Category Archives: Marketing

It’s not us, it’s you

Posted on January 28, 2007 | 2 comments

Open-source  software and services like Linux, Firefox Web browser and Wikipedia are very famous. These are some well known examples of product development with the help of the community. This is a phenomenon that started purely as a community effort backed by a foundation or a non-profit organization. But the massive effect this has had over the past years made even the corporations with big bets on IP involve the customers in mass customization of their products. And this is not limited to high tech products anymore, even conventional products like t-shirts and shoes are getting co-designed by the customers. The open innovation wave is touching everything from food-flavors to music systems to video games. 

Let’s skim through a few examples to add value to what we are talking here. Slim devices is one of the favorites in open innovation. Slim devices has a community of music enthusiasts who help the small staff of in-house designers give shape to their next music player. The community is so strongly knit that sometimes its even hard to tell who is an outsider and who is a company employee. Some top contributors in the community have complete access to the designs and source of the Slim’s future releases.

Big names in the footwear industry are asking customers to help them design shoes. Customers can evaluate new designs, give feedback or even create totally new designs in a CEC-made-shoe project launched by the European Confederation of footwear industry. Famous Canadian shoe designer John Fluevog has also been soliciting ideas from the customers. Brand enthusiasts are encouraged to submit their own sketches for all kinds of shoes including leather boots, high-heeled dress shoes and sneakers. The submissions are posted on the company website and customers discuss and vote for the design leading to the best ones being manufactured by the company.

Start-ups like Zazzle.com are leading to an even more innovative open source development. Zazzle customizes all kind of merchandise for the customers. Customers can contribute their own designs at Zazzle or pick from one of the designs available in there. If other customers choose to get mechandize designed by a contributor, the contributor gets loyalty from the site. Zazzle is creating a massive community of designers who are using it as a platform to sell their design and add an additional avenue to their business.

Even food-flavors are customized to suite the customers’ taste. Frito-Lay customizes the taste of their chips in each geography based on the feedback from the customers. Same is the story with burgers at McDonald’s. So the taste of chips and burgers you will get in US will be considerably different when compared with the ones in Europe or Asia.

Involving customers in designing products is a real blessing for marketing. Marketing department in a company acts like the voice of the customers. They are the one who make sure customer requirements are fulfilled and the product has all they need. By involving customers in co-designing the products, the company is easing the job of the marketers. When customers call the shots, they generate an affinity with the company. This makes the task of marketing organization even easier because they get advocates in the form of these customers.

Product development also benefits a lot from customer involvement. They are able to tap in a lot of unexplored talent for almost negligible cost. In order to make sure there is good customer involvement, the company will have to create a good community experience and make the customer feel that they are welcome. The important thing to remember is that the company is in a way doing marketing and advertising all throughout the product development.

In a nutshell, I think involving customers in designing the products and services is like a win-win scenario for everyone. The customers get what they want and the company gets a lot of assistance in their marketing and product development. George Costanza claims that there can be no better break-off excuse than his invention – “It’s not you, it’s me”. In a (kind-of) similar fashion (though I don’t claim it as my invention :-)), I think there can be no better product out there than the one co-designed by its customers with the company stating loud and clear – “It’s not us, it’s you”! 

2 Comments

Posted in Business, Marketing, Technology

The timeless art of demand creation!

Posted on January 21, 2007 | 1 comment

One of the most coveted arts in the World of marketing is that of demand creation. You need to put in immense energy, tiring efforts and often flex the monetary muscle to create demand for your product, but ones you have that in place, it’s worth everything, and many times it last for a very long period. I can’t think of a better example to kick-off this discussion than what Rockefeller did to create demand for oil. John Davison Rockefeller, now more known for his philanthropic work, was an American industrialist who played a pivotal role in establishing the oil industry. Rockefeller distributed kerosene oil lamps for free to generate demand for kerosene. He also made sure that all the products that used kerosene as a fuel was cheap and available readily in the market. This created the never ending demand for oil in America. Rockefeller started a unique way of marketing in which out of two products, he subsidized the former which is basically useless until you keep buying the latter.

