We’ve reviewed a lot of Mission Statements over the years—it’s one of the ingredients we consider when we’re developing a Positioning Statement. Most Mission Statements I’ve seen have been filled with big words but left me asking “where’s the mission?”
Dan Heath, co-author of Made to Stick, offers up why bad Mission Statements happen to good companies in the following video:
When I work with entrepreneurs or inventors who are excited about their new products and eager to get busy “marketing,” I often have to urge caution – for two reasons:
Because when they say “marketing” they really mean “selling,” and that’s a different operation altogether. Because entrepreneurs don’t always consider the sequence of events necessary for “marketing” to be properly deployed.
In launching a new product—as opposed to offering a service—there is one strategic element that is rarely given its proper due: deciding on the channel strategy.
Failure to carefully plan a channel strategy is perhaps the No. 1 mistake entrepreneurs make in their rush-to-market approach. Unfortunately, the consequences of such an oversight are significant.
For example, industry statistics indicate that 50 to 80 percent of new products fail within five years. Granted, not all failures are the result of poor channel planning. But the lack of channel planning severely reduces a new product’s already slim chance to succeed in the marketplace.
So how do I develop my channel strategy?
First, let’s define the term. Simply put, channel strategy is a set of decisions that identifies the path a product must take from producer to end user. There are three channels that must be considered: sales channel, product channel and service channel. Although some channel intermediaries may serve one or more of these three different channel roles, it is essential to refine your new product’s marketing strategy through each of these three lenses.
The sales channel. These are intermediaries involved in selling your product through each channel layer and ultimately to the end user. The key question is this: Who needs to sell to whom for your product to be sold to your end user?
The product channel. The product channel focuses on the series of intermediaries who physically handle the product on its path from its producer to the end user.
The service channel. The service channel refers to the entities who provide necessary services to support your product launch, as it moves through the sales channel and after purchase by the end user. The service channel is an important consideration for products that are complex in terms of installation or customer assistance.
The four key points to consider when building your channel strategy:
Internal capabilities. Be honest and identify where you might need help. Do you have the resources to service end users directly? Do you have the ability to service all the retailers who should be carrying your product? And what about your sales staff? Is it large enough to call on distributors who handle regional markets?
Margins and fees. Every intermediary extracts a fee or reduces your profit margin. How will these costs impact your pricing to wholesalers? To direct-to-retail buyers? To end consumers? What about the fees your channel partners charge each other? How will those affect the end user’s price? And finally, how will your channel partners handle discounts, coupons or rebates?
Market connections. Identify which channel partners have the necessary relationships to help place your product. Is your selection of channel partners consistent with your brand identity and positioning? Do the best-connected distributors also carry your competitors’ products? If you use multiple distributors in overlapping markets can you manage conflicts over territories?
Alternative channels. Develop alternate channels to ensure continued sales growth. If key distributors or retailers refuse to carry your product, do you have other creative but still strategic ways of reaching your targeted end users?
So where do I start?
Having said all that, there is one additional factor that complicates even the best of plans: The Power-Trust balance between the producers and channel partners.
Here’s what I mean. Let’s say that you plan to use a certain wholesaler to sell your product into key retail outlets. Naturally, wholesalers and retailers prefer to handle products with a proven level of demand. In fact, they may refuse to carry new products with insufficient demand, although that’s a rare occurrence, since consumers like new things. But ultimately, producers are in a weak bargaining position. They can only trust that their product will be marketed properly, while the channel players maintain the power to dictate the terms of the relationship.
As demand increases, however, power shifts upstream to the producer, and reliance on trust shifts downstream to the retailer. Once a product reaches a high level of demand, the producer gains the power to dictate how the product is marketed by its channel players. The downstream channel players have to trust that the producer will deal with them equitably.
Take Nike’s dispute with Foot Locker stores in 2003 as an example. There is no doubt that there is high demand for Nike products in general, and for Air Jordan brand shoes in particular. But that didn’t keep Foot Locker from mistakenly thinking that it still had the power to dictate the terms of the relationship. They were sorely mistaken when Nike decided to withhold inventory from them, putting a dent in their revenues and strengthening their competitors in the process.
Nike is clearly the power holder in that channel, but it takes years for most producer—especially for new ventures—to reach that point.
How then does a new product build demand in order to acquire this coveted power position? By utilizing effective consumer marketing communications (advertising and direct mail) and promotions (discounts and special events) to generate increased demand to pull products through the channels.
