Increases in the call for transparency are legion. Health inspectors post food safety grades for eating establishments. Websites track lists of political campaign donors. And restaurants redesign bars, kitchens, and more to show patrons how drinks and meals are prepared. All this, in order to give customers a window into processes for product and service creation.

And to be sure, there’s definitely even more opportunity for transparency in product creation, especially in financial services. As an example, Michael Lewis’ Big Short cites how via the securitization process, hundreds of subprime mortgages were packaged up and divvied into “tranches” of investment quality. Through securitization, it was tough to estimate the contents of a particular asset-backed security. One hedge fund manager exclaimed; “I didn’t know what the (expletive) was in the things. You couldn’t do the analysis. You couldn’t say, ‘Give me all the ones with all California in them.’ No one knew what was in them.”

Creating a product with so much complexity that teams of MBAs are necessary to decipher its contents surely is a recipe for confusion. And on the ugly side of things, perhaps that was the intention. Regardless, in an age of social media where a company’s reputation can be destroyed in five minutes or less, this avenue will not ensure long term success.

However, a key question is whether customers really want to peer inside the black box. After all, investment banks had very little difficulty offloading these impenetrable structured products. Plenty of hedge, pension and even sovereign wealth funds lined up to buy these complicated products—and most with no questions asked.

In the analytics market, there’s an adage that business users really don’t care how a particular solution works, just so long as it meets their needs. And while this may be true in some instances, there’s also ample opportunity to enlighten consumers (or in this case application users) as to the “value” received through peeling back the curtain on how a product or service is designed and delivered.

What say you? Do your customers really want transparency? Do they really need to know what’s in the black box?

It’s common knowledge that when it comes to shopping for an automobile, most people dread setting foot on a car lot. That’s because the customer experience often includes pushy salespeople and plenty of exasperating negotiation with the dealer on a final price.

That’s why a Financial Times article titled “Benefits of a Showroom Bypass” is so interesting. It mentions that BMW is offering buyers a way to circumvent the dealer showroom and custom build a car of their very own.

According to the article, BMW has long offered buyers in Germany the ability to customize their own automobile, from paint and interior colors to installation of custom features, such as grills and moonroofs. However, as the company has shifted production of some models to the United States, this option is also now available for U.S. buyers.

In designing the customer experience, BMW had to revisit many of its processes in order to offer customers a personalized encounter. First, there was website design on the front end and database design on the back end. (There are more than 70 million possible combinations of models, interiors, exteriors, and accessories.) Second, engagement with buyers throughout the process was a consideration. The company ships each customer a video of their particular car as it’s built—it’s the actual car in the video—so the process needed redesign consideration when “custom built” became an option offered to consumers.

Why would BMW go through all this trouble—especially when it doesn’t charge extra for a custom-built car? A few things come to mind, including better customer engagement and the creation of a unique and special “one of a kind” automobile that arguably enhances an image of status in the mind of the buyer. In addition, it doesn’t hurt that most buyers of a custom BMW end up spending more money to accessorize a car of their own.

There has been plenty of research in the field of customer choice—and how too much “choice” can ultimately lead to customer confusion. However, this appears to be one instance where a highly customized and personalized customer experience is leading to extremely satisfied customers and ultimately higher profits.

Questions:
• Does the concept of a customized automobile purchase appeal to you?
• Is “build to order” a concept applicable to premium products only?

So why is networking company Cisco getting rid of its line of Flip mini video cameras? According to the Consumer Electronics Association, sales of mini video cameras grew from 4.5 million units shipped to retailers in 2009 to 5.7 million in 2010. Sales are projected to continue to rise  in 2011, an estimated 6.5 million units.

Does Cisco know something that we don’t know?

• There’s competition in the category from the likes of Sony, Kodak, and other brands. Maybe Cisco’s share of the pie isn’t big enough? Maybe profit margins are even slimmer than they are in most electronics categories?
• Lots of folks are using their smartphones’ camera features. I mean, why fork over $150 for a Flip when smartphone video features are free?
• Isn’t it easier to just use our phones to do more things these days, making it unnecessary to buy additional electronics?

Here’s the thing: Mini video cameras are easy to use. They‘re light, fit easily into a pocket, and let people capture good times in a quick and enjoyable manner. Plus, they have more video camera features than a smartphone. And, oh yeah, some people can’t fork out big bucks for the iPhone. Lastly, it’s obvious people like the Flip and its competitors because they’re selling.

What do you think?

• Is Cisco being too hasty in dumping the Flip?
• Do you think mini video cameras are already getting passé?
• Do you use your smartphone as a video camera or do you prefer to use a small mini video camera?
• Do you believe in “doing more with less” and decide against purchasing the latest and greatest consumer products?

I’d love to hear from you.

If everyone is sourcing from China, it must be a worthwhile endeavor right? Author Paul Midler might disagree. In his tome, Poorly Made in China, Midler discusses Chinese business culture, manufacturer/importer relationships, counterfeiting, and more. Of particular interest, Midler provides a behind-the-scenes look at quality control in a typical factory, where he spots workers sticking their hands in product, problems with substandard and “wobbly” packaging, and the routine shipping of defective products. “Consumer and product safety (are) not large concerns,” he says.

And that’s why, despite initial cost advantages, some companies are finding that it is ultimately a better choice to bring production back home.

A March 2011, Wired Magazine article titled, “Made in the USA,” mentions a case study for Sleek Audio, a high-end maker of ear phones. Every few months, Mark Krywko, CEO of Sleek Audio, would make a trip to China’s factories to discuss quality challenges. And when Krywko visited his outsourced factories “his Chinese partners would assure him that everything was under control. These promises always proved empty.”

