Friday, March 4, 2011

The five deadliest marketing mistakes - Deadly Mistake # 5

Success does not breed success. Success breeds lethargy.

The people and companies I admire most are the ones who have had the guts to re-invent themselves IN THE MIDST OF SUCCESS.

Deadly Mistake Number 5: Complacency
Let’s stick with Wal-Mart for a moment. About 10 years ago, there were very few Wal-Marts in smaller areas. The parking lot used to be packed at almost any time of day. It was a shock to the people in the vicinity when they announced they were building a new store five miles away and closing the original store. Of course the new store was a five times larger, with more parking, more services and yes, it was packed any time of day.

Think of this boldness -- would you close a store that was wildly successful if you didn't have to? Wal-Mart has the vision to constantly re-invent itself. It built a new store with thousands of new product offerings to put itself out of business! They didn't have a competitor brash enough to take themselves on so they attacked themselves.

My favorite example of re-invention is Apple and the breathtaking innovation occurring with its iPod and iTunes format. The product was successful, but the real story is how it sustained that success by innovating so furiously that no competitor could keep up.

We can learn some valuable lessons from these examples and apply them to the everyday reality of the small business owner. How are you fighting complacency and the lethargy induced by success? This is the time to take a fine-tooth comb to your business processes and look for re-invention opportunities.

Here are some questions to help you kick-start your re-invention process. If you spend some time on the answers you will certainly develop insights to improve your competitive advantage.
  1. How have your customer’s needs changed during this economic downturn and what do you need to do to respond aggressively?
  2. What are your industry’s best practices in lean manufacturing, accounting and marketing? How fast can you adopt these practices and create new customer value?
  3. If your competitor knew your company’s biggest vulnerabilities, what would it do? What can you do to protect my flanks before this happens?
  4. What new technology might disrupt your business model? How do you put it to use before somebody else does?
  5. What is the rate of innovation in your marketplace? What would be the implication if you invested and doubled that rate?
  6. Have you made any changes to the way you market and advertise to capitalize on cost-effective media channels?
  7. Has technology and supply-chain efficiencies opened up new doors in global markets? Is there a new way to work with suppliers that can provide competitive advantage?
  8. Do I have the right human skill sets in my company to compete today?
  9. How do you measure success? Is it still the right measure?
  10. Do you have a handle on which operations are making you the most profits? How has your product mix and profitability changed and how is it likely to change? How can it be re-invigorated?

Friday, February 25, 2011

The five deadliest marketing mistakes - Deadly Mistake # 4

The pain factor on this one is VERY HIGH because you’re probably going to spend a boatload of money before you discover that you’re failing.

Deadly Mistake 4: No unique value proposition.

To illustrate my point, let me take you back, back, back in time to the heyday of U.S. retailing giant K-Mart. Here was a company that predated Target and Wal-Mart but lost the retail leadership position it enjoyed because it lacked a clear value proposition. K-Mart pioneered the idea of everyday low prices but could not keep up with Wal-Mart’s dominant global supply chain technology. So it abandoned that idea and tried to sign on designers and celebrities to provide exclusive clothes and home products to compete with Target. This confused its core customers (seniors who wanted to find the latest in polyester) and loyal Target customers wouldn't be caught dead in a K-Mart.

So, it spent a fortune on bigger, newer stores (remember Super K-Mart?) that were Target-like but still selling goods that nobody wanted … at prices higher than Wal-Mart. Confused yet? I
am :S

Anyhow carrying on with the story, K-Mart’s last gasp was to leverage the chain’s iconic "blue light specials." In the 1990s, it created "Mr. Bluelight". The company said, "Mr. Bluelight does not just represent a sale or clearance anymore. With Mr. Bluelight, we are making the shopping experience fun. We know there are more people than ever today who see shopping as an escape and a reward, and we are giving them the entertainment and excitement they seek."

WHAT?? The best thing they had going for them was the blue-light clearance and now they are abandoning it for yet another value proposition: K-Mart is FUN and EXCITING?
My dear readers, how is that for creating a clear value prop for consumers!!