Remember: Demand is the driver that changes the Power-Trust balance.
Herman Kwik, Ph.D. is Marketing Integrator + Principal at Outsource Marketing in Bellevue, Washington. His experience includes work in international trade and supply chain management.
Want to know what Responsible Marketing is about but don’t have the time to read our white paper on the topic?
Well, here’s “The 7 Keys to Responsible Marketing in 2 Minutes,” featuring the characters you’ve grown to love (or hate) in our Responsible Marketing web shorts.
I’ve owned dozens of cars, and like a lot of people, most have been Japanese or German. So when I turned in my leased Honda and started the hunt for a new hybrid, I drove the Toyota Prius, Camry and Highlander Hybrids, the new Honda Insight and a Lexus RX 400h.
The Prius felt underpowered
The Camry was nice, but felt too much like the Accord I’d just turned in
The Insight was loud and somewhat disappointing
And the Highlander Hybrid was so close in price to the Lexus, I chose the latter of the two
But the events of the last week have me second-guessing myself, and I have Ford’s social media marketing team (and a great product) to blame for it.
Let me explain.
A few weeks ago, Ford contacted me “looking for fresh perspectives and feedback, something a little more engaging and authentic” from “non-traditional approach for bloggers and other content creators” and asked if I’d be interested in test driving the new Fusion Hybrid for a few days.
I agreed, and last Thursday, they delivered a shiny new one to my office, with the Michigan “Manufacturer” plate and all.
Here are few pictures I snapped with my iPhone:
I drove the car to work, to the beach, to Costco, to a Mariners game. Basically everywhere.
The fit and finish were good and the ride was really quiet. In fact, it put my both my high-energy kids to sleep on the ride back from their grandma’s house. Sounds like a cliche, but it’s true.
I got a lot of comments from neighbors “That’s really a nice car,” co-workers “I’d buy that” and was even given a special parking spot by a parking lot attendant after he said “Is that the new Fusion Hybrid—cool!”
What I liked most was the fact I nearly forgot it was a hybrid. The transfer from electric to gas is less obvious than it is with my Lexus, a fact that the press hasn’t missed, with USA Today calling it the best gas-electric hybrid yet.
Oh, and while I didn’t get the 81.5 miles per gallon achieved in a recent hypermiling stunt, I did get a respectable 39.5 MPG in a mid-size car.
All-in-all, an eye-opening experience.
Ford’s social media team is firing on all cylinders
You might have heard the buzz about the Fiesta Movement, Ford’s social campaign that put 100 “agents” (selected from over 4,000 applicants) behind the wheel of a 2011 Ford Fiesta for six months and how they’re sharing the results of their “missions” on Facebook, Twitter, Flickr and YouTube.
Ford is winning on the social web due to the aggressive approach that Scott Monty and Ford’s social media team have been taking to engage customers and build authentic conversations around their products and brands.
While Ford’s branding and social media campaigns are good, I’ve become brand loyal to other manufacturers and it will take a lot to break that hold.
Ford’s dealers still publish absurdly noisy ads with prices the average buyer will seldom get (loyalty discounts, military discounts, first-time buyer discounts, etc)— and you’ll always have to haggle with the salesperson and expect them to bring in the manager when they can’t close the sale.
Still, that happens with most dealers and Ford’s product is good and worth a look.
People like me have been saying “Once American manufacturers catch up with Japanese and Germans, I’ll start buying American cars again.”
Well folks, has that time come? Ford’s product quality and the way they’re communicating with customers has me reconsidering their offerings.
Yesterday, I received a lumpy mailer from a company I’d never heard of. Normally I give unsolicited mail about the same amount of consideration you probably do—a few seconds.
But since it was, well, lumpy, and delivered via FedEx I opened it. Here’s what I found:
On one side, it says “Yes, these are real grasshoppers. They’ve even been approved by the FDA of Thailand.”
On the other side:
You’re a risk-taker, a dream-realizer. What’s left to do that you haven’t already done? Eat a grasshopper. They’re farm raised, covered in chocolate and rich in protein. So, not only will you be breaking boundaries, but you’ll be eating healthy, too.
I really didn’t have the time, but I couldn’t resist jumping on this to learn what it was all about. The URL takes you to a page with the following video:
As it turns out, Grasshopper offers a nicely-packaged virtual PBX service for businesses. It’s a direct competitor to Grand Central, a similar service recently purchased by Google that’s locked down while Google integrates it into their systems.
