Back Seat Marketers

Let’s be honest, the stock market turmoil makes great fodder these days. Feeling like we’re getting out of the woods one day leads to punishment the next. I’ve learned to just tune it out and use a few tools to guide me on where things are headed for the economy.

First, The Conference Board posts a month survey of consumer sentiment:

The trend line where the US consumer stands is more important than the single points each month. While not perfect, retail sales and consumer shopping tie into this pretty well.

I’ve also learned over time who to trust when it comes to where the stock market and the consumer divide. Even though the consumer feels better when the stock market goes up, it isn’t the only factor in driving up confidence, thus consumer behavior. Top of the list is Mauldin primarily because he doesn’t post every day, provides analysis instead of reposting of news and is not truly main stream.

I’m believing more and more that the 24×7 news cycle is creating momentum swings faster. We’re getting to the same end point, but are facing a lot more churn in the process. Turn all the noise off, watch the long term trends and stay sane.

The Pew Research Center has found that the one-time and regular use of social networks by older parts of the US population are starting to take hold. This chart is the true sign of technology taking hold:

While many older parts of the US are not as well penetrated as younger ones, what we’re starting to see is the likes of Facebook gain the benefit of network effects and is likely the gateway to deeper use of such tools. The adoption of these tools will create a chance for business models to shift to the much written about referral based, pull demand from consumers instead of push marketing to the masses. In short, conversations, positive experiences and then sales instead of a shotgun and a falling bird.

This year, financial targets are already blown. Any idea of guessing, er, budgeting for 2009 is extremely difficult. Intel does the right thing and forgoes a 2009 projection and with it, the CEO reminds internal and external constituencies that there is work to be done during the downturn:

“Intel has weathered difficult times in the past, and we know what needs to be done to drive our success moving forward,” Paul S. Otellini, chief executive at Intel, said in a statement.

Most companies focus on both strategic and financial goals. This year is different and all but the most basic financial goals (=positive cash flow) are out the window. For managers, we’ve reached a time to focus on the strategic, non-financial targets like picking the right fields of play, ROMI, innovation relevance, organizational alignment and market share.

Windows 7 is launching in Beta and not soon enough. Generally, Vista was a bad launch in that it was years late, obsoleted in-market PC’s, and wasn’t well adopted. Honestly, Vista gets positive impressions from users that have done the switch, but the company struggled with getting demand for its system to make the switch. The passion to switch to Microsoft products back in the early 90’s was based on ubiquitous backward compatibility has been lost to incrementalism and a heavy user belief that everybody buys a new PC every 2 years.

In areas of tech equipment, I’ve tried to buy high end and less frequently and with Apple, that has paid off because OS X is improved frequently in small doses. With Microsoft, big steps are taken in 2-4 year steps with the belief that the 2-4 year old PC isn’t worth keeping. That ignores a user reality, even in companies, that the older PC gets downgraded to a kid or a new employee (sad, but true). Microsoft would do well to take heed to this trend as it isn’t about losing out on new upgrade revenues, but more about the expanding use of PC’s.

Instead of driving new PC pricing into the ground to further substantiate throwing away the slightly older, but still usable machine, software and hardware providers should embrace this new market with replacement parts, service programs and software support (for a value fee).

With everyone hoping to get better value, maybe companies in the PC and software markets will embrace a reality for 2009 and 2010 that the new PC and software market are going to be traded off with extending the life of the equipment we’ve already got and wished we didn’t have to upgrade to use. This is blog post is written from a focus group of one. I bought a Dell Precision 670 in 2005 and now have a graphics card that isn’t compatible with Vista, and won’t ever be (thanks, Adaptec). Upgrading now is another $500 or I just never do it. Bummer, its a really good machine that has been forced to the dump bin years earlier than needed.

Updated thought: Wouldn’t it be cool if Microsoft, Apple, or some open sourcer figured out an lightweight way to make a media box that used an old PC?

Is it too late for the Detroit 3 to tune up its marketing strategy? In good times and bad, having Unique Selling Propositions (USP’s) are important part of maintaining and growing share. USP’s create a reason to talk to consumers via advertising. In bad times, brand campaigns for the sake of brand recognition die, but ad campaigns that talk about products that are different need to keep on talking.

