Monday, May 29, 2006
If you are a dyed in the wool marketeer working in a truly marketing driven organization you will have nothing to learn from this blog entry. If you are a marketing novice or a true marketeer working in a technology driven company you might want to keep reading.
Marketing has nothing to do with organization. Companies choose to organize the work of marketing in many different ways. Some companies gather all of Kotler's Ps (Product, Price, Place, Promotion) in the same organization while other companies have a marketing department managing advertising and the rest of the Ps are distributed throughout the organization. (Some companies don't even have a marketing department.)
Marketing describes how companies understand customer needs and satisfy them for a profit. To paraphrase Kotler marketing is all about what product to sell …to which customer…at what price….how will the customer find out about the product, buy it and get it delivered? (And what will the competitors do about it?) All companies do marketing. Whether it be done poorly or well, consciously or unconsciously marketing cannot be escaped. No matter how your particular organization organizes the work of marketing success depends on your ability to manage the balance and/or trade offs between the 4 Ps (the marketing mix).
Imagine a company where a market research department works with customer insight to identify customer needs, a product development department creates new products, a pricing manager sets the prices for the products, a market communications department does the advertising and the sales department defines a distribution strategy. So far so good?
Now imagine that none of these groups coordinate their activities with each other and in the event that they ever do meet it is not clear who really makes the decisions. These companies do exist and most often the people running the show in companies like this are the product development people. In the end they are making products with little or no input from the people with the customer insight and the rest of the organization has to do their best to try and sell them or the company will go bust. These types of companies are doing marketing (albeit poorly) whether they realize it or not. Because product development has created products that were not optimized to customer needs the company will compensate by increasing advertising expenditures and paying higher commissions to its dealers and/or with lower prices to the end users. This is managing the marketing mix.
Imagine, on the other hand, a company where the people with the customer insight (not the salespeople) are defining the requirements on new products including retail pricing, commisions and gross margin. Product development creates the defined product with the right performance and price. Promotion of this product will be very cost effective since the product so clearly meets the customers real needs at a reasonable price making the sales departments job much easier. Companies like this do exist and they are usually the leaders in their industries or they are hungry small companies de-throning the old industry leaders.
If you would like to read more of my thoughts on marketing have a look at the following:
The World's Shortest Marketing Plan
THE MARKETING PLAN: THE GOOD THE BAD AND THE UGLY
Friday, May 26, 2006
When trying to understand the fundamentals of your customer’s behaviours and attitudes regarding your products and services two key parameters should be evaluated. How interested or how engaged are they and how frequently do they use the product or service.
The diagram demonstrates the four generic behavioural/attitude (Behav-Atudes) categories that can be found in most industries. Depending on your specific product or service the size of each group will vary but you will likely be surprised to find that there is almost always a sizeable group in each category. The offerings you make to each group as well as the way you communicate to each of these groups should be adapted to their specific behaviour/attitudinal position. Identifying your customers Behav-Atudes can give you a real competitive advantage or even lead to discovering new ways to solve the customers underlying needs by substitution making your products obsolete and redefining your industries.
The Four Generic “Behave-Atudes”
( You will likely find names for the Behave-Atudes that describe your customers from your industry perspective that are much better. Feel free!)
Individuals who are actively interested and frequent users of products and services like yours could be called Professionals. Not because they necessarily use your products in their professions but because they are typical very knowledgeable and have strong opinions based on a great deal of real experience of the products or services. Insight gained from these users can contribute significantly to further product development. Branding is very important.
Enthusiasts are people who are very interested but not frequent users. Among these you will find people who have expensive kitchens but who eat most of their meals in restaurants or people that have a fully equipped carpentry workshop in their garage for hobby use. These users can be very talented and sophisticated despite having less “real” experience than the professional. Branding is important in this group.
These people will use your products and services occasionally but are really not interested in the products. As long as the product works they really don’t care very much about design, branding or extra accessories. Simplicity is key with these customers since these users will not spend time learning to use your products or services.
Rebels use your products and services often but are not at all interested in them. They may drive their car much more than the average car owner or use their cell-phone much more than other people but they view the product only as an means to an end. These users view products in the same category as commodities and are very price conscious. They seek basic functionality and ease of use. It is not uncommon to find users with negative attitudes about your products despite being frequent users. These people often feel forced into using the product or service.
Friday, May 19, 2006
It is not my ambition to condescend those activities and institutions of business life that will be discussed here. Nor is it my goal to ridicule the "traditional religions" or religious people. My goal here is to attempt to understand business life, management, and organisation from a different point of view. One that might give us better insight into the workings of the organization as well as the individuals that comprise them. Management theorie has been primarily scientific in its approach. This has led to a great number of theoretical models of organizations from more or less scientific orgins. In "Images of Organization" by Gareth Morgan the point is made that the metaphors we use in decribing an organization imply " a way of thinking and a way of seeing that prevade how we understand our world generally". Any metaphor we choose will open possibilities but also create limitations. A metaphor is by definition "like" or similar to the object of comparison. It is not the same as that object and therefore even if it may given insight as to how the organization works it will also mislead. The problem is then to ascertain which of the "insights" are correct and which are faulty. By trying to understand organizations and business life as religious expression we may find ourselves in the same perdicament, however, there is a good chance that this will not fall into the same trap as other metaphors because it may not be a metaphor. I could be that our business life is in fact a part of mans search for meaning and his attempt to fill his spiritual needs.
