Friday, November 25, 2005

Measuring Marketing Effectiveness

As a student at University of Texas, my marketing professor always said "Best friend of a marketing manager should work in Accounting department (of the same company)".

Knowing how much importance Wall Street gives to quarterly numbers, it is not surprising that all public companies focus of short term Return on Investment (ROI). This maniacal focus on ROI is seen in marketing activities also. Marketing chiefs are now looking at immediate increase in sales for every dollar spent by marketing. Though this exercise is doomed from the start - as it is impossible to tie each dollar of marketing expense to sales.

While ROI in sales promotion and advertising can be measured. But in marketing big ticket items - the marketing ROI cannot be measured on a quarterly to quarterly basis. For example in high technology products, like semiconductors or industrial furnaces, marketing money is spent to educate potential customers, generate market awareness and to build brand recognition. These activities cannot really show an immediate sales shift. Similarly, customer relationship expansion and retention initiatives take time to achieve and to be observed having their intended effects.

So now I understand why my professor said "Best friend of a marketing manager should work in Accounting department (of the same company)."

By having a friend in accounting/Finance department, it will be easy to exclude certain expenses towards ROI calculation (for internal purposes only ) also one can get the expense report for a longer periods of time to measure the overall improvement in sales performance. Thus make it possible to redefine the business performance of marketing effectiveness and accountability more broadly, so that they take into account the full span of marketing investments and long time horizons.

Observations on Marketing mix effectiveness

Many companies develop predictive models to guide future planning and investment decisions. Using historical data on marketing mix spending, Sales revenue is split into parts that can be attributed to advertising, promotion, distribution, product, and pricing. The elasticities of each of these components of marketing mix is then used to simulate what would happen to future sales if each of these marketing levers were changed. These results are analyzed and graphed over time. This analysis often reveal that the effects of the marketing levers account for a relatively small changes in the overall sales of the brand.

The largest component of total sales is found in the brand level. The sales of a particular brand are not influenced by immediate changes in marketing lever (such as promotion spending and price changes). In other words, it represents the endurance of the brand reputation that is independent of the marginal changes made in brand marketing tactics on a daily basis.
This clearly illustrates the value and consequence of the building and managing of the brand that has taken place over the years. Brand value or Brand reputation results from activities of the marketing organization along with other parts of the company, such as manufacturing, supply chain, etc.

Brand value or Brand Reputation is an extremely important asset and should be well understood in order to sustain it, increase it, and apply the learning to other parts of the business.

Brand, price, and product features:

Marketing Mangers often seek to understand the drivers of customer choice to support product design, development, and positioning decisions. In the process, they look at the tradeoffs customers make between brand, price, and functional attributes of the product. Attributes include structural features such as the processor, memory, and screen options for a personal computer and other electronic devices.

Sophisticated analyses, such as conjoint or discrete choice experimentation and try to isolate the value of individual features and price from the pure brand value. But quite often in high tech products the benefit to consumers of the features far outweighs the pure brand preference. In other words, the largest shift (increase/decrease) in sales comes from changes in product features.

There are exceptions to this general observation (e.g., consumer products with strong brand preferences such as soaps, toothpaste etc.)

To fully assess the sales impact of feature changes in product or service, A detailed analysis must be conducted. Such analysis should include the cost of creating and delivering the additional features. This should also be a part of the marketing effectiveness discussion along with the discussions of brand value and marketing communication effectiveness.

Customer Experience

The customer’s experience with a product or service and its provider is often an important driver of customer relationship expansion and loyalty. Customer experience begins in the information search and shopping phase. It becomes more intense through available channels during the actual purchase process, leading to a transaction. It continues as the customer uses the product, receives continuing service and support, and decides when the time comes whether to remain a customer and repeat purchaser.

The magnitude of the effects of these experience variables is often hard to detect because they occur over time and are the result of the company’s overall business model for delivering value to customers, not necessarily the result of particular initiatives (from marketing, operations, or elsewhere). Many service companies have high levels of retention and repeat purchases (e.g., 90% or more).