Many industries today follow the same route to create continuous demand for their products. Hardware companies like HP almost give away printers and copy machines for free and make all the money by selling cartridges. The basic principle here remains the same…more the printers in the market, more people will end up using them, hence creating the demand for cartridges. So in fact when HP sells a printer, it doesn’t actually sell a printer, it basically laid the foundation to create demand for cartridges. Most recently, the same concept is followed by the game console companies. Sony, Nintendo and Microsoft sell gaming consoles at subsidized value incurring a loss of up to $200 per piece just to make sure that the customer buys their console. This console sale creates a solid platform for selling the games which provides these companies most of their revenue in this industry. Some other industries following the same path are cell phones, software and cable television.

Another very common way to create demand is by letting people get used to a service for free or less and charging them to keep using it in the future. Everything from non-prescription drugs to online movie rentals to cellphone providers are trying this means to create demand. Ones a person gets addictive to the product or service, it becomes very hard for them to stop using it. Every ones in a while you get an offer by mail asking you to try something for free for a month. That’s the perfect spark, which leads to a long lasting demand for that product. Many subscription based services follow this model to attract customers and create demand for their product.

One unique way to create demand is by maintaining a “long tail”. This is getting very common in the Internet era, where companies have a luxury not enjoyed by the retailers with limited shelf space. This is how it works: you are looking for some particular novel written by your favorite writer long time back. You checked all the retail stores in the neighborhood but no one carry it anymore. Now you go to this book store on Internet which happens to have the novel. This makes this store take that special place on your to go list and next time you are looking for any book, you might directly end up here. So in a way by maintaining this long tail, which is accessed every ones in a while, these virtual stores on the Internet are creating a demand for their service. Same principle is being used by search engines, download services and online communities to create demand for their service on the Internet.

The great art of demand creation timeless. It was around ages ago, it is there now and it will be reinvented many times in the future as well. Marketing organizations use new methods every now and then to create demand for their products and services. How many people can live without a cell phone, a car or even an online search engine after using it for sometime? Most of us can’t, we got to have it creating continuous demand for either these products or the products required to run them.

1 Comment

Posted in Marketing

One size doesn’t fit all

Posted on December 17, 2006 | 3 comments

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.

3 Comments

Posted in Business, Marketing, Technology

Chase the customer (if you can’t show the way)

Posted on November 18, 2006 | Comments Off on Chase the customer (if you can’t show the way)

I recall a speech by President Bill Clinton to the Saudi leaders sometime back where he said that Middle East should not be Oil repository of the World, it should be Energy repository of the World. He exclaimed that with big open desserts, high degrees of temperature and so much sunlight, what better place can be there to invest in solar energy! That’s so much true. There is continuous effort out there to locate alternative sources of energy as a primary means to fulfill the energy needs. Why not use this as an opportunity instead of threat? Same applies for the oil companies out there. These companies should see that the customer is trying to find alternative means to fulfill their energy requirements. So if they are not the ones showing customer the way by providing oil supplements, they should at least chase the customer and be in the business of meeting the customer needs. There should be no Oil company, there should be Energy companies that address customer needs of energy with oil as well as other alternative energy sources.

The same principle applies to any business. It’s the need of your customers that’s important, not the product that you are providing them to address the need. If there’s only one thing that’s constant in the World, it’s change. Change occurs with revolutionary new things or continuous evolution in existing things, but sooner or later it occurs. When it is lead by revolution, some new product to address customer needs in a better way comes along and the customer slowly starts moving towards it leaving the existing product they are using. When it occurs by evolution, it’s a gradual process and the customer keeps adopting the better product as the developments occur. Most of the existing companies try to retain their customer base by gradual improvements in their products. But what they tend to miss are the revolutionary new products in their field which pull the customers away from them. Why? Because of some obvious and some not so obvious reasons. These companies are so much concentrated in satisfying the existing customer requirements and making improvements in their existing products that they place these revolutionary products in their blind spot and completely miss them. In other cases, the big corporations generate high revenues and profits by marketing their existing products. When a start-up brings a new product to the market and till it doesn’t reach to mass adoption, the revenues generated by this product are considerably less and gets ignored. And then there are companies that believe in the “Used Apple Policy”, who like to wait and watch for the first comers to take the risks and jump in after the first comer shows the signs of success. So what do these companies do if they missed the opportunity to show customer the way? The smart ones follow the customer in the new product segments, start in-house development of the new product and/or do acquisitions, mergers and partnerships with the companies involved in developing the new products. Others either remain content with their existing products and try to retain customer with improvements in them or start to go downhill depending on how revolutionary the new product is.

