Category Archives: Product Management

Peace of Mind as a HUGE Competitive Advantage

Some of you may know that I recently moved from the Chicago area to Raleigh after some 35 years.

While I have moved away from many close family members and old friends, the person I will probably miss the most is Mr. Lee (who, like my elementary school teachers, has no known first name).

Mr. Lee runs a humble shop called North Town Auto, and took care of our out-of-warranty cars, both domestic and foreign, for many years. It helped that he was only 2 blocks from us in Northbrook (convenient to the Metra Station!). And while there are probably mechanics who could do a certain thing for a slightly lower price. I would use Mr. Lee even if it required a drive to get there.

The reason? Peace of mind. Peace of mind that the car would be fixed correctly, that I would not overpay, that I would not pay for unnecessary repairs, that things would be done on time, that if he said I needed to do something, then I actually needed to do it.  That there was service with respect and a smile.  No worries, as they say.

I had complete loyalty to Mr. Lee.  And when it comes to loyalty, peace of mind turns out to be a huge competitive advantage.

Americans spend a lot on lots of stuff. They generally don’t seem to mind spending a lot.

However, Americans HATE the thought that they might be over-spending. And they don’t want to worry about it.

Think about institutions that offer what Mr. Lee does:

  • fair price (not necessarily the lowest)
  • high quality
  • consistency in delivery – no surprises
  • customer focus – great service, you don’t need to be on guard

Here are a few that come to mind that deliver great peace of mind:

unknowntj

  • COSTCO – – once I pass through those portals with my oversized shopping cart, I’m pretty sure that anything I put in my cart is a great deal and great quality (even if in the back of my rational mind I realize that some things are better value than others)
  • Trader Joe’s – – great value, interesting selection, fun experience – 2-Buck Chuck!
  • Amazon Prime – – I know my selections will be delivered on time and at no cost
  • Tire Rack – – awesome customer service, great pricing, instant shipping – – it’s the only way to go
  • Online window treatments – seriously – – it’s so automated and competitive that you’re not going to make a big mistake
  • Spirit Airlines (just kidding!)

Here are a few organizations that seem to fall down on the peace of mind continuum – – you might be overpaying, you’re not sure of the quality delivered, etc. And that bugs you.

chipotle

  • 1-800-Flowers – – sometimes works, sometimes doesn’t
  • Chipotle – – unfortunately moved from the other list – – love their food, but still have a vestige of doubt
  • Car Dealers – – sorry, guys – no change
  • Movers, painters, realtors, various local contractors – – until you build a track record like Mr. Lee, you’re not on my speed dial.

Why is peace of mind so important? Because we’re so stressed with just the basics of surviving from day to day that we need to simplify and eliminate unnecessary decisions.

dog

While Mr. Lee is a small businessman, the Peace of Mind list includes enterprises of all sizes.  We all have our examples of who provides peace of mind and who doesn’t (would love to hear about yours).

In the end, it’s about delivering consistent, dependable value. And that’s good advice for everyone.

Not all Innovation is High-Tech. Not all High-Tech is Innovation.

To borrow an old punchline, sometimes companies innovate around technology ‘because they can’.*

A recent visit to the Hertz facility at the Denver airport illustrates the point – – innovation can only work when it is designed around the user experience.  Innovation that requires the user to adapt to technology, at the expense of experience, is not usually a blueprint for success.

My key car rental criteria are price, convenience and how fast I can get my car. At the counter, I preemptively say I don’t need an upgrade, don’t need insurance, and will fill it up myself. I also tell them they’re on the clock and my personal record is out the door in 3 minutes (although I had a wonderful 1:30 experience just this past week). It works, and it’s not nearly as jerky as it sounds. (really)

photo-1

So I was eager to experience the Denver Airport Hertz facility, which is huge (2500 s.f.) and bristling with open format desks, high-tech kiosks, and bumblebee-colored employees. The car rental facility of the future, right?  I’d be out of there in no time.

It was a disaster.  First, 25 minutes in a standard Disney-style winding line; then left the line and went to the separate line for a kiosk on the recommendation of a Hertz employee.  10 minutes to get to one of the kiosks, which needed assistance to operate.  The disembodied head on the kiosk video screen informed me that while I had a reservation, my car would not be available for at least another 30 minutes.  Except, of course, if I wanted to upgrade (at extra cost).  (we’ve seen this before)

I got mad and tracked down a manager, who finally gave me an upgraded vehicle without the upcharge (duh).  That was 45 minutes of hell in a facility that was presumably built on research and smart engineering.