Presumably they are doing a lot things right to achieve those levels continuously. While specific things can be done to "save" defectors and incrementally improve satisfaction scores, the generally high base level of these measures is relatively stable over time, unless there is a major service delivery or quality problem. This is another example of the great value in brand delivery system structure that creates the base level of retention. Marketing expenses for incremental improvements in service/product delivery should be thought of differently like strategic actions taken to preserve and grow the base business.

Closing Thoughts

Discussion on Marketing effectiveness should therefore focus on long term factors such as brand value, brand reputation, customer retention, product features. Long-term value creation requires an understanding of what constitutes the features of a brand, what creates that value, and what can be done to build on it. Use the tools of finance to focus the discussion of marketing productivity to the long term results.

NOTE: I wrote this with high tech marketing in mind. Marketing high tech products are usually not advertised and do not involve sales promotion. Here sales is mostly connected to product features, brand value and customer experiences. The above argument has little significance in consumer products.

Tuesday, November 22, 2005

Should your company have a corporate Blog

I have been writing this Blog for some time now and I have concentrated my writings on marketing. So after a while, I started to look at the feasibility of using blogs as another marketing platform in the Internet world. After a detailed study and analysis, here is what I have to say about corporate blogs.

What is a Blog?

The term "Blog" comes from Web log, i.e, an online log or dairy. Though publishing content on web has been around for a long time, Blog emerged through a software which makes it easier for creating professional looking web pages - which give users a easy-to-use, low cost platform to publish their thoughts, images, videos, articles etc. online.

The concept of blogs became popular in 2003. By 2005, there has been millions of personal blogs. However there has been relatively very few corporate blogs. Most corporate blogs are written by company employees on voluantary basis - and in most cases these blogs do not have any official sanction. The rapid growth of blogs should act as an eye opener for the marketing department and actively involve in publishing corporate blogs. Few firms have started taking active steps to promote blogs. For example, SUN Microsystems has created and has more than 2000 employees publishing their blogs on it. Similarly IBM, GM, Microsoft, Google, RedHat etc have created blog portals within their corporate website.

Market Potential of Blogs

Bob Litz, Vice Chairman of product development at General Motors, wants to get quick feedback from consumers on the company’s latest product launch, new strategy, or something as specific as the quality of the sheet-metal fits on the latest Chevrolet, he knows where to go:his corporate blog,

Product Manager of Microsoft logs on to a blog to know customer’s first reaction to X-Box 360. He sees a posting of a customer not being able to do a particular maneuver in game, he quickly replies to that and posts it on the blog - so that other customers can read it and know what to do.

These example show how a blog is an incredibly effective yet low-cost way to:

  • Influence the public "conversation" about your company:
    Make it easy for journalists to find the latest,most accurate information about new products orventures. In the case of a crisis, a blog allows you toshape the conversation about it.
  • Enhance brand visibility and credibility:
    Appear higher in search engine rankings, establish expertise in industry or subject area, and personalize one’s company by giving it a human voice.
  • Achieve customer intimacy:
    Speak directly to consumers and have them come right back with suggestions or complaints—or kudos.

What I intend in rest of this article is to help your company realize the full benefits of blogging.

How bloggers connect

Bloggers are somewhat like constantly circulating guests at a very large cocktail party: they don’t all talk directly with one another, but each of them talks to many others, thus forming a richly interlinked network. A simple google blog search shows about 18 million blosgs - this translates to several billion links.

Technically, conversations among bloggers can occur in two ways. Blogging software can be configured to allow blog visitors to post a comment that others visiting the blog can also view. - i.e. My blog has an area for visitors to comment on a particular blog.
Most corporate blogs take a lead in the conversation on a particular topic. Also many corporate sites do not permit outsides to post comments on their blogs. Instead they provide links to other blogs to know what is being said about themselves or their blog in cyberspace. Companies can use blogs as listening posts - to keep an ear to the ground to hear what’s being said about it and if necessary speak up with a correction.

By not blogging, companies are missing out on the chance to contribute to conversation taking place in the blogsphere - thus allowing others to take charge on the direction and nature of the conversations.

Blogs also allows companies to communicate with journalists - who write about your company in traditional media (newspapers, magazines etc). A Euro RSCG Magnet and Columbia University Survey of the Media in 2005 found that 51% of journalists view blogs regularly.

