Tuesday, January 31, 2006

What is a Whole Product

Everyone knows what a product is. For example - cell phone, laptop, office software etc. But when a customer makes a buying decision, he/she will buy not just the product - but the whole product.

A "Whole Product," is traditionally defined as adding more value to a product so that it adds more value to the lives of those who buy it. For example, Cup holders and DVD players in automobiles. Travel services for credit card holders. Products that started with one set of features and, over time, added more and more features to add more and more value.

Thus a whole product can be defined is a set of complex cluster of value satisfaction. I.e., A cell phone with color screen, camera & a whole set of add on features. Thus a whole product is a set of features which add value to the customer.

From this perspective, the company that provides the most complete cluster of value satisfactions for its market is the one that's closest to achieving Whole Product.

Whole Product is just not features

I think core strategic marketing has evolved from a product centric approach to customer centric. The core focus has shifted from "how good can we make our product?" to "how happy can we make our customers?" Two very different questions, looking at the marketplace from two very different perspectives.

This means that "Whole Product" really is a product, to the potential buyer, a complex stream containing numerous clusters of value satisfactions.

Your cluster is just one stop along a meandering "solution stream" of actions and events that ultimately takes customers to "Whole Product." A stream that begins to form and grow the moment a need is recognized, is fed and swelled by tributaries—other "value satisfactions"—as it travels toward satisfying the need, and doesn't end until it either disappears or returns to its source.

Your cluster may be a small element of that stream— songs in MP3 format for iPod (or plastic skins for the iPod) or it may be the central element - iPod itself. It is important to have all the clusters necessary to make the complete product - A portable music system.

From this perspective, the company that provides not the largest cluster but the largest number of clusters all along the solution stream for its market is the one that's closest to achieving Whole Product.

Tracking Your Customers' Stream of Clusters

That's what your job really is when it comes to Whole Product specification. To understand your customers' needs, map out all the clusters of points which result in customer satisfaction - then you will have a map which best describes the whole product.

Once the map for the whole product is done, we can ask the correct questions:
  • How many of these clusters can we profitably supply?
  • How many should clusters we should build?
  • How many should we partner to create value?
  • How many clusters should we ignore?

And with this we will end up with at least a plan to develop and deliver components which make up the whole product.

Wednesday, January 25, 2006

When it is better not to have a corporate Blog

Today blogging is ubiquitous. Marketing experts, the media and books on business blogging give the impression that we should all do it, or be thinking about doing it. As with every business decision, One needs to decide whether a blog is worth its time and resources. Is it always a wise use of resources and an asset?

In my earlier blog, I had written on how a firm can use blog as a marketing tool. Being an active blogger - I took a deep look on the pros & cons of corporate blogging and in this blog, I am writing about when it is better for companies not to have a blog.

Case-1: When the blog becomes a one sided communication medium

Blog is a great tool to get the corporate messages across. But blog is not a one-way communication tool. It has to be a two way messaging system. If the company does not want to read any negative comments on its blog, then it must not have a blog.

Case-2: Blogging can leak company secrets

Every organization has confidential information. This information is often shared between employees - and there is likely potential that some of this information may unintentionally leak out through the blog.

Loss of confidential information can be prevented by having the blog contents go through a review process before being published. But this leads to another problem - Blogging takes too much time.

Case-3: Blogging Takes Time

It takes time and effort by company employees to publish & post contents on the blog. Often times employees are hard pressed for time. This makes the blog content being not updated regularly or the quality of the postings drops to a low level that it reflects badly on the firm. Committing resources for maintaining the blog should be a well thought out decision.

Case-4: Key market segments cannot be reached by Blog

Not all customers are Internet savvy. If your customer are not reading your blog, then there is no point in maintaining the blog. A clearly segmented customer base that can be touched through a blog deserves a corporate blog. If not, then there is little value in having a corporate blog.