There are several examples that can highlight this principle. To pick one, let’s talk about the entertainment industry. This is one industry that has evolved continuously over the past, taken several tangents and will keep doing the same in the future. Starting with the revolutionary part…(not going back to the medieval ages,) there was live theatre entertainment, then came cinemas, radios, televisions and now the Internet. With each of these revolutionary new platform of delivering content, new players evolved and several existing one made adaptions to the new platform. Most of the ones that became successful chose to either show customer the new platform of entertainment or chased them to the new platform and provided them content in there. The latest shift in the industry is from television to Internet. With the evolution of the World Wide Web and the broadband, slowly customer focus is increasing on getting more and more content on their computers. Television will always be there, but a very large customer base will adapt to the Internet providing the first stop for entertainment. Several big broadcasting networks like Viacom, News Corp and so on didn’t notice this at the start because either they were highly concentrated towards television based entertainment, or the revenue stream from videos on Internet was not clearly identifiable. This lead to new players like Yahoo, MSN and lately YouTube, MySpace etc. to evolve in this field. Observing the shift, the obvious happened – MSN and Yahoo started showing news and show snippets online and News Corp acquired MySpace. So what’s next? Very soon we will see all the big networking companies either going in for stronger partnerships or more acquisitions to keep hold of its customer base. The ones that won’t chase the customer, will still be there, but their growth might not be as fast as the ones that make the move.
Moving on to improvements with continuous evolution of the platforms…let’s consider television as an example. In case of television it started with black and white televisions sets, to color television sets and so on leading to high definition television sets to something much better in the future (I am no expert in this area…but change is constant). Most of the companies providing content to the customer on television kept evolving and providing content on improved platform and will hopefully do the same in the future.
The important thing to understand is that in the entertainment industry, it’s the content delivered to the customer that holds the importance, not the platform of delivering the content.

This is the case with every industry and will remain the same. A company should focus on the entire industry and not just the product they are delivering to fulfill some needs in that industry. Everyone should acknowledge that changes will occur and the better way to deal with them is to lead the way to bring changes and if that’s not happening, try to align yourself to adapt to the changes. Either show the way to the customer or chase them wherever they want to go.

Comments Off on Chase the customer (if you can’t show the way)

Posted in Business, Marketing

A video speaks a million words!

Posted on November 12, 2006 | Comments Off on A video speaks a million words!

You must have heard that a picture speaks a thousand words. That’s so much true, and equally true is the fact that a video speaks a million words. Video is like simulated pictures, lots of pictures passing in quick succession (yeah I know you don’t want me to prove it mathematically, but just for the sake of argument). A video has a greater appeal than a written memo or a static picture because you can give much more details using a video and use sound to increase the impact. Essentially, if you create a video just to explain a picture, you are delivering the message you were trying to deliver through the picture in an easier and better way. With the decreasing cost and ease of use of the video cameras, advent of broadband and growing popularity of podcasts and online video communities, videos are gaining popularity as the standard way of delivering message at any level.

Just like any other technology, videos have their usage in the field of marketing. Advertising through video clips on television is time tested successful way of reaching a customer, so I think we can take that to be a well known application here. Videos can be used in several other ways to enhance marketing. One of the most important application which can directly impact the customers is product demonstration videos. Companies create such videos to familiarize the customers with their products and services. These videos can be as simple as a 360 degree view if the product and can be as complicated as a completely interactive demonstration of the product with voice descriptions. Videos for product demos is a very economical and effective way to reach the customers. Video demos online have become more important now than ever before because more and more companies are trying sell products directly through Internet.

Another use of videos is to create product brochures. The difference between the number of people reading a novel and number of people watching a movie based on the same novel is huge. Number of people watching the movie is manyfolds as compared to reading the novel in normal cases. Similarly, instead of writing a beautiful product brochure for a product, if you show a few minutes video of the product, you will get more people to watch it as compared to read the brochure. In other cases, video brochures can accompany paper based brochures to appeal to all kinds of customers. These video empowered brochures can either reach customers by distributing them traditionally in the form of discs or can be viewed on the Internet. This is a growing practice in marketing organizations and significant product brochures that come to mind are that of BMW and Starbucks Interactive Cup Brewer. Marketing brains can come up with many more useful applications of videos to better reach the customers and create buying a product a much better and satisfying experience.