Boost credibility and get closer to customers

Not surprisingly, many of the early adopters of blogs have been technology companies eager to leverage blogs’ ability to position a company executive for recognition as an expert in a given industry or on a specific topic. With his blog, Jonathan Schwartz, the president and COO of Sun Microsystems, has established himself ( as a thought leader on issues
pertinent to computer operating systems. Blogs allow companies to get their message out to the world in a direct and unfiltered way. Blogs allows Sun to write things that are read directly by software developers without being filtered by journalists and analysts.

Blogging by employees has made it apparent to the world that Sun is not a faceless corporate monolith but a community of people who are passionate about software and information technology, and eager to engage with customers. Blogs are an additional means to communicate with customers and help resolve customer issues directly by employees without the need for a formal corporate communication.

To get the most from your blog

For now, corporate blogging is still an evolving practice, with much testing and experimentation under way, and yet early practitioners and analysts agree that corporate blogs can deliver distinct benefits, provided they:

  • Have a distinct focus and goal

    For a blog to deliver value, it has to be created with a specific purpose in mind. GM’s Lutz, for example, devotes much of his blog to discussion of car-design issues, his specialty. Sun’s Schwartz focuses on enterprise software issues in his blog. The blog written by Randy Baseler, a vice president of marketing at Boeing, focuses on commercial aviation topics (
    "You need to set expectations very carefully as to what a corporate blog is going to be about. People will expect you to discuss everything about your company, but you need to stay on topic as explained and introduced," says Michael Wiley, the director of new media at GM.

    Companies should carefully identify the corporate marketing objectives of any blog:

    Are you trying to showcase your employees?
    Are you tyring to promote your products?
    Are you using the blog as a recruitment tool? ( as does with their blog)Or is it more of a product support tool?

    You have to determine what it is you are trying to get done.

    For example, Organic food manufacturer Stonyfield Farm, for example, chose to launch four distinct blogs, each targeting a specific consumer market for its products. One blog features a chatty organic farmer who produces milk for Stonyfield. On another blog, new parents at Stonyfield talk about babies. All four blogs reflect the firm’s commitment to environmentalism, good health, and organic food. "Our blogs are a way to showcase different aspects of our brand and encourage brand loyalty," says Cathleen Toomey, vice president of communications at Stonyfield, Who adds that company blogs have helped to more fully engage core customers, who then go on to become brand ambassadors for the firm.
  • Feature an authentic voice

    Don’t let the PR department write your blog. Bloggers will sniff it out, and when they do, you will lose all credibility. Look at GM’s Lutz blog whose writing style is genuine, conversational, and engaging. In your blog, express your enthusiasm and passion for your work and your company’s product, with occasional asides on topics that reflect your personal interests. The latter will keep your voice authentic and increase the linkability of your blog.

  • Are open to comment

    Permit both positive and negative posts on your blog, and reply to comments made on other blogs pertinent to your area of focus. Respond in a professional and businesslike way. If you don’t want to hear from your customers and critics in a public environment, don’t blog.Blogs that don’t feature comments from readers are missing a large part of what makes a blog interesting. Blogs are not meant to be a one-way conversation. Companies can easily configure the comment function so that it is delayed and can be reviewed.

  • Establish ground Rules

    Some corporations simply advise their blogging employees to be guided by corporate communication guidelines already in place, blogs are a new and distinctive medium with distinct properties and accompanying risks. For a public company, there are certainly constraints about what can be said online, but they might not be apparent to all employees. In fairness to them, it’s a good idea to have a public policy in place with blogging dos and don’ts.

A final word

For a blog to accomplish its multiple purposes, it has to be updated regularly, at the very least once a week.


Good resources for news and information about business blogging:
BusinessWeek’s Blogspotting -
BlogWrite for CEOs -
Business Blog Consulting -

Tuesday, November 15, 2005

Communicate a Rock-Solid Brand Identity

Branding has been the key for marketing for many decades. Branding is often associated a name, logo, tag line, colors and images. But the term ‘Brand’ has implications far beyond corporate logos, mission statements and theme songs. Effective branding is all about telling customers who you are, what you do and how you do it.

