Point: Tough economic times call for different brand messaging

Story: We’re in a time of new frugality, said Kevin Roberts, CEO of Saachi & Saachi, at a recent HSM webinar. People are evaluating their purchases more closely. They’re comparing more products and contemplating switching brands more often. They will still buy luxuries, but they’ll buy fewer luxuries; and, they’re redefining what luxuries are. They’re separating true value from false economies. Roberts suggested three strategies that companies can use to keep their products and services on a customer’s “buy” list in an era of less buying.

First, companies can reframe the competition and the category.  In the era of new frugality, many people are eating out at restaurants less and eating at home instead.  Some companies see parallels in this inside/outside phenomenon to redefine their place in the market.  For example, P&G compares its premium-priced Tide Total Care with the cost of dry-cleaning, not with other cheaper detergents. P&G is reframing the category, positioning its detergent as a frugal way to achieve clean clothes in the home without the high-cost of dry-cleaning outside the home.

Second, companies can help consumers use products in a more cost-effective way.  For example, in a similar spirit of saving its customers money, Tylenol’s new ad campaign offers advice that helps customers ease the pain of a headache — without taking a Tylenol product.  Tylenol suggests that if you have a headache, drink a glass of water and wait 20 minutes. If you still have a headache, then take Tylenol.  Although the campaign may lose Tylenol some sales, the ultimate goal is to side with the customer and win in the long run. Empathsizing with the need to save money, Tylenol suggests a solution that can save customers money while remaining the brand of choice for tougher headaches.

Third, be honest and highlight the value if you can’t decrease the cost. If your product truly is a premium-priced luxury, don’t pretend that it’s a cut-rate necessity. Be honest. Customers still want joy in their lives, and they’ll still treat themselves to an occasional luxury. Rather then make a luxury seem cheap, highlight what makes it more special and more meaningful. The product may not cost less, but the emotional bonus makes it more valuable.

Action

1. Reframe your product’s category (e.g., detergents competing with dry cleaners)
2. Offer useful advice on cost-effective use of your product
3. Enhance the emotional value of your product

For More Information:

Kevin Roberts will be presenting at the World Business Forum in New York City on October 6-7, 2009.

Kevin Roberts is the author of Lovemarks: The Future Beyond Brands
and The Lovemarks Effect: Winning in the Consumer Revolution

Point: Inventing new management techniques offers big paybacks.

Story: What’s more valuable than a new product or service innovation?  An innovation in a management technique, said business strategy expert Gary Hamel at the Spigit Innovation Summit last week. Innovations in management techniques have far-reaching impact.

Consider Thomas Edison. He’s credited with 1093 patents, but one underlying invention is what made such a multitude of patents possible: the invention of the corporate R&D lab. Edison was the first to bring management discipline to research & development to enable a more powerful method of invention than the lone inventor of the past. Edison’s 1093 patents had less to do with technological genius and more to do with management genius: creating and managing an R&D lab that could efficiently and effectively crank out new inventions.

So, what steps can you take to innovate the management of innovation? Management is the effective control of resources to execute tasks that achieve goals. What, then, does effective management of innovation look like? Hamel talked about the need for a combination of freedom and discipline: the freedom to come up with ideas but also the discipline to find the best ideas, refine them, and channel them into something that creates value for the firm. He posed it as a paradox, which is always a clue to generative potential.

As you think about improving the management of innovation, think about the recent inventions that you can draw on. For example, in my previous post, I wrote about how social media tools support innovation processes. These tools let you invite ideas from across the whole organization and provide a way to refine, track and vote on those ideas. Other advancements, like open sourcing and open innovation (see earlier post), help you tap into almost-free resources. Furthermore, widespread adoption of smartphones changes the fundamental equation of management in terms of reach and timeliness. All these technologies support new approaches to management, especially the management of innovation.

Action

• Take a step back from inventing and innovation to think about how to improve the management of innovation
• Ask: how can we generate new ideas more effectively with available resources? (freedom)
• Ask: how can we develop and validate new ideas more effectively with available resources? (discipline)
• Create coherent processes that balance resources between freedom and discipline

Further information:

Gary Hamel’s book, The Future of Management and his blog

I enjoyed hearing Gary speak and having the opportunity to ask him questions. If you’d like to do the same, consider joining me at the World Business Forum October 6-7, 2009 in New York City. Gary will be one of the speakers, along with former president Bill Clinton, Jack Welch, George Lucas, Paul Krugman and others. You can see the full agenda here.

Point: Use friction to your advantage

Story: McGuckin Hardware is a family-owned store in Boulder, Colorado, long known to any do-it-yourselfer as the place to go for supplies. The store has knowledgeable, friendly staff, many of whom have worked at the store for years over its 54-year history.

A few years ago, Home Depot opened a store in Boulder, with twice the space, offering lower prices. Can McGuckin’s survive against giant Home Depot? Or will it become another mom-&-pop store shuttered by behemoth retailers with economies of scale in supply chain and large marketing budgets?

According to recent research by Wharton’s Olivier Chatain INSEAD’s Peter Zemsky, McGuckins has a good shot at success due to a concept that Chatain and Zemsky call “friction.” As they define it, a friction is any force that makes it difficult for buyers and sellers to connect. For example, a poor location is a friction if it makes it harder for customers to get to the store. A complex website or a confusing store layout is a friction if it’s hard for customers to find the products they want to buy.

Smaller companies can out-compete giants by exploiting frictions. For example, McGuckin’s can use its loyal, knowledgeable staff to help customers quickly find what they need or give them sound advice if they’re embarking on a new project or product purchase. Long-time loyal employees are more likely to go the extra mile to help a customer. McGuckin’s loyal staff also know the local area, so they know which paints withstand Colorado’s intense sun and which garden plants thrive in the local climate. McGuckin’s local knowledge reduces its distance to its customers, which reduces friction.

Action:

• Document the time, costs, knowledge, hassles that customers face in finding your business, buying from you, or using your products
• Compare the frictions in your business or products with those of your competitors
• Adjust or redesign your business to minimize your friction
• Emphasize your low friction in your marketing and advertising

For more information:

Olivier Chatain and Peter Zemsky, Value Creation and Value Capture with Frictions

How a Little ‘Friction’ Can Change a Competitive Landscape

McGuckin Hardware