Unit volume declines for US auto sales are off by so much that I’m not sure you can advertise a way out of it. The New York Times reports that unit volumes may be headed for a new low normal level which means people will be buying less cars, less often. What a company under stress does shows its character, and Ford is hinting that its stripes are in listening to its consumers and adding features that enhance the user experience. (See: the F-150)

While a frustrating time, and a reason for GM and Chrysler to pull back. Ford is running a solid F-150 advertising campaign that makes me think that it is the one of the D3 that will do better through the recovery than the others.

By comparison GM is further piercing the corporate veil of its brands, thus reducing each brand’s uniqueness.

GM will have to ask itself if GM will be its master brand for national advertising while Saturn, Buick, etc. will end up being sub-brands. Are they unique anymore? Once brands start getting presented on the same web page and TV screen, they start to be considered replaceable which doesn’t create uniqueness.

Back to Ford: On track and nice work.

[PhotoKeith's shoot of Josh Ritter at Southgate House on Flickr]

I was talking to PhotoKeith this past week who is a [very good] professional photographer about different ways to grow his business and we both realized just how much value there is in combining a traditional micro-marketing database driven marketing approach combined with Facebook and MySpace.

Professional service businesses face opportunities and threats from the explosion of online networks and businesses.

* For businesses that haven’t shifted to an online model (e.g. most personal services that require being in person), then social networks allow for a changing of the guard. Specifically, with an increased use of a social network or referral site, the opportunity to be the leader is a new one. Existing leaders may or may not be able to adapt. For professional services, the person really is the brand.

* The online arena is empowering more information, more tools and more ways to share. While this means that the market for certain services like the occasional photo shoot goes down because people can shoot and edit a picture with a lot of tools, really this just means that professionals need to identify more clearly where the value exists for services. Most people aren’t going to watch a video to learn to cut someone’s hair, so professionals are certain to continue to have a place in the market, but certain kinds of jobs in each profession are going away.

Online social networks are getting much more user friendly and as the ease of use of the platforming moves from early adopter to the majority, we’re going to see far more networkers leverage a new kinds of business model to grow business. Specifically, a database driven marketing model where the customer’s data is retained and the service provider uses technology to stay on top of needs and can recommend services as needed and get referrals for being very good.

While we’ve covered the purpose driven brands, the next two years will also mark the beginning of brands being driven by the people at the companies they work for, or their own businesses. Gary V. is the story worth learning on how a person can drive the sales and marketing of a business by creating content everyday that builds into a contextual marketing platform.

Companies are going to need brand meaning as told by a person that can be trusted. Steve Jobs is an easy example, but, in reality, all but one company don’t have Steve Jobs and need to understand how to create a role for a trusted communicator for the business. Having one personality will be hard enough, but scaling that role into more than one person will get even more complex. In fact, Google has done exactly that by allowing multiple people to be the voice boxes for the company exemplifies how the activity generators can directly communicate with their target audiences. To be sure, Google has a more formalized process for how employees are to communicate on their own.

Organizations have built traditional infrastructure around communicating outside the company in a polished way for a reason: the message is created by professional creative folks, approved by management, tested with consumers and launched in a controlled way.

Companies turning to employee talent for communications have benefits and risks. The benefits are:

• Speed of interaction between the line managers and consumers and with it discovery of more problems/solutions,
• Increased lead user identification, and
• A higher rate of communications.

The risks can create real reasons to question implementation:

• Loss of senior management control over message content and timing,
• Increase of employee talent awareness within a company by outsiders, and
• More visibility to vision, commitments and failures after the fact.

These risks are real and leading brand driven companies have succeeded by building a product driven brand based on less personalized, indirect communications (e.g. TV and radio). As blogging and social networking take hold, how many layers of communications infrastructure (=PR, agencies) will be needed go-forward? Tools to empower communications will definitely continue to roll out to meet this area much like Salesforce.com did for the sales process in many companies over the past five years.

