1066 Blog

Swimming Against the Tide

I must confess that I find it hard to get excited about laundry detergent. I find it harder still to get excited about the marketing of laundry detergent. But there's little question that smart marketers ignore Proctor & Gamble at their own peril. This excerpt from Roger Martin's recent book The Opposable Mind: How Successful Leaders Win Through Integrated Thinking, featured in BusinessWeek , is a perfect example as to why. He offers an anecdote concerning A.G. Laffley, President & CEO of P&G, that offers some useful takeaways for marketers.

Lafley's originality came into play when he faced a big decision about compacting packaged laundry soap. Though P&G's research and development folks had devised a way to compact the big fluffy granules of powdered detergent into a form that was less than half the volume, consumer tests showed a lukewarm response and P&G mastery would have said that without a clear test win, the new product should not be launched.

But that verdict didn't sit right with Lafley.

With his carefully nurtured capacity for originality, though, Lafley focused on what was potentially unique about the situation that might call for a novel response from P&G. He saw that, unlike the majority of product upgrades, this one had the potential for massive cost savings for retailers since the smaller boxes would take up half the space in warehouses and on store shelves for the same dollar of sales. In addition, P&G's manufacturing and logistics operations would reap the same cost benefits as the retailers. And the voluntary comments that some of the consumers added to their quantitative research forms revealed that while consumers weren't wildly enthusiastic about compact detergents, few were actively hostile to the idea.

Lafley totted up the data points. Retailers saw compact detergent as a big win, and so did P&G manufacturing. Consumers were neutral at worst. So despite the lack of conclusive consumer evidence, Lafley argued for a huge investment to convert all powdered detergents to compact. It turned out to be a big win for P&G. "We ran and we won the race," Lafley says. "It was huge, absolutely huge."

A couple of things struck me here. First, Lafley trusted his instincts and was not blinded by the results from consumer research. Research is useful but too often substitutes for innovative thinking. Research participants, it should be noted, often don't know what they don't know. There's something to be said for gut instinct and common sense.

Second, Lafley considered the economic and strategic benefits of the new product to his company as well as the benefits at various points along the entire value chain. He then weighed the cumulative benefits against the research. In so doing, the new product launch seemed a no-brainer. As marketers become more and more active in product development, they need to understand the business they're in as much as the needs of the market.

 

Disruptive Marketing

Typically a service disruption is bad for business. For example, when an online store goes down it means lost revenue and aggravated customers, right? Well, Apple's turned what might be considered bad service into a marketing tactic. While most companies try to downplay technical difficulties, Apple hypes them. You might've noticed they even highlight their service disruptions with a cute "We'll be back soon" Post-It icon. It's not there to be condescending; it's actually a signal. As the BusinessWeek Apple blog notes, when the Apple Store is down, "that's often an indicator that a new product is about to be announced." Apple has turned an inconvenience into a positive newsworthy event. Now anytime the store is down, the likes of Engadget and Gizmodo, as well as the hundreds of Apple fanboy sites, report it and the speculation begins. When the store's back up what new product will be there? A Mac tablet? An ultraportable Macbook? A pink iPod Nano for Valentine's Day?

It's an unconventional and innovative approach to marketing - it fundamentally transforms a negative into a positive, it creates suspense, and it builds in viral marketing. But it can have its drawbacks. As BusinessWeek points out, that "We'll be back soon" icon doesn't always mean a new product is about to be revealed. Sometimes it means that the site is just down - you know, for maintenance or technical problems or some other nuisance. Has Apple, in using this marketing device, created unrealistic expectations? Probably. But as long as they don't suffer too many unwanted outages and regularly deliver on the promise of innovation, they'll continue to get invaluable free publicity.

Goes to show that virtually anything can be turned into advantage if you apply a little creative thinking.

Update: This blog entry has been recently published on both Chief Marketer and the U.K.-based uTalk Marketing.

Identityworks Reviews LodgeNet Rebrand

We we were thrilled to see our LodgeNet brand work favorably reviewed on Tony Spaeth's Identityworks site... it along with his Corporate Brand Matrix tool is a practical and authoritative (and often funny) online resource that brings much needed discipline and guidance to the practice of corporate branding.

HSBC makes a bundle?

HSBC has launched HSBC Premier, a new way of banking.

It's a bundle of financial services targeted, it appears, at those who may be in position to benefit from the bank's global presence.

But as I read the features and imagined myself being bundled off for a time to an expat assignment in Paris, London or Rio, I found myself thinking: "yeah, but as you are a global bank, shouldn't I be getting these things from my existing account anyway?" By which I mean: international recognition, worldwide assistance, investment options, privileges and rewards.

While I may benefit by avoiding lines at the branch or by talking to investment specialists in plush carpeted surroundings far from the bustling lobby, these features and the above seem table stakes for an offering the name implies is premium.

Innovation in financial services is a tough business to be sure. Tougher still if Marketing isn't aligned to make the most of combined capabilities and at least one somewhat unique strength: global ubiquity.

What HSBC has here is a missed opportunity to make a bundle.

RAZR Burn

Yesterday Motorola released disappointing earnings news and saw its stock drop to 2003 levels. The precipitous declines are being blamed on weakness in the company's mobile handset portfolio and the strengthening of competitive pressure from stalwarts like Nokia and newcomers like Apple.

And yet, competitive pressures notwithstanding, it seems that Motorola is its own worst enemy. Since 2003 when the company launched the enormously successful RAZR phone, its been in a kind of paralysis. Motorola, it seems, is allergic to success.

We've seen this before from Moto. Remember the StarTAC? Motorola's innovative, and chicly diminutive, clamshell phone which won high marks for its stylish design and quickly became a high tech status symbol? As you might recall, Motorola sold a lot of StarTACs in the years following its 1996 release--so many in fact that it became incapable of imagining a post-StarTAC world.

Well, history is repeating itself. This time around Motorola has released alternatives to the RAZR, but it has RAZR'ed them all to death. Looking through the company's phone portfolio, one can't help feeling like a dyslexic kid during finals week: RAZR, ROKR, KRZR, SLVR, RIZR. Is it a product naming convention or a cruel joke? This is not to mention the vagaries of the sub-brand modifiers; V3i, V3xx 3G, Z6tv, etc.

Clearly Motorola needs to come up with some radically new phone designs if it is going to remain a serious competitor in the tough neighborhood of Apple, Nokia, Samsung, HTC, LG, Sony Ericsson. But it needs to do something else. It needs to realize the consumers are under a siege of choice. They don't have the time, energy or interest in unpacking an impenetrable, highly-coded product portfolio in order to feel assured that they are getting the product that best meets their needs.

Make it more by making it less

Sometimes clever product development can mean making more by making less. Check out the Give Well prepaid health gift card. This product is “new” because it limits the use of the card to only health related purchases. It’s positioned as an ideal gift for everyone from aging boomers to recent college grads. Of course, conventional gift cards from Visa could always be used for health purchases so in reality the “benefit” is really just what you can’t do with the card. It’s a smart idea and a great example of how new product development is becoming as much about positioning as developing “new” product benefits or functionality.

Bank Brands and the Subprime Mess

In an article in this week's, American Banker (available to subscribers only), we address the effects of the sub-prime mess on bank brands. As the crisis continues to unfold--today's Journal, for example, highlights investor concerns that the crunch may expand to other forms of credit--we'll see banks struggling to shore up investor confidence. This obviously will require changes to processes, organization and so on. How these changes are marketed will bear close watching. How will this new wave of reputation branding play out? I'd be interested to hear your thoughts.