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The Need for Smart Innovation
The iPhone wasn’t the first time Microsoft has been smoked by Apple, nor was it the last. Microsoft’s Zune media players entered the arena five years after the iPod exploded the market and Microsoft is again chasing Apple into the tablet space. This is the critical difference between the two giants is simple: Microsoft is following trends while Apple is starting them. It’s easy to ridicule Ballmer but hindsight is, of course, 20/20. Still, to innovate intelligently and nurture long-term success, foresight is vital. It’s this sort of smart innovation –an understanding of your strengths coupled with the vision to apply them to create new opportunities—that has rewarded Apple with massive hits like the iPod, iPhone, and iPad. Microsoft’s aggressive (but late) entries into spaces pioneered by other companies reflect short-term bottom line thinking, not the long-term smart innovation the tech giant needs. Consider Microsoft’s recent strategy in the young eReader market. The company announced two weeks ago that it is buying into the Nook eReader and tablet brand owned by popular US bookseller Barnes & Noble, to the tune of $300 million. It’s not hard to understand why; the Nook is popular, owning a solid third of the US eReader market and holding its own against Amazon’s Kindle and Apple’s iBook platform. This way Microsoft didn’t need to win market share on its own, it simply bought it. The move will be profitable in the short term, but unless the spirit of enterprise that created the brand is maintained, will it continue to grow? Buying the innovation of others is not always the way forward, even for Microsoft: remember Razorfish? Apple wasn’t in a great place when it first announced the iPod. Apple’s share of the computer market was miniscule, it didn’t have any other real pillars to rest itself, and it had recently stayed afloat only on a major investment from Microsoft. But it didn’t have nothing. Apple had a brand, loved and admired by the few, it had design chops in both hardware and software, an innovative spirit, and, thanks to Steve Jobs, a vision. Beginning with the iPod, then the iPhone, and now the iPad, Apple applied its assets and core competencies to create entirely new experiences and ignited whole new categories. Smart innovation at its finest. On the way, Apple have been showing up other former stars like Sony, who have been busy with cost-cutting, rationalizing and now engaged in a massive ‘downsizing’ in the hope of returning to profit. Most companies aren’t as large as Apple, Microsoft or Sony, but all can learn from both and decided which to emulate. In this global recession especially, it can be tempting to take every opportunity to cut costs, downsize to protect the bottom line – or hedge your bets and buy ready-made innovation. But this will lead only to a downward spiral or, at best, short term ‘acquired’ growth. Smart innovation, the Apple way, is the better route. It may take guts; it sure needs vision, but the payoff can be real and the future bright. Invest in the future, not in cost-cutting (itself a costly exercise) – or buying others’ opportunities. Leverage your strengths to create the new. Be the pioneer, not the chaser. Co-Written by Stuart Mackay & Stephen McVerry Predicting Consumer Behavior: Research vs. Intuition
In Isaac Asimov’s 1951 science fiction classic, Foundation, Hari Seldon makes a bold prediction: the fall of the Galactic Empire. He can make this prediction only because he has spent his entire life developing psychohistory, a branch of mathematics that allows him to make accurate predictions of future events with the help of mass data and statistical methodology. Brand managers would love a tool like psychohistory. With it they could get their branding and campaigns right every time, merely by inputting the right information, accounting for the right variables, and religiously following the result, whatever it may be. Brand managers don’t quite have psychohistory, of course, but do utilize a rudimentary version of it: consumer and market research. With research, marketers aim to extract helpful data from consumers in order to predict behaviour and future preferences, and to plan their brand accordingly. Research is a useful tool, yes, but should not be a crutch. Using research data to inform every aspect of a product, brand, or campaign may seem like a scientifically-sound idea, but one that is very dangerous in practice. Market research, and the information it uncovers, is inherently flawed. It’s flawed because what research asks respondents to do –to rationalize the irrational—is unnatural and nearly impossible. The deep forces that affect what we do and why we do are mostly unknown to us and impossible to put into words or rate on a 10-point scale. Instead, we can only post-rationalize our actions, assigning sensible reasons to our decisions, whether they actually played a part in them or not. If qualitative research provides us only