Hey, marketing managers. Are you spending too much time on the toilet?

Photo by buckofive on Flickr

Are your once innovative products becoming commoditized? Are you getting pulled down into a cesspool of cost cutting as you try and stay price competitive?

HBS Professor Ranjay Gulati says, if that's happening to you, you may be spending too much time on the toilet and not enough time figuring out what your customers really want. In this HBR podcast, he explains his toilet analogy. When you go to a restaurant, he asks, will you go back again if, at the end of an otherwise good meal, you go to the restroom and it's a disgusting mess? No, probably not. How about if you go to a restaurant and the meal's horrible but the toilet is sparkling clean and has all the latest bells and whistles? It won't make any difference. You won't go back.

Restaurant toilets are what Gulati calls "hygiene factors" and what others call cost-of-entry attributes. These are must-have factors that will hurt you if you don't have them but have no upside potential once they pass inspection and are good enough.

In any competitive market, more and more things become hygiene factors over time. What was once breakthrough quality, performance or service becomes something that everyone else offers too and which customers take for granted.

The tough challenge is to recognize and accept that what once made you stand out from the crowd may have become a figurative restaurant toilet. The natural tendency is to stick to what you know and keep on trying to improve on what you're already good at. But that strategy won't work if what you are good at is already good enough.

When a once-signature feature becomes hygienic/cost-of-entry, more effort and investment to improve it will add cost but won't add customer value. Over investment in hygiene factors is what eventually opens the door to the Vizios of this world--they are able to produce stripped-down, good enough products at lower costs, then price aggressively to take market share.

How to avoid falling into this trap? Think about how to better recognize what value-add features customers are prepared to pay for, don't assume that your once strong differentiating factors will work for you indefinitely and watch out for factors that have started to decline in customer importance and value. 

As key differentiators approach the "good enough" zone, slow down further investment in them and seek new sources of differentiation, even if these are outside your comfort zone. That's the best way to make sure your efforts, yes I'm going to say it, aren't flushed down the toilet.

The You Called Brand

In his famous 1997 Fast Company article: The Brand Called You, Tom Peters told us that we all should become brands. "To be in business today, our most important job is to be head marketer for the brand called You," he said.

How about the other way around? From personal branding to branding personified.

I was thinking, for example, that there's a lot of similarity between how we go about getting and keeping a job and how a brand goes about winning and keeping a customer. Let's see:

We start looking for a job by trying to find suitable employers and letting them know we're willing and able to work for them. We use a variety of tactics to do this from reaching out to contacts, to answering ads to blasting out resumes, hoping that one of them will fall on the right desk.

Similarly a brand has to find appropriate customers and make them aware that it can meet their needs. It also uses a variety of tactics from word of mouth, popping up on search results to traditional advertising (the blasting approach).

When we finally get an interview, we need to bring our best game if we're going to get the job. Of course, we must have the right skills and experience. We might be lucky and be the only one with the right qualifications, but there will probably be others who are just as suitable, at least on paper. So, we'll also need to tell a good story about ourselves to stand out from the crowd. We'll need to dress the part--that could mean a suit and tie for some jobs but definitely not for others and finally we must seem like a good fit, difficult to put a finger on exactly what that entails but we know it's important.

Brands have to do pretty much the same things to win over consumers. They probably won't get the job based on functional benefit supremacy alone. They'll need to tell their own compelling stories, present themselves well and make emotional connections with their customers if they are to be selected.

Once we get a job, from then on it's mainly about performance. If we live up to or exceed expectations, we will do well. If we don't, we risk being fired.

Here brands actually have a tougher time than we do. They don't have much job security; they are like contractors continually bidding for projects. If they have a strong track record of performance their customer employers may be loyal to them but, even then, one screw up can be fatal. And there's always the chance that some other brand will come along doing things better, differently and/or less expensively. 

That sounds like more of a dog's life than a human's.

Jacobs by Marc Jacobs for Marc by Marc Jacobs in collaboration with....

Photo by Alex Do of sweater purchased at Marc by Marc Jacobs

Marc,

If you're joking, ha ha! If not, call me. I'm a brand architect. I can help

Regards,

Martin

The rise of Android, another killer ingredient brand

Nielsen data on smartphone share (recent acquirers) as reported in Fortune

When Android first started outselling the iPhone about a year ago, PCWorld said it was no big surprise because: "Two models of the iPhone (the 3GS and 3G) are doing battle with scads of Android handsets in an array of shapes and sizes" (my emphasis).

As you can see from the Nielsen data in the chart, Android has continued to move ahead and now has half of the market of recent acquirers. Even the launch of the Verizon iPhone hasn't slowed down Android's march to the top. Nokia, once the dominant market leader, has been reduced to irrelevance and there's increasing speculation about whether it will be forced to dump Symbian, its own operating system, and join the Android party. Forecasts suggest that there could half a billion people using the Android OS by 2015.

With results like this, Android can lay claim to the title of most successful ingredient brand of all time, challenging the previously unassailable Intel. Like Intel, Android has achieved its success at the expense of its host brands. We talk about Android phones, we don't talk about Motorola phones with the Android operating system. Motorola may have found a new lease of life by adopting the Android OS but its margin opportunities are significantly eroded if it's just one of many manufacturers who can supply Android phones. Any manufacturer that partners with an ingredient brand as strong as an Android or an Intel trades away a good portion of its equity and heads towards commodity status.

One important difference between Android and Intel is that Intel made itself really difficult to extract from its hosts. The significant marketing dollars that Intel has spent both directly to the consumer and indirectly through advertising subsidies to its OEM partners worked their magic. The OEMs became addicted to the money and consumers were trained to look for the Intel mark. Android has take a different route to market, gaining market traction quickly by being offered for “free" and without significant marketing support.

That means that, despite the huge success of Android so far, it's possible that some manufacturers may still be able to liberate themselves from their Android dependency. Indeed, there are reports that Motorola is going to try and develop a new, proprietary OS. There may not be much time left. A future where there's just Apple's iPhone vs. a mass of Android smartphones that compete against each other on price and a few relatively unimportant features (much like current PC’s) looks the most likely scenario.

Reference: Ingredient branding, or, finding your Nemo (Landor.com)