So what can we learn from K-Mart’s demise? If you’re starting a business, you must conduct upfront research to find your clear points of differentiation – what makes you UNIQUE in the marketplace? Why do customers should buy from you? The prospect’s unmet need your company will satisfy? Thats just the basic concept of value proposition you read in the books.

Once you have that strategy, you need to stick to it with a laser-focus.If you have an established business, your unique value proposition should be already well-understood – at least your customers understand it or you probably would not be in business! Still, you need to constantly check your strategy, adjust, re-invent yourself and defend your position, like Wal-Mart.

Many people get into business who think they can take on existing businesses and simply convince prospects they have a better product or service. They announce to the world, "We might not be first, but we're going to be better." That might be true, but if you're late, and you have to battle well-established competitors, bring a bundle of cash baby!

I'll ask all my readers a question here, was K-Mart really going to challenge a Wal-Mart that was rolling in cash? Never! A well-managed company is going to defend its market share ferociously until you are broke. So, once you have your niche, DOMINATE it.

Another pitfall is having a great value proposition but not being able to explain it simply. Can you explain what you sell and why you sell it in 30 seconds? Sometimes that can be excruciatingly difficult, especially if it's a new category or a new technology that requires education. The biggest marketing successes come with simple, but powerful explanations of the product offering.

Here was Wal-Mart’s value proposition: "Everyday low prices. Always." Compare it to K-Mart’s: "Home of the blue light special." Wal-Mart had a clear point of differentiation and could tell the story in four words, and later ONE word, "Always."

This economic recession is an excellent time to re-evaluate the relevance of your value proposition. Your customer needs are probably changing. Make sure you are innovating to stay aligned with the new unmet needs that are being created all the time.

Monday, February 21, 2011

The five deadliest marketing mistakes - Deadly Mistake # 3

Deadly Mistake 3: Thinking your website IS your marketing strategy

Many business owners imagine the Internet like a Mississippi River of money -- a wide, swollen sea of cash just rushing by! All you have to do is put an Internet site out there and start diverting money away from ol' Man River. This is rarely true.

Here's an excerpt from actual conversation with a seasoned business person looking to start a new business. To protect her identity, let's use codename "Clueless."
Clueless: "I want to start a new Internet business and I want you to help me build a website."
Me: "Well, what's your business idea?"
Clueless: "I don't have one yet."
Me: "Then how do you know you want to start a business?"
Clueless: "Does it really matter what I come up with? I mean you can SELL anything on the Internet! All you need is a website."
I swear ... it happened.

In defense of Clueless and thousands like her, the Internet is an amazing place. I read an article where a woman had made over $10,000 selling tumbleweeds through a website. Well, even a blind hog finds an acorn once in a while. Maybe it's you ... but probably not.

A website must be viewed as just ONE possible sales and marketing communication channel for your business. And it's going to be worthless unless you have .... what? Have you been paying attention gentle reader? Anyone? Anyone? A STRATEGY!

Your marketing strategy serves as your guide to a successful and cost-effective promotional plan. The strategy is built around customer NEEDS, not your passion to have a website with animations and disco music. If you've done a good job on your strategy you'll KNOW if a website is going to be a major workhouse for you or just a pony you have to have out there for show.

For most small businesses, a website is not even the primary sales channel. Usually it's another form of advertising or networking and referrals. Is networking really a marketing strategy? Sure it is. Remember, you're trying to sell more stuff, to more people, for more money. If it helps you do that, it's marketing.

Friday, February 11, 2011

The five deadliest marketing mistakes - Deadly Mistake # 2

One my wisest and favorite teachers would preach, "There is really no such thing as a personal weakness -- just over-done strengths!"

Deadly Mistake Number 2: Creating a plan around your ego

Think about it. It's nice to be out-going, but over-done, it becomes over-bearing. Tenacious becomes stubborn. Laid-back becomes lazy. Most business owners have to be self-assured to found and run a company. But over-done, that means arrogance. That can be annoying, but when it impacts a marketing strategy, it can be a disaster. Every successful marketer knows how to be successful, you have to push aside your personal agenda and serve the customer.

So, painful mistake number two is thinking your business is all about you.

Marketing isn't about who you think you are and what you think customers need.
Marketing is about who your customers think you are and what they think they need.