With the fast moving world and rapid improvement in technologies, the marketers are getting new tools to reach to the customers. Video is one of them. In order to succeed in this fast changing environment where customers have more options than ever before, marketing should make a point to stay at the cutting edge of all the technological advancements happening around them. The bottom line is to reach the customer in the best possible way and today if creating an attractive video serves that purpose, you got to go for it.

Comments Off on A video speaks a million words!

Posted in Marketing, Technology

“Used apple policy” and Success

Posted on November 4, 2006 | 4 comments

“Used apple policy” in layman terms mean you don’t have to get the first bite of the apple to make out. The second or third juicy bite is good enough. Just be careful not to get the tenth skimpy one. In the business World, this can also be defined as product development by imitation. There are many pros of this approach. Like if the apple is rotten, you won’t suffer, i.e. if the industry is not ready for the product or for any other reason if the product is unsuccessful, your company won’t be hit by the damage. Another pro – fetching the apple to take the first bite is lot more expensive as compared to waiting for the second bite, in business terminology – innovating a product is more expensive in terms of research and development as compared to doing innovative imitation using reverse R&D. Now let’s switch sides to look at the cons. The biggest con is that someone else got the apple and they have the advantage to take the best and the biggest bite out of it, i.e. your product doesn’t have the first comer’s advantage in the market. Most of the time, you won’t be the only one there to take the second or the third bite, there will be many others looking to take the bite off the same apple, in other words you will have considerable competition from other imitating products in the market to grab the same market share.

Let’s talk about the more interesting part – how companies with used apple policy succeed? I think lot of factors help them in getting successful. To kick-off, they tend to keep an eye on the industry developments and put the competition activities under the radar. It is very important for a company to wider their horizons and look for opportunities in the industry outside the segment their products address. As always, you got to make sure that the customer needs are getting addressed. Following closely how the competition is trying to address the customer requirements and what innovative steps they are taking to succeed also helps in successful product imitation. It is very important for companies to correctly and truthfully evaluate the potential of the new products launched by the competition. This goes long way in successful product imitation. I think it’s clear that to be successful in the used apple policy, you got to be the second or third one to take the bite, not the tenth one. For this, it is critical to evaluate the new territory which the competition’s product is addressing. By doing the correct evaluation, you can get a quick start in getting a competitive product to the market while the territory is still hot and happening.

A very vital step for the company to be successful in this process is to locate the right apple. You got to look for the products closer to your company’s expertise. Going for out of the bound extensions are very risky for the company as a whole. It is always helpful to package or set links with the existing products of your company to attract the customers to the new product. In order to succeed using the used apple policy, it is important that the imitator does some innovative imitation. I think we should get it correct when we talk about innovation. Innovation is not just doing great research and development to bring new products to the market. That’s one type of innovation, but an equally important type of innovation is to start with existing products in the market and do creative and breakthrough developments in them to come up with more compelling solutions. The imitation of the product should have the correct mix of innovation in it to challenge the market leader in the segment. Imitators should establish concentrated reverse R&D units to do such innovative imitations.

Other factors that help companies with used apple policy succeed are better execution, stronger monitory muscle and better marketing. It is critical that an immitator develops and delivers project in an agile fashion to tackle the already existing innovative leader. The execution to bring this product out should be top-notch and the entire product unit should be alligned to achieve a clear goal. To invest in reverse R&D efforts and catch a leader from behind, you got to have enough cash flow to support the efforts and take risks. So there is no denying that strong monetory muscle is one of the most important part of this entire process. But I think the most important factor is to do the right marketing for the product. It’s critical that the product is presented in the market not like an immitator, but like an innovation to address the customer needs in the future. Marketing should make sure that their product looks like a better alternative as compared to anything else out there.

No company can be first in all products they launch. Every company at some point or the other follow the used apple policy and success in it is as critical as any other product development effort. The good part here is, you got the problem and the solution, now all you got to do is solve it in a better way. If you can do that, no one will remember down the road if you were the first one or not.

4 Comments

Posted in Business, Marketing

Don’t mess with Customer Service

Posted on October 22, 2006 | 3 comments

Customer Service is the face of any business. Happy and satisfied customers is a prerequisite for customer retention and creating a positive image for the company. Success of any business highly depends on the services packaged with their products. Whether it is a software program which is developed to provide the services or a customer support representative providing support to the customer, it is very critical not to mess things there. Customer Service should be aligned properly with Marketing, Finance, Product development and other critical operations of the company to make sure the customer is getting served to the optimum standards.