For high tech companies, Internet provides an ideal platform to create a strong brand identity. Business customers interact with the supplier mainly over Internet - even before they make the buying decision. For example, A prospective customer of Wipro Technologies, a provider of IT services will first visit Wirpo’s web site before Wipro’s Business Development manager can make a face-to-face presentation.

Today it's vitally important for B2B companies and high tech firms to use the Internet to make an impact with a solid brand Image. Here are nine tips to help you carve a focused identity online.

1. Define your brand up front.
When visitors arrive at your web site, let them know immediately what you do and why they should care. Far too many web sites shroud their identity in flashy graphics and ambiguous slogans without telling people what the company or person actually does. View your Web site through the eyes of a new visitor. Does it spell out exactly what your brand stands for? If not, redesign it so your purpose and identity are unmistakable. For example, eSilicon Corp. Their home page displays:

"eilicon Corporation is a semiconductor company that manufactures and designs custom chips for the world's leading electronics companies. Our experienced in-house manufacturing and design teams integrate their deep domain expertise and proven methodology to consistently deliver first-pass silicon success and rapid time-to-volume. The result is fast, predictable and cost effective chip delivery"

The opening paragraph lets visitors know exactly who the site is for.

2. Lead with what you do, not who you are.

It may defy logic, but making your company name the most visible element on your home page may not be the most effective way to reinforce your brand. A Web-based or e-mail marketing message should state a benefit right off the bat.

Which of these paints a clearer identity: The business name "LSILogic" displayed in large letters or the more specific description "RapidChip® Platform ASIC combines three things: pre-verified slices, Intellectual Property and design methodology, to create silicon products."?
The overuse of company name in the above example is undermining the brand of "RapidChip"

3. Use a real person as a figure head.

The online world can be a cold, mechanical place. Your branding efforts are more effective when you add a recognizable, consistent human element. Think of the way Steve Jobs promoted Apple. If your company has a CEO or spokesperson who is closely identified with the company, make sure that connection is maintained in cyberworld.

Web sites that carry the name, photo and personal message from the leader creates a soft human touch to otherwise a machine like web site. Nothing creates mystery and distrust more than a site that is void of a human contact and asks visitors to send e-mail to the "webmaster."

4. Develop a fan-club mentality.

Most online marketers try to generate readers, visitors or users. I encourage you to switch gears and create fans. "Users" are people who visit your web site, subscribe to your newsletter or buy your products and services. "Fans," on the other hand, have bought your product, rave about you to their friends and on your web.

Most companies have case studies buried deep in their web site which visitors must dig out to read. Having a customer testimonial in the opening page will send a powerful message to all prospective customers. For example Wipro’s home page prominently carries a customer testimonial.

5. Make good use of words.

Verbal content is not only the king, it's the entire kingdom. Even though designers try to squeeze as much graphic impact as they can out of limited bandwidths, what matters most online are the words you use. To create fans online, you must deliver useful brand-related information and speak to readers in a conversational tone. If it takes more than one or two scrolling screens to do that, so be it.

The common web page design guideline of not having to scroll for content is applicable - but to the front page or Index page only. For subsequent pages - where text based content is key, scroll is fine. Readers who land on these pages are curious to know more about you and will be willing to read through the text. For example see The Index page is limited to one screen, but subsequent pages have lots of information - but people don’t mind the scroll.

6. Make sure visual elements reinforce your identity.

While words are important, the look of your Web site must also support your brand image. Is your brand best served by hard edges or softer, rounded shapes? Do primary colors capture your personality or would earth tones be a better match? Find the design scheme that best compliments your brand identity.

As a rule of thumb, establish a set of corporate colors and shapes - and ensure that all the pages in the web site follow this color/shapes scheme. Consistency makes it easier to create web pages and the brand identity is reinforced in all pages. Most of the well established companies have implemented this policy. See, or

7. Become a one-stop destination.

Let's say your company sells temperature sensors. You might simply post an online catalog and a few information about products. However, a far better approach would be to set up your site as a clearing house for all things related to temperature transducers -- articles on the technology of transducers, personal stories from customers who have benefited by using your product, a message board, information regarding use, service and repair of transducers etc. Your online presence should establish you as the primary resource of information for all temperature sensors.