The expensive technology and fancy building did nothing to help this experience.  The difficulties I had (kiosk operation, being held hostage for an upgrade) were resolved with the human touch.  The same human touch that gets me in-and-out of low-tech counters in under 5 minutes (often with a high-five to the counter person).Hertz charging

(Perhaps I should have thought more when I passed the cute ‘recharge’ station – under what conditions would you be using one of these at a car rental place?!).

photo 3

On the other hand, a recent Delta flight showed how smart innovation made the experience much better.  This was on a newly refurbished plane.

The overhead compartments had signs asking passengers to load their rolling bags vertically rather than horizontally, which gets more bags on the plane, and therefore keeps me from gate-checking.  Smart!  I win!

photo 1-1photo 5

Facing me on the bottom of the seat in front was an electrical outlet. I’ve seen these before but they’ve been awkwardly placed in a hard to reach place around my ankles, presenting the constant danger of feeling up my seat mate’s leg.

In both situations there was an outlet on each seat.  Delta figured out it’s better when you can see it.  Smart! I win again!

Technology has transformed our world and has fueled amazing innovation.  But this innovation has only worked when it has improved the user’s experience.  

Technology with no benefit is usually not lasting.

*it’s a guy joke.  If you don’t know it already, you probably wouldn’t appreciate it.

HarperCollins Teaches Us About Brand Management

Posted on

Watchman A strange thing happened during the recent launch of ‘Go Set A Watchman’, the new(ly discovered) first novel by Harper Lee, author of the classic ‘To Kill A Mockingbird’:

  • Publisher HarperCollins advance printed more than 2 million hardcover books
  • Presses were globally coordinated to simultaneously deliver versions in multiple languages
  • Extremely tight security was used, including shrink-wrap, security cameras, and secured shipments by truck to retail locations
  • Barnes & Noble was in the news

BN-IL593_HARPER_P_20150517145924

A new book shrouded in mystique, focused on retail distribution sounds more like a 1980s release than 2015. Especially for a book that was written before TKAM, which no one had yet read! Why the throwback approach?

HarperCollins very shrewdly realized that it had an opportunity of huge proportions, which could be optimized by understanding the audience and delivering what they would want.

  • A brand, named Harper Lee, with enormous equity from over 50 years of visibility
  • A built-in audience of several generations who first enjoyed ‘To Kill A Mockingbird’ in book form
  • A heavily covered back-story concerning the surprise discovery of the secret manuscript and inquiry into the mental state of the author
Watchman at Costco

Display Shipper at Costco

As of now, the book has already been reprinted several times and is the fastest-selling book in HarperCollins history – remarkable in this digital-centric era.   The fact that ‘Go Set A Watchman’ has gotten generally mediocre reviews is almost beside the point.

HarperCollins scored a big success by understanding the audience, the environment, and having the courage to act accordingly and decisively.

Diet Pepsi drops aspartame: Gilding the Lily?

PepsiCo just announced that it will be taking the artificial sweetener aspartame out of Diet Pepsi and replacing with another artificial sweetener, sucralose (known more commonly as Splenda®), combined with another sweetener named acesulfame-K (‘Ace-K’), which is a lower cost ’sweetener helper’.

apm-free D Pepsi

The stated reason is to respond to consumer objection to aspartame, as stated by a Pepsi Sr. VP: “Aspartame is the number one reason consumers are dropping diet soda.”

The more likely reason is that Diet Pepsi volume is down over 5% in the last year, part of a long-term slide, and nothing so far has worked to reverse the trend.

But this change is unlikely to make a material difference, for a few key reasons.

First, let me risk public embarrassment to try to establish my bona fides.  I marketed aspartame (Equal® Sweetener) for 6 years, and sucralose (Splenda) for another 5.  Did a lot of consumer research during those years.

DavesSweetenerBonaFides

Left: failing the dorky marketer test. Right: at a trade show, excitedly pitching sweeteners

Here’s why I don’t think this will make a difference:

1) Consumers generally don’t know what’s in their diet soda to begin with.  When asked open-endedly about ingredients in diet sodas, they have a vague notion that they contain artificial sweeteners, but the sweetener is not often mentioned by name.  When prompted, they will recognize aspartame.  But while consumers may theatrically claim that they avoid aspartame when they’re in a focus group, in reality very few actually check labels.

2) Consumers are generally full of it when it comes to stated preferences.  They will tell you all day long that they want less fat, less sugar, less salt, etc – – but in reality they will rarely change ingrained habits if there’s even the slightest risk of compromise (such as taste or cost).

