Cannibalization as a growth strategy

Posted on November 30, 2009 | 1 comment

Cannibalization, in very simple terms, is losing market share of one product by introduction of a new product by the same producer. Talk about Hulu, and one of the things that come to mind is cannibalization of network airtime by broadcasting television shows online. But then talk about YouTube, DailyMotion et al and one of the things that come to mind is losing airtime to competition on new media channel. Which one sounds better? Losing market share to your own product or losing share to competition?

This is a classic question which every company needs to address to some extent while releasing a new product that in some ways is competing with a current offering.Whether it’s Coke launching Diet Coke or The New York Times investing in nytimes.com, you have to look in the issue of cannibalization. When does cannibalization make sense?

Short answer, when there is competition. Long answer, almost all the time. When you see an opportunity to come up with a new product to tap a new channel or a new way to fulfill some customer needs, you should go for it. Because the possibility is that the same opportunity is being discovered by other players in the industry irrespective of whether they are currently competing with you or not. Like Amazon never competed with Barnes & Noble through brick-and-mortar stores, but as Internet started gaining traction and Barnes & Noble delayed putting together an Internet strategy due to various reasons, including fear of cannibalization, Amazon discovered the Internet as a channel to sell books and took off. Parallels can be drawn, to some extent, in case of Microsoft delaying to put Office Suite online while Google Apps and Zoho tapping that market (though Microsoft Office losing share is not an issue at this time).

The point here is, more often than not, cannibalization is required. It should be seen as a growth engine. When a better channel of delivery emerges, people will notice it just like you will. If you go and tap it, you have an advantage of expertise of delivering product on the traditional channel and brand name over anyone else. You can grow the sum total of your business by using all the channels available. But if you sit and watch the show, someone else will develop the expertise and gain the first mover advantage on the new channel.

Accept the fact that change is constant. One way to grow in this changing environment is by keeping up with the change and if the only way to do that is by cannibalizing your own product, go for that. It’s much better than losing it to the competition.

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Posted in Business, Technology

Every individual should find a Ben Graham

Posted on November 14, 2009 | Comments Off on Every individual should find a Ben Graham

When you see a 79-year-old living idol refer to his mentor’s name half a dozen times in a 60 minutes talk, you got to pay attention to it. I had this unique opportunity to listen to Warren Buffett and Bill Gates at a town hall event at Columbia Business School. I got more than a few sparks to think about, but one I believe I should share with everyone is the importance of Ben Graham for Warren Buffett.

You will say that there can only be one Ben Graham and one Warren Buffett in a generation. True, but that’s not the point here. The point here is to find a true mentor, an individual who inspires you, someone who makes you excited to talk to and work for and make you a better person. Ben Graham was a great professional mentor to Warren Buffett, someone whose values he lives up to and applies in his work even to this date.

Many of us will find our parents as inspiration to live up to. They are possibly the best personal mentors one can ever have and the easy thing here is, you got them when you were born. In your professional life, it’s a bit harder than that. I asked someone lot smarter than me: how do you know that this is the Ben Graham for you? The answer: it’s more of a realization than anything else. If that’s the person who energizes you to stay up at night and get things done, if that’s someone who motivates you to jump out of bed early in the morning and that’s the person you can refer to in order to crack the toughest codes, you found what you were looking for.

Good luck!

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Posted in General

It’s not about the technology

Posted on October 31, 2009 | Comments Off on It’s not about the technology

New media, communities, customer intelligence and targeted marketing. Speak of them and the first thing that comes to mind is technology. Of course technology enabled all this to happen, but it is not about the technology. Technology is the enabler here, but it’s about how you adopt the technology and how well you consume it.

New media is there for all. People talk about everything. They search and research for things they buy. Technology empowered them to have access to unlimited information at their fingertips. Now it’s about how you, as a company or organization, can use the new media and reach your customers, how you can create interactive channels, how you can come out of the traditional media shells and meet your customers where they reside.

Communities are great platform for you to talk to your customers. Connected people, powerful devices and web-based platform can provide you all you need to interact with your customers. You got all the tools, so now it’s about how well you use them. It’s about how you take in the input from your customers, how welcome and important you make them feel and how you use the platform to promote your objective.

There’s large amount of data available to mine intelligence about your customers. Using data extraction and mining technology, you can find in-depth information about your customers. It’s about how you use this information, how you make your message more appealing to your audience and how you implement changes to provide the best products to your customers.

Technology is a great enabler. Over the ages it has opened new avenues and empowered us in new ways. That’s not going to stop. A decade from now, you will get something more revolutionary to make the current new media and customer intelligence appear traditional. The important thing is to accept it and make it about how we can use it and make the most of it.

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Posted in Marketing, Technology

Community Inference for Market Research

Posted on October 3, 2009 | Comments Off on Community Inference for Market Research

Market research is one of the most fascinating areas in the world of marketing. Companies spend billions of dollars each year on getting market research done. Nielsen, one of the pioneers in the field of market research, made $3.7 billion in 2006 to find which product sells, which TV programs people watch and which music and books were getting consumed. Whether it’s a washing detergent or a presidential candidate, market research has its role to play.

