Archives for 2017

Welcoming unwelcome innovation

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In my Principles of Marketing class I ask my students a simple True/False question: “Good marketing means giving customers the products and services they ask for.”  I’m always surprised at how many say “True”.  What they don’t yet realize is that customers don’t always know what they want or even what’s possible.  Successful innovators often develop products that people aren’t asking for and, sometimes, they create products that are so disruptive they elicit a negative initial reaction from their customers.  That doesn’t mean the idea is necessarily bad but it does mean they need good marketing to help customers get over that initial rejection and embrace the benefits possible.

Amazon is one of those companies that’s not afraid to take risks in all aspects of their business.  Some of those ideas are spectacular failures but those that have succeeded have helped propel the company to becoming one of the world’s top three retailers.  One of Amazon’s most recent initiatives is the “Amazon Key“.  This new device replaces a traditional lock on a customer’s front door with a smart, electronic lock.  This new lock allows Amazon delivery personnel to deliver products inside a customer’s house, not just at their front porch.  The device includes video recording of the delivery as well as options for the owner to block entry.  The idea has been met with understandable skepticism.  Allowing strangers into our home feels like an invasion of privacy and there’s an inherent fear of theft when the consumer hasn’t personally vetted the delivery personnel.

Ask your students what they think about the innovative delivery idea.  How can Amazon successfully promote the new concept in a way that gets customers past that initial rejection and to the point that they install the Amazon Key on their front door?

Promoting differentiation in a mature market

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Bloomberg’s short article/interview entitled “A Folding Bike Helmet That Looks Good and Still Shields Your Brain” shows inventors can still find room to innovate, even in a mature product market.  Spanish inventor, Carlos Ferrando, created a bike helmet that has two unique features – it collapses/folds to reduce space when not in use, and it is designed to be more aesthetically appealing than the traditional bike helmet.  Ferrando said he wants his helmet to “normalize the idea of wearing one (bike helmet) as a fashion accessory”.

Ask your students who they think the target market for this product would be.  If they say “bicycle riders” push them to go deeper.  It’s true that anyone who rides a bicycle could benefit from this product but a mass market strategy is unlikely to be as successful for a product like this.  A segmented strategy has a better chance of success.  In chapter 4 we offer a possible market segmentation for the bicycle-riders product-market.  If students believe this product could effectively serve multiple segments you might want to break them into groups and have each group focus on a particular segment.  Ask each group to develop a promotional strategy for their target market.  After a few minutes have each group share their strategy and discuss the differences.  If the students did a good job there should be distinct strategies for each market.  If the strategies are generally similar then they’ve taken a “Combiner” approach which doesn’t really cater to the unique attributes of each segment.  Either way, you have a good discussion!

 

The World’s Most Valuable Brands

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Most students understand that a recognizable brand is an important asset for a company, but few realize that value can be quantified as brand equity.  In Essentials of Marketing we define brand equity as “the value of a brand’s overall strength in the market.”  In this Interbrand report on the world’s most valuable brands you can see the staggering value of top global brands but it’s also interesting to see how many of these top brands are technology companies.  Time-honored brands like McDonald’s, Disney, and even Coca-Cola have fallen in value relative to tech giants like Apple and Google.

Infographic: The World's Most Valuable Brands | Statista
A simple but fun class discussion can be sparked by posting half a dozen popular brands on a slide and asking students to estimate what those brands are worth.  You can then reveal the actual value of those brands and have a discussion with students about the value of brand equity.  With so much riding on their brand, companies spend millions of dollars to establish, maintain, and protect their brand image and familiarity.  In chapter 8 we talk about the importance of brand selection and some of the characteristics to consider when choosing a brand name.  Another exercise can be to give students a few brand names and ask them to evaluate those names based on the criteria outlined in chapter 8.

Smartphones top $1000 price point

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Smartphones revolutionized the world and it wasn’t long after the first smartphone was released that everyone wanted one of their own. For years, smartphone manufacturers were able to capitalize on unmet demand but as the product-market reached maturity and demand became saturated, manufacturers needed to find ways to entice users to upgrade in order to protect their new revenue stream.

The classic approach in technology is to release new versions of products. If a manufacturer delivers enough added value with the new release, existing consumers will be willing to buy the new product to replace their old one. But how much is necessary to entice consumers to upgrade? That answer is dependent on several factors that influence consumer buying behavior. These influences are reviewed in detail in Chapter 5 – Final Consumers and Their Buying Behavior.

This article, “Your Next Phone Will Probably Cost $1000“, talks about the latest generation of smartphones to hit the market and the various influences that will determine their success or failure. In particular, the article notes that this is the first generation of products to pass the $1000 price barrier.  The article suggests that surpassing that psychologically significant price barrier may slow adoption of the new line of phones.

Ask your students how many have purchased or intend to purchase one of these new phones, when they purchased (or intend to purchase), and why they chose to upgrade.  This can lead to a good discussion regarding all of the influences that impact that purchasing decision. Some will choose to buy primarily because of psychological social needs – the desire for status or acceptance from peers.  Others will apply a more economic assessment.  Those individuals may justify the purchase based on faster performance, larger screen sizes, new features, etc.  A full discussion of the various factors that influence consumer purchasing behavior is covered in Chapter 5 – Final Customers and Their Buying Behavior.

This conversation can also apply when covering the adoption curve discussed in Chapter 13. In any given classroom you’re likely to have students that can be classified as members of the early adopters and early majority segments of the adoption curve but you may also have members of other segments.  Asking students from each group how they make decisions about when to buy can really help illustrate the differences between segments.

Copyrighting the banana

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Product innovation comes in many forms, including the banana!  According to this Reuters article, that includes banana Halloween costumes.  The article talks about a lawsuit brought by a banana costume designer against Kmart for copyright infringement.  The article goes on to say that US shoppers spend a staggering $3.4B on Halloween costumes each year.

Intellectual property protection is something all innovators must consider when developing new products.  That can be especially important when a novel idea is easy to copy.  Patents and copyrights provide producers a period of legal exclusivity for their idea or design but it can be tricky when trying to determine if someone has infringed on someone else’s rights.  Historically it was difficult to copyright clothing design but in March, 2017 the US Supreme Court issued a ruling that allowed cheerleading uniforms to be copyrighted.  This has opened the door for significant litigation in the fashion industry but it also provides the opportunity for clothing designers to protect their designs (and ensure their designs don’t infringe on competitive designs!)

With Halloween approaching, this can be a fun way to introduce the scope of intellectual property protection to students and get them to think about their Halloween costumes in a whole new way.