Gaurav Bhalla has just published an article in the January-February Harvard Business Review titled - Rethinking Marketing.Along with his co-authors - Roland Rust and Christine Moormon - Bhalla insists that companies must shift their mindsets from a product-centered focus to building long-term relationships with customers.
Says Bhalla:
"The traditional marketing department must be reconfigured as a customer department that puts building customer relationships ahead of pushing specific products. To this end, product managers and customer-focused departments report to a Chief Customer Officer instead of a CMO, and support the strategies of customer or segment managers."
You can sign up for Bhalla's Customer-Driven Innovation Newsletter and download "Rethinking Marketing" here >>
You can read the interview we did with Bhalla here >>
As is often the case with labels and designations, what you name your product or solution actually determines to a significant measure - your success, or lack thereof. An example that comes to mind is the term "IT Service Management" which is an industry designation which was meant to be centered on the customer's perspective of IT's contribution to the business. Can you tell? I can't.
So a few years ago, one of the vendors in this same marketspace came up with the term"business service management" to show that IT was now aligned with a company's business objectives. The organizing principal of business service management is that IT departments must monitor and measure their services from a business perspective.In other words, business service management is "whatever is required to align the IT organization to the needs and demands of the business" (see Keyworth).
Even though this particlar vendor coined the term, it was unable to brand it in such a way that gave it ownership. To be sure, it started ahead of the pack, and continues to lead, but the other top three or four vendors in the industry have nearly caught up. The ultimate irony, the rivals are also using the phrase "business service management."
So how could the thought-leader have maintained a branded position?
Unfortunately, they lacked the marketing and branding know-how to do so. They didn't trade mark the term, or even use it as a "tag line" for their business. They failed to create and nurture a community of prospects and customers around their idea. In short, they left the barn door open.
The lesson?
If you're going to lead the market with a shaping strategy, you must follow through on branding your initiative in a way that belongs to you, particularly in the mind of the prospective customer.
P.S. - see how the French go overboard >>
In “How GE is Disrupting Itself” (October 2009, Harvard Business Review)
GE’s Jeffrey R. Immelt and consultants Vijay Govindarajan and Chris Trimble make some critical observations about global innovation.
GE is disrupting itself, they claim, through reverse innovation.
And according to the GEReports blog, the “disruption” that is at the center of their article can strain
companies because reverse innovation requires a decentralized,
local-market focus that fundamentally clashes with the centralized,
product-focused structure that multinationals have evolved for
glocalization. For example, GE’s new handheld electrocardiogram
developed for India sells for around $1,000 and the portable, PC-based
ultrasound that was designed for China sells for as little as $15,000.
The authors note that with these kinds of products, companies like GE
are “establishing lower price points, and even using the innovations to
cannibalize higher-margin products in rich countries” — which is
“antithetical to the glocalization model.”
Professor Govindarajan explains:
Indeed, this is a game-changing approach to innovation for global companies.
GE is taking a bold step to create products to meet customer needs in developing markets, and then bring the innovation back to the developed countries - the US, Europe, Japan, etc. One can argue that this is being done by necessity, but then why isn’t everyone else doing it?
Hats off to Jeffrey Immelt for his leadership. Let’s see what else they come up with.
More from Vijay Govindarajan here >>
Co-sponsored by Emory Marketing Institute and AIGA, author, consultant, and marketing guru Dev Patnaik will be our guest speaker on Thursday May 14, 2009 from 7:00 to 8:15 PM.
His topic: Wired to Care: Driving Growth Though Customer Empathy
What it’s about: Recent history has seen the rise of innovation as a key mandate for driving top-line growth in business across multiple sectors. But as organizations have devoted increasing resources and attention to innovation, a critical issue has been ignored in the process. How can you create new value if your company doesn’t have a gut sense for what people outside its walls actually value? The challenge facing business today isn’t a lack of innovation, it’s lack of empathy.
Dev Patnaik takes audiences inside leading companies like IBM, Target and Intel to see how empathy can drive change and growth. He dives deep into the human brain to find the biological sources of empathy and their critical role in decision-making, learning, and judgment. And he spends time on both sides of the political aisle, to show how empathy can give politicians the acuity to cut through a morass of contradictory information.Patnaik is a founder and principal of Jump Associates, a consulting firm that helps companies innovate. Together with his teammates, he works with visionary business leaders to identify new markets, reinvent existing categories, and define new products and services. Dev is a trusted advisor to senior executives at some of America’s most admired companies, including General Electric, Nike, Procter & Gamble, Target and Hewlett-Packard. When he’s not working at Jump, Dev moonlights down the road at Stanford University as an adjunct professor, where he teaches design-research methods to undergraduate and graduate students. Since 1999, he has taught a course called Needfinding. In the class, students draw upon methods from anthropology, design and business planning to discover insights about ordinary people and create new products. While the class is required for all Design majors, it’s become a favorite of students from the Business School, School of Education and even Computer Science.