with post-rationalized reasons for past behavior, how can we expect it to predict consumer action in the future? Instead, marketers must allow room for intuition. It’s the reason why interviews, focus groups, and other qualitative research methods are just as important as quantitative research: they give the researcher an opportunity to sense the moods, dispositions, and meanings behind what subjects choose to verbalize, leading to better understandings. With these intuitive understandings, a skilled marketer can make far more accurate consumer predictions and better branding decisions than hard research could on its own. Maybe one day there will be a “psychohistory for marketing” that identifies all relevant data and variables and outputs perfect brands and campaigns every time. Until then, marketers must not allow themselves to think that research is capable of that level of precision. What role then should research play in brand planning? Marketers should digest research findings, forget everything, then allow intuition to direct their decisions. This way research becomes one of the streams of information that gets synthesized in the marketing process, rather than a dangerous one-off. Written By: Stephen McVerry Rebranding: Fair and Square
One of the biggest challenges in branding –more challenging than branding itself—is rebranding, taking a product or brand that is understood by the public and sending it in a whole new direction. Earlier this year, JCPenney, a popular midrange department store in the United States, began a rebranding effort that has turned more than a few heads. Its new logo and the new brand promise it symbolizes –to be fair and square—may not seem like much until you consider what JCPenney has, for years, represented. Traditionally, JCPenney has embraced heavy couponing, endlessly cyclical sales, and crack-of-dawn doorbusters to move their merchandise. In the US, few other retailers epitomize these practices the way JCPenney has. That is why JCPenney’s new “Fair and Square” rebranding is such a 180° departure: they are killing off coupons and sales completely, rounding their prices to whole dollars (goodbye $9.99, hello $10), and allowing easy returns without a receipt. To make up for the lack of coupons and sale discounts, JCPenney will lower prices storewide by an average of 40%. In other words, you will save just as much under the new pricing as you used to under the coupon system. The former JCPenney might have priced a jacket at $100 with the expectation of selling it for around $60 after discounts. The new JCPenney will price it at $60 outright. Fair and square, right? But there is a reason most retailers price, coupon, and discount merchandise the way they do. Without comparison shopping across stores, for example, it is not obvious whether $60 is a good deal. Applying a 40% off coupon to the jacket priced at $100, however, feels like steal. The model is fresh, bold, and pro-consumer, but JCPenney needs to do two things for it to succeed. First, it needs to convince customers that eliminating coupons, sales, doorbusters, and psychological pricing are major benefits, worth shopping at JCPenney to enjoy. Second, after spending years conditioning customers to look for discounts, it needs to convince customers to keep returning to the store after coupons stop appearing in their mailbox every week. JCPenney’s recent campaign featuring popular American talk show host Ellen DeGeneres does the first very effectively but hardly touches on the second. In several spots, Ellen whimsically demonstrates the absurdity of .99 pricing schemes, coupons, and doorbuster sales. But they do nothing to assure consumers that their next JCPenney purchase won’t be more expensive than the last. Consumers won’t notice the lower prices on their own but will notice the absence of coupons right away. JCPenney must expand on its message accordingly, illustrating why the new model won’t cost shoppers more than before. These customers need to know that ‘no coupons’ does not equal ‘higher prices’ and that they are still getting a great deal in the store JCPenney is in a precarious situation. If the retailer is forced back into its old practices after publically criticizing them, it could become a public laughing stock and alienate consumers further. If they adjust their message appropriately, however, they could become the ultimate counterexample against the manipulative pricing games played by most other retailers. Written By: Stephen McVerry The Post-PC Era