A survey based market research has a huge dependence on a couple of things: what questions are being asked to the people and the sample of people to which the questions are being asked. The basic shortfall of such a market research is that the results can be skewed by tampering either one of these parameters. Plus the opinion of the target group is limited to the objective questions asked and to add to that the consensus building exercise is closed and constraint.

Another way to do market research is by using the social media. People talk about your product, their problems and how they are trying to solve them on social networks. They discuss and critic. Researchers can monitor conversations people have on various social network and infer what people want using these conversations. To make these conversations more fruitful, the company can host discussions. It can provide a community platform to customers and marketers to facilitate direct communication. This community – controlled and monitored – can be analysed by the researchers to reach to a consensus with the help of direct customer participation.

A community based market research has a few key advantages. The information gathered is broader as compared to what is gathered through surveys providing researchers reasoning behind a customer’s poll choice. And the consensus is built in an open environment, with active customer interaction, making it more credible and effective.

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Posted in Marketing, Technology

Communities as advertisement design canvas

Posted on September 25, 2009 | Comments Off on Communities as advertisement design canvas

What do you want in your advertisement? Something that people like, appreciate and get excited about. Something unique that can help them link to your brand. An effective advertisement campaign has a singular theme for all mediums which can be identified by the customers. A good way to design that theme is by using the social media.

Marketers can monitor various elements of web-based social world to identify what people think about their product, which part of their product most excites them and what are the turn-offs. They can monitor what people generally look for when they are shopping. Using this information effectively, and designing advertisements by keeping in mind the factors that will appeal to the customers, marketers can design better advertisements as compared to the ones designed in a silo.

To take it a step further, a company can have their own community where it can interact with its customers. By having discussions on their domain, marketers can extract customer intelligence on the conversations taking place. They can conduct polls and surveys, have healthy discussions and better understand what clicks for their customers. Essentially, by doing this, marketers will be in a way able to indirectly run themes by the customers and come up with campaigns that are most influential in the community.

The idea here is to take help of your most engaged customers in designing the marketing campaigns. Creativity in designing the advertisements is as important as anything else, but just imagine how much more impactful that can be when you are hitting the right strokes in the right style!

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Posted in Advertising, Marketing, Technology

Listening to customers and Innovation

Posted on September 6, 2009 | 2 comments

“If I had asked people what they wanted, they would have said faster horses.” This famous quotation from Henry Ford puts listening to customers and innovation opposite to each other. It is quite possible that if Henry Ford had asked people what they wanted, they might have said that they want to travel faster, putting both at the same side. Though the important thing to note here is that Ford didn’t ask customers and came up with arguably the biggest innovation of the industrial age. The question this raises is an important one: can you innovate without listening to the customers?

Companies put a lot of focus on what customers want when they develop products, which leads to great products to solve big problems faced by customers. But then there are breakthrough products which come along every now and then which no one expected or asked for. Apple is known for doing that all the time. No one asked for or expected an iPod to fit every pocket and budget, nor did anyone imagine an iPhone to revolutionize the cellphone industry. Both solved big customer problems like organizing their music in a cool device and putting a little powerful device in their pocket that can have a few dozen necessary applications (and can be used for talking) respectively. But had Apple asked customers what they want from the company, it is quite possible that they would have remained Apple Computers satisfying the need of their niche market.

So one might wonder how Apple, or for that matter any company that comes up with breakthrough innovation, does that? I believe by putting themselves in the customers’ shoes. If you develop a product that you would love to have, something that makes your life easier, something that solves some major problems for you, the chances are your customers will love to have that product as well. All you need is honesty, persistence and self critical observation.

And what about listening to customers? That’s post version uno. You put the breakthrough product out there and now let the customer chip in to tell you how you can improve it and make better to fit their needs. Then you form the maven force to help you deliver breakthrough products and great customer focused innovation.

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Posted in Business

Intelligence in advertising

Posted on August 23, 2009 | Comments Off on Intelligence in advertising

in 2006, $400 billion was spent on advertising worldwide. Most of this budget went on traditional media like television, radio and print. Companies with billions in advertising budget make sure that their message reaches as big a population as possible. On traditional medium, spending is directly proportional to reach and frequency. It is like using an amplifier and reaching as many people as frequently as possible.

But what if you don’t have (or want to) spend billions in doing this? That’s where intelligence in advertising kicks in. The factors like who, what, when, where and how starts playing a bigger role. Note that it starts playing a bigger role…doesn’t matter how big your marketing budget is, these do come in picture, but when it is small, they sit on the driver’s seat.

When we talk about intelligence in advertising, a couple points are considered most important. First, using proper targeting. You don’t have to reach everyone everywhere. If you are selling office supplies, you don’t have to bother homemakers and retired citizens. When you are selling dorm room goodies you know who your target audience is and return to school is probably the best time to reach them. The idea is to reach the right people at the right time using the right message and the right medium.

