Monthly Archives: February 2008

King Canute, ITV, BA, Easyjet, Google and Zopa

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I have lost count of the number of times I have sat in meetings where King Canute reigned and new ideas were put in the trash can because of the risk that they would substitute the existing sales in the business

Meanwhile, some-one else bowls a long, creates the idea and the sales substitution is done by new competition.  The traditional business is left struggling to catch up.

Remember when ITV dominated ad spending and took more ad money than anybody else?  But see what happened last year


An analysis for The Times shows that Google generated £327 million in
advertising between July and September, compared with an estimated £317
million for all of ITV1 across the UK during the same three-month period.

10 years ago just think how inconceivable it would be to
suggest that on airline selling low cost seats on the internet would be the dominant short haul airline out of
Gatwick.  Now Easyjet dominate short haul rather than BA.

Who could have predicted that strangers would trade and trust each other through their computers.  Many retail markets declare their growth or declines and this often excludes substantial trading volumes on Ebay and Amazon and elsewhere that are not tracked by conventional stats.

Growth orientated marketers need to be looking for new ideas to stay ahead and not be afraid to compete with themselves and create new approaches to conduct their business. 

So what are the next markets that will be transformed or at least attacked ny New Internet models.  I cannot be sure these will succeed but they are all doing something very new that could transform the way markets work.

Zoba_2

Savings and investments     http://uk.zoba.com

 

Bookmooch_logo
Book buying and borrowing   www.bookmooch.com

World_66
Travel guides and hotel bookings  www.world66.com

Lululogo
Book and media publishing     www.lulu.com

These are all ideas that have long legs and real depth.  They are not a retail concept slapped onto the internet.  They do things that only the internet can do by using information and communications.   The have identified a real customer problem and they are solving it.

Lulu – self publishing is so expensive

World66 – how to find out what normal people think (not massaged by journalists or promoters)

Bookmooch – what to do with my old books?

Zoba – banks tend to rip me off and cannot be trusted

Whether they succeed will depend on many things, not least how well they are executed and whether people are ready for these radical new ways of doing things yet.  But the traditional industries they are attacking have to decide if they want to end up struggling like BA and ITV and EMI or if they are going to embrace a whole new world.

For us we need to keep an eye out for new models that attack our business.  or even better stay one step ahead and spot the opportunity.  In the language of the Growth game, if you know the Power attributes of your customers, then you will know what they want that traditional businesses do not supply.  So go find out about your customers’ Power Attributes

How much do you help your customers through the tyranny of choice?

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BqTwo experiences in the last 24 hours have  prompted me to think about why less is often more.   What a relief it is when a supplier, manufacturer or retailer helps you to find your way through the amazing choice of products and services that confront us these days.

The first was when I was in B&Q today.  They offer a massive selection in the core home and building products, but have more limited choice in the Garden Centre area.  As some one with a limited appreciation of gardening and in search of quick convenient solutions, this proved to be a huge relief.  Their range was not just limited but very well selected to cover all the task and needs and presented in a way that made it easier to choose.  Three powerful attributes seemed to make the range work.

1.  Limited to a size I could survey and understand
2.  Covered all the tasks and needs so there was something to address each issue
3.  Merchandised by task and clearly explained how to choose.

I have to say my foray into the bathroom and kitchens section was more dazzling and confusing as the choice expanded.

These thoughts on choice were forcefully echoed by some consumers in research groups last night who when examining the array fo products available in the category we were exploring, made a straightforward and simple appeal.

Please simplify our choice, tell us what the product does for me, what type it is and put a window on the front so I can see what is inside.  All this other technical detail can go on the back.

I am sure that offering people manageable choices and helping them choose can be turned into a Power Attribute and can be used to differentiate your offer wherever you do business.

So could you do more to help your customers through the tyranny of choice?

£4.99 or £5.17 or £4.83 – which is better?

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I came across this paper today. 

Title:
Do Consumers Perceive Precise Prices to Be Lower Than Round Prices? Evidence from Laboratory and Market Data

Authors:
Manoj Thomas, Daniel H. Simon , and Vrinda Kadiyali

Here is the summary of the findings

In considering price tags, do consumers perceive
round numbers to be larger or smaller than precise numbers of similar
value? The authors examined the prices of 27,000 homes in South Florida
and Long Island, N.Y., and their results showed that homes priced with
a rounded number (for example, US$550,000) sold for about 0.73 percent
less on average than homes with a more precise price (say, $553,505).
Furthermore, the authors found that buyers perceived precise prices to
be lower, and were therefore willing to pay an amount closer to the
asking price than they were when the price was a round number.

My analysis
People tend to
perceive precise prices as less than round prices of similar value.
This discovery could have significant implications for buyers, sellers,
and pricing strategists in any number of industries.

Marketers have long since believed that £4.99 is better than £5.00.  If you take the conclusions of this report, it may be that £5.17 or £5.42 is much better. 

Further to that, maybe consumers have been well trained to think that £4.99 is really just £5.00.  But what if precise prices like £4.87 or £5.13 are seen as better value? 

This research suggests that precise prices are seen as lower than rounded prices.  they also seem like they might reflect the real cost of the goods rather than being a rounded up to make more money.

Do you promote what you do well or what matters to customers?