For the past nine months, my mother has been living without a computer. She gave up her Windows notebook with the intention of buying a tablet, but quickly found that purchase unnecessary. To be clear, she hasn’t quit the web. She still emails. She’s still active on Facebook and other networks. She still conducts Google searches for quick answers, pulls up directions to places around town, plays music and watches the occasional viral video. She does everything she did on her old notebook, but on the Samsung Galaxy S smartphone she carries in her pocket This is what is implied by a ‘post-PC era’, a heavily hyped epoch when traditional Mac and Windows machines are replaced by the next class of devices, smartphones and tablets. When someone tells me it would never be possible to live with just a smartphone, I tell them about my mom. You may have noticed in last week’s write-up of six budding social networks that all, except Pinterest, are based entirely on smartphones. That’s because, with a few exceptions, the innovators in social media have turned their full attention to mobile platforms before even considering the desktop browser. It’s where technology and consumer interest is heading and where the biggest innovations and gains remain unexplored. There are several core reasons why the most notable social startups are preempting the post-PC era and focusing on smartphones today. Most critical, however, is that smartphones do new things. They’re always on and always in your pocket. They’re always connected. They know where you are. And they’re flexible – your smartphone will guide you turn-by-turn to a stunning mountain vista, capture the moment in a beautiful landscape shot, upload it to Facebook, then call your girlfriend so you can tell her about it (it is still a phone after all). The vast difference between smartphones and the last generation of cellphones and traditional computers can be easily ignored, but smartphones are a truly a world-changing evolution. This helps explain why young social startups are developing on smartphones first and, more generally, why the post-PC era is inevitable. Entrepreneurs are realizing the new and unexplored opportunities waiting in the latest smartphone and tablet technology and are racing to be the first to innovate them. These sorts of innovations increase the value these devices offer consumers, tugging them further and further from their notebooks and desktop computers. Furthermore, smartphones and tablets do nearly anything notebooks can, and increasingly do it better. My mom couldn’t be happier with her post-PC lifestyle. After years of struggling to move photos from her camera to her notebook and to the web, she’s a pro at uploading them within a few taps of taking them on her Galaxy S. She loves that using Google Maps to get somewhere no longer means printing out a cryptic list of steps, but hearing turn-by-turn directions every step of the way. She loves that quick weather reports and movie times don’t require a five minute boot up. She may not realize it but she’s ahead of the curve, living on the cutting edge of the post-PC era. Written By: Stephen McVerry Account Director Wanted We’d love to talk. We are seeking a smart and energetic individual with well-rounded talent to join us As the ideal candidate, you will have solid experience across branding, strategy and Your role will be to offer strategic consultancy in branded consumer goods and services, This is your opportunity to develop in this rapidly growing sector and business. Read more...
Social Networking Newcomers to Watch – Part 2
Imagine you’re sitting cozily in your favorite café, slowly sipping a piping hot cappuccino and reading a new paperback, when your phone vibrates lightly in your pocket. You pull it out to discover that while you were enjoying your book and beverage, your smartphone was hard at work finding a potential date for Friday night. Turns out she’s sitting in the opposite corner of the café, looking at her smartphone. She has just been found the perfect date as well. If that sounds like science-fiction, brace yourself for reality: the technology is here and real. If current trends continue, it won’t be long before a majority of consumers in the US, the UK, and other European countries are carrying smartphones capable of creating scenarios just like that. The magic comes from two key features: location-awareness and persistent web connection. Even when the device is asleep in your pocket, your smartphone knows where you are, which nearby café you’d love, that they make an especially good cappuccino, and, once you’re settled in with your paperback, who you should talk to. The smartphone is not merely the modern cellphone; it’s a totally new class of device. While popular apps like Foursquare leverage smartphone technology to facilitate location sharing with people you know and trust, the next generation of location-based social services aims to introduce you to those around you. Here are few pioneers. Highlight Highlight has enjoyed the most press lately but wasn’t the SXSW breakout many had predicted. The service alerts you to other Highlight users in your vicinity who share interests or mutual friends (data it pulls in from your Facebook profile). Highlight keeps a log of every time you cross paths with a user, potentially eliminating those “where have I seen this person before?” moments for good. Sonar Sonar utilizes Foursquare check ins to determine the location of users rather than constantly pinging GPS for a precise location like Highlight. The