In an earlier blog entry i introduced the “Holy Trinity of Sustainable Growth” (Customer, Employee and Shareholder) in which I argue that over the long-term it is impossible to create value for one of these stakeholder groups without creating value for all of them. As with the “Holy Trinity of Christianity” most of us cannot credibly describe the relationship between the three entities even though we believe there is a relationship. Everyday we hear references to “the market”. There are events that happen in the market or we are told that the market has behaved in one way or the other. Has this market become our new god? A vague entity that effects all of our lifes. An entity that is omnipresent (everywhere at once) and as close to omniscient (all knowing) as anything else we know.
Business gurus are the priests of our time and weild as much power over society as the priests did hundreds or thousands of years ago. Our holy scripture might be described as a limited number of books by a few holy apostles like Maslow, Pavlov, Kotler, Porter, Kotter and Drucker. Everything else written in management literature could be seen as exergesis on these apostles fundamental themes.
In my own management experience I find that it is much easier to gain acceptance for my theories or “beliefs” than it is to get critical, analytical views. It seems to be easier to believe than to think and analyze.
We need to be alert to the fact that we humans find ourselves so easily believing. We must learn to exercise our free wills and our intellects to continuously question and analyze reality as best we can perceive it and make the best possible decisions from time to time. Companies that strive to create a common belief system risk eliminating critical thought and will surely loose their competitive edge.
Thursday, May 11, 2006
Following is my response:
All businesses are either providing a product or service which directly satisfies a “real” customer need or they are part of a value chain that in the end will satisfy that need. Nobody really wants to buy a complex managed service solution or a rock crusher. The only “rational” reason for buying either of these is that they in some way make it easier for you to satisfy your customer and your customer should never buy your product if it doesn’t in some way improve their offer to their customer and so on!. In highly competitive industries (virtually all industries) understanding the full value chain from beginning to end can give you the insight to gain a competitive advantage over others who are simply focused on their part of the value chain.
All decision makers are human and base decisions on what satisfies their needs. Decision makers in B2B environments understand what requirements need to be fulfilled in purchasing a managed service or a rock crusher. Even if the requirements are expressed in technical and economic terms the underlying motivations of the decision makers are Maslowian. They want to be perceived as talented, successful, get bigger bonuses, promotions, etc. Sellers in B2B should always be thinking about how they can make the decision makers life better!
Tuesday, May 09, 2006
The great philosopher Leibniz (born 1670) said “Reality cannot be found except in One single source, because of the interconnection of all things with one another.” Although certainly not his intention this statement rings true for the Telecom or IT industries today. In the very near future everything from our breakfast cereal to our heartbeats will be connected.
What if telephones of the future will be no larger than a dime and cost less than a dollar?
If telephones could be very small and very inexpensive would we still have only one telephone each or would we have hundreds? Would they just be laying around everywhere or would they be built in as an extra feature or component of all sorts of other products?
What if our customer identity moves out of the SIM-card and into our driver’s license or maybe in a “chip” implanted under the skin on our neck. (My cat has one and horses often have them.) If someone would borrow your telephone, the telephone will automatically identify them and charge whatever calls they make to their bill. While they use your phone they have access to all of there own telephone numbers, calendar and anything thing else they want to access (files, entertainment, photos, music, whatever). When you take the phone back it switches back to your identity and your content. In short, what if you have access to all of your personal content with whatever device you have access to wherever you happen to be without the limitations of the memory capacity of the device?
When I connect my customer identity to a device the size of a dime and lay that little phone on top of a TV or a PC or a screen in my car or a Palm in my pocket I can see my content. None of this is technologically farfetched, however, there is still a great deal to do on the commercial side of things to understand what products and services with which business models will generate revenue for what companies.
There is a convergence of everything to everything.
Telephones have become computers and computers have become telephones. We can watch TV on phones or over the internet! Any decent telephone contains a camera and a Mp3 player. Cameras are getting SIM-cards so they can automatically send your photos to your computer or your server supplier. Some gurus claim that this is not really convergence but divergence. To avoid getting caught up in semantics, maybe the best thing is to say that from a technology perspective things are changing rapidly.
New disruptive technologies will impact the way we work and play as individuals! They will create great opportunities for some companies and spell out doom for others. Although it is relatively easy to see these changes happening at a macro level it is enormously difficult (impossible) to say which companies will win. It is equally difficult to know exactly what technologies to bank on or which new business models will succeed.