Learn more and register here >>
The in-store experience is set to change as well. After experimenting with warm sandwiches, the company has decided to give up on the egg-and-cheese and concentrate on its core business, namely coffee. Speaking of coffee, it would appear that Starbucks is testing $1 cups of coffee, in a move that is surely designed to counter the likes of McDonald's and Dunkin Donuts. For the company that built an empire by selling $4 frappucinos, this could be a radical move, made necessary by increased competition and a lagging economy.
After a few years of branching out and experimenting with new items (sandwiches, cd's, etc...), Starbucks is being challenged on its own turf, which is why company is looking at ways to get back the upper hand. But is undercuttind Dunkin' Donuts on the price of a cup of coffee really the way to go? Starbucks currently stands for premium coffee drinks and a premium store atmosphere. $1 cups of coffee run the risk of cheapening the company brand, and might also cannibalize sales of the more expensive (and more profitable) drinks.
One thing is for sure: Starbucks is going to face a lot of competition in the next few years, and if it intends to keep building thousands of stores per year, it will have to come up with something new.
-"Starbucks Tests $1 Cup, Free Refills in Seattle", 01/23/08, The Wall Street Journal
So when Wal-Mart announced on January 23rd its ambitious plans to become a greener company and offer cheaper health care to companies, it was easy to be skeptical. Wal-Mart has long been known for its low wages and often devastating impact on small businesses around its stores. But the Bentonville giant can't be discounted that easily. What makes Wal-Mart stand out is its sheer size: over $350 billion in sales annually, and a supply chain second to none.
What does this mean? If Wal-Mart actually follows through on its promises (which include forcing suppliers to meet stricter ethical standards, selling hybrid cars, and helping companies manager health care costs), the impact could be huge. Not only because Wal-Mart is so big, but also because other retailers will want to avoid being left in the dust.
Is Wal-Mart doing all this because it wants to help the environment? Probably not. But in this case, it might not matter.
-"Wal-Mart Chief Offers a Social Manifesto", 01/24/08, New York Times
-"Wal-Mart 2006 Annual Report", Wal-Mart.com
Still, many consumers (44% of them, according to an AOL-AP Autos poll) think that Japan makes the best cars, this despite recent improvements in GM's dependability ratings. So GM is putting out cars like the Malibu, and hoping that in time, it can recapture some of the market that it lost to Toyota and Honda. It's likely that GM's turnaround will take years: many consumers, especially younger ones, are highly skeptical of American cars.
In the end, this will be an uphill battle for GM and the Detroit three. But it would seem that GM is at least headed in the right direction. A billboard outside of Detroit featuring the Malibu contains these words: "We're tired of being a foreign car in our own country". I think that says it all.
-"Too many buyers for Malibu", Detroit News, January 3rd 2007
-www.jdpower.com
-"Americans still favor foreign cars" (http://www.msnbc.msn.com/id/16524038/)
The event will be held in two sessions:
Session 1: Customer Experience Management
An attractive
customer experience is critical for differentiating brands.
In his presentation, Dr. Bernd Schmitt will cover tools and
methodologies for managing the brand experience. He introduces
the five-step Customer Experience Management (CEM) framework,
a comprehensive tool for managing the customer experience and
connecting with customers at every touch-point. The framework
demonstrates how CEM enables managers to:
" Gain original insight into the customer's world
" Develop an experiential strategy platform
" Create a unique and vivid brand experience
" Provide dynamic interactions at the customer interface
" Innovate continuously to improve customers' lives.
As part of the CEM framework, Mr. Schmitt will present cases of successful CEM implementations in a wide variety of industries. Join us to see how he links customer experience to customer equity - the financial value of customers.
Session 2: Experience Engineering
Through illustrations from Fortune 100 clients, Dr. Lou Carbone will share how the systematic design and delivery of experience clues can have immense impact on customer value, loyalty and the bottom line. Experiencing thought leader and author Lou Carbone will change the way you think about customer experience forever. His message to business leaders and professionals is simple: Create customers that come back and customers that tell others, by connecting emotionally with them through the experiences you deliver.
Carbone urges business to focus on managing experience "clues", conscious and unconscious, because experiences are what customers value most. He stresses that the world has moved from making and selling to sensing and responding-a dynamic change that requires new competencies.
Complete info here >>
Gone are the days when environmental promotions consisted of a serious message paired with a side of guilt. No longer merely endorsed by the granola-crunchers of the world, the idea of “going green” is today downright cool.
Pro-environment agencies, for instance, have revamped their advertising campaigns to fit with a more laid back image. 1% for the Planet’s new ads capture the public’s attention with large-font all-caps statements which go against everything such a company would defend. “If the dolphins are so smart, they would start a small business and save themselves?”, reads one of their many ironic advertisements. By flipping around the typical “this is why you should care” statement, the campaign sends a perhaps even stronger message of “this is how ignorant it is not to care.” All this without losing its light-hearted touch.
Another company which makes it fun to be green is Ben & Jerry’s, built from the get-go on principles of environmental sustainability. The company that brought you ice cream flavors like “Phish Food” and “Chunky Munky”, brings the same attitude to “Lick Global Warming”. This new campaign involves a partnership with Dave Matthews Band and SaveOurEnvironment.org, and integrates the logo on their packaging with a website including games, facts & figures, and most importantly – information on what you can do to help the environment.