Second thing to consider when designing intelligent advertising is new media. If traditional media is all about shouting (one-way), new media is all about talking (two-way). If on traditional media budget is directly proportional to reach and frequency, on new media intelligence is directly proportional to influence and impact. Using new media you can form a bond with your customers. Using social media, you can understand what your customers want. You can make them feel valued, have a healthy dialog and take in their input. The idea is to have a conversation instead of a campaign, because campaigns start and end,but conversations go on forever.

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Posted in Advertising, Technology

What can’t be outsourced?

Posted on August 11, 2009 | Comments Off on What can’t be outsourced?

Outsourcing the right thing to the right vendor can make you a leaner and better operating business. But an important question to ask here is what can and cannot be outsourced? Call centers, software development, design, testing, advertising…well it depends. Each one of these can be outsourced, but that depends on what you want your brand to be known about.

Whatever you want your brand to be known about cannot be outsourced. If you want to make your brand to be known about customer service, you cannot outsource customer service. If you want your brand to be known about great design, you got to have design in-house. If creative advertisements is what your brand is all about, outsource something else and keep that in-house.

We outsource something for a couple of reasons. First, to save cost. If your brand is known for something, you don’t have to (and you should not try to) aggressively save cost in that domain. There are plenty of opportunities to cut costs or eliminate cost centers which can be better managed by outsourcing. This brings us to the second reason for outsourcing something. It’s to use the expertise of the company to which you are outsourcing the job. Now applying it back to what you are outsourcing, if you want your brand to be known about something, you are better off developing expertise in that domain as compared to outsourcing it. On the other hand, if you have a back office, it is a good idea to outsource it to someone for whom it is the front office and leverage their expertise.

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Posted in Business

Subtle Branding

Posted on July 21, 2009 | Comments Off on Subtle Branding

Branding in simple words is connecting a name with a product. Companies take various approaches to attain this task. One of the most fascinating approaches is to go for subtle branding. To put it simply, subtle branding is to take on a bigger issue and go after it with your brand in the background. The intent is to identify a purpose and make your brand the driving force behind it which would lead people to associate your brand, consciously or sub-consciously, with that larger-than-product purpose.

Using a creative approach, you can make almost any product to fit the bill. If you are in business of selling bags, broaden the horizon and link it to tourism. If your product is nicotine tablets, make anti-smoking as your purpose. If you are a retail bank, subtle brand it by picking up money management initiative. The basic idea is to expand the canvas. Every product has a purpose…it is there to solve a problem.

A necessary ingredient for this kind of branding effort is persistence. The idea here is to develop trust. You cannot expect people to instantly link a brand to a purpose. Like in any other case, building that trust requires time and a continuous effort.

What’s the most important thing to keep in mind while doing subtle branding? It’s the authenticity. If you are associating your brand with a purpose, make sure you put the purpose before your product. Faking purpose-driven branding is not possible in the long run. Your customers are too smart to identify the fake and such attempts can lead to a permanent dent in the brand image. An authentic subtle branding has a strong impact in developing your brand image, and above all, it will help you as an organization fill in for your social responsibility.

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Posted in Advertising, Marketing

Go SaaS!

Posted on July 10, 2009 | Comments Off on Go SaaS!

Any organization goes for a software solution in one of three ways: build it in-house, buy from a vendor or use Software-as-a-Service from an expert service provider. Here’s an analysis of each one of these options:

  • Build it in-house: If you are in business of software development, this is the route you should choose. When you are building a software in-house, you will need to develop, maintain and upgrade software as required. If you are not in the business of software development, why create a back office to build this software solution? Software applications are continuously evolving. Technology gets better every year. So if you go for the in-house option, you will have to carry additional overhead of maintaining and upgrading the software throughout its lifetime.
    Now let’s talk about the hardware side. If you decide to build the software in-house, you will have to go through the IT hurdles to get it hosted and maintained in-house. The Moore’s law of computing (which states that the processing power of hardware will double every 18 months) is still true and is expected to be true at least in the visible future. So if you choose to go for the in-house option, you will have to mess with IT department for upgrading the hardware every other year in order to keep your system up-to-date and state-of-the-art.
  • Buy from a vendor: If you buy from a vendor you successfully avoid creating a back office for developing the software, but what about maintenance and upgrades? You can manage maintenance by giving contract to the vendor who built the software for you. As for upgrades, you will require an in-house experts to know when to get upgrades and whom to court to do that. Along with this, dealing with the vendors can be an expensive and distractive process. Even further, the issues of data security and persistence, bandwidth and performance still exists.
    As far as the hardware end is concerned, all the problems that are in building it in-house persists in this option as well.
  • Software-as-a-Service: If you go for Software-as-a-Service, you are off-loading your software and hardware problems to an expert service provider. In other words, the back office that you might have otherwise created is replaced by the front office of this service provider. So what are you left with here? That’s your core competencies, your front office. With the software and hardware hurdles out of the way, you can completely focus on your core competencies.

SaaS is the only option where you can completely concentrate on your core competencies. So for software solutions, go SaaS!

Slide 15

Along with this, the software upgrade involves dealing with the vendor, which can be an expensive and distractive process.

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Posted in Technology