app pulls information from your Facebook, Twitter, and LinkedIn accounts, promising to reveal the unexpected connections you share with everyone around you. Sonar’s greatest feature could be its LinkedIn integration, making Sonar a potent on-the-fly professional networking tool. Banjo Banjo’s approach is the most aggressive of the three (and most invasive regarding privacy). Unlike Highlight and Sonar, which list only users who have signed up for their service, Banjo shows anyone who has indicated their location on any social network, be it Foursquare, Twitter, or something else. As a result, Banjo surfaces significantly more people but has less information to show for each of them. You typically won’t know if you share interests or connections, but you may get to browse recent tweets in hopes of finding something useful. Written By: Stephen McVerry 'The Artist' of InnovationHollywood has been inspiring us lately with examples of best and worst in marketing ‘innovation’. Every new film is to some extent an ‘innovation’ - much as Hollywood likes to hide this fact with remakes and re-hashed formulaic products. But the most recent $200million Big Disaster – Disney’s John Carter – seems to be down to bad marketing. They went for the classic ‘Big Bang’ launch strategy – every cinema complex across USA simultaneously, backed by a $100m marketing campaign – and relied on 3D, hype and ‘push’ to get the mass bums on seats. But despite the swagger and noise, with an uninspiring name and a confused offer they did not get across why anyone might want to watch it. They failed to address the question: “Whats the Big Idea?” Viewers avoided it in droves. By contrast, a work of marketing genius lay behind the big hit of the Oscars earlier this month: The Artist. A film with no special effects, no colour and no colour, the Artist has captured the interest and imagination – and the wallets – of audiences across the world. Harvey Weinstein made it happen, against all odds. What makes it work? Our assessment: - Astute understanding of the distinct nature of each of his products and where it ‘fits’; - Bullish belief in the idea – expressed itself in energy and passion behind the brand; - Clever leverage of the media mix - ‘endorsement’, via the Oscars, rather than just advertising This plus a real, visceral understanding of the audience – treated with respect, brilliant ‘route to market’ strategies and a healthy dose of realism: “There’s not one thing this movie has going for it, except for the fact that it’s great,” he says. It could run out of steam “if it was overly distributed. Look, we’ve got 10 Academy Award nominations, we’re in 800, 900 theatres. Most people would go straight to 2,500. We will go to 2,500 ... but not now.”
We could all learn something from that. Social Networking Newcomers to Watch – Part 1
Google+’s failure to impact Facebook’s dominance has convinced many that the social networking wars have long been won, but don’t tell that to the many budding startups hoping to blaze new trails in consumers’ social lives. Despite the Google+ dud, the social sphere is far from impenetrable. Differing from Google’s approach (emulating Facebook) several startups of recent memory have shown that success can be found in pioneering new ideas and utilities. Proving that there is still room for fresh approaches to social services, Foursquare entered location-tied social networking early and became the dominant player in the space, fending off even Facebook when it tried to follow into the territory. Tumblr, which recently celebrated its 20 billionth post, took blogging and infused deep social and community elements for massive success. Twitter etched out its massive audience as a bare bones platform for short form sharing. Similarly, newer networks hope to make an impact by pursuing new ideas. These are a few to watch. The recent social media explosion on everyone’s mind is Pinterest, a platform so different from Facebook that it defies much comparison. Pinterest’s purpose is very specific; to be consumers’ social place of discovery and depository for images they find interesting or relevant. Users pin images to themed boards and, in doing so, share their finds with their friends and subscribers. Perhaps Pinterest’s attraction is similar to that of Tumblr, fulfilling a desire to be fed interesting content and to further share the best of it. Furthermore, individual posts to Pinterest have the same high viral potential via repinning that is both common on Tumblr though reblogging and rare in Facebook’s high privacy system. Whatever the reason for its success, it’s clear that Pinterest’s approach to social media and sharing has been novel enough to cut through the social media clutter. Path Path is a smartphone-based social network that bills itself as the social journal of your life. On its iPhone and Android apps, users are encouraged to share their day-to-day lives, from standard updates, photos taken, and locations visited, to songs listened to, conversations had, and, oddly, sleep