Please write that one down. There will probably come a time in the life of every business where you need to be reminded of this! Time and time again, I hear clients tell me what they want to sell ... without really knowing what their customers NEED. And by the way, those needs are changing, probably dramatically in this economic environment. What are you doing about it?

You deserve a lot of credit for what you've accomplished in your business. I give you permission to celebrate within your own home. But at work, be humble and put your customers FIRST! Listen, respond. Learn and grow. Most of all, beware of your over-done strengths!

Wednesday, February 9, 2011

The five deadliest marketing mistakes - Deadly Mistake # 1

To err is human, but some mistakes are bigger than others. Here are the five most painful, most horrific, most DEADLY marketing mistakes you could inflict on your company …

I switched my job from a more advertising oriented function which included more of dealing with Media, Publications, PR and event based stuff. Now I have more hardcore Marketing job functions, which include product based research (rather than client based), strategy development and product management. Recently I have been working on the marketing plan for a new product which will be launched in the near future. This provided me a learning curve and I am very excited about it.

I want to avoid the mistakes that many marketers make and try the best practices. Therefore I've decided to put up a series of posts in which I'll highlight the deadly mistake that marketers makes.

Deadly Mistake Number 1: Not having a strategy

I was having lunch with a friend the other day. He opened an innovative retail business last year and has spent tens of thousands on advertising. He's tried everything -- print, radio, TV, Internet, billboards. He's had sales, promotions, and PR events but can't seem to move sales.

So I asked him, "Who's your customer?" He said at first he predicted it would be middle-aged women, but then he noticed mostly couples entering the store. He said senior citizens need his product but he doesn't know how to target them. He tried ads in the local college student newspaper to appeal to young people but it got him nothing. And he thought locals would frequently visit the store but has seen people drive in from neighboring areas, too.

You can see that it's impossible to have an effective advertising campaign without clearly defining who you're selling to; the customer needs you're meeting, competition, pricing, and your points of differentiation. In fact, if you don't KNOW these things, you are probably going to fail while burning through huge amounts of cash.
My friend is firing "buckshot advertising" ... just shooting here and there, hoping he will get lucky and hit a customer. What he needs is a guided MISSILE ... and that's where strategy comes in.

So What makes a good strategy?

Some of the key elements are:
  • Target demographic and market segmentation
  • Market positioning and points of differentiation
  • Product and service attributes - finding under-served needs
  • Competition and external influences, threats and opportunities
  • Marketing channels
  • Pricing
  • Communications and branding - differentiation and value proposition
  • Distribution
Going through a methodical process to research and identify your marketing approach is the most important thing you can do for your business. And it's so LIBERATING! You don't have to guess any more. You don't have to play advertising roulette. You can sell with confidence and it will work because you have data, insight and a PLAN!

Saturday, January 29, 2011

Whats all the fuzz about 'BRANDS'?

As we continue to move into the 21st century, we do so in a world where brands are becoming a dominant force in business. They are often the catalyst for major mergers and acquisitions; they can be valued, and valuable, assets on a corporate balance sheet; they can change the way
companies organize and conduct their business. As they have evolved, so too they have evolved the business world around them.

And yet - here's the strange thing - we can't seem to agree on an accessible, universally acceptable and plain English definition of the word 'brand'. Indeed, over the years, definitions of the word have multiplied and become increasingly out of touch with the real world. It was not always thus. The word 'Brand' actually started out as meaning marks on cows. Now there at least is a clear definition.

But since that beginning, it has variously been described as 'a set of promises made by a product to a consumer' ; 'the means of distinguishing one producer's goods from another's'; 'a guarantee of provenance' ; 'a company's most important, and most intangible, asset', 'a significant sustainable wealth creator' and a whole host of other definitions. One of the world's leading brand consultancies defines it as "a mixture of tangible and intangible attributes, symbolized in a trademark, which if properly managed influences and generates value".
Phew! Think we prefer 'marks on cows' to that one!

None of these are intrinsically wrong, but few of them would be readily understood by the man on the Clapham omnibus. Few define the word with an accessible concept that makes it both transparently clear what a brand is, and why it is important.

