- Posted by: Super User
One of the most difficult challenges a marketing organization faces is how to regrow a brand that has appeared to reach the Maturity stage of the Product Life Cycle. We have touched on this many times including our recent post dealing with the beverage industry and our 2014 post of how marketers were trying to revive the Smith Brothers brand of cough drops.
However, the problems associated with re-growing a leading brand become even more difficult when the company behind the brand has devoted little attention to it for a significant period. When this happens, if there is value in the market, competitors will take notice and will invariably take advantage by marketing their own offerings. Once the former market leader figures out they need to pay more attention to their product, competitors may have assumed a commanding position that will be difficult for the original market leader to recover.
An example of this can be found in this story from the Washington Post. It discusses how MapQuest, a once dominate online resource for providing maps for travelers, has fallen on hard times and is now struggling to reinvent itself. The problem befallen MapQuest are nearly textbook in terms of how a brand loses a dominate market position. During the dotcom frenzy of the late 1990s, MapQuest was purchased by AOL, which invested little in the product over the next 10 or so years. Competitors, most notably Google, then came in with superior offerings leaving MapQuest as a small, bit player.
Yet, things may not be totally dead at MapQuest. Understanding the brand is still widely recognized, the company is now making an effort to improve their product. They have a long way to go, but with AOL now being part of Verizon, maybe MapQuest will once again be a player in the mapping market.
- Posted by: Paul Christ
Most organizations believe a key measure of marketing success is found with how many customers return time and time again to purchase their product. If we look at our definition of Marketing, the idea that success can be measured in repeat purchasing is certainly supported when we say an important goal of marketing is to "maintain satisfying relationships" with customers.
Yet in a few industries, the idea of developing loyalty to a certain product provider may not be what customers are looking for. For these customers, if they had their druthers, they would prefer not to continue spending money on some products. For instance, homeowners may not want to deal with a mortgage company for any longer than is needed. The same can be said about companies offering online user protection services.
While it is easy to see how customers in these industries would prefer not to buy, things get somewhat murkier when it comes to the pharmaceutical industry. Drug companies thrive on developing products that address specific medical needs and they are especially attracted to health issues that persist for many years. In fact, a cynical person would say there is no incentive for a pharmaceutical company to find a cure to a chronic problem as this could significantly impact a major revenue source. But what if a cure is found? What happens to marketing?
This story from Pharmaceutical Executive examines what marketers may face if a cure is discovered or if a treatment has become routine and little profit can be realized. This story suggests ways marketers can take advantage of this situation. For instance, if a cure for a condition is found, marketers should tout their role in lessening or eradicating the health issue. This helps build customer awareness of the company and will help with marketing of other products.
Of course, depending on the type of health issue that is no longer considered a major problem, marketers may still be confronted with significant fallout. Unless the company has many strong products in the pipeline, curing a health problem can lead to significant financial ramifications for the organization. Thus, the lesson here is that organizations in almost all industries must continually develop new products because what is bringing in the big money today may not be something to be counted on in the long-term.
- Posted by: Paul Christ
It is pretty amazing how far e-commerce has advanced into the last 10 or so years. Ten years ago online purchasing was pretty much still in its infancy. Not only did online buying represent less than three percent of all retail sales, the methods used by customers to place orders and the methods used by online retailers to fill orders, now seem downright ancient. Back then, customers would shop around on websites, often for an extended period, until they found what they wanted. Also back then when an order was placed it was common for the online seller to say it would take five or more days for the customer to receive the order. And back then one-stop shopping for a wide-range of products was rare. Online sellers just did not have the means for supplying tens-of-thousands of different products.
But over the last ten years, almost everything about online retailing has changed. Today, websites use sophisticated personalization software to make suggestions as to what shoppers are searching for online. They even use advertising methods, dubbed re-marketing, to track customers as they visit different websites and continue to make suggestions through highly targeted advertising. Today, online sellers, including Amazon and Walmart, guarantee delivery within two days. And today, because of an increased focus on the importance of distribution and warehousing, many web retailers sell an astonishing number of products.