3) Non-users or lapsed users have a handy reason for why they don’t use the product.  Aspartame has enough negative PR that it is an easy, politically correct and inarguable reason as to why surveyed consumers aren’t using the product.  But the true answer is a more complicated mix of dynamics including macro consumption trends, emergence of new alternatives, and changing demographics (‘modern’ diet sodas were first introduced, and gained loyal followings, in the early 1980s).

4) Changing out one artificial sweetener for another just reminds consumers that diet sodas generally contain artificial sweeteners.  Not a great plan to bring in new users. 

5) Changing ingredients to meet claimed consumer preferences is no guarantee of success.  3 years ago ConAgra changed its Hunt’s ketchup back to High Fructose Corn Sugar after a 2-year switch to sugar, ostensibly to answer consumer objections to HFCS.  Sales volumes showed that consumers didn’t really care.

Hunts No HFCS

6) Most importantly, consumers like their products the way they are.  ANY CHANGE in a loyal user’s product formulation will arouse suspicion.  A product as iconic as Diet Pepsi owes its unique taste to the specific combination of sweeteners in its formula.  It is impossible to improve the taste of Diet Pepsi, because its ideal is defined by its current taste.  So any change will alienate current users, who are currently drinking it even knowing in the back of their minds that it contains an artificial sweetener.

Ironically, this is the same category where New Coke infamously demonstrated what happens when you change the formulation of a well-loved product.  It will be interesting to see whether this ‘New Diet Pepsi’ fares any better.

Below is an introductory spot for New Coke in 1985.  In retrospect, a product and spokesperson that ultimately followed similar paths, albeit on different timing.

SAP spells ‘Trust Me’: S-I-M-P-L-E

Say ‘SAP implementation’ to someone who has been through one and you are likely to get a look conveying some combination of pain, pity, terror and dread (and perhaps schadenfreude).

Enterprise Resource Planning (ERP) giant SAP recently announced an approach and suite of applications called ‘Simple’.

For a company with a reputation of being anything BUT simple, this casting-against-type positioning could be tricky business; successful transformation will not be immediate.

And one look at their recent 2-page WSJ ad indicates they may not yet be fully embracing this ‘Simple’ concept.

SAP

5 years ago Domino’s acknowledged that it didn’t taste as good as it should, and used this acknowledgment to justify a reformulation that was the focal point for a new campaign.  By many accounts, this bold ‘we sucked, now we’re better’ approach has yielded good results.

DominosCombined

But ERP software is not pizza – – with pizza, a $10 or $15 mistake and you’re on to someone else.

Do a search for ‘SAP Implementation’ and it’s obvious that the stakes are quite a bit higher – – not only $100 million or more, but years of organizational churn and resources, as well as lost opportunity if/when things go awry.  You can’t say ‘we know we’ve messed these up in the past, but going forward we’ll be awesome – trust us’.

A few examples here, some others below:
Avon Products halts an SAP implementation, leading to write-down of $100-125 million
– Waste Management and SAP in $100 million lawsuit
– HP claims $160 million damage from flawed SAP implementation
Select Comfort abandons SAP ERP implementation
SAP issues at Hershey prevents $100 million in shipments for key holiday
While client’s management often has a hand in screwing things up, at the end of the day, it’s SAP’s name in the headline.

SAP has chosen to own ‘Simple’ as its defining principle going forward.  In the ERP space, this is a compelling proposition. And some industry experts are cautiously optimistic.

But based on SAP’s history, it’s a tall order – – and prospective clients will certainly have a ’show me’ mindset.

Requiring 2 full pages to explain Simple is not a great start.

We Tested it On You, So It’s Probably OK for Your Pet

I had the pleasure of attending a brand new trade show – Petfood 2.0 – in Chicago recently.

Petfood2.0logo

Not surprisingly, this show is still getting its furry legs under it – – a very manageable group of 35 disparate exhibitors made for a quick and interesting, if not yet cohesive, experience.

Overall, though, a larger theme presented itself:
Following thousands of years of dogs serving man, the tables have turned.
Man now serves dog.

Exhibit 1:  Hemp for Pets.

Now available from our friends at HempMeds, is a line of products made from hemp to benefit your pets.  aNew™ Pet Nutrition‘s products provide essential fatty acids (EFA – – Omega-3 and -6) and are made from a blend of hemp seed oil and raw hemp stalk oil (which is rich in cannabidiol – CBD).  EFAs, as we know, are highly beneficial – – just don’t ask the industry to agree on what the top benefits are.

pet_oil250

This innovation in pet health could not have been possible without the committed testing of hemp products by millions of Americans in the 1960s and 1970s.  So while the outcome of all that testing is up for discussion, your cat or dog is possibly benefiting now from what you did in college then.