Let’s face it, if you’re reading this, you’re likely as addicted to being connected as I am. One thing I’ve realized in 2008 is that one place that needs to be off limits for my online presence is in my car. I’m going to make a conscious effort in 2009 and beyond to avoid driving and using my Blackberry, my iPod, my wife’s iPhone or any other ‘heads down’ display. Honestly, auto makers have a lot of innovation room to grow in this area (and Sync is only the beginning) as I’m quite interested in using my dead time in my car, but really need to be focused on the task and not on a page load or typing a quick tweet.

Join me in my resolution, or add a comment on any other plans of your own.

In a product marketing class we took in undergrad, we played a simulation game each week that was supposed to replicate a market with consumers that had shifting preferences over time. All of our teams were given comparative advantages and then had to determine where we fit today in the market, and had to read the tea leaves of only a handful of data points to understand where consumers’ interest would be for the future weeks and make changes accordingly. The game proved to be educational in its interactivity as well as the point it relayed: things change and companies have to think ahead to be where consumers shifting preferences will be. Sort of throwing the ball to where the receiver will be, not where he is.

A great example was Porsche’s choice of getting into the SUV market with its Cayenne. Generally regarded as a huge bet on the company’s future, the Cayenne has been a very profitable move by a savvy company in touch with what its clientele wanted. While its 911 sports car was a icon, it had spent too many years trying to create a ‘mini-911′ which never seemed to carry the same weight. In the past 15 years, the company saw SUV’s grow wildly and put its own spin on one. While not revolutionary in design, it offered those interested in a Porsche a chance to get one in the right flavor.

What happens to the other SUV manufacturers as Porsche enters is where the real problem develops. Customers’ choices increase, volume at each legacy player decreases and old less desirable lines die. Chrysler started the minivan category and Ford owns the truck category with its F-series yet both companies are not profitable. In time, competitors new and old can shift to meet consumers’ preferences and hone offerings.  In fact, automobiles are no different than any category in Wal*Mart. Why are so many auto companies in trouble? Over time other players targeted all the right features of the best products while very little new technology (read: alt energy vehicles) emerged.

Avoiding strategy decay requires looking through the crystal ball and charting a course. Here are some general areas to consider when placing time into the marketing strategy mix:

1. Innovation over time is unpredictable, but measuring innovative successes has greatly improved making ‘fast following’ or copying features/products a profitable venture with a far lower cost structure. Additionally, as fast following becomes a norm in society, rules protecting unique properties have been weakened to allow consumers access to more manufacturer options.

2. Optimized business models for fast following strip away needless innovation and hone product offerings by all companies to the most successful options. Value chain leaders integrate or contractually lock up fast followers stripping costs out of identifying consumer preferences and integrating them into the product mix.

3. Traditional innovators unable to sustain multi-year investments must move downstream into being fast followers (being locked up or bought) or upstream into core technology developers that are harder to replicate. [Note that Apple continues to buy small technology companies to ensure its edge on core technologies over its suppliers.]

4. Supply chains are adapting into mass market, large scale ‘best product mix at lowest cost’ v. ‘newest technology / design at premium or value-for-features price’. In automobiles, think BMW and Porsche v. GM and Kia. In grocery, think Whole Foods and Harris Teeter v. Wal*Mart and Kroger. [Along this case, I'd note that Hulu v. YouTube is sorting this out where Hulu is the lowest cost distribution point for content producers like NBC while YouTube will need to differentiate by being a value-for-features option (begs the question: what are those features?)]

The next two years will mark a very difficult time across the board. Consumers will push for value and a purpose forcing companies to think about where they fit. Only a few like Apple are lucky enough to have its consumers next gen versions of its products for them.

The WSJ reports that spending is far off, and the more luxury and discretionary, the less people chose it.

As people hunker down, lose their jobs, see iconic corporations change dramatically, and face a new reality of a more fundamental lifestyle, we’re going to see a shift of importance in creating value. Value in 2007 was about trading up the ladder by adding features that offered more for slightly less more money.

If you’ve got a brand that’s about creating something of value, then you better focus on it. If you’ve got a brand that has lived on being a lifestyle, then you better find a meaning or plan on being smaller for quite a while. Brands that were making money by being slightly better for slightly less, be aware of the old strategic phrase: getting stuck in the middle.

Brands and companies in the middle will shrink in 2009 and companies that aren’t able to shift down, or hone a premium message, shrink and stay on the top (of mind) will not fair well.