Tuesday, May 27, 2008

Servitisation

According to E&T journal ‘servitisation’ is a term originally coined in the ‘Harvard Business Review’ in 1988. In the same issue as its ‘Are you being served article?’ which discusses the reinvention of product companies as service companies is a major series to co-incide with the sixtieth anniversary of publication of George Orwells’ book ‘1984’. The journal looks at how far his scenario has been realised at least in terms of technology. Of course as with science fiction - Arthur C Clarke’s ‘2001 Space Odessy’ serves to illustrate that to imagine a future is very different from putting a realistic date on when it might happen. Both 1984 and 2001 are already history and some predicted technology inspired products have indeed become commonplace while some have come and gone. I am not sure whether much was predicted about outsourcing or off shoring sixty years ago, but today as a country the UK has outsourced production, call centres, software development, service support and arguably politics and law making. In previous blogs I have noted the problems facing one client where the traditional sales support model through development into volume production is no longer relevant. I have recently received their instructions for the launch of a new product. There is nothing new about the product except that it is produced in China and no doubt costs a whole lot less than making the same item in Birmingham. So while some companies are transforming into service organisations, keeping very close to the customer by consulting during the development phase and putting themselves into a better position to then supply product for volume manufacture others like our client are using low cost sourcing to stay in the game. I suspect the service route will prove more sustainable

Sunday, May 18, 2008

How to make your customers pay for your advertising

Interesting isn’t it how as consumers we accept a role similar to the sandwich board man when we shop in the high street or shopping mall of carrying branded bags around proclaiming the names of stores we have patronised. Of course it wasn’t always like this. At one time purchases would be discretely wrapped in brown paper packages tied up with string, or smaller items in plain brown paper bags, or vegetable sold loose and tipped into our own bag or basket. But this was all a long time ago in the days when shop assistants brought out the product, before we had to do it ourselves and present our selections at a check-out. Taking your own shopping bag into a store suddenly became suspicious and to avoid accusation of shop lifting we accepted that our purchases would be shoved into a store bag that also served as a form of receipt. You also needed the bag should you return goods as some sort of proof of purchase. Before long supermarkets had piles of flimsy plastic bags at the till and you simply helped yourself to as many as you wanted. But wait, these same stores are now telling us that their plastic bags, the ones we didn’t ask for in the first place by the way, are destroying the planet. Marks & Spencer has even taken the step of charging 5 pence for every bag you accept as some sort of fine. I have refrained from shopping in their store, but should I be asked to pay I feel inclined to ask for a plain bag – or else present a rate card for my advertising fees.

Wednesday, May 14, 2008

Rapidly changing technologies?

A friend e-mailed a scanned clipping from a newspaper – in itself an indication of change, he would have posted it at one time – which listed a range of skills for dealing with technologies that are no longer needed. For example, changing the ribbon on a typewriter, winding a watch, getting up to change a TV channel, using the choke in a car … and plenty more. Newspapers love lists almost as much as market research into human behaviour, but it indicates the challenge facing new product development. OK so a number of these little wrinkles for using yesterday’s technology are obsolete, but on the other hand it still seems to take an age for new technologies to get into general use. Take the case of compact fluorescent lamps – CFLs – I was involved in their launch in 1980. Nearly 30 years on they are much more widespread but still way short of being universally used to replace Swan’s and Edison’s 19th century invention. Another lighting example is the promotion and take up of new dimming technologies that have been available for a decade or more but still in a tiny minority of total dimmers sold. In fact what the list actually demonstrates is not so much the advance of new technologies but easier use of the old concepts, improvement and evolution rather than invention and revolution. An iPod plays music same as a wind-up gramophone, just better; today’s motor car bristles with modern technology but most of the roads we drive it on were laid out by the Romans or ramble round ancient fields and river crossings established by the Anglo Saxons. So actions like filling a fountain pen, lowering a stylus (or needle) on to a vinyl record and using carbon paper may all be lost skills, but the tasks of writing, playing music and copying are still relevant. We just have better ways on doing things now. So the NPD marketing executive would do well to revisit the tasks his customers are needing to accomplish, to evaluate how new technologies can help in improving achieving the task and then figure out how to embody that into a product that can be successfully solved profitably. Not much to ask really!

Charging for design advice

In a recent blog – The China Syndrome – I discussed a problem that a client had identified of customer development support. The problem being encountered is that traditionally working with a customer on prototype development had been an essential part of the marketing plan; using expertise and knowledge to provide a solution through using their products. Once the product had been demonstrated at a test level then volume sales could follow thanks to this earlier specification work. It is or was a familiar business model using technical sales activity to build a specification so that boxed goods products could then be supplied for the volume production needs through distribution networks. Of course holding ‘spec’ has always been an issue, but now with the massive price difference between product produced in China and in home based factories not only are buyers switching, but the price and margins are destroyed. It leaves companies like our client with the knowledge but without a means of charging for this expertise. I return to this subject because another client, this time operating in the building services sector, has a similar problem. Here prospects might recognise they have a problem but need help in identifying its exact nature before selecting and installing products that will provide a solution. The design support required does not stand the cost of a specialist consultant but typically calls for a site visit leading to a report and recommendation for supply and fix. The real issue they have to confront is that the design advice is essential to a successful outcome, but not traditionally chargeable as it is part of the quotation process. The question now is can this be made chargeable. This is where marketing to build trust in the brand can create an environment where the relationship created in the specification phase carries over to the implementation where a price premium for the safe option can be traded against the risk of using a remote low cost supplier. It only takes a container to go over board in the South China Sea and suddenly the supply line comes to an abrupt halt and what does that do for reputation of a carefully nurtured brand?

Thursday, May 08, 2008

Lies, dammed lies and statistics …

The advent of Google Analytics has ushered in a new era of web site accountability. Suddenly the colourful Webalizer charts have given way to the free to use but rather dour monochrome displays offered by Google. Now there is a heap of data that can be sifted by activity and time frame to reveal a wealth of statistics. What it doesn’t actually offer is information - that requires interpretation of the statistics. OK so we know that the bounce rate is 50% for example, but what does that mean? That half the visitors find your web site of no use to them, or half the visitors are not your prospects, or they went there by mistake, or are stupid, or just surfing anything hopefully? The problem with this data is it begs the questions of why? And what does it all mean? Then there is the mismatch between what Google says happens and what the accounts package says was actually ordered and you have to wonder whether it is most useful to indicate trends rather than give an absolute measure. Then there are some recent top-level statistics from BRMB that provide interesting statistics on the use of the Internet. Still top at 73% is e-mail followed by online research at 48% and online banking at 35%. Top sites are Travel at 48%, Weather forecasts (38%), cinema listings/events (35%), Music/mp3 (32%), Sport (27%), Jobs (26%) and News (24%). It is curious that weather sites should rate so highly – perhaps a weather forecast should feature on all sites. But as with all statistics there will be flaws in the validity of how they are collected, how they are interpreted and how they are used and this is where solid marketing experience comes into play and basic common sense. It can be useful to stand back and ask the question – does it make sense? Of course the data can be used as a guide to make changes and observe the results, but some things will remain constant. With ‘General Research’ being the second most popular use of the Internet after e-mail, first make sure people can find your web site when searching for sources of supply for their specific need. Then ensure that they can find the information they need and finally they can contact you to enquire further or place an order. And once they have found you, use means that give them a reason to return and become a loyal customer.