According to the article, in one instance, Sleek Audio had to discard an entire shipment of earphones (10,000 in quantity) because they were improperly welded—a mistake that cost the company millions of dollars. Another issue was continually missed production deadlines, which caused Sleek Audio lost profit opportunities.

Fed up with quality issues, Sleek Audio decided to bring production back to the United States. After exhaustive research, Sleek Audio contracted with a Florida company to produce the company’s earphones. Granted, the product cost 50% more to produce in the United States vs. China, but the benefits of increased product quality and faster time-to-market far outweighed an initial up-tick in costs.

And while this is just one case study, the Wired Magazine article notes that many companies are finding that once design considerations are taken into account—to remove as much manual labor as possible—manufacturing in the United States can actually be quite competitive.

Before we get too far ahead of ourselves, let’s be sure to recognize that there are many advantages to sourcing from China. China is still the manufacturer to the world—from shampoos and lotions to high-end technology. And without a doubt, according to a recent World Bank Report, there are few “low-cost” countries that have China’s infrastructure (transportation, electricity, telecommunications, water supply etc.) for making and transporting goods in an efficient manner.

However, as sources from this article recognize, an initial low cost is only part of the overall value equation. The entire supply chain must be considered in addition to the demand chain. It is for this reason then, marketing executives—with a pulse on customer needs and expectations—should be a crucial component of any product or service outsourcing discussion.

Questions:

• Paul Midler writes, “American consumers had once preferred to see the Made in USA tag, but somewhere along the line, Made in China began to sound like a bargain.” Do you see a sea change in consumer expectations, or does the mantra “as cheap as possible” still reign?
• Is “paying a little extra” a wise trade-off—not only for companies but customers too?

When I was 7 years old, my dad took me to a work event with him. That first taste of networking and being taught to absorb a room, use intuition, and know how to make people feel at home was one of the principles heavily taught in a Cuban family. “The Arturo,” as we affectionately call him, is someone with 34 years of sales experience for some of the largest medical and surgical equipment companies in the world. His words of wisdom—such as “In a sales-oriented world, you must always have a market-oriented mind and approach”—have stuck with me throughout my career in public relations and digital communications, from the B2B clients to even the B2C sector.

Are your vendor-client relationships matching up to “The Arturo” criteria? Why are you pairing up with a certain vendor? Is it because they meet your needs? Did you only choose them because of audience recognition? Are you a brand that doesn’t know the why for choosing a product?

Product, Meet Need
“The Arturo” is fond of saying that “if a product meets all criteria and needs, it doesn’t matter if it has the extra bells and whistles. Problem is, if there is no communication or support from the vendor, those bells and whistles mean absolutely nada.” Even the best relationship builders need to have a quality product that meets all base needs. My boss is fond of telling me that I always say, “Own the industry, not the product” and “The two things that matter most in a tool is meeting basic needs and phenomenal tech support.” Those two statements are what make a vendor stand apart from others.

Thought Leadership
Is your vendor only e-mailing you in response to a crisis or question or to get you to renew the contract? Look to see what vendors provide that something extra. There are even vendors out there that provide thought leadership to those not even looking at their tool.

Do they:

• Email you when they see an interesting article for your industry/client industry just to share?
• Call to tell you about a conference that you might be interested to speak at/have a client attend?
• Connect you with interesting people, even if you are not a client?
• Have DM and e-mail conversations about the industry and your thoughts on it?
• Ask you to blog and collaborate with them, even when a deal is not in the works?

The little things can add up and really enhance that vendor-client relationship.

Response Protocol
Remember, the bells and whistles are great. But if the support isn’t there for questions, glitches, or overall assessment, then the client and/or brand is risking only using 10 to 20 percent of the actual product power. A vendor that waits three days to respond to questions about reporting, tool capabilities, or upgrades isn’t going to satisfy client needs. A powerhouse product is only as good as the people who respond on the other side. Another product might not have the extras, but if it gets the job done, the support is what will make the product better.

Person vs. Robot
We’ve all experienced the slick salespeople that only want to make a sale. “The Arturo” taught me that the best salesperson is able to build a relationship on trust without the client/brand getting the heebie-jeebies. But how do they do that?

“The Arturo” tip is to go for the vendors that ask how you are, how the family is, and have connected with you on a hobby or interesting quirk. He always used my hatred of chocolate as an example: “That’s weird, but it’s something to start the conversation.” For every product mention he might make, my dad makes three other mentions that relate to the person. It could be a personal quirk, how bad the Dallas Cowboys are, or even talking about his kids.

What would you add? Do you think “The Arturo” is on target or could learn a thing or two? What makes a vendor shine for you?

Author note: The next post in this series will include the vendor voice, so if there is something you would like to be discussed, let me know in the comments.

Why? You’ve got the wrong associations. The headset is what the old telephone operators used to wear. “One ringy dingy… two ringy dingy…,” said Lily Tomlin for those of us old enough to remember Laugh In. Wheeled luggage is what stewardesses used, not us burly alpha male road warriors. We lug our garment bags around the world and pay for our chiropractor visits when we return. Today, we don’t look twice when we see these products. We wheel our bags through the airport as we talk on our Bluetooth headsets, and we look just like everybody else.

Both products have made the leap, neither particularly quickly. Both went through considerable design and re-design processes to come up with the right user experience and the right design aesthetics. So how do we short circuit this process today so we can get to acceptance that much faster?