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If you want to discover the Power Attributes that
drive your customers to choose your brand rather than the
competition, you have to have start by generating a list of possible
attributes.  When we help clients do this, we get the initial attribute list
from talking to the customers.  You can only really rely on customers to think
like customers.    However, the business team can think of attributes that
customers cannot even begin to imagine, so we also get some valuable attribute
ideas from the client management team.

We do
this through our facilitated workshop approach.  These workshop
events often attract a senior audience.   When we work with these knowledgeable
and experienced managers we often find that the list of attributes is a list of
features or things that the company does well.   But that is not always what we
need.  We know that what will be powerful for the customer is a specific benefit
or a special way the business helps the customer solve a problem. 

So
for example the director of a financial services firm tells us that what really
matters to the customers is "we give independent
advice",  which we translate  into a more customer focused
benefit "has independent advice I can trust", but when we talk to the customers,
this is still not good enough, the most powerful attribute turns out to be "makes my business more successful"
.

Time after time, we discover that the hot
power attributes are all about the customer and the cold
attributes are all about the business and the brand.

Experience this week
brought this home to me and showed that directors
may not always be the best choice when we are generating potential insights
about what matters to customers.

In one of our current
projects we are trying to discover some Power Attributes in a whole new category
for the business.  We ran a workshop this week where we wanted to generate a
list of candidate attributes that we plan to investigate with customers.  The
investigation and consumer research will establish which attributes are most
powerful in influencing customers to choose a product. 

The project is being led by the sales director who helped
us bring a fresh approach. Rather than directors, he invited a
number of the PA’s and front line team to the session and this proved to be an
inspired choice.  They seemed to think more like customers and in a more natural
way.  As a result, we have come up with a list I am confident is much closer to
what customers will suggest.  This means when we do workshops with the customers
we are already part of the way there and we will be able to spend time
discovering why the attributes are powerful rather than just generating the
list.

Our ezine always aims to deliver practical advice, so I would
suggest you can take two things out of this When you are thinking about what is
important to your customers,

1.    always
challenge yourself to think "is this about the brand or about the customer" 
I can pretty much guarantee that if it is about the brand it
will not be that important to the customer.
2.    go and ask some customers or at least a few "real"
people around the office, they might just shed some insight on
your thinking.

Our Power Attributes paper discusses how you can come up
with this insight in more detail click here

Is your growth constrained by a lack of resources or a lack of action?

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Last post we discussed marketing influence across the whole business.  But
according to some commentators, there might be a recession soon.  Does this mean
marketers influence will decline even further.  You may have less money to spend
and fewer resources.  It will put pressure on costs as growth gets more
difficult.

So should you react in a different way as a
result.  This week we show how "internal entrepreneurs" get growth. 
This is the same whether the market is growing rapidly or stagnant.

The
first thing is to focus on action; doing things rather than analysis, research
and meetings.  I was reminded of this when reading Tom Peters blog
and saw this quote.

Any project worth doing is worth doing because in
some small or large way it challenges "the way we do things around here."
Moreover, it is a given that bosses are primarily hired to be cops who make sure
that we do things "the way we do things around here."

This dilemma
is often resolved by a select band of individuals who drive for practical steps
that will create growth.  These team members refuse to accept the processes,
always find ways around the restrictions and "kick down doors" to make things
happen.

This select band are the internal
entrepreneurs.  They will work with limited resources.  Internal
entrepreneurs push their ideas with conviction and energy.  They also recognize
that they must win people over and cannot achieve their goals by just pushing
their ideas.  However they are willing to push back and are not put off by
objections and obstacles.  We have noticed they can exist at many levels of the
organization.  This is not just a feature of senior management.  What are their
behaviours?

We recently worked with someone in a 7m business who used
this "internal entrepreneur" approach and it has worked, two years later this is
now a 12m business.  They also operated with some of the constraints of a larger
business since the business is owned by a multi billion global business.  But
they did not have access to additional finance from this larger business.  The
resources available to them were only those generated by the revenues of this 7m
subsidiary. 

Here are our practical tips based on the
behaviours we have observed in this case and others.

  • Identify the five top drivers of growth on the business and ensuring the
    whole team understands them.   
  • Translate the 5 drivers into practical actions and review them every month
  • Refuse to accept that it is OK to miss objectives due to a need to adhere to
    process.  When obstacles arise, the question is how do you get around this? 
    What else could we do?
  • Develop a great enthusiasm for celebrating successes.  Make the office area
    full of boards with updates on progress, pictures of successes, statements of
    intent and performance vs. targets.
  • Evaluate all activities using three simple questions, what works, what does
    not work, what could we do better?  (Always start with the positive
  • Always talk about the customer and understand the customer needs.  Underpin
    decisions by robust insight.  All ideas were tested with customers.  This can
    involve very low cost market research tools that the team created and managed
    themselves.
  • Be clear about the working environment you want and the type of people this
    required.  Ensure all new recruits are interviewed and tested against this
    profile.

So if you are the boss, make sure you have some internal entrepreneurs in
the team. If you are the team, try being an internal
entrepreneur

If you want your team to understand how to do
this look at  our programmes on  increasing
marketing influence  (you can also read our papers on
this.

Differentiate supports internal entrepreneurs with The Growth Game
which is an approach that works to translate insights into practical steps for
growth that have the support of the business team.   Our best clients are often
"internal entrepreneurs; they know a lot of this stuff intuitively and use our
approach to not only develop their ideas but to sell them to the business
teams.

If any of you have experiences that relate to
this, please let us know, either by private email or post comments under this article