Green also plays its part in the beauty product market – as many would pay a premium for the knowledge that they are treating their planet and their skin as they apply body lotion made only of the purest ingredients. The Body Shop, a chic English beauty firm, prioritizes social responsibility and feeds off its powerful brand, characterized as high quality and eco-friendly, to give to the many environmental organizations it supports.
Laid back and fun, but also swanky? “Green” now seems to represent a multi-faceted image, a range of attributes applicable to differing concepts of "cool". And considering the large-scale human initiative necessary to make a significant positive impact on our planet, having the Green Concept relate to a variety of aspirations for a variety of people is a powerful idea.
In a world increasingly filled with advertising clutter, marketers are trying to find new ways to cut through the noise and send their message straight to the consumer. Although the phenomenon of celebrity endorsements is not new, there has been a resurgence of this trend in recent times.
Brands are using celebrities as sources of product differentiation through co-branding, a step beyond endorsement. For example, beginning last June, bargain clothes retailer Steve and Barry’s signed an exclusive agreement Sarah Jessica Parker to sell a line called “Bitten” in its stores. Parker, a celebrity famous for her Sex and the City character’s impeccable (and often expensive) style, will promote the brand of clothing consisting of 500 items ranging between $7.98 and $19.98. Along the same lines, Kate Moss designed a line for English retailer Topshop that became a hit with fashionable yet price conscious consumers. In fact, the line was so popular that it restricted shoppers to buying 5 items each. The success of the line continued in the United States when it was sold at discount retailer H&M, later expanding to upscale Barney’s New York.
While celebrity endorsements are a popular way for brands to gain publicity, there is a difference between celebrity endorsements and celebrity branded items. While endorsements claim “I like it” branded approaches say “I made it.” Both approaches are evident in many cosmetic campaigns. For example, Tyra Banks endorses certain Cover Girl products, claiming to use the products with great satisfaction. On the other hand, Queen Latifah has represented Cover Girl in the branded approach where she promotes the Queen Collection as a product line in which she had great influence and involvement in creating.
This trend of celebrity endorsement extends beyond clothing lines. Celebrities are endorsing products that range from cars to liquor. Harbrew Imports has begun a campaign that uses different celebrities to endorse different drinks; it has even signed Danny DeVito on to promote the launch of Lemoncello.
Such a strategy of product differentiation and branding has both upsides and downsides. On one hand, celebrities may add a credibility and likeability to a product. This may induce fans and new consumers to sample and eventually adopt the product. This trend may be an effective way to cut through the clutter that has come to characterize a market inundated with new products and increasingly skeptical consumers. For example, Proactiv, a brand of skin products, has used a series of celebrity endorsements such as Jennifer Love Hewitt and Jessica Simpson to promote the product. Although the ads are infomercials, the celebrity testimonies add credibility to the ads that have resulted in good publicity and increased brand awareness.
However, such source attractiveness may backfire. Using a celebrity endorser is both an art and a science; in order to be effective, an advertiser must use a celebrity that will enhance the marketer’s message without overshadowing it. In addition, an overexposed celebrity will not have the same effect on consumers as a celebrity that only endorses brands and products selectively. While such dangers may be guarded against by exclusivity contracts, marketers must weigh a celebrity’s past and present endorsement deals in evaluating a good spokesperson for their brand. Also, a celebrity endorser may become a liability to the brand because actions taken in their personal lives may affect their public image, and in turn, brand identity. For example, Nike and Reebok quickly cancelled their endorsement deals with Michael Vick, an Atlanta Falcon’s football player who pleaded guilty to federal dog fighting charges. In an attempt to disassociate their brands with a liability, Nike and Reebok sought decisive action in hopes of minimizing negative impacts of Vick’s personal life upon their brands. Pepsi is another example; in various attempts to match the brand equity of Coca-Cola, Pepsi Co. has used celebrity endorsers such as the Spice Girls, Michael Jackson, and Britney Spears to draw attention to their product and brand it as a trendy choice of soda. However, the volatile careers and personal lives of such celebrities have called both positive and negative attention to the brand. Even though Pepsi Co. has spent large sums in advertising expenditures, it still has a long way to go before it can match the timeless marketing campaigns of Coca-Cola, including Santa Clause and the Polar Bear.
Also, there is an argument that the pairing of a popular celebrity with a favorably perceived product ultimately detracts from the product’s brand image. If the product already has a solid brand image, an endorsement by a celebrity may have a negative impact because it does not allow the product to stand on its own.
Have retailers and advertisers found an effective way to publicize their products? The jury is still out. While celebrities may induce immediate sales and short-term growth, questions remain about the possible long-term impacts of celebrity endorsements. The personal lives and public images of celebrities may not be worth the short-term effects; their association with the brand may endure longer than the temporary boost in sales.
Sources:
Belch, George E., and Michael A. Belch. Advertising and Promotion. 7th Ed. New York: McGraw-Hill Irwin, 2007.
Janoff, Barry. "Sarah Jessica Parker to Star for Steve & Barry's." BrandWeek. 1 Oct. 2007 .