I had this conversation with Peter von Conta, the vice president of design and development at Vibram, the footwear brand that makes the oh-so-polarizing Five Fingers shoe. This product embodies the “barefoot running” movement, dovetailing in nicely with other societal forces, such as local organic food trends, smart consumerism and a general return to basics. But its defining feature is that it has five “fingers” for your toes. It doesn’t look like anything you’ve worn before. And that really scares a lot of people away.

In speaking to Peter about how a designer approaches making an outlandish product more palatable, he pointed to three key steps:

1. Focus on the “how”—not just the “what”—of your defining feature. Peter told me, “We try to maximize the potential of the product using whatever tools are available to us. If life gives you wheat, you make pasta, but you also have to choose the shape, or conversely, you can choose to make bread instead. We also know that in today’s product culture that cool looking is accompanied by great functionality, or you potentially lose your audience.”

Design isn’t just aesthetics. It’s product management, knowing what’s in, and what’s out. It’s user experience. It’s also having the forethought and creativity to take your defining feature into new and unexpected places.

2. Create meaningful associations that we can latch on to. “I believe in quantum leaps, but consumers are sometimes unprepared for the experience,” Peter continued. “My personal approach to design is about transforming the strange into the curious or recognizable, so that the consumer can meet the product through their own perceptions and expectations. Creating multiple perceptive pathways to the product can make it successful in its own right, even if the primary benefit is hidden or ignored at first glance. The goal is to make a great connection with your audience. People love connections, just look at Facebook.”

What are the associations that matter here? To athletes who are serious about cross training, who would be the sort of runners who would gravitate to non-traditional barefoot alternatives and others, creating an outdoors association would resonate. What if your design evoked feelings of SCUBA gear? What if your execution looked like those old sprinter’s spikes looked like back in high school? We’re not talking “toe shoes” anymore, are we?

3. Know when to stop talking and start listening. “You have to be willing to teach what you know, and to change what doesn’t work, so that your product is allowed to be the subject of a shared experience. Products ultimately take on a life of their own, occasionally outside the intention of their inventors, and so dealing with this movement is the real task. For instance, when people use Vibram FiveFingers shoes, they are not necessarily pondering the Vibram designers’ intent, but know inherently and instantly that they are receiving an interesting experience through their feet. It’s all about the connection.”

Your role as teacher and evangelist never stops. But at a certain point, they will start telling you what they see. For Vibram, pouring more barefoot alternative fuel on the fire is their mission. But where people take it is a community effort.

Peter’s thinking should provide hope and guidance to anyone working with a product, technology, or solution of any sort that “isn’t for me” at first glance. He reminds us to focus on how we choose to embody our defining feature and to make conscious choices here. He exhorts us to find the right associations and metaphors that connect us with the right feelings we want to evoke. And he reminds us to get out of the way and let your people tell you what they’re thinking.

Good rules for rule-breaking products!

PlantBottle technology is still fairly new, and Coca-Cola took the early lead in using it for its soft drinks. Expect more companies to follow suit as suppliers seek sounder packaging alternatives to petroleum-based plastics made from plant-based polymers, including CPG giant Procter & Gamble.

Not only is the new packaging 100% recyclable, it also reduces the company’s use of nonrenewable resources, cuts CO2 emissions substantially, and is expected to save approximately 400,000 gallons of gas. All of this according to a recent Greener Package newsletter article.

Odwalla president Alison Lewis says, “Plants do such a good job of making our juice, Odwalla hired them to help make our bottles. Doing good things for the community and building a business with heart are core guiding principles of Odwalla’s vision.”

The beauty of PlantBottle packaging:
• The plastic-like material comes from molasses and sugarcane juice.
• It looks like and performs as well as traditional HDPE and PET bottles.
• It can be endlessly recycled.

Naturally derived, sustainable packaging makes sense for natural and organic brands. For brands like Odwalla, packaging their juices in the PlantBottle is consistent with the company’s core values. But what about Coca Cola or Procter & Gamble? Is it as important to their brand values?

There’s no disputing that cutting down on nonrenewable resources, cutting harmful emissions, and coming up with totally recyclable polymers is desirable from an environmental and PR point of view. But do the consumers of these big brands care as much as an Odwalla customer about packaging? How much does it matter when these customers are making purchases?

What do you think?

I’d love to hear from you.

This line from the 1992 movie “My Cousin Vinny” stated by someone claiming to be an eyewitness to a crime provided the slick, New York, first-time lawyer a clue to the innocence of his clients.

More so, it truly and accurately represents the way Southerners feel about their grits.

Instant: Form Factor Furthest From Fresh

It is no surprise about grits. This rule applies to nearly any instant food product. Instant is the furthest point, on the opposite end, from fresh. Instant grits. Instant potatoes. Tang = instant orange juice. Even “juice from concentrate” pales in flavor compared to freshly squeezed oranges.

We Americans love convenience, but we often trade it for quality.

To hear Starbucks launching its VIA Ready Brew instant coffee last September was shocking. To rephrase that line from “My Cousin Vinny”: No self-respectin’ coffee lover uses instant coffee.

I got my coffee training and education from Starbucks. We were clearly taught that if Starbucks was as close to godliness coffee could get; instant and flavored coffee were the devil.

Speaking of treasured coffee …

Starbucks Christmas Blend, The Most Special Coffee

At Starbucks, as special as its whole bean coffees are, Christmas Blend has always been considered the most special. It has been blending Christmas Blend for 26 years. While we know it contains Latin American coffees and Aged Indonesian coffee, the rest of the recipe is a guarded secret.

Each year it is featured in custom-created packaging that serves as the center point for the Christmastime promotion. In fact, the packaging is reviewed and approved by Chairman and CEO Howard Schultz himself.