Many people for instance use the word 'brand' simply as a substitute for the word 'make' ; as in "I buy this brand of cornflakes" has become the same as "I buy this make of cornflakes". Technically this is not incorrect usage. But the overall definition is incomplete - a brand is much more than just the name on a product. And it doesn't help us understand why branding matters.
Why branding is so much more than the logo on your letterhead. Or indeed why you should employ a brand agency…

The time is long overdue therefore for a definition that is readily understandable and applicable. And to explain, we begin with an analogy.

If you've ever been in the position of hiring someone to do a job (whether at your home or your work) chances are that you've made this decision based on two apparently simple (but actually rather mysterious) criteria.

First of all, their apparent expertise (i.e. what they can do and their ability to deliver this effectively) and secondly, their personality (i.e. how they do what they do, and whether they will 'fit' in).

Brands are no different!!

When we buy a product, or a service, (as household consumers or corporate customers) we do so on the basis of the same essential criteria : a) its expertise (i.e. what we believe it can do and its ability to deliver this effectively) and b) its personality (i.e. how it communicates about what it
does and whether it 'fits' with us).

The optimum mixture of these two attributes is of course rarely 50:50 and can vary massively both between product/service categories and also between brands in those categories. Small cars for example ooze personality, family saloons less so. But they are both cars! It is this combination of a specific expertise and a specific personality that makes a brand individual. For this reason at gospel we call this combination a product or service's individuality.

So if you want a simple and accessible equation of what a brand is, we believe it to be:

Brand = Individuality.

Individuality = Expertise + Personality.

It is an equation that leads to your products possessing uniqueness and often therefore significant added value.

Now let's define these broad terms in more detail. First, Expertise:

Expertise we have said is about what a product/services does. But this does not to be purely a focus on your defined job. It is possible (and often desirable) to take a familiar category and bring new and relevant expertise to it.

E.g. You are an insurance broker : the expertise you communicate does not have to be just in broking good deals. It could instead be an expertise in making the whole insurance procedure easier for customers to handle. Which is how Direct Line created a brand. (Or look at Virgin Atlantic who created an expertise in airline travel that was more 'fun' : a totally new
dimension to bring to the world of air travel).

In fact, expertise can comprise a whole number of different elements all
relating back to your basic skill. For example:

what you can do ; what it costs ; relative value for money ; relative value for time ; your provenance ; your reputation (and many others, including category dependent dynamics)

You'd think, especially in commodity markets, that Expertise might be enough on its own. Why is this rarely the case? First because skills on their own rarely differentiate sufficiently. (Especially nowadays when all companies are expected to be excellent at what they do).
Consider that well known promise of 'Quality. Service. Value' : what more could a customer want? Maybe nothing - but the problem is that everybody says it! It neither differentiates you, and if it does it is not wholly protectable - someone may, and probably will, copy you.

Bananarama have rarely been quoted as an expert source on branding before but their words hold true - "It ain't what you do, it's the way that you do it, that's what gets results". Often, whilst Expertise can be critical in establishing credibility, it is how you express this expertise that gets you noticed - in other words Personality.

It is generally personality rather than expertise that makes all brands unique. No surprises here- if, as we say, brands are like people, then it is also personality that tends to make different people unique.

As expertise can comprise many sub-elements, so can a brand's personality. For instance:
what it looks like ; how it speaks ; how it acts ; what it believes in ; who
its 'friends'are ; what it wants to be (etc., including other category-dependent

As noted above, the optimum balance of Expertise vs. Personality may vary considerably from category to category. A manufacturer of sheet metal, for
instance, may want to prioritize Expertise, but a soft-drinks producer may
find the opposite more appropriate.

Whatever, it is the total mixture of all these various sub-elements, grouped into the two main qualities of Expertise and Personality that make up a product or service's Individuality- its branding. We believe that for a business to succeed in the long-term it must have a powerful sense of its own Individuality and apply that across every aspect of its relations with its customers. The way it looks to them, reaches out and speaks to them.

Such an exercise is therefore about much more than just defining the way a brand looks, in the same way that my Individuality is (hopefully) defined by more than my haircut. It includes all levels of activity from name to staff behaviour; from visual identity to the words it uses in its letters to customers; from the values that it holds to the values that it rejects.

(As an aside which is explored in more detail elsewhere, often much of this Individuality is just the beliefs or personality of the company founder writ large).