A great example of this concept in action, check out Xilinx's web site carries all information about FPGA and SoC related technologies.

8. Publish an e-mail newsletter.

Having a brand-centered web site is great, but you must rely on people taking it upon themselves to visit it. Offering a free e-mail newsletter allows you to build a database of subscribers who are specifically interested in what your brand represents. Better yet, being able to deliver your message by e-mail puts you in control of the frequency with which your audience is exposed to your brand. Repetition is critical. To generate subscribers, place a newsletter sign-up form on every page of your site. Note how this is done at

9. Be visible through online forums.

Small high tech business should also regularly post to online forums, such as message boards and discussion lists widely read by people likely to be attracted to the brand. If your area of expertise caters to semiconductors, make sure you offer useful information -- not just a sales pitch -- at web sites which other ASIC designers usually read - , , etc. Be sure to include a link to your web site in a signature file at the end of each message.

Closing thoughts

The Internet is still a gold mine of opportunity, use it to create a recognizable brand identity. The above tips are basic guidelines - and when used consistently, it helps create a credible brand identity online.

Wednesday, November 09, 2005

Web marketing using RSS


In my earlier writing, I had described about using permission based emails as a marketing tool. Emails are effective and have earned their place in the marketer’s tool kit. Internet has evolved rapidly and has grown beyond email. Advances in technology has opened new channels for marketers: Blogs, RSS feeds and Podcasting have emerged as a viable marketing tool for customer communication. In this article, I will concentrate on RSS and its use as an effective communication tool.

RSS as a communication tool

As an alternative to email, RSS is becoming an increasingly important content delivery channel that allows marketers to deliver all of their content, fully upgrade all of their marketing initiatives and establish lasting client relationships.

Whether direct marketing, PR, e-commerce, internal communications, online publishing, SEO, traffic generation or customer relationship management, RSS brings the power of delivery back to the hands of marketers.

Rising use of various Intranets, customer portals, secure web services etc - have created several new customer touch points. Communicating uniformly through all the touch points is a marketing challenge. The need to monitor and develop content for all the web based customer touch points takes a lot of resources. RSS makes it simple to manage and control customer communication through various web sites.

RSS feed for company news, customer updates, employee news/updates etc has to be created first. Once the feeds are created, it can be used in various websites and Intranets. Thus creating uniformity across various websites.

Here are some of the benefits marketers are missing out on by not marketing with RSS:

  • 100% delivery of their marketing, relationship building and educational messages to their subscribers, customers, prospects and partners. E-mail isn’t getting delivered, but with RSS you will achieve 100% delivery.
  • Increased search engine rankings and quick content indexing, and increased traffic from other RSS-enabled online sources.
  • Getting your internet content published on other websites.
  • Generating new subscribers more easily and quickly.
  • Track how popular your communication messages are. Tools are available to track how many people are reading your messages from the RSS feed. This will help you customise and improve your company communication program

However, companies are slow in using RSS. Being a new technology, The next section talks on how to use RSS for marketing.

Using RSS for marketing

Most marketers still do not know how to actually get started with RSS, especially when trying to take its power beyond basic blogging. Here's a seven-step plan to help get you started. It includes a personal RSS marketing checklist to help you get the most from RSS marketing.

Step 1. Start using RSS as an end-user
The first step to getting started with RSS marketing/publishing is getting your own RSS aggregator, subscribing to other RSS feeds and just seeing and understanding how it all works. There's a variety of RSS aggregators to choose from, including the following:

Web-based RSS aggregators:,,,

Desktop RSS aggregators (software): , ,

Integrated RSS aggregators (integrate with IE or Microsoft Outlook): (browser with integrated RSS features), , ,

To find feeds of interest to subscribe to, cruise RSS feed-specific search engines such as

Using RSS feeds to get information will help the marketer to get a basic understanding of how it works and how RSS can be used in the marketing plan.