slept. While most of its core functionalities are not unlike Facebook’s offerings (sleep being the obvious exception), Path differentiates itself by limiting your friend count to just 150 of your favorite connections. The result is a social network that is more personal, enabling the deep sharing Path encourages. Pair If Path is designed to be a small scale mobile social network, Pair is a minuscule one: you’re allowed just one connection. Intended for couples, Path offers much of what you’d expect in a modern social network (status, photo, message, and location sharing) plus one heartwarming innovation: a feature called “thumbkiss”. When the two users properly align their thumbs on their smartphone screens, both phones vibrate in sync. Is it just me or do Facebook pokes suddenly feel outdated? Tune in next week for part two... Written by: Stephen McVerry Discovery, a Covert Route to Consideration
Visualize this as a three-ringed archery target. The bull’s eye contains your go-to selections, the next ring holds your default alternatives, and the third ring contains your reluctant backups. Brands in a given ring are given roughly equal consideration and must all be exhausted before you consider the next grouping. Brands aim to be in the bull’s eye for their target audience but as long as they’re at least on the radar, they can nudge toward the center with clever branding and marketing. The greater challenge, however, is for brands who float outside the rings altogether. Until recently, Agwa was off my radar. I don’t recall having seen the obscure herbal liqueur advertised or sold before, and I probably ignored it if I had. So when I tried to order a Jägerbomb in Shoreditch last Friday night and the bartender suggested an Agwabomb instead, I didn’t know what he was talking about. He showed me the funny-shaped glasses specially made for the drink, the green colored liqueur, and explained that it was like a Jägerbomb but better. I decided to trust his recommendation (he was an expert after all). In the two seconds it took to drink, Agwa leapt from outside my rings of consideration to the bull’s eye, sitting comfortable next to the illustrious Jägerbomb as my go-to drink for rocket launching a night out. That’s the power of discovery. Unlike a massive advertising campaign, which I probably would have written off as just another campaign vying for my money, this autonomous bartender managed to influence me into trying something I would never have considered on my own. It wasn’t a corporation commanding that I buy their product; it was me stumbling into an exciting Agwa culture that I had never known existed. Natural discovery circumvented the natural barriers we’ve all learned to put up to salespeople and advertising and managed to get an unknown product to the center of my consideration rings in mere minutes. If customers ordering Jägerbombs are converted to Agwabombs regularly, that’s effective and inexpensive promotion for Agwa. Advertising can be effective, but is often inefficient and can’t solve every problem. Instead of above-the-line advertising, which consumers are largely trained to deflect, a product could be set up for natural and powerful discovery. As far as I know, Agwa has no special deal with the bar in Shoreditch, but it could be a powerful idea. For brands like Agwa, largely off the radar to most consumers, embracing discovery is a potent and largely untapped alternative to advertising. Written by: Stephen McVerry Do We Ever Make Rational Purchase Decisions?
Imagine you are purchasing a new laptop. On a subconscious affective level you lust for the Macbook Air, You compile a list of laptops that fit your criteria, but when you consider prices you discover that Apple’s We like to see ourselves as savvy consumers, making the best purchase decisions available to us and Things like our emotional response to advertisements, clever branding, and conversations with our peers What follows is post-rationalization, justifying to ourselves and to others why we made the choice we did. We give all the credit to our free will and thorough decision making and deny the unexplainable forces WRITTEN BY: Stephen McVerry
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In early 2007, Microsoft CEO Steve Ballmer laughed off the iPhone, conceding Apple’s latest device “no chance” of gaining market share. He’s not laughing anymore. Several years later, Microsoft is chasing the iPhone and the booming smartphone market it ignited with its too little/too late Windows Phone 7.
In today’s marketplace, we face a seemingly endless selection of brands to fit every possible need. Unable to consider each and every option thoroughly, we rely on internal rankings to make each purchase decision efficiently. Of course we don’t necessarily rank brands as #1, #2, #3, and so on. Instead, we are loosely aware of the one or two brands that get the front of our consideration, a few that are comfortable alternatives, and several that we typically disregard unless nothing else is available.