Good branding can give a company or its products a massively unfair advantage and set it far apart from its competitors, irrespective of the size of that company or the field in which it operates.

Just as people can define category stereotypes ("he's a typical accountant"; "Kylie is the perfect girl-next-door" etc ) so strong brands can indeed possess such a consistently powerful and a charismatic Individuality that they can come to embody the category itself, and become the lodestone against which others are measured. So Cadbury's has come to mean 'chocolatiness' and the FT is a symbol of the City. Such a strength can allow brands to extend into other related categories.

This definition embraces all others (e.g. sure a brand is a valuable intangible asset - so is Individuality. But which one brings the notion alive more?) but hopefully gives the word 'brand' a meaning that is readily accessible in both the boardroom and on the shop floor. It's also universally applicable, from manufacturers of cornflakes to manufacturers of sheet metal.

So, when you embark on a branding exercise, you are simply trying to develop the most charismatic Individuality for the company or its products, in order to increase your clarity, attraction and differentiation within your market.

Similarly, when you 're-brand', you are endeavouring (as people do as they mature or their situation changes) to refine this corporate individuality. Branding helps companies develop and bring to maturity their Individuality. To find the best, truest, and most differentiating way of making a company magnetic and special.

Friday, January 28, 2011

Facebook introduces new advertising program based on users’ status updates

Facebook is ramping up its advertising efforts with a new word-of-mouth feature that will take status updates where users "check in" to a location using a business name and place them in a special advertisement that will appear on their friends' profiles.

The announcement also comes as Facebook has said that every application and game available on the social network will be forced to use the site's own credits system, in a move designed to drive up revenue ahead of a likely IPO in 2012.

Facebook's new feature, "Sponsored Stories", works by having businesses sign up to the program. Then, whenever a Facebook users "checks in" to a location that features their business name, that information is shared with that users' friends.

The move to leverage these status updates is a testament to growing power of location-based marketing. For months now, researchers have been saying that social networking recommendations among friends are far more powerful than reviews or other types of ads.

In the new program, a box will appear on their profiles featuring the word "Sponsored Story", and below it will have the user's status update, and then a link to that particular business's website.

Facebook has said that businesses wanting to be a part of the program will need to sign up, but the cost is unknown at this stage.

Facebook says the system leverages the power that personal recommendations have over traditional advertising.

"Companies and organisations are already seeing the benefits of marketing that includes people and their real friends through our core ads product – more effective, more engaging and more personalised marketing," the site says.

"Like News Feed, it's just another way to share and see what your friends are doing. Some actions people take with companies, products or apps on Facebook, will appear not only in the News Feed, but also as Sponsored Stories on the right side of the page."

The system is a type of sponsored word-of-mouth marketing, but relies on businesses having a presence on Facebook's locations feature.

While some Facebook pundits have already pointed out that users will be unable to opt out of seeing these types of ads, the site counters that by saying the information being used are only status updates that have appeared on news feeds anyway, and the update won't be used outside of Facebook.

However, it is still unknown how Facebook will differentiate between negative and positive status updates. An Australian spokesperson was contacted for comment this morning, but no reply was available before publication.

"A Sponsored Story may also appear on my friends' profile or homepage with the same check-in story. This creates another way for businesses to drive predictable word-of-mouth marketing between friends at scale."

Meanwhile, Facebook has also said that it will force game developers to use Facebook Credits for purchases from July 1, and will provide incentives to those who start switching over early.

The announcement comes as the popularity of Facebook games has exploded over the past year, with millions of people now logging on every day to play game such as FarmVille.

However, some developers have kicked up a fuss, which is why Facebook has said that it delivered the news early in order to have discussions with developers about the change.

But the real reason for the switch here is revenue. Facebook needs as much as it can get, and with a 30% commission from all payments made using Facebook Credits, making the switchover mandatory will potentially mean a lot of money will be flowing into the site.

Analysts suspect the company will announce an IPO for April 2012, thanks to a remark in the company's filing last year which stated that "even before the investment from Goldman Sachs, Facebook had expected to pass 500 shareholders at some point in 2011, and therefore expects to start filing public financial reports no later than April 30, 2012".