There was a time in the late 90s when customers would call to reserve pounds of Christmas Blend and stand in lines to pick it up. If, to a little kid, Christmas is all about Santa coming down the chimney delivering presents—that is the same anticipation folks had for Christmas Blend.

And Now …

This month, Starbucks launches Christmas Blend as an instant coffee: Christmas Blend VIA Ready Brew. It has taken its highest form of coffee and produced it in the lowest format. It’s “selling out” (compromise integrity) its most precious product.

Now what? It is a coup for VIA, but a bad day for Christmas Blend.

Too Much Too Soon?

So let’s put aside my old school, purist, golden days at Starbucks. Anyhow, some think they blew that reputation when they started offering Frappuccino.

Let’s say you’re okay with instant coffee. And Christmas Blend—regular or instant—doesn’t bother you.

As a marketer and/or product manager, from a strategic marketing perspective, is the VIA product team doing too much too soon?

VIA Ready Brew Timeline

Within 14 months they’ve done all there is to do with their new platform.

Other than adding more flavors and varieties—creating the Starbucks version of General Foods International Coffees—it doesn’t seem there’s anywhere else to go.

What do you think?

• Am I too old school about Christmas Blend?
• Does anyone associate Starbucks with the highest quality coffee anymore? Or is it all about convenience?

What about the timing and extensions of the VIA Ready Brew product?

• Too much, too fast? Or would you have managed it the same way?
• What about next year? What’s left for VIA to offer?

So, here’s my true confession.  I recently wrote and developed a direct mail postcard targeting two segments. I pored over the copy until I thought the messaging would be persuasive and factual. I spent hours laying out the design to grab attention while making the most of our brand colors and the limited space.  And then it went to our trade printer and mail house.

After it dropped and I received my own copy, I realized what I had done. As Homer Simpson would say if he were my partner, “D’OH!”

I hate it when I notice the most obvious boo-boo after the fact. No matter who proofread my piece, it would have taken another marketer to pick up on my mistake. And a few simple words will likely make the difference between people calling us—or not.

We’re marketing customized pre-designed and graphic-designed holiday cards. Realizing that packaging/bundling has been de rigeur in marketing these days, we created an affordable custom package that included graphic design, a choice of stock images or an image the client provides, printing them on 14-pt card stock with a printed return address on the matching envelope. Clients can have the cards scored and delivered to their doors for signing and mailing, or we can insert their electronic signatures, insert the cards into envelopes and mail them from our trade mail house at reduced bulk rates. Innocent enough, right?

Here’s where I screwed up. The most expensive option is to order a small quantity of 250, in which case, the cost of a custom-designed card and envelope set would be around $2.06. Prices go DOWN from there. The more people order, the cheaper the unit price. Duh. At 5,000 cards, for example, the unit cost per card/envelope would be less than 30 cents! So, what did I say in the copy?

“Custom prices start at just $2.06/card and envelope set.”

Oh, no! Do I have a self-destructive thing going? I beat myself up for two days after that!

So, why am I embarrassing myself and sharing this story with you? Because, chances are that you’ve had a similar experience.  Somewhere in the recesses of your past, you did a dumb thing. We’re all human—no matter how good we are as marketers. And it was cathartic for me to share this. Was it good for you?

Your turn. Come clean. What’s the biggest marketing boo-boo story you can share with the rest of us?

What’s new about the iPhone 4? It offers a slimmer design. High-resolution screen. HD video-recording/editing. 5 megapixel camera with 5x digital zoom and LED flash. Bing and Google search capability. Folders for a mind-boggling 225,000 apps. And more.

But why talk about a laundry list of features in an ad campaign when consumers can be engaged on an emotional level? Don’t we already expect updated Apple products to offer sophisticated new features? Do we want to know what they are? Sure we do. But first things first.

What’s the most important aspect of purchasing the iPhone? Staying connected with family, friends, business associates and clients. And what’s more important than taking a few moments from our frenetic lives to reconnect with those who matter most to us?

In view of this, filmmaker Sam Mendes’ new “Face Time” iPhone 4 ad spot is simply brilliant.
• What’s more enjoyable to dads than being able to watch video of their kids and share a two-way experience with his family when out of town on business?
• What’s better than out-of-town grandparents being able to share a granddaughter’s graduation happiness?
• What’s more poignant than a serviceman overseas sharing his wife’s ultrasound?
• What’s more fun than a friend sharing her “found the perfect pair of boots” joy with another friend?
• What’s more touching than a loving couple signing to each other via the Face Time capability of the new iPhone?

The emotive aspects of the spot grab our attention immediately and rivet us. They touch the heart. They evince a very human response. The implication is  these are life’s everyday moments that couldn’t be shared when miles separate people—without Face Time.

Does Apple have a winner here? And what wins more: the product or the message? You decide. I’d love to have your insights on this question.

The U.S. Humane Society asked McDonald’s to take 5% of its egg-laying hens out of cages that are smaller than a sheet of paper, according to a recent article. The Society has advocated a more humane approach to egg and chicken meat production for some time now.

McDonald’s Board of Directors acknowledged that its major competitors, such as Wendy’s, Burger King, Denny’s and Hardee’s, already do so. But it also declined the request citing this reason: Research is inconclusive as to whether cage-free eggs are really better.

At first blush, it might look like McDonald’s doesn’t care about this issue. But that isn’t so. Last year, the company joined the Coalition for Sustainable Egg Supply which will conduct more research on cage-free farming in the near future.

Interestingly, McDonald’s uses cage-free eggs in Europe already. No doubt due to political pressure there. With upcoming testing, the company will likely adopt the same policy in the United States in the future. It will all depend on new research into cage free and other options being explored by the Coalition. And it will likely depend on how costs can be managed.