Case-5: Blog needs to be on a interesting topic

People will read your blog if the contents are relevant to them and if its interesting. It is easy to start a blog, but keeping its content lively and interesting to its readers over a long period of time is a challenge. Often times, blogs do not have new content added regularly or have the same old topics recycled through - or some dull content. A dull blog is a sure way to turnoff readers and reflects poorly on the firm.

Closing thoughts

Corporate blog is a great way to reach out to the customers. But it must be treated like any other marketing communications tool - like advertising/pamplets/handouts etc. The decision to build and maintain a corporate blog must be well thought out one. I have outlined five reasons for not having a corporate blog. If the company plans to have a blog - but after the initial zeal, if the blog begins to flog, One must not hesitate to kill the blog.

Think of Blog as a marketing tool. Like all marketing communication mediums, there must be a well defined budget, objectives, road map and an exit plan in place before launching the blog.

Monday, January 23, 2006

The Art of Naming a Brand

Naming a brand - A function of marketing department that can be done by anyone from a 5 year old kid to a adult, that can be done in few seconds. But yet, for most firms & individuals it is the most difficult & frustrating task. Choosing a name for a brand becomes so difficult for firms that they are willing to spend some serious money on marketing consultants.

Does this sound familiar to whats happening in your firm? Then read on.

In this blog, I am going to write about the art of creating and applying names to products, services and companies.

Having studied several names of companies, products & services over the years, I'm firmly convinced of the utter irrelevance of names. Naming isn’t something as complex as the big, ultra-expensive corporate identity firms and naming boutiques will tell you.

Here's what I mean. Imagine that you're planning to open a low-cost, high-quality sandwich shop and you need to come up with a name to put on the empty awning out front. It's critically important, wouldn't you think, to communicate to hungry lunch goers that your lettuce is crisp, your bread fresh, your ham and cheese of prime quality?

So, let's see... perhaps you should name your sandwich shop after a pitch-black, dark, dangerous hole in the ground that reeks of stale urine and is so loud that you can't hear yourself talk. An abysmally bad idea, you say? And yet it's worked out rather well for Subway, one of the most successful restaurant franchises in the world.

Ah, but you say, Subway is a reference to "submarine sandwich," which is what it's called in those parts of the U.S. where it isn't, instead, called a hero or a grinder or a muffaletta or a hoagie. And, yet, if you go into a Subway sandwich shop, the wallpaper contains reproductions of antique newspaper articles about the opening of urban subway systems, back in the days when they were even noisier, darker, danker, etc. than they are today.

Let's try another example. Let's say you're going to open a high-quality copy shop that offers high-speed copying and printing services, faxing, computer services, shipping and office supplies. Would you give it a name that evokes... oh, I don't know... a depraved clown? Of course not. And, yet, for Kinko's, it's worked out well enough.

That these names have odd connotations is completely irrelevant. That's because what really matters is the quality of the product or service the name represents. Once the initial oddness of the name wears off, it soaks up these positive qualities like a chunk of tofu soaks up soy sauce, and the original meaning is utterly immaterial.

Hence Google which, by the way, is a play on the mathematical term "googol," itself concocted by a 9-year-old boy.

Automobile companies Chrysler and Chevrolet, which to our ears sound like perfectly reasonable names for cars, but which—when they were first introduced to the world—sounded exactly like what they were, the last names of their respective companies' founders.

Put another way, "Hershey" is a name that seems indelibly associated with chocolate, and yet there is nothing inherent in its two syllables to suggest chocolate; if Walter Chrysler and Milton Hershey has switched places early in their careers, we'd be snacking on Chrysler bars and driving Hershey cars, and we wouldn't even notice the lack of almonds.

So what makes this irrelevant discipline of naming so difficult?

It is because a name is so easy to come up with that an expensive consultancy that spends six months and hundreds of thousands of dollars to extrude a new corporate name is likely to be met with a good deal of skepticism. "Apex," the company founder says in shock. "It's just four letters! That's $250,000 per letter. Plus, it's right there in the dictionary! See, it means pinnacle! I could've come up with that myself!"