OK, that’s not accurate.

While hemp is illegal to grow in the US, it is perfectly legal to import any part of the hemp plant in all 50 states.
And while the prospect of Fifi or Rover lying on his or her back contemplating the ceiling tiles for hours on end and giggling is intriguing, these products contain virtually no THC – the active ingredient that makes marijuana psychoactive.

Although it would be interesting to see if Nigel would behave any differently with the munchies.  Doubtful.

Hempmeds

Exhibit 2:   Functional ingredients for pets – – it worked on Man, so it’s probably safe for Rover.

We long ago realized that we could do better than feeding our pets Ol’ Roy (WalMart).  Thus emerged added value feed (e.g. Iams, Eukanuba, Science Diet, etc), offering different formulas for large breeds, older pets, etc. as well as some medical needs.

Meanwhile, human foods and beverages have increasingly been stuffed with a dizzying array of functional ingredients, many of which have no empirical basis in efficacy.  But we humans have shown that we’re willing to buy them anyway.  What did Charles Revson say about hope?

Based on this massively-scaled test market on mankind, it apparently has been deemed that animal-kind is now ready to safely ingest all sorts of functional ingredients that may or may not actually ever benefit them.

Petfood2.0

Incorporating things like ancient grains, fiber, medium-chain triglycerides, probiotics and ionic trace minerals, your pet can now get benefits heretofore only considered for the human species (notwithstanding hairballs and a healthy coat).

One company, PetNaturals of Vermont, offers products to address the following areas:
– Agility, Antioxidant, Bladder Support, Breath, Calming, Daily Multivitamin, Digestion, Hip & Joint, Immunity, Slim-down, Urine pH balance (really – to avoid yellow spots on the lawn), Periodontal health, Fecal function, and Skin/Coat health.

You dog and cat owners will probably recognize some of the benefit areas in the products below.

photo 1

We live in a world where the things we eat promise magical powers to fix whatever marketers insist needs fixing.  And regardless of the effectiveness, manufacturers have made a tidy business catering to hope.

Now, due to the significant sacrifice, expense and effort expended in testing on humans, our pets will soon be able to have their diets enhanced, and your wallet may end up just a little lighter.  So when your pet looks up as if to say ‘Thanks, Man’, now you know what’s going through that little brain.

I have no doubt that many of these ingredients can provide real benefits to some of the 150 million dogs and cats out there.

Except I’m not believing anything that promises intelligence to an Irish Setter.

Captex

Shoes, Elephants and Michelangelo

A famous and probably apocryphal story relates how in the late 1800s, shoe companies sent scouts to Africa to assess opportunity. All came back and said: “no one in Africa wears shoes – – there is no opportunity” – except for the rep for Bata, who said: “everyone in Africa is barefoot – – there’s a huge opportunity”. Bata shoes are now ubiquitous in Africa.

Bata1

With its vast population, diversity and resources, why aren’t more companies committed to growth from Africa? Why do EMEA business strategies have no patience for the ‘A’? Certainly with that many people, shouldn’t African commerce, like life in Jeff Goldblum’s Jurassic Park quote, “find a way?”

The challenge is daunting, and figuring this one out is above my pay grade, but thinking about solving for Africa can make just about any other challenge seem pretty straightforward.

africa

There are of course very real reasons that Africa is challenging. A Sept 16 scan of Google News stories across 54 African nations (below), reveals overwhelming existential crises such as Ebola, terrorism, sectarian violence, mixed in with a standard dose of President-for-life type scandal (see: Mugabe, Robert), but not many commercial or consumer focused stories. Where much of the developed world has surplus calories, Africa has a basic food (and water) deficit. A quick look at per-capita incomes shows that African citizens are among the poorest in the world. Barriers, indeed.

Yet we are all still more alike than we are different. We all have needs: food, shelter, entertainment, and yes, shoes.  And so within a mass of challenges, there are opportunities.  Bata figured this out long ago – – it saw millions of bare feet, rather than cultural or economic barriers, and methodically penetrated the continent.