A recent article took pains to present both sides of this controversial issue and did it very well. I think it’s worth looking at.

The upside of caged chickens (according to a Pew study):
• Cheaper, more efficient food production
• Prevents the spread of animal-borne diseases like salmonella
• Protects the animals from bad weather conditions
• Keeps the cost of the eggs and chicken meat lower

The downside:
• Animals kept in small, confined spaces suffer because their movements are very limited. It is thought many animals live in pain. (Note: Even cage-free birds are often deprived of fresh air and sunlight, often almost as confined as caged chickens because there are thousands of birds sharing a specific amount of space. The main difference: They can move around freely.
• Caged free eggs cost much more. The USDA reports that a dozen eggs from caged chickens average $1.11 at retail whereas a dozen cage-free eggs retail for $2.79; organic eggs cost even more.

Questions:
• Do you purchase cage-free eggs at the supermarket or are they too expensive? Would you buy them if you could afford to?
• Would you prefer that McDonald’s purchase most of its eggs from cage-free producers?
• If they don’t, would that send you to a competitor to purchase a fast breakfast instead?
• Would you be willing to pay more for McDonald’s breakfast foods made with more expensive eggs? If so, how much more would you be willing to pay?

I’d love to hear from you.

It seems stellar service, with notable exceptions, is a thing of the past. Or is it? A recent Fast Company blog post: “The Surprising Secret to Breakthrough Customer Service” shares what “could be.”

In fact, a sluggish economy just might be the best time to establish and grow a company if the proper attention is paid to employee and customer engagement.

The gist: Paul Clinton, founder and CEO of Everything Wine in Vancouver, retired from Diageo, purchased two small wine shops and turned them into wine superstores. He is now in the process of opening up a third outlet. His stores are thriving. So are his employees. Better yet, so are his customers, who are the direct beneficiaries of his people-centric business model.

Check this out:
• Every employee at Everything Wine, from the cashiers up, are wine experts.
• All have been trained, so they can assist customers to pick out exactly the right wine for them by asking a few questions.
• Every employee knows where every product is located in the store.
• Every employee has been given a wine education.
• Every employee’s schedule is worked out to suit their needs (school, family, full-time jobs, etc.).
• The more knowledgeable employees become about wine, the more opportunities they have to advance within the company.
• The customers enjoy the customary wine tastings; they can also take wine classes in the store.

“We are passionate about providing outstanding selection, service and value to our customers,” Clinton says. “We want our employees to have a good time, and look forward to coming to work, and we want our customers to have a good time, and enjoy doing business with us.” Great philosophy. Shouldn’t it be core to every company?

So what are the “secret” to success take-aways?
• Passion
• Vision
• Employee engagement, training and buy-in of the company brand=employee retention
• Employee encouragement to bring family members into the company
• Outstanding service to every customer by every employee
• Management’s recognition and appreciation of employees’ individual talents and skills
• Management’s clear appreciation for the customer

What’s new here? Nothing. These are the “secrets” long used by successful companies. Can every company follow this model? You bet. It only takes hard work and commitment.

Do you think a tough economy is a good time to launch a company if Clinton’s ideas are used as a business guide? Can you cite companies where you, as a customer, truly enjoy your shopping experience because of the environment and employees?

It seems like more and more retail outlets are getting wise to the concept of marketing their own product insurance. And is this because they are thinking about you,  the customer? Doubt it. This additional revenue must add decent profit to the bottom line because many stores have incentive programs for their employees. The more insurance they sell, the more bonuses they make.

I can somewhat understand this concept when it comes to electronic, electric, and other goods with microchips or moving parts. It seems that appliances, computers, and other big ticket items just don’t last as long as they did in years past. But, my friends, get this. Have you ever heard of insurance on shoes?

When Sports Authority sold me a pair of New Balance tennis shoes in December of 2009, I declined to purchase the added insurance, which can run up to $16, depending on the cost of the shoes. That’s supposed to cover usual wear and tear for up to one year. Do they think I’m nuts?

Well, two months later, the shoelaces completely fell apart, so I went back to the store to ask for new laces. The manager took a look at my bill and reminded me that I hadn’t purchased the insurance and that the warranty was only good for 30 days without it. But … this time only, he’ll let me have a pair of new shoelaces (worth $2.49 in his store). Gee, what a pal. After exploring the Sports Authority website, I discovered that shoelaces are not even included in the warranty, so I’d be out of luck anyway. Besides, the floor sales rep handed me the wrong lace length after I showed him the shoes, so the replacement laces were useless.

But, the bigger picture here is … what happened to standing behind the products they sell? Has manufacturing gotten so bad that retailers need to add this insurance to protect themselves from the multitudes of returns? Shouldn’t retail buyers ensure that the products they buy match quality for price?  The guy in front of me at the store spent $155 on Nike runners and declined the insurance. If his shoes fall apart after 30 days, does that mean the store will tell him he’s out of luck for $155 shoes?

Why aren’t these retailers standing behind the products they sell and then dealing with their distributors or manufacturers after they look after their customers? If consumers continue to accept this practice and it becomes more commonplace, wouldn’t it make sense that more and more retailers will jump on the bandwagon?

So, what do you say? If you’ve paid for product insurance, do you think you got ripped off or was it worth it? If you didn’t, is it because you think it’s a rip-off or did you prefer to take your chances? Share, please!

I recently read an excellent post by Paul Dunay on Social Media Today presenting the 4 C’s of B2B marketing. We’ve known about the 4 P’s of marketing for years: Product, Price, Place and Promotion. Paul argues the 4 P’s are primarily a B2C mix. The 4 C’s, however, (Content, Connection, Communications, Conversion) illustrate the marketing mix for B2B. Sounds great, but how should B2B organizations implement the 4 C’s marketing mix into their campaigns? I would like to highlight an approach that has served our B2B agency very well: The 4 Pillars of a B2B Marketing Campaign.