Why is it so important to get this right? Well you can draw parallel between designing and customer service. If anything (be it a complex entity like building, vehicle or software application, or something as simple as a can opener) is designed perfectly, no one notices it. It becomes part of the regular work-flow. But if there is some flaw in it, something that is not as expected or intuitive, it gets highlighted. Same happens with customer service. Everyone expect is to be seamless. So as far as the customer is getting the service he expects, no one notices it. But as soon as the customer service experience is bad, the customer satisfaction index towards the entire company and its products dips down. That’s the nature of the game and everyone needs to accept it.

We can lay out some basic rules any company needs to follow to provide good customer service. First and foremost, don’t experiment in this area. It’s really astonishing to see how companies provide disastrous customer service just because they are experimenting with some cool new tool or technology in this area. The most common example that pops in my mind is speech recognition software to answer the customer calls. That’s a major disaster. Everyone in the software industry knows that the speech recognition technology is not yet ready to deploy as a dependable tool. Still companies use it in answering customer phone calls. No customer in the World is going to call you till they are in dire need of help and then when you ask them to speak the details, and try to interpret it with something which is not perfect, you are basically forcing them to blacklist your company. So let’s first make sure the technology we are using is sound and then use it on the customer. I think this is the last place you got to experiment.

Rule #2, don’t drag the customer to the tipping point. I think the entire reason a company has customer service is to keep the customers happy. A company should put a face in front of the customers so that the customers think that the company appreciate their business, not that you are one of zillion customers we have and we don’t care if we lose one. For instance, try to keep the wait time to a minimum. Companies should deploy good analytical tools to make sure that a customer is not holding phone for ever to be answered, or waiting for technician or delivery personal for too long to show up. Along the same lines, charge your customer reasonably. Asking insane amount of money to help a customer fix his computer on phone if it is out of warranty, or to use a feature that’s not covered in the customer’s opted plan is like burning bridges with them. This is like literally dragging the customer to the tipping point from where they have no option but look for alternatives. I understand that cost is important for the company to take into account, but showing some compassion over here might lead to a long term trust relationship with the customer.

One more thing that’s important in customer service is that the entire company should take this as a priority and stick to the commitment made to the customer. How often do you reach an airport to find out that the plane is overbooked and they don’t have space for you? Or your flight got cancelled for some “unknown” reason with no alternative but to wait? Or you reserved a rental car and that type of car is not available ( Or in Seinfeld’s World – they know how to take reservations, but they don’t know how to hold ’em.)? This should never happen. If as a company you are committing something to your customer, you need to stand behind it. Every company should have system in place to fulfil the commitment made to the customers.

In short, go an extra mile to keep the Customer satisfaction high, because you can have great products, awesome supply-chain and what not, but if you don’t have a satisfied and happy customer, you can not succeed.

3 Comments

Posted in Marketing

80-20 rule and the Internet

Posted on October 15, 2006 | Comments Off on 80-20 rule and the Internet

A typical definition of 80-20 rule in the field of product development is 80% users use 20% features of any product. A slightly different interpretation – 80% of time a user ends up using 20% features of a product. This is true for any product in the software industry out there and lots of companies have become successful by pioneering those bare minimum 20% features of the products. The question that arises here is how? How can a company survive without fulfilling 100% customer requirements? Or in other words, why does a customer stick to a product which only fulfils 80% of their requirements? I think there are several reasons for that. First and foremost, is the barrier to change. Most customers start using a product when they feel that the product is fulfilling most of its requirement, which the product does. Now when they come across one requirement which is not fulfilled by the product, their natural tendency is to find a work around for this feature rather than abandoning the product and using something else. Another reason, cost associated with the change. Customers who paid certain amount to purchase the product that fulfills most of their requirement, normally chooses not to pay again in order to get a product that meets those edge case requirements. And if for any reason, that edge case becomes a common one, if starts getting close to that 20% basket and gets added to the product feature list.