Step 2. Plan your RSS feeds

Planning your RSS feeds might be the most important thing you do for RSS. It's the one factor that decides between RSS marketing success and failure. Start by identifying the different target audiences that you might want to reach with RSS, especially these:

  • Prospects, segmented by prevailing interest
  • Existing clients, segmented by prevailing interest, business topic or existing products
  • Business partners, segmented by partner type, such as suppliers
  • Internal audiences, such as employees, owners and investors
  • The media
  • Web site syndication partners, segmented by their existing content
  • Search engines and directories

Depending on how complex your business and online content strategies are, you might need to plan for different feeds for each of the target audiences you identify. Of course, this also depends on your marketing goals with each.

After identifying the key target audiences for RSS content delivery, the next step involves actually planning what content type and topics you are going to deliver. These might include the following:

  • Product feeds
  • Podcast feeds
  • News feeds
  • Articles feeds
  • Direct communication feeds
  • E-zine publishing
  • Autoresponder content
  • Forum content
  • Latest downloads
  • Product support information & updates

Step 3. Create a list of RSS marketing/publishing requirements

Then create a list of requirements for the RSS marketing/publishing solution you will obtain to publish your feeds. The list should answer the basic questions, such as these:

  • Do you want to integrate RSS publishing with your existing content management system?
  • What RSS metrics you'll want to watch? For example, are you satisfied with just a rough idea of how many people are reading your RSS feed, or are you interested in more precise subscriber counts, clicks and even individual content-item popularity?
  • Do you need feed personalization, such as personalizing your RSS content with the recipient's name and other details?
  • Do you want to provide your subscribers with the ability to precisely select the content they want to receive in your RSS feed (customization), such as by content topic, keywords, authors and so on?
  • Do you want the RSS feeds to be hosted on your own server?
  • Do you need the ability to target promotional messages or other content to your individual RSS feed subscribers, for example based on their previous clicks and reading habits, or even their subscription data?
  • What's your budget?

Step 4. Choose an RSS marketing/publishing tool and start generating feeds

After you've prepared a list of requirements, start searching for the appropriate tool. These come in a few general categories:

  • Desktop feed generation tools. Desktop software you can use to inexpensively, quickly and easily generate RSS feeds, but that doesn't allow for more advanced features such as content targeting.
  • Basic hosted online RSS publishing solutions. These work quite similar to desktop tools, but generally allow for a more streamlined publishing experience. Their key problem is that they usually require the publisher to host the feeds on the vendor's server, thus decreasing the SEO impact of RSS.
  • Advanced RSS marketing solutions. These will cover more advanced RSS marketing capabilities, such as metrics, scheduled autoresponder messages, database building capabilities and similar features.
  • High-end email integrated solutions. Email integrated solutions are the most recent newcomer to the RSS industry, being provided by some of the best reputable email vendors, and providing marketers with full integration with their existing email marketing solutions.

Other options. There are other options as well—for example, using your existing content management system to publish RSS feeds, or using a blog publishing solution, which allows for some basic RSS publishing features but not much in terms of RSS marketing.

Step 5. Promote your RSS feeds through your own channels

Create an RSS presentation page to explain to your visitors what RSS is; how the visitor will benefit from using RSS; where they can get a free RSS aggregator (recommend one yourself!); how they can subscribe to your RSS feeds; and why they should subscribe to your own RSS feeds.

Then, on this same page, include the links to all of your RSS feeds. In addition to the standard orange RSS button, also include direct links for subscriptions via My Yahoo and other relevant services, such as Bloglines.

Promote the RSS presentation page as much as you can using all of your available channels.
Promote your RSS feeds directly below your e-zine subscription box, and always "above the fold." Promote your RSS presentation page (telling your visitors that's where they can subscribe to your feeds) on the most prominent locations of your site.

If you're publishing more than one RSS feed, or a couple of focused-topic feeds, promote each of them next to their topics on the site.

Promote your RSS feeds in all of your email messages and e-zine issues.

As for the content, don't just say "Subscribe to receive news from my site." Instead, prepare compelling copy to show your visitors why they need to subscribe to your content in the first place, and why they should subscribe specifically to your RSS feeds.

Enable auto-discovery to allow browsers with integrated features to easily discover your feed upon visit, and help search engines locate it on your site.

Step 6. Promote your RSS feed through external channels

Submit your feeds to the appropriate search engines and directories.
Ping the RSS aggregation sites each time you update your online content, letting them know that new content is available to be indexed.