We have found that the combined effectiveness of four key aspects of B2B Marketing determine the success of a B2B campaign: Insight, Strategy, Creative and Metrics (we call them pillars). Each pillar is essential in supporting the campaign, whether it be online or in print. One could argue that this holds true for B2C as well, however, B2C makes heavy use of media buying (TV, Radio, etc), a marketing strategy that B2B rarely requires.

Think of each pillar as a leg supporting a table. Short-cut or remove any leg and the marketing campaign either becomes very shaky, or it can completely topple over and crash to the ground. The four pillars provide a solid framework for mixing the right marketing activities in order to create engaging campaigns.

Not to be confused with the 4 C’s of B2B Marketing, the 4 Pillars are the critical stages in the life cycle of a B2B marketing campaign, whereas the 4 C’s are key the ingredients within a B2B organization’s annual marketing plan. During a 4 Pillar campaign, one must always check to ensure the 4 C’s are addressed accordingly at each stage.

Insight – Get The Right Ideas
All ideas start with insight, and all great ideas require great insight. Insight enables you to see and understand what your audience is all about, and marketing without insight is like marketing blind. Many B2B organizations make educated guesses at what they perceive to be the wants and needs of their customers. However, true marketing insight is generated through carefully considered interpretation of business intelligence and financial data. It’s the stuff that’s gathered through the process of analyzing market research, together with everything already known about the target market. It provides vital information and data that helps us craft killer ideas and creative ways to communicate to our audience.

Strategy – Get Integrated
Marketing in the B2B space is not like marketing to consumers. I love Paul Dunay’s analogy: if B2C marketing is a sprint, then B2B marketing is a marathon. Let’s face it. We are living in an age of information overload. It’s a noisy landscape. That’s why it is so important for B2B organizations to cut through that noise with integrated marketing that’s both strategic and creatively crafted. In the everyday bombardment of messages and tweets, it is pointless to hope to stand out and be heard without consistently engaging our audience. An integrated B2B marketing strategy helps organizations successfully connect with their customers because it helps them get branded, get online and get social in relevant and meaningful ways.

Creative – Get Experienced
Creativity is no longer just an embellishment to brand management. It has become a strategic imperative for creating killer content and a core driver of innovation and differentiation in a crowded marketplace. Creative thinking is drastically transforming online experiences by separating great content from mediocre content. Why? Because creating great content is hard. It’s not a creative writing or pixel pushing project. You can’t “just create something” out of thin air. Content creators know that great content involves so much more than “clever buzzwords” (if there is such a thing). Great content requires a balance between function and form, both written and visual, in order to deliver an experience that is both relevant and meaningful to the customer.

Metrics – Get Optimized
Planning and executing a marketing program is a good start, but how are the results measured? What’s working? What’s not? Accurate metrics involves consistent and persistent monitoring, measuring and adjusting along the way. The process becomes truly valuable when the right data helps make intelligent business decisions. A critical component to achieving the right data is testing. At Ad-Tech, last April, I learned that less than 30% of companies test their marketing. Those 30% saw their marketing ROI increase by more than 70%! That means the majority of companies rely on gut instinct and misinformation. No wonder marketing is perceived as an expense rather than an investment! When in doubt, test… and then test again, because testing illustrates what the customer really wants.

Thoughts?

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Achim Klor is the President and Creative Director at SterlingKlor Communications. Reach him at connect@sterlingklor.com.

The article: “Package-Good Players Plan New-Product Surge for 2010” states that some of the largest global consumer product companies “have said or signaled that they expect to step up new-product activity, and by extension, marketing support in 2010.” [Ad Age subscribers can access the article here. Non-subscribers can access it through BX Business Week here.]

These players include Procter & Gamble, Reckitt-Benckiser, Kimberly-Clark Corporation, Energizer Holdings and Unilever. Many retailers report they’re not seeing many new product launches yet. In fact, just the opposite, as manufacturers trim their product lines of under-performing items.

With sales flat to down in many categories, CPG companies have been reluctant to go to market with many new products of late. If anything, they’ve taken a defensive posture analyzing and lowering pricing where practicable. As a result, private label brand managers made inroads with new offerings, expanding SKUs and sales of their store brands.

National brands are beginning to respond. According to Nielsen Bases, “a dominant player in concept testing” for the consumer products industry, companies are beginning to spend market research dollars again in their new product pipelines. But, as we know, new product launches take time. Some industry analysts don’t see significant new products coming to market until late 2010. But others think manufacturers held promising new products back in 2009 due to the dismal consumer climate and are poised to position them in the marketplace.

Regardless, major CPG players have lost sales and market share to private labels so they’re likely to go on offense in 2010 to make gains and take back some of those losses. Of course for that to happen, new product launches will have to offer a bigger “wow” factor than recent introductions. That means branded products will have to offer true innovations to excite and entice consumers. Think about it: which new products can you recall being excited about lately?

Most telling at the end of the article: “But while 2010 may be a bigger year for innovation, it will probably be a lot bigger in developing markets than the U.S.” One senior package-goods executive said, ‘Focus will be skewed towards developing markets, as this is where he main battles will be and it is actually easier to innovate, as a lot can be leveraged from what has been done elsewhere.’”

What does that say about developed markets?

No matter what: buckle up, consumers and marketers. It’s going to be a bumpy ride in 2010.

