an online movie rental service where you can select and queue up the movies you want to watch from thousands of selections (their long tail), pay a flat monthly fee to watch as many movies as you can and keep the movie as long as you want. Reed Hastings had the courage to invest in the idea and create the service to take on the blockbusters of the business at that time.
To name a few more – Sell Personal Computers directly to the end customer and let them configure it to fit their needs: Dell. Create a universal bidding platform: Ebay. Create an online community for people to keep in touch: MySpace. Let people make their own sandwich: Subways (or let people make their own Pizza: Kramerica). All of them have baked in simplicity and drive of passionate people to make sure the idea materialize into reality.
The important thing to understand here is that idea is not important, what’s important is the implementation of the idea. There is nothing in this World that only you can think of and no one else can. So just getting an idea and letting it go earns you nothing. The drive to bring this idea to reality is what counts. The passion in building a team of people who have faith in you and your concept, the tireless work in creating the financial backbone, and the endless marketing efforts to face the pre-existing mammoths in the market is what is required to turn your idea into a product. If your idea is simple and obvious, it’s even better. Don’t give it up assuming that someone out there has done it, do your market research. If it is already done, look for what’s next. If you thought of something that is now a successful product, it means you had a good idea. Look for the next thing that strikes you, and this time, take it with the just do it attitude!
Adware based products and services have become very common online. Giants like Microsoft, Google and Yahoo are providing services like email, instant messaging, web sites and a lot more to the customers free of cost. The main revenue generator behind these services is advertisements. In any industry where advertisement is the main source of revenue, eyeballs = dollars. With more and more advertisement dollars finding its way on the World Wide Web, the competition between these companies to attract customers is greater than ever before. It will be interesting to see how we can apply some of the strategies of adware offline, i.e. in the World outside of the World Wide Web.
Adware is nothing new, it has been around for a long time now. Newspaper, magazines, television channels etc. are some very good examples of adware. The publishing cost for newspapers and magazines is much more than what is collected from the readers when they purchase their copies. But they are sold cheap. Reason being the same…the main source of revenue for newspapers and magazines is advertisements. By keeping the cost low, the circulation increases, hence making each ad spot more expensive. This concept can be expanded beyond broadcast mediums as well. There are lots of things out there that can be subsidized by thoughtful use of some part of more than a trillion dollar advertising budget Worldwide.
Let’s start with some very basic things that can be funded by advertisements. Construction and maintenance of roadways fall under this category. These contracts can be given to construction companies and they should be allowed to generate revenue, most of it if not all, using billboards on both sides of the road. This will reduce the expenditure of tax money on road development by the government and the same money can be used at better places like education and healthcare. Speaking of healthcare, the distribution of drugs at many places can be subsidized using advertisements. At many places, drug distribution is a very difficult task. The cost of medicine increases exponentially because of the distribution cost. Even the ones which government wants to distribute for free does not reach the people because of the road blocks in distribution (especially in the under-developed and developing countries). This cost can be reduced by setting vending machines for drug distribution in kiosks and funding these kiosks with the help of advertisements. Expanding this concept even further, any kind of commodity distribution can be subsidized in the same way.
I think any product or service can be subsidized to some extent by leveraging the adware concept. To pull a not so common example, let’s talk about collect calls. Collect calls can be made cheaper by making the caller and acceptor listen to a minute of ads before they can talk for 3 minutes. I think such advertisements can have more impact than some generic broadcasted advertisements, because the advertisement is getting complete attention of the customer at most times. The advertisers can make the ad more targeted because they already know the approximate location of the customers from their phone numbers.
Using advertisements to make the products and services cheaper for the end customer is like a win-win proposition. The sellers of the product or service don’t lose anything. They are charging the same amount from the advertiser to make up for the discounts given to the end customer. In fact they end up making more money because due to the low cost, the end customer normally uses more of the product or service. The advertiser meets their goal of publicizing their product. They can use all the normal tactics of effective advertising to make such advertisements give more bang for the buck. And as for the end customer, I think they are the biggest beneficiary. They get the same products and services cheaper by just having to stand some advertisements, which if targeted properly can act more as an informational than a commercial.
I was listening to David Pensak the other day and an example from his talk really challenged me to think what difference personalization can bring to a product. He was talking about the Teva Gamma’s innovative application in personalizing the women shoe line using thermoplastic microspheres (this is an innovative solution he came up with at DuPont and is currently being tested by Teva Gamma shoe manufacturers). It was observed that in case of shoe fitness, the biggest problem for women was the width of the shoes which makes them not fit perfectly. So David and his team developed these microspheres that are half a millimeter thick and can expand up to one and a half millimeters on applying heat and being spherically symmetrical, cannot compress again. Teva Gamma applied a layer of this material in the walls of the shoes and by applying heat to the shoes using a hair dryer, they can adjust the width of the shoe right there in the stores. Now Teva Gamma is planning to launch this line of shoes under the name Perfect Fit which has about 4 cents of this material applied to it and are going to charge $75 more per pair of shoes claiming that they make the shoes personalized just for you and that too instantaneously! Their initial market research of this product shows that women just loved the shoes which custom fit them and are willing to pay extra dollars for it. This is the kind of difference personalization can bring to your product.
Lot of products out there are personalized and this personalization factor makes a company’s product stand out above others in many cases. I can’t think of a better example than Dell Computers here. Dell changed the way PC industry functioned in many ways, and letting the people personalize their own computer is one of those. It is more appealing to anyone to configure a computer personalized to their own needs and fit their own budget as compared to picking one from three standard configurations on a store shelf. Another personalization example from a completely different industry that stand out is from the fast food industry. People love eating at Subways and Chipotle for the same reason, you can get whatever you want to put in your sandwich or burrito respectively. Personalization does not have a fix magnitude attached to it. Amount of personalization can be as big as building your own BMW and as small as getting your name engraved behind your IPod.
Personalization is one of those things out there that is not required for your product to sell, but if you add it to your product, it adds a lot of value. And more than that, people love getting special attention and getting a personalized product. Personalization gives a big boost to the marketing department of a company. Marketing is normally the voice of the customer, and what better thing can be out there as compared to letting the customer build their own product. Personalization essentially puts the customer at the driver’s seat hence easing the task of the marketers.
Personalization sometimes bring hidden value for the company as well, along with the obvious ones mentioned above. For example Teva Gamma, they are now personalizing their shoes to fit a woman’s feet. But it gave a hidden benefit to them which they didn’t even think about at the beginning. It reduced their shoe production categories by a factor of three. Shoe companies normally have three categorization of shoes based on the width – wide, medium and narrow. The width differs by one millimeter between each of these categories. Now based on this shoe customization technique to change the width of shoes, Teva Gamma only produces wide shoes at their factory and reduce the width in their customization process. Another example of hidden benefitter – Dell computers. They have a system set up where they order parts from the manufacturers only after they receive orders from the customers based on their personalization, hence reducing the unnecessary inventory in this fast moving industry and getting a payment lag of approximately three weeks (the customer pays them right at the time they order a PC and Dell pays the manufacturers three weeks after the part is supplied). In fact Dell only has total space to store 200 computers in its factory that assembles more than a few thousand computers every hour.
Personalization is one of those things that people are starting to take for granted in many industries nowadays. How long can you survive without personalization? Till you or one of your competitors do not introduce it in your industry. I think there is no product out there that cannot be personalized, so the call of the hour is to knit the perfect fit for each one of your customers.