The key, as in eating an elephant, is to take it one bite at a time.  In fact, it’s really just another execution of basic marketing – identifying segments, understanding their needs and barriers, and creatively and selectively applying solutions.  Pricing? Access? Promotion? Distribution? Positioning? Unique benefits?  A solution is almost always available – it’s just not always obvious.EatingAnElephant Unlocking this potential may be gaining traction: PricewaterhouseCoopers’s Africa Business Agenda 2014 report was released last week.  The report, comprising surveys and interviews with 260 chief executives in 14 African countries, indicates that CEOs are optimistic about growth despite volatility and uncertainty on the continent.  From Business Report/Africa: “The Chief Executives acknowledge that a lot more needs to be done in terms of transforming the continent’s potential for exponential growth into tangible business opportunities”. There are examples where creative and focused approaches helped realize growth from similarly unlikely places.

  • In India, Colgate has carved out over 55% of the oral care market (~$600 million+) despite toothpaste penetration of only 55% (and only 15% of them brush twice daily), and a per-capita income ranked 120 of 164 countries in 2013 (World Bank).
    • This was done by offering more affordable sizes, and innovating a multi-layer distribution system to penetrate the largely rural population
  • In Mexico, concrete giant Cemex, through its Patrimonio Hoy (‘Private Property Today’) program, has enabled many low-income families to build onto their homes on an installment plan at affordable levels.
    • For example, in this innovative program, one family pays $18 per month for $960 in construction materials, allowing them to add stepwise onto their home.

Whether it is Africa, India or a mass of consumers (or customers) at home, the same principles apply.  Where there is need, solutions are always possible.

Michelangelo

As Michelangelo said: “Every block of stone has a statue inside it and it is the task of the sculptor to discover it”.

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A Day In The Life of Africa – September 16, 2014

Country                                              Story 1                                        Story 2
Algeria                                                al Qaeda                                        Soccer
Angola                                                Sub-Saharan investment             Oil Exploration
Benin                                                  Ebola                                             Trade
Botswana                                           Crackdown on press                     Ebola
Burkina Faso                                      Soccer                                          Trade
Burundi                                              3 nuns murdered                             —
Cameroon                                          Soccer                                            —
Cape Verde                                        Soccer                                         Tropical storm
Central African Republic                 Muslim-Christian violence              —
Chad                                                  Guys named Chad                         —
Comoros                                            Islamic oil deal                   Indian Ocean Comm.
Dem. Rep. of the Congo                    Ebola                                          Mineral dev.
Djibouti                                               al Qaeda                                     Violence
Egypt                                                Fighting Islam                          Muslim B’hood exiles
Equatorial Guinea                           UN Ambass. accused          Call for national unity
Eritrea                                             Leather export trade                   US travel warning
Ethiopia                                           Relations with Egypt                   Egypt opposition
Gabon                                                Soccer                                            —
Gambia                                              Anti-gay legislation                       Ebola
Ghana                                                Ebola                                           Soccer
Guinea                                               Corruption                                    Ebola
Guinea-Bissau                                   Ebola                                           Political instability
Ivory Coast                                        Soccer                                             —
Kenya                                                Cost of living                          Investment/trade
Lesotho                                             Coup attempt                                   —
Liberia                                               Ebola                                                —
Libya                                                 Migrant boat capsizes                    Islamic terrorists
Madagascar                                      Lemurs                                            Locust infestation
Malawi                                               Political scandal                              Soccer
Mali                                                    al Qaeda                                          Sectarian violence
Mauritania                                          Moving weekend to Fri/Sat              Business/trade
Mauritius                                            Foreign investment                          Murder invest.
Morocco                                            Anti-racism demonstrations                —
Mozambique                                      Elephant poaching                           Political rivals
Namibia                                              Foreign trade                                    —
Niger                                                  US drone base                                 Baby trafficking
Nigeria                                               Building collapse                              Ebola
Rep. of the Congo                           Ebola                                              Political corruption
Rwanda                                             Genocide 20th anniv.                Rebuilding efforts
São Tomé and Príncipe                     Infrastructure dev.              New: cellular roaming
Senegal                                             Ebola                                               Soccer
Seychelles                                         Tourism                                            Protected species
Sierra Leone                                      Ebola                                                —
Somalia                                              anti-al Qaeda/ISIS                           anti-Shebab
South Africa                                       Pistorius trial                                    Rugby
South Sudan                                      Foreign aid worker ban            Internal peace
Sudan                                                Condemned Christ. woman         Peace with S. Sudan
Swaziland                                          UK power investment           Royal family antics
Tanzania                                            Foreign investment                       Infrastructure
Togo                                                  Qatar investment                          Soccer
Tunisia                                               Economic pressure                         Security
Uganda                                              Foiled terrorist attack               US warns Americans
Zambia                                              Political leader dies                          Soccer
Zimbabwe                                         $3B mining deal w/Russia                  —