Questions:

• Do you think CPG companies are right to launch innovative new products in spite of the slow economy? Or should they do it because of the economy?
• Can you think of any strong CPG product launches over the past year?
• If you’ve switched from some of your favorite brands to private label to save money recently, would you consider going back if innovative new products were launched?
• Do you think major brands can still grow in most consumer product categories, even in mature markets like the U.S.? Or do you think CPG companies should put most of their focus in developing markets?

I’d love to hear from you.

Suppose you are a marketer at a wireless telecommunications company in Europe. Your company has a deep historical record of customer transactions, products purchased and billing history. Three months ago, your company also finished an implementation of an activity based costing project complemented with a profitability management application that now shows customer spend, margins and life-time value.

Deciding it’s high time to determine which of your customers are creating and potentially destroying value, you start analyzing a key segment of customers.

On one particular day, while finishing the last sip of your Monster energy drink, you’ve zeroed in on customer “Thomas Smith”.
The analysis shows that Mr. Smith is chronically late on his bills. He does pay but often late, and while you appreciate the incremental revenues associated with late charges, you also examine that he constantly uses your call center to ask mundane questions (bypassing the automated systems). You also see from your product analysis that he likes to switch phones frequently, bringing back product just before the thirty day exchange policy expires.

In the initial analysis, it appears Mr. Smith is costing your company a lot of money. Now, as a marketer, should you keep Mr. Smith as a customer, or gently pass him onto the competition?

What might be obvious is in fact a very complex decision, especially when you include social network analysis.

Leading edge companies are using Social Network Analysis to detect and interpret the patterns of social ties within a customer base. Authors Stanley Wasserman and Katherine Faust in their book “Social Network Analysis: Methods and Applications“, mention that SNA is “based on an assumption of the importance of relationships among interacting units. The social network encompasses theories, models, and applications that are expressed in terms of relational concepts or processes.”

In this particular marketing example, social network analysis can be used to determine the “importance” of Mr. Smith, especially in relation to other paying customers.

So let’s get back to the analysis on Thomas Smith. By adding call detail records to your data warehouse, and using social network analysis techniques, you now see that Mr. Smith is a “node” in a pretty complex network of customers. In fact, through a “Fab Five” campaign you concocted a year ago (where customers can call five friends for free in-network), you also see that Thomas is linked to five very profitable customers.

Since Mr. Smith is well connected to five very profitable customers, treating him poorly on his next customer visit, or jettisoning Mr. Smith altogether could lead to the defection of his five closest friends … customers on your network, and customers that pay their bills and produce positive cash flow.

Let us suppose you also had the divine prescience to add net promoter scoring to the mix. Now you notice that while Mr. Smith has trouble paying his bills, he is in fact a “promoter” of your company. He likes your friendly customer service representatives, and also is very generous in telling his friends about your willingness to “bend over backwards for him” to meet his changing needs.

With this analysis in hand, you determine that Mr. Smith isn’t a customer to jettison, and in fact, is probably one that deserves a closer look.

Before we get too caught up in the hype, social network analysis isn’t a savior to marketing decision making.

Social network analysis–done right–requires a lot of data from myriad sources. In the hypothetical marketing example above, simple call detail records are used, but to say–find a terrorist–the National Security Agency of the United States (NSA) would require call detail records, credit card transactions, car rental receipts, and many other digital markers. Even then, the output of the analysis isn’t always accurate.

Accurate data is a key factor in reliable results, but so too are the assumptions used in the model. Is Mr. Smith really that “important”? Should we assume that “associations” are actual close relationships? Should we also assume that if Mr. Smith leaves our company, his “Fab Five” connections will follow?

Social network analysis–hype or help? It’s up to you to decide.

Questions:
* It is well documented that Social Network Analysis (SNA) can be the source of “false positives”. Would you trust the output of SNA to make marketing decisions in your organization?
* Call detail records show Mr. Smith calls five contacts quite often. Does “activity” … in this instance a phone call–denote a “close relationship”?
* SNA can also be used to model employee connections in an organization–in effect to determine the “importance” of an employee? Good or bad idea?
* If you were the marketer in the situation above, what other tools might you use to determine if you should keep Mr. Smith as a customer?

In a previous blog post, “Pursuit of the Authentic”, I noted that people are hungry for the authentic and are willing to pay any price to get it. That apparently goes for Hollywood TV producers who are searching for actors and actresses across the globe that haven’t been marred or tainted by too much botox and plastic surgery.

According to a recent WSJ article, “The Backlash to Botox”, April 6, 2007, with the advent of high definition and big screen televisions the search is on for people who are the real deal and look the part. The article notes, “The rarest commodity in TV these days, say veteran casting directors: stars without Restylane-frozen faces and collagen-inflated lips. Indeed, studios — scrambling to finish casting the 113 pilots slated to go into production this month for the fall season — say there’s a shortage of familiar faces that look their age.”

Hollywood producers know the believability of “the product” highly depends on many of the key ingredients, in this instance the actors and actresses. “We try very hard for authenticity,” says Marcia Shulman, Fox’s executive vice president of casting. “If you’re playing a mom you need to look like a mom. Otherwise it takes viewers completely out of the show.”

The article also notes, “A rival studio says it made an offer to a star this spring on the highly unusual condition that she “lays off the injectibles.”

So while consumers and business across the globe actively seek products and services that are scarce, special, real and valuable, it seems that Hollywood is no stranger to the pursuit of the authentic in the name of producing a more believable and watch-able product.

If you are an actor or actress in Hollywood, it must be hard to keep up with the Joneses. Plastic surgery, it seems, is one avenue to simply stay on par with the competition. However, as the article notes, with Hollywood casting agents scouring the globe for the untouched face, imitation and incrementalism are probably roads to a dead-end.