This is the case for a typical software product out there installed on a customer’s computer. Now lets move on to the Internet. Is it the same there? Does this 80-20 rule works there as well? I think we should consider the points that help 80-20 rule work for desktop products and see their standing in the Internet world. First, the barrier to change. The barrier to change for a typical application on WWW, like search or online store is as negligible as typing a new url in the Address Bar. So if some customer is trying to search lyrics of a not so common song or looking for some special merchandise and cannot find it at one particular destination, they can just type in a different web site address and see if they can find it there (Yeah there is some barrier in case of an online store if you want to buy something you need to provide a payment source and your address, but I think you won’t mind doing that if you find a merchandise you didn’t find at your regular store). Second, cost of change. Well with most applications not charging anything to the end user to use it, I think the user has no cost of change. Talking about our previous applications, search run on advertisement revenue, so are free for the end user and an online store only charges a user when they are buying something over there. This means the 80-20 rule doesn’t work that well for a Web based product.

In fact, I think this 80-20 rule sometimes work against the product if the customer is able to locate an alternative with answers to all their requirements. If I am looking for some very uncommon information and I find it through one particular search engine, that search engine promptly secures a place in my list of favorites. Now I will know that whatever I want to search, I will look for it here. So now slowly I will start using this for my other 80% of the common queries as well. Similarly for an online store. If I find a not so common merchandise on a particular online store, the next time I want to buy something, I will go back to this store hoping that I have a much better chance of finding the product here. This is the reason behind the success of lots of Web based companies. They try to fulfill 100% of customer requirement. How do they do that? Its by maintaining a long tail…whether you do it by writing a better algorithm that fulfills all customer’s search requests or by supporting a more exhaustive inventory to find the customer any merchandise they are looking for. To sum up, these companies need to be highly customer focused and align their products and services to address customer needs in agile and innovative ways.

Comments Off on 80-20 rule and the Internet

Posted in Marketing, Technology

The Beta Culture

Posted on October 8, 2006 | 13 comments

The Internet has revolutionized many things in many ways. One of the most significant things Internet has radically affected is products service based products delivery. It has reduced the distance between the customer and the producer of products. One of the interesting developments is the Beta release of products to the end customer. So what’s new here? Beta stage has always been there in technology products where the product is debugged, i.e. the stage after alpha (new features added to the products) and before release candidate (all important bugs removed). But this conventional definition of Beta is no longer true in the Internet World. How I see the Beta now is a stage encompassing market research, development, testing, debugging and early adoption. The idea is to get the initial concept out there to the customer with some prototypical implementation and do the rest with the help of the customers.

This is a great concept in many ways. Market research gets a whole new perspective. With the help of business intelligence software, market researchers can track the customer usage of the products, analyze the early responses and adoption scenarios. Product development becomes an agile process. The speed of an idea to convert into a product is more rapid then ever before. Reason – there’s no need to wait for market research to be completed and requirements to be assembled to start the development. It’s more of an ongoing process. Features can be added sporadically while customers are adopting the product as per customer needs and requirements. The biggest benefitter of all is testing and debugging. Instead of a few dedicated resources to test the product, Beta release opens the doors to the World, potential future customers to test the product. This in no way can replace those dedicated resources, but still the combined force of many many people using the product is like a great addition. Beta release is also a great way of booking the early adopter’s loyalty. Adding features to the product, fixing bugs and making changes based on feedback from early adopters make them advocates for the product which helps in mass adoption.

Beta release has some drawbacks of its own, specially for the established brands. If a product is launched in Beta and is very buggy and hard to adopt, it’s not easy to attract the customers back to the product with the competition providing equally compelling and attractive options. Another downside is if the company is not able to attend to the early adopters, take in their feedback and respond to it, these customers can influence mass adoption in a negative way. The bigger the brand behind the product, the more vulnerable is a Beta release.

Beta release is a real delight for start-ups wanting to establish a brand with the help of Internet community. With the immense power in the Web to connect people, it’s really good to have a positive word of mouth behind your brand as a whole and product in specific. It is very important to give due credit to the early adopters and recognize them in making the Beta a success. Companies roll out schemes to recognize the early adopters in different ways. One of the most prominent ones in the recent years which comes to mind is Gmail Beta. Google provided early adopters option to invite new users to have a Gmail account. This helped Google fulfill two objectives – gave early adopters a feeling as if they were a part of Gmail product in development and increased the public adoption of Gmail. Before the beta tag will get off Gmail, it will already have more than a million customers.