Friday, January 13, 2006

Advantages of Niche Positioning

When companies or individuals invest money in a new venture, they generally want to shoot small with their market positioning or in other words target just one niche segment within their chosen market.

Indeed, many companies take comfort in the fact that by striving for a market position that has niche appeal, they'll only need to concentrate their resources in a small area to be successful.
By owning an identifiable market position or niche that may appear to be on the fringes of the market,small firms greatly improve their chances for survival and success. Their offering will be well aligned with the needs of the select few people in the market. This is better than a product/service that is designed to have a wide appeal to everybody, but the competition is so fierce that the new firm is bound to lose.

Yesterday I happened to meet an extraordinary person Mr. Dee Mehta, the co-founder of Bayside Design Inc. A niche design service provider who specializes in offering high-end package design services. Needless to say that his firm is successful and have carved a name for themselves in the Silicon Valley. During our conversation, he brought up a fact that he was also the co-founder if Velio Communications Inc. Velio Communications was not very successful and was acquired by LSI Logic.

It was during my conversation with this tireless entrepreneur, I began to formulate three compelling reasons to target a niche market and be successful.

1. You are more likely to have an impact

A strong position that targets a market niche is much more likely to help you make a dent in the market. It provides your business with an identity, and gives customers who are unfamiliar with your business a reason to consider dealing with you.

For example, if you are a ASIC design services provider, you could occupy RTL verification services niche. This may not appeal to most large semiconductor firms, but that’s OK. Small startups which have little expertise in design verification will hear your marketing message and will come to you because your offering is uniquely positioned to appeal to their needs. E-Infochips a design verification service firm has managed to do just that.

Another Example, Bayside Design Inc offers package/board design & analysis for high end designs.

In this way, a niche strategy gives some of the people in your chosen market a strong reason to call you. This is almost always preferable to giving many people in the market a weak reason to call you, or no reason at all.

Making a dent in your chosen market through a niche strategy is critical in gaining some revenue in the early days of your business venture, a key to long-term survival. Many businesses overlook this fact when forecasting sales—the early sales may have a greater importance than future sales, depending on your cash flow position in the first few months of your venture (or the trigger finger down at your corporate office). In either case, pulling in a few dollars early in the game is never a bad idea.

2. You are more likely to be able to defend your business

In any business, you can bet that as soon as you have a few customers, a competitor will be after them. A strong market position will help you defend your growing customer base. Using the above example, Einfochips or Bayside Design Inc, is in a good position to grow its niche market position even when more than reputed design services firms.

A niche service provider can alter their service offerings to meet their customer needs more readily and hence command a higher customer loyalty. This will build a stronger customer base and it is easier to defend their business from competition.

This is true of almost any business. Match your position well against the needs and wants of a niche market, and you'll build a loyal clients who won't easily be swayed by competing offers.

3. You can organically grow your niche

Service the needs of a particular market niche well, and your niche will start doing some marketing for you.

You may start generating referrals or word-of-mouth advertising from within your niche client base that attracts clients who fall outside of your niche. For example, Open-Silicon a customer for Bayside Design Inc was eager to introduce Bayside Design to other firms in Israel. Independently, it would have been impossible (or close to impossible) for Bayside Design to reachout to firms in Israel.

In this manner, your strong, defined market position can help you build business in other segments of the market over time, and grow beyond your current niche position. Of course, word will spread within your niche as well. People within your niche may be alike in certain demographic categories and thus more likely to spread word about your business to peers.

A defined market position that targets a niche market is a great opening play for a new business, or a business breaking into a new market. Whether you are leading new product marketing efforts for a major corporation or starting up in the most entrepreneurial of businesses like real estate, a niche position in the market allows for good short-term prospects and the potential for long-term business maturation beyond your initial niche position.

Closing Thoughts

The next time you look at a market, don't think about getting a small chunk of a big market. Shoot for a big chunk of a niche within the market, and build from there.