In this world there will always be a place for the “me-too” product or service. In fact, some people will get by and reap profits with a quick fix or a blatant imitation of a competitor’s product or strategy. Even the WSJ article says there’s still a demand for those actors and actresses with plump lips and stretched faces.

However, it takes guts to be true to yourself and your core business mission, and carve a special and differentiated niche in the market. The “pursuit of the authentic” is alive and well; just ask those in Hollywood whose phones are ringing much less frequently.

What are your thoughts on the pursuit of the authentic?

Do you have any pity for actors and actresses who feel the need to compete through plastic surgery and botox?

In a similar vein, how many companies attempt to compete through similar quick fixes and incremental value propositions?

However, it seems “Price” gets the short end of the stick time and again. Those days are over. In an increasingly global economy where new products are launched at break-neck speed, commoditization reigns, and consumer choice is abundant, “pricing” is more important than ever.

Airlines, hotels and the like have long used yield management applications to assist them with maximizing revenues for limited inventories. However, with the advent of the internet and specialized applications for pricing, many industries that once used “cost plus” pricing models, are now able to use analytics to drill down on a detailed level to fine tune pricing.

Yesterday, I ran across two articles in the main stream press showcasing how “pricing” is making a comeback. The first article from the Wall Street Journal, “Changing the Formula: Seeking Perfect Prices, CEO Tears Up the Rules“, detailed how in a staid industry like manufacturing, some companies are using analytics to increase revenues by examining pricing of all products.

In the article, Donald Washkewicz, CEO of Parker Hannifin Corporation, mentions that for many years, the pricing model of all products was cost plus 35%. The article notes, “No matter how much a product improved, the company often ended up charging the same premium it would for a more standard item.”

Realizing the insanity of such a system, Washkewicz instituted a pricing review of all products and examined what a customer was willing to pay rather than what it costs to make. No small undertaking, the pricing review in one of his businesses took six months to review 2,000 items and gathered 20,000 data points in total.

The pay-off, however, more than made up for the hassle. According to the article, “Today, the company says its new pricing approach boosted operating income by $200 million since 2002. That helped Parker’s net income soar to $673 million last year from $130 million in 2002.”

Overall it wasn’t easy and Washkewicz faced pressures from customers and suppliers since some prices were adjusted higher, and some lower. Ultimately though, Washkewicz persevered and the power of “Pricing” speaks for itself.

In a related article in the LA Times, “Baseball Charts a New Course on Seating“, the Los Angeles Dodgers are now getting granular in pricing, down to the row and seat.

The article notes, “You might pay more for your seat than the fan seated next to you. The Dodgers sell tickets in the field box section for $20, $30, $35, $37, $40 and $45, depending on whether you buy on game day, before game day or as part of a full-season, partial-season or group ticket package.”

The article also highlights that teams across the league are dividing the parks into smaller and smaller sections and charging more per seat based on whether a “hot” team is in town or whether it’s opening day. The re-emergence of “pricing,” at least in these instances, has created some detractors. Dodger fans complain the pricing is too complex and long for simpler days of three or four pricing tiers.

Even CEO Washkewicz was a target for push back as he instituted his strategic pricing review. And I know hundreds upon thousands of airline customers just wish they could have simpler pricing for an airline seat. So “pricing” is making a comeback and yield management isn’t just for hotels and airlines anymore. However, I have to ask the smart marketers in this forum, is this trend in pricing a good thing? Especially from a service perspective?

From the LA Times article, “It’s not all about making it easier for the consumer,” said Dennis Howard of the Warsaw Sports Marketing Center at the University of Oregon. “It’s largely revenue-driven.” Increasing revenues is obviously a good thing but how do you balance revenue management with the presentation of a coherent and dare I say, “fair” pricing strategy?

Also, at what point will consumers and business customers become confused and start looking for those companies presenting a simpler pricing model?

Perusing the December 2006 issue of Harvard Business Review, I focused on a particular article, “Innovation through Design” by Roberto Verganti. In the article, Verganti discusses how Alessi, a northern-Italian home-furnishings manufacturer, has sold 1.5 million teakettles designed by American architect Michael Graves for a princely sum of $145 a piece.

Being the utilitarian that I am, I had a hard time believing someone would pay $145 for a tea kettle, especially since Target contracted with Graves to make a replica of the exact same kettle for a more reasonable price of $25! Yet, the $145 tea kettle continues to sell.

As I encountered and continued to park and amalgamate other examples in the dark recesses of my brain, I came to the following conclusion: most people are searching for authentic and are willing to pay any price to get it. I’ll define “the authentic” the following way, it’s a product, service or experience that is:

* Scarce: not easy to come by, you need to go out of your way to get “it”
* Special: unique and differentiated, you can’t find it anywhere else
* Valuable: as Warren Buffet would say, valuable not because of the dollars you pay, but for the value you get
* Real: the product, service or experience “speaks” to the core of who you are, your mission, your purpose

“The Authentic” is why people are willing to pay a premium for a unique teakettle, a scarce work of art, a great bowl of soup, or a spiced latte they can only get at their local coffee shop. Authenticity breeds passion and the examples of the authentic are endless.

The pursuit of the authentic then, for a marketer means:

* Incrementalism, or simply adding a few new features to an existing product or service, is the path to mediocrity
* Imitation, while “the highest form of flattery”, will always be challenged to measure up to the original
* Boldness, is taking a new direction, even when your customers of today are telling you they want more of the same

People are hungry for the authentic and are willing to pay any price. What are you doing to make your product/service/experience “the real deal”?