So when should a successful Beta release get rid of the Beta tag? I think, the best time for a product to come out of the Beta is when the product is ready to cross the chasm (Geoffrey Moore). Things like bug free product, stability and other technological issues are important considerations, but removing the Beta tag in a timely manner is also very important to attract a certain type of users who are not very excited to adopt a product which they think is not yet officially released. So when the product has enough customers to help it get into the main stream and get mass adoption, it should evolve into an official release.

13 Comments

Posted in Marketing, Technology

Let’s do brand extension “correctly”

Posted on October 2, 2006 | 2 comments

Since my blog post about Rights and Wrongs of Brand Extension, I have had lot of interesting discussions on this topic. Some very good thoughts came forward and we were able to classify all the brand extensions we talked about in right and wrong buckets using the three things mentioned there – creativity, innovation and link to existing product line. One point that again and again came forward, which is also the reason for me writing this post, was how a company that had wrong brand extension could have done it correctly? So let’s pick the two wrongs mentioned in the previous post – Amazon and Dell.

Amazon missed two (of the three) very important things in its brand extension, and that were the link to the existing product line and innovation. Here’s an online book store that got famous for its long tail and recommendations. Logically thinking, brand extension for this online store would have been selling products where the long tail and recommendations matter the most. Another logical brand extension would have been showcasing products similar to books to customers who came to their site looking for books. This suggests Amazon should have evolved into an online store selling and renting (in some cases) books, music, videos, computer and video games and software. I think by keeping this link to existing product line in mind, they could have fixed brand extension to a large extent. Trying to sell products like shoes, jewelry, grocery and pet supplies from their online store just broke this link and made it loose its essence. One could argue that this could have limited Amazon from going into a large part of 35 product categories they are involved in today. Well I think, keeping Amazon the extended book store to the products suggested above and spinning partner stores for these other product categories would have been a better idea. Amazon could have had distinct links to these stores from their original store landing page and search results in order to use the credibility and dependability of Amazon, may be shared the shopping accounts and user information and applied some of its innovative shopping experience to these other buckets. The important thing to note here is the segregation to prevent bad experience for a customer coming to the book store.

Another area that Amazon could have fixed during brand extension is innovation. Amazon, which rided on its innovative stinct all through the dot com boom and bust came up with no major innovation in brand extension. Along with creating an extended book store and partner stores, one innovative step Amazon should have taken in brand extension is segmenting its stores more on the customer intelligence and less on product categories. For example, a customer looking for Mystery novels would feel Amazon is a store for me where I can find all Mystery based books, videos and games to buy or rent, a community to get involved with others with similar taste and an extended search feature with categorized results around what I am looking for. Amazon does it to a great extent, but its not well meshed across products due to the wrong brand extension.

Moving on to Dell…I know lot of people believe that Dell did not fly off with electronics because Dell’s primary customer base was enterprises and not home customers. But I think, if Dell would have brought the kind of innovation and creativity they brought in selling computers in the field of electronics, they would have done much better in their brand extension. Dell evidently missed creativity and innovation in its brand extension to electronics. Dell is known for two things – Direct marketing to the end customer and build (or configure) your own personal computer. It went on to brand extension to electronics, a somewhat natural next step for the biggest computer maker in the World after already extending its brand in servers, storage and printers. It did link back to its computer product line by selling directly to the end customer, but the build your own stuff was not there. Well if you are Dell, you got to have that personalized experience in there to satisfy your customers.

How about trying to add it to electronics? I think it will be really creative if you ask your customer to take steps with you to build a digital camera instead of asking them to choose one from the given list of cameras. Literally speaking you don’t have to build one for each customer out there, what you can do is start from the most basic feature (say megapixels) and provide options (like optical zoom, digital zoom, screen size and memory type) to choose from to reach to a final model. It’s basically bringing the customization experience from the personal computers and applying it to electronics. In order to make this happen, Dell will have to (or make the equipment manufacturer they are partnering with) support enough options in each category to meet the customer needs. If Dell is successfully able to do this in electronics like cameras, MP3 players, televisions and so on, it will be a real innovative step to empower customers configure their own electronics leading to a successful brand extension.

Exercise to the reader ;-) please send me cases of brand extension, both successful and unsuccessful, which you think contradicts my thinking on this topic.

2 Comments

Posted in Marketing