What are the keys to success in this brand new world or maybe I should say in this new brand world? Customers and brands have always been important and I will not fall for the temptation of saying they will be more important in the future. However, the role of brands is changing as are the tools we use to build brands. TV advertising has been the most powerful tool for building strong consumer brands for 50 years. Viewers are opting out of traditional TV for other forms of entertainment or they are fast forwarding or simply hoping over commercials on digital channels. New media consumption behaviors require new marketing know-how. Consumers are becoming immune to traditional brand promises. Volvo’s promise of safety has gone from a powerful driver of the brand to being a prerequisite for any carmaker competing in that customer segment. Whatever else a BMW, Mercedes or Volvo may aspire to be in the hearts and minds of their customers they must also me safe.
This is not a paradigm shift, it is a paradigm eruption!
The expression “paradigm shift” at best creates a mental picture of one state of things that will shift to another state. What we are witnessing is more like an eruption in which there are so many parameters and so much change happening simultaneously that it can hardly be called a shift. When the dust settles many of the winners (not all) will simply have been lucky. They will have gambled on the right technologies and services. Organizations need a certain amount of stability to operate. The agenda cannot be changed completely everyday! Paradoxically, despite the fact that technology is radically changing the way we live and work, our fundamental human needs remain the same. Here we find the underlying stability we need to run our businesses. Fundamental human needs change very slowly, if at all. I am sure that a traveling business man in Roman times would have wanted to call home to his wife and his office if he could have. The need was there but the technical solution was not. As technology advances we find better ways to satisfy our needs. Our behaviors change but the needs that drive these behaviors do not.
Maslow will move from the marketing department to the boardroom
Companies who build their visions and strategies around satisfying these fundamental needs by means of whatever technologies best happen to suit them at the time will succeed. Companies who entrench themselves in technologies and then look for commercially viable applications will falter. Maslow will reign supreme and move from the marketing department to the boardroom.
Tips for success in this “New Brand World”!
Focus on fundamental human needs
-Shift from acquisition to retention (Anyone can win a customer, winners keep them)
Be open minded
-Don’t defend old technical solutions or business models (Kill your darlings)
-Accept that you don’t know what tomorrow holds
-Failures are inevitable! Expect, Accept, Celebrate and Learn from them!
Be fearless in the face of change. It’s a great business!
Thursday, May 04, 2006
My short template got some attention on my blog and then I got an email from Guy Kawasaki, one of the true business blog gurus. Guy suggested that we adapt my template with a new version of the 4Ps created by another blogger named John Sviokla. John’s 5Ps do a great job bringing Kotler into the digital universe. His blog is well worth the read!
In short Guy improved the content of Kelly’s blog by adapting it with content from John’s blog.
Following is the new hybrid! Let me know what you think and do take a look at Guy and John’s blogs!
To view a word document version click here.
Some years ago I took a course to get a hunting license. One of the things we had to do to qualify for the license was to shoot a paper target shaped like a moose moving back and forth on a track at a distance of 80 meters. The target area on the moose was about the size of a basketball. Having had very little prior experience with weapons it came as a great surprise to me that in order to hit the target area I had to aim at a place where the moose wasn’t. It didn’t take very long to learn how to aim just far enough ahead of the target so that the paper moose would run into the bullet. On a shooting range there are very few parameters to keep in mind when shooting the paper moose. The moose travels in a straight line in one direction at a constant speed. (I have since learned that moose do not do this in real life.)
The problems we face in business are normally much more complex with many different parameters to consider and each of these parameters is itself mutating, developing and changing over time.
“You can’t step into the same river once”
About 2500 years ago Heraclytus wrote that ”You cannot step into the same river twice!”and Cratylus, one of his disciples, went a bit further by saying “You can’t even step into the same river once!”. This pretty well sums up my day to day working life.
As managers we continually confront various problems (or issues and opportunities to be politically correct). We define the current situation, identify the ideal future state, evaluate various alternatives and finally develop and implement an action plan. This model more or less describes the common steps in all change and/or development models. Everyone who has worked with change initiatives knows how challenging they can be. Unfortunately, many changes initiatives are doomed from the very beginning for at least a couple of key reasons.
Lots of small errors can make on hell of a mess!
Much of our analysis is based on assumptions, educated guesses and sometimes wild fantasies. Don’t get me wrong, I would rather have a best guess from a competent colleague than no information at all but none the less many of the problems we face in business are so complex that even small errors in a number of basic assumptions multiply into significant deviations in the final analysis.
If you ever get anything right it was probably a mistake.
We forget that we are shooting at moving targets. We define the problem based on our knowledge (or perceptions) in current state but by the time we have completed our analysis and defined our actions the problem has already evolved into a new state. Most change initiatives take time to implement and by the time the actions are in place the problem the changes were designed to resolve is so different that our changes may at best have no effect at all and at worse might have put us into an even worse position than if we had done nothing at all. In extremely dynamic environments you might say that if you ever actually get anything right it was probably a mistake.