So it is not surprising that innovations taking place in online shopping continue at a staggering rate. For instance, consider Amazon's latest development. Back in November 2014, Amazon introduced a device called Echo that is capable of responding to voice commands. Initially, its functions were directed to playing music, providing answers to questions such as:"What is the weather like today?" and a few other things. But as discussed in this Time story, Amazon has now equipped their Echo product with the ability for customers to order products by simply speaking the words. This clearly is the next step in online shopping. It is easy to see the day when someone walks around their kitchen, looks into cabinets and the refrigerator, and just talks the products that are needed, and within a few hours a friendly delivery person hands over the order. While such technology will take some time to trickle down to small online sellers, there is no doubt this is the future of online ordering, if not all retail ordering.
(Friendly warning: The video included with this post, which explains the features of Echo, appears to have been produced before the voice ordering capability was added. However, for anyone, who has watched too many sci-fi movies depicting lives being taken over by some unknown force, this video may seem a bit creepy!)
- Posted by: Paul Christ
When it comes to competing against big companies with deep pockets, small retailers often struggle to make ends meet. While the lack of financial clout is one big impediment, another has to do with the talent and skill set of the entrepreneur. In most cases, a small business operator enters retailing with very limited expertise. For example, they may be good at providing certain services but not very strong managing their finances. This places a small retailer at a major disadvantage compared to large competitors, who employ specialists in nearly all business functions.
But while entrepreneurs may not be skilled in a wide range of business activities, there is one advantage small business operators may have over big competitors – connections with customers. This is because being successful as a small retailer almost always requires the development of a close relationship with those who shop in their store. In turn, getting to know customers enables the retailer to gain insights and develop new ideas that address what customers may want long before big competitors can learn this. For instance, the bureaucracy the often exists in huge chain retailers often means they cannot respond quickly to emerging customer needs. This is because those involved in marketing are often housed in office buildings located well away from customers and in-store personnel, who are engaging customers, may not possess the ability or incentive to implement or even suggest new ideas on their own.
A good example of how smaller retailers are addressing customer needs with innovative ideas can be seen in this story from the Los Angeles Times. The story looks at small players in the $17.5 billion pet supply retailing market. To compete against industry heavyweight, such as Petco and PetSmart, and large general products chains, such as Walmart and Target, smaller pet retailers have added unusual product offerings, such as dog scarves, in-store pet cafés and specialize pet services, including tooth brushing. The ideas for such products come from the close relationship these retailers have developed with their customers.
Of course, if these ideas take off expect the big guys to adopt them and to lower the price of offering these products. Thus, the cycle will need to start again, and the small guys will once again have to come up with something new.
- Posted by: Paul Christ
The ultimate goal of nearly all marketers, and especially consumer-oriented companies, is to get to the point where the name of a product or company is instantly recognizable. As we note in our Product Decisions tutorial, building a strong brand offers a number of benefits. And one of the major benefits is that when customers see or hear the brand name they associate this name with important attributes of the brand, such as great taste, excellent service, low cost, etc.
While the benefits of strong brand recognition are indisputable, there is a major downside that comes with this. The downside is that perceptions customers have about the brand can hinder the expansion of the brand into other markets. This is especially a problem for brands targeted to either very high-end, high-income markets or targeted to markets at the lower end of the economic spectrum.
Why is this a problem? Because people perceive a brand as serving a certain population. And targeting customers outside this population may not only be difficult (i.e., targeting high-income customers with a brand perceived as a value brand), it can also impact existing customers' perception of the brand. They may wonder if the brand is still as good as the brand they have come to know because it is now targeting customers who may not be like them.
So how does a company with a well-recognized brand name grow if they are stuck with a brand perception that may impact current customers if changes are made? Well, high-end food retailer Whole Foods is about to find out. According to this Fortune story, Whole Foods will attempt to grow its business by creating a new grocery chain targeted to more cost-conscious customers.
It appears from a company announcement, Whole Foods will launch this chain using a "uniquely-branded" approach. This appears to be code for naming it something other than Whole Foods. This is also a bit of a gamble as there are not many examples of retailers that have successfully launched a new retail concept using a name that does not contain the well-known brand name. For instance, Nordstrom has their Nordstrom Rack outlets stores, Target has a smaller version of its store for urban locations called TargetExpress, and Macy's has said they are testing a discount store approach. But each has retained its well-known name for the new outlets. Developing a new brand of retail outlets, with a name and retail model that is quite different from that of the main brand, is not easy. So it will be interesting to see how Whole Foods moves forward with their new retail concept.