Step 7. Other key RSS activities

  • Measure and optimize your feeds.
    Tools are available which will help marketers track how many people are reading the RSS news feeds. This will indicate which articles, news items are popular and which are not - thus help you improve/optimize your RSS feeds.
  • Syndicate your feed content to other Web media.
    Allow third party websites to carry your RSS feed only if that is an appropriate place for the message you are trying to communicate. The best place is often your company’s partners, associates and collaborators.
  • Display third-party RSS feeds on your site.
    RSS feeds from your partners, colloborators can be displayed in your website. In return, make them carry your RSS feed on their website. This increases your message coverage and builds a brand reputation.

Big Guys Join in

Microsoft recently announced that the upcoming Longhorn operating system, as well as the next version of Internet Explorer, will include the ability to read RSS feeds. Google has gotten into the picture as well by supporting the addition of AdSense advertising into RSS feeds. Finally, Yahoo! has given you the ability to add RSS feeds onto your "My Yahoo!" homepage, where the headlines are updated automatically. All of this indicates that RSS will not only continue to live, but that we are on the edge of an RSS "explosion"

What does this mean for marketers?

A) By being integrated in IE and other Microsoft software, RSS will achieve mass penetration. For marketers this means that RSS will finally become one of the standard tools of mass communication and content delivery. Furthermore, internet users will start to expect RSS from marketers, probably even more so than e-mail newsletters.

B) Marketers will no longer (eventually, of course, when most of the world starts using the latest software versions) need to explain how to get an RSS reader, but will be able to focus only on presenting their business and benefits to the end-user.

C) Broader RSS integration in Microsoft's tools will enable for additional RSS uses, far beyond basic content delivery in the form of stories, podcasts and products. Marketers and developers will be able to deploy rich interaction applications to make communication and business/personal interaction more fluent, easier and more effective. In essence, for many advanced marketers the capability of marketing with RSS will mean they're either "in" or "out" of the game.

D) This is now official.
Marketers need to start taking the lead and implementing RSS feeds across all their communicational initiatives, from PR to direct marketing and sales.

Wednesday, November 02, 2005

Marketing - Build a distinct brand with Product Differentiation

It is a widely accepted tenet of marketing that companies can sustain competitive advantage only through product differentiation based on unique features and benefits. But this is only half the truth. Products win when differentiation is based on features or benefits which are valued by customers.

Unless a product is really different from the competing product in terms of what the customers perceive its value and market differentiation, it is bound to fail (or fail to win).

Yet, many companies wrongly allocate millions of dollars to add a slight twist to their product : A new color, a new taste, a new chemical, or a new label — to distinguish it from the previous version. They put an equal amount of money into promoting their new-and-improved product through advertising and other marketing campaigns. Their return, over the long term, is usually marginal. The reason why this happens is due to the fact that marketers have built a perceived product difference for their products when compared to the competition - But customer does not care or value those differences. Take for example, the web enabled refrigerator from Whirlpool, or Intel’s ‘Manitoba’ processor for Cell phones, or IBM’s routers. These products failed to create a significant differentiation in the minds of the customer and disappeared from the market.

Meaningful Differences

So What’s going wrong? When companies are so preoccupied with fiddling with individual products and brands, they lose sight of the value they can create for customers.
If Manitoba, Motorola Razr cell phone, Via C6 CPU, or Transmetta disappeared tomorrow, most customers would hardly notice. At most a few will be slightly inconvenienced by having to switch to an alternative.

But how would the customers feel if HP, Qualcomm, CISCO, DELL or IBM disappears? Such an event will have a tremendous impact on several customers. These companies represent an entire category — Printers, CDMA chips, Routers, Personal Computers, or Enterprise systems. Notice how these companies represent an entire sector. These category leaders are being rewarded by customers for constantly raising the standards and quality. And these type of companies are what customers care about.

To become an industry leader, companies must really know what customers care about and then deliver more than their expectations. As long as a company is listening to the customer’s needs and constantly are able to beat customer’s expectations, they will be rewarded by customers in form of market leadership.

