Welcoming unwelcome innovation

by Leave a Comment

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

by Leave a Comment

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!

 

Smartphones top $1000 price point

by Leave a Comment

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.

Apple Advertising Over 40 Years

by Leave a Comment

Many of our students love Apple products and the brand in general. It usually ranks in the top 2-3 most frequently mentioned when I survey my students to share their favorite brands. Our textbooks use an Apple case study to open chapter 5 (Consumer Behavior). Over the last 40 years, Apple has produced some truly memorable advertising. Some have called the Apple 1984 Super Bowl commercial the greatest ad ever. I personally like the “Think Different” campaign and enjoy using it to demonstrate differentiation and positioning. Over at The Next Web you can find “The 40-year evolution of Apple ads” (April 5, 2016). It offers some commentary sprinkled between 12 ads from over the years. Most of the ads are from the last decade.

These ads could be shown to demonstrate how Apple’s strategy has evolved over the years — or a few could be shown to introduce chapter 5 and foster a discussion of this chapter opener. The ads could also be used to show how the personal computer market evolved (product life cycle) or as examples of advertising when that is covered in class. The video below provides a look at Apple’s history in 40 seconds.

 

 

New-product development at Ikea

by Leave a Comment

IKEA-logoIKEA is one of the most successful and interesting companies of our day. IKEA is a case study we use to open our chapter on cross-functional coordination (chapter 19 in Basic Marketing and Bonus Chapter 2 in the new Essentials of Marketing 15e). This article, “Behind the Scenes at IKEA’s Top Secret Furniture Lab” (Wired), provides an inside look at IKEA’s new-product development process. The article lines up well with the new-product development process we describe in our textbooks — so it would be a great complement to your coverage of chapter 9. You could assign the article and ask your students to identify Ikea examples of the five steps in the new-product development process.

You could use this short video — no text, only music — as an introduction to a discussion.