Five things I loved about this campaign
The FedEx package made it feel urgent without using deceptive “Urgent – Open Immediately” language. This is message responsible.
Lumpy mail gets opened.
This is textbook example of how to do a word of mouth campaign. Chocolate covered grasshoppers? I had to share this with colleagues and with you.
A little mystery goes a long way. There was no sales copy—just a creative idea and a URL to learn more. Irresistible.
Each tag was numbered, X of 5,000, and I understand after doing some research for this post that Grasshopper sent these packages to the people they deemed the 5,000 most influential people in America. Very flattering. But at first I thought I might need this code when I logged onto the website. Not so. This is not a limited edition keepsake, it’s a marketing piece. And by letting me know there were so many produced, it made me feel less special—at least initially.
The moving-text style video that was so fresh and interesting a year ago is beginning to get tired. I still like it, but it would seem every ‘movement’ has a video like this associated with it.
Which brings me to the whole ‘movement’ thing. I like to be inspired as much as the next entrepreneur, but I’m approaching my ‘movement’ saturation point. How many movements can one person truly join?
Still, Grasshopper has succeeded where most fail. In one fell swoop, they got my attention, held it, and they got me talking. And though I don’t need their service, If I did, I’d consider them.
So, what do you think of Grasshopper’s campaign?
Would you eat a chocolate covered grasshopper? (I won’t)
But if you’d like to try one, contact me and we’ll make it happen. I’ll post a video of you eating one here and you’ll be famous.
In the last few months we’ve seen one client see a 75% decrease in their monthly revenue. A start up’s development and marketing funding source dried up when an adviser failed to move the money quick enough. Other clients have had their marketing budgets frozen or slashed.
In their own words, these folks have told us they are “nervous,” “on pins and needles,” “anxious,” “angry” and “scared.”
Not everyone feels that way.
Other clients tell us they see this as the opportunity of the lifetime (and we agree with them). Their competitors are cutting spending or going away and they want to put the pedal to the metal—now.
The words they are using include “excited,” “nervous,” “pumped,” “anxious” and “ready to go.”
Whether the attitude is optimistic or pessimistic, everyone is nervous and anxious right now, but they’re obviously channeling that energy differently.
The saying “attitude is everything” comes to mind but it fails to recognize the severity of the challenges being faced by companies of all sizes right now. Pep talks don’t mean much if the dollars simply aren’t there.
But if there is budget available—your company should consider investing it in strategic, responsible marketing while your competitors aren’t.
Any automaker could have done this, but they haven’t—yet. And Hyundai did it first.
Not only will this drive word of mouth, it positions Hyundai as a company that cares—not just another automaker desperately trying to move metal.
What’s more, this is simply smart business:
When someone starts missing payments, what happens? Collection calls are followed by legal notices, and eventually the gets a visit from the repo man and their car gets to ride the hook. Ultimately, the customer is demoralized and the creditor loses money.
With this program the car is returned without incident, the customer retains their dignity and Hyundai is the good guy.
They battled it out on New Year’s Eve in Times Square with Pepsi revealing it’s new Refresh Everything campaign while Coke introduced it’s Refresh. Recycle. Repeat. green campaign, wind-powered billboards and all.
Both campaigns are refreshing, but that’s the problem.
By using the word “Refresh,” either Pepsi or Coke is breaking rule #6 of the 22 Immutable Laws of Marketing: Two companies cannot own the same word in the prospect’s mind.
I don’t know who claimed the word “refresh” first, but the company that claimed it second is guilty of irresponsible marketing.
If you know who claimed “refresh” first, or if you just want to show your Coke or Pepsi allegiance, comment below.
I often ask audiences “Are you happy with your marketing results?” Regardless of the number of people in the audience, nary a hand will go up.
Later, when I ask “How many people are working from a marketing plan?” about the same number of people raise their hands.
It’s no coincidence that of those that do raise their hands were among the few that said they were happy with their results.
I’m not saying having a marketing plan is the path to marketing success. But I will say, without one, you’ll fail.
That’s why I’m using the last day of the year to nag those of you that don’t have a plan, and share The one resolution marketers must make. I’ve shared it before, and I’ll probably share it again next year about this time.
If you are still putting the finishing touches on your 2008 marketing plan, take a quick gander. And if you haven’t started your planning yet, give it a good read.
