Who Wins in a Tough Economy?

J. Walker Smith, president of the Yankelovich MONITOR, recently wrote in an article for Marketing Management, that “[T]he sure winners in any recession are companies that invent more efficient ways to deliver benefits to customers. These companies win because what they pioneer becomes the new way things are done.” Although Smith may have some logic to this statement, I think he’s way off base. The truest winners in a tough economy are those companies who ALL ALONG provided superior value to the customer. Not those who innovated efficiencies.

It may be an issue of the chicken and the egg – which comes first. For Smith, he says that in good times “a rising tide lifts all boats.” While I certainly agree with that, and have for years said that money covers a multitude of mistakes, I don’t agree that it is innovation during a recession that separates out the efficient from the rest of the pack. Take for example the good people at your local grocery store or the corner breakfast café that is always packed. These people are not huge innovators or efficiency mongers. On the contrary, there is likely a lot they could be doing better according to Smith’s model. But what separates them out is the intimate value they bring to their customers and relationships.

Perhaps if you’re big and bloated, then innovation and efficiency certainly helps to cut costs and find savings while consumers pull back on their spending. But that’s isn’t true success – it’s only refining your business in the areas that should have been addressed while you were on your way up. I call that “paving as you go.” But those companies that have taken the time to develop deep insight into their customers’ core desires, and know how to link and deliver meaningful value to those desires – those are the companies that thrive in a down economy.

During this recession, I still see people at restaurants, the movie theaters, plays, bars, sports events, and in hotels. It’s not that we’ve stopped spending, but we’re only spending on those companies that make us feel good, tap into our hopes and dreams, and deliver consistent value for our scarce dollars. So, I’d say to Smith that if your company is focusing on innovation and efficiency, you’re still going to be behind the true leaders – those whose focus has always been on value delivery.

-- David Kinard, PCM

Fight Commoditization with Real Value

I just finished reading an amazing book by Erich Joachimsthaller, Hidden in Plain Sight: How to find and execute your company's next big growth strategy. It's a fabulous book and I'll be interviewing Erich on my radio program on Wednesday, November 19 on wsradio.com.

One line in the book hit me like a ton of bricks this weekend while I was reading it.

"We were a highly specialized product turned into a commodity."

To be clear, the line references a German insurance company who by all accounts was a superior product in the marketplace, but because people where shopping on price, none of their elaborate feature sets meant anything. I see this same situation so often; price-driven markets turning complex and highly differentiated products into commodities. So what is a markter to do?

Well, first you should read this book and it will tell you what the insurance company did. But aside from that, you need to ensure your head is not hidden in the sand, hoping that somehow consumers will suddenly wake up to your messaging and branding and agree with you that your products are truly the unique offerings you believe they are. It's never going to happen.

When a product is willingly or unwillingly turned into a commodity by the market and consumer opinion, the simple fact of the matter is that the product has failed to rise above the fray and create a demand ecosystem. In other words, I would say that most products suffering this fate are developing and pushing feature sets that are not relevant, not important, and don't resonate with consumers. That's why they're comparing only on price, because you're just as good, or good enough, as everyone else.

I think Joachimsthaller brings out many excellent ideas in his fresh book and it shoudl be required reading for MBA students. Oh wait, I teach MBA classes, and I assign the books. Guess what folks -- it's now on the reading list!

-- David Kinard, PCM

Hidden in Plain Sight is also the American Marketing Association Foundation’s Berry Book Award winner for the best new book in marketing.

Two New Ideas -- Review of Wrap Mail and Elevator Pitches

I found two new items on the Web today that really impressed me. The first is simple enough -- go visit it: Elevator Pitches, a service of TechCrunch. This is a site where you can upload your own elevator pitch, have others vote on it/provide feedback, and even review others' pitches. If you're a budding entrepreneur, or a grass-roots marketer needing to generate some buzz, this is an excellent site for you.

While there, I happened up on an idea I think has some solid potential -- Wrap Mail. This is a service that while relatively inexpensive could quickly easily pay for itself. The basic idea is that each email you send out -- or anyone in your company for that matter -- from their client-side machine would be wrapped by clickable and trackable ads about your company. So, while you're emailing out Web site maintenance announcements to your customers, sending customer service emails, or basically any other communication for that matter, the email is wrapped with yoru ads. It's the ultimate in "did you want fries with that?" marketing.

-- David Kinard, PCM

What are the Essential Characteristics of a Disruptive Product or Service?

I posed this question in an earlier blog (see September 30 post) and said I'd do more research on the subject. After asking the question to groups on LinkedIn, I found that two main sources of information were consistent: 1) check the wikipedia definition on the subject; and 2) Clayton Christensen basically is the father of the idea.

From the wiki definition:

A disruptive technology or disruptive innovation is a term describing a technological innovation, product, or service that uses a "disruptive" strategy, rather than an "evolutionary" or "sustaining" strategy, to overturn the existing dominant technologies or status quo products in a market. Disruptive innovations can be broadly classified into low-end and new-market disruptive innovations.

By contrast, a "revolutionary technology" introduces products with highly improved new features into the market. This is the innovation that most often replaces the incumbent [automobile - horse drawn vehicle]. In addition, a "sustaining technology or innovation" improves product performance of established products. Sustaining technologies are often incremental; however, they can also be radical or discontinuous.

Other than one angry commenter on LinkedIn (go figure), there were a few interesting comments. Particularly, I liked Jody Wilson's comment about Step - Stretch - Leap.

Surprisingly, however, what I didn't find (even after some serious googling) was a laundry list to check against if you wanted to build a disruptive product or service. What this confirmed for me is that the characteristic of disruptive is nothing that can be planned or programmed. Rather it is a whole combination of elements working together at the right time and in the right ways that produces a disruptive nature.

Ahh, the beauty of synergy -- where one plus one equals three or more.

-- David Kinard, PCM