Take Broadcom for example, Broadcom launched Ethernet MAC chip which was faster and cheaper than that from the incumbent leader 3COM. Qualcomm then sold their ethernet solution to Cisco, Linksys and others. Soon Broadcom became a leader in Ethernet solutions and has maintained that position ever since - by constantly raising the performance bar for its chips while lowering the price for customers.

Another example, In 1993, Unilever launched Mentadent toothpaste, a combination of toothpaste, baking soda, and peroxide delivered through a clever pump. Within two years, Mentadent became a $250 million brand with a 12 percent share of the U.S. toothpaste market, an impressive figure in this crowded category.

Why? Because Unilever understood that dental hygiene is what’s on people’s minds when they buy toothpaste. So the company created a product that offered superior dental hygiene. Unlike a meaningless pink stripe down the middle of the toothpaste, this was differentiation that made a difference.

Maintaining Innovation

In today’s fast pace of business, where the value added to products and services may quickly be commoditized, it’s essential for companies to be focused on customer expectations to be keenly aware of the product features that customers want, and to continue to deliver them as they improve their offerings and the expectations for the category. If they do not do these things, companies risk losing market leadership.

Xerox, US based leader in photocopiers, learned this lesson well when it lost its market leadership to Cannon and had a near death experience. Xerox for long dominated the photocopier market and concentrated on developing big office copiers and ignored the needs of small offices. Japanese manufacturers - Panasonic, Kyocera and Cannon soon discovered the need for small desktop copiers and quickly captured a huge market share. Xerox in the mean time had also failed to develop office printers. Cannon licensed its Laser printing technology to HP - and HP soon took market leadership in office printers. By failing to listen to customer’s needs, Xerox failed to innovate and that caused the company to fall from its mighty position.
What these examples tell us, and what we have learned, is that most companies succeed by consistently satisfying basic customer needs better than the competition, not by continuously pitching them a unique selling proposition.

Branding for Services & Esoteric products

My firm makes custom chips for customers - referred as ASICs (Application Specific Integrated Circuits). To build a distinct brand, the firm has to differentiate itself from the competition - mainly the incumbent leaders LSI Logic, IBM, Fijitsu, and Samsung, by offering products to customers which beat their expectations (Note that in almost all cases, customer’s expectations are being set by the incumbent leaders). Merely offering better product/service is not enough - we have to know and understand what customer needs are and then offer more than what they are expecting.

In such cases, the new entrant is the challenger. Challengers can win only when they beat incumbent’s offerings in the minds of the customer i.e., the customer must feel that the challenger’s offering is superior to that of the market leader, and the challenger provides a risk free migration path for the customer to move his existing business from the incumbent. Only then a strong brand can be built by the challenger.

Often times, firms which offer high tech products or services fail to distinguish themselves from the competition. For example, Wipro, TCS and Infosys - three leading IT services providers from India. These firms collectively have been able to differentiate from the market leaders: IBM, EDS & Accenture. But have failed to distinguish among themselves. Customers cannot distinguish Wipro from Infosys from TCS.

Another example would be Open-Silicon and eSilicon. Both these silicon valley firms are fabless ASIC vendors challenging the market leaders. Yet customers cannot really differentiate Open-Silicon from eSilicon.

This happens because the challenger is focused on beating the incumbent and forgets that other companies(challengers) exist. The only way to create a distinct brand in such cases is to focus away from beating the incumbent - and focus on what the customer needs. And then figure out ways to beat customer’s expectations. The product/service features that help meet & beat customer expectations will then become the key brand attributes - which can be advertised to promote the product. This on the long run creates a distinct brand in the minds of the customer - and over a period of time will help the company build a market leadership position.
For example, take the example of Southwest Airlines. Southwest airlines concentrated on providing low cost air travel with minimum hassle. Over the period of time, Southwest Airlines has developed several brand attributes: No assigned seating, No in-flight food service, no business class, Humorous flight attendants, on-time flights and low fares. Southwest Airlines has developed a strong brand name in US aviation - based on distinct brand attributes.


Building a distinct brand in the minds of customers is possible only when customer perceive that they are getting a distinctly superior product or a service when compared to that offered by the competition. This has been proven several times in the past - Southwest, Qualcom, IBM, Uni-Lever etc. succeeded only because they listen to customer’s needs and beat their expectations.