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Positioning of BlueWave

BlueWave is a solar company that operates across several markets: 1) solar project development; 2) community solar; 3) residential solar financing. In this discussion of BlueWave’s positioning, I’ll focus on community solar market, as a new avenue of growth for Bluewave.

Community solar

Community solar is a very localized market, since solar energy from solar farms (also called solar gardens) can only be provided to nearby residents. Players in the community solar market in Massachusetts include Clean Energy Collective, Nexamp and IGS Generation (Next Step Living mentioned in the table below discontinued its operations in 2016).

Source: GTM Research U.S. Community Solar Outlook 2015-2020

4 P’s of companies providing community solar

Product: Clean Energy Collective is positioned as a pure-play community solar provider. The focus of their website is to educate a consumer about the benefits of community solar and how it works. Nexamp is a company focused on commercial solar solutions, but also providing community solar. Nexamp brands its full project lifecycle and a proven track record in solar projects. For community solar, Nexamp focuses on 15% savings on energy bills for users and lack of upfront costs. IGS Solar is a company within IGS Group focused more broadly on energy generation. IGS Solar does residential, commercial and community solar projects.

Place: All these companies build and maintain community solar projects in Massachusetts.

Promotion: All companies have websites with detailed description of their offerings. Nexamp shows up as the first result in Google search for “community solar.” Yelp search for “community solar” returns rooftop solar installation companies only.

Price: All companies are somewhat vague about the price of using community solar for consumers. All underline savings on the energy bill (Nexamp specifically mentions 15%, BlueWave mentions 10%). However, it’s not clear how much it costs for consumers to buy Net Metering Credits.

Positioning opportunities for BlueWave

Out of the 4 P’s Product and Price present most opportunities for unique positioning of BlueWave. To differentiate itself from other companies providing community solar BlueWave can underline its expertise in solar project development. BlueWave can also leverage its expertise in financing solar projects by educating consumers about the price and benefits of community solar and various financing options that can be offered by the company. 

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You can even beat Amazon with the right points-of-difference

Large long-established brands sometimes look like unbeatable monoliths. Those appearances are however often misleading. Malcolm Gladwell, a bestselling author, noted in his book David and Goliath:

The same can be said about companies. Successful smaller competitors can exploit weaknesses of large established companies by re-framing those as their own points-of-difference. An illustration of this statement would be a quote from the case by the co-founder of Better World Books, a used books re-seller focused on social and environmental value: “I’m not worried about Amazon developing social conscience... I don’t really think it’s in Amazon’s DNA.”

Other examples include:

Tesla vs. the BMWs of the world:

- Tesla’s point-of-difference: greener electric cars

- Tesla’s points-of-parity: stylish design; car performance.

Patagonia vs. outdoor apparel companies

- Patagonia’s point-of-difference: incredible focus on sustainability

- Patagonia’s point-of-parity: quality of apparel

Mi fitness band vs. Fitbit

- Mi’s points-of-difference: battery life of up to 3 months; low price

- Mi’s point-of-parity: sleek design; accuracy in data collection. 

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Jobs didn’t underestimate customer needs research

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Intel inside your smartphone

The main question of the case is whether Intel should extend its successful Intel Inside campaign to market chips for smartphones and tablets. Would it strengthen or dilute its brand?

To answer this question it is important to understand 1) what perceptions towards Intel chips were created by Intel Inside campaign and 2) who were its end users.

The end users who would make decisions about buying Intel chips were engineers and executives at PC manufacturing companies. Within this group of customers Intel chips were associated with safety and leading technology. Intel was the industry leader, almost always the first to introduce the next fastest chip.

In the smartphone and tablet market the end users are different: they are ordinary people buying these devices for communication and entertainment rather than for work. They care about different things: how fast the phone can connect to the network, whether it works reliably, if the camera is good, if there is enough storage. In these devices the focus moves from the chip being the center of the system, to a number of systems and devices working coherently together. The speed of computing power means much less.

I believe that Intel Inside campaign for smartphones wouldn’t be entirely consistent with consumers’ perceptions about Intel vs. their perceptions about the constituents of their smartphones.

Vice versa, if we imagine for a second that Intel Inside campaign for smartphones is successful and consumers are now looking only for phones with Intel chips inside -- how would the same users feel about buying Intel chips for their corporations? This could become a Black&Decker problem, meaning that if the brand becomes too strongly associated with consumer market it might lose trust of professionals.

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Ubiquitous Burberry

Is Burberry’s check a blessing or a curse?

I believe that when I first saw the check I neither knew it was Burberry, nor paid any attention to it. It was probably at a booth in an underground walkway in Moscow that was selling cheap but useful stuff like socks, stockings, plastic bags and umbrellas.

The first time I did pay attention to the check was in China. A friend of mine brought me to a Shanghai Fabric Market where, according to her, all expats in Asia would come to order their tailor-made suits - for a third of the price suits would cost them in Europe. We didn’t want to miss the opportunity and had our measures taken for skirt suits, dress pants and a couple of dress shirts. I also ordered a trench coat. It was ready in two days, with a lovely checked lining. “Oh, a Burberry check!” - said my friend. I wasn’t sure why that ubiquitous pattern was worth paying attention to, but I liked her approval.

To me, a real luxurious Burberry was associated with a perfume my mother kept on her dressing table (it only had the brand name of it, no check). The power of the check seemed to have been long diluted by numerous products and counterfeit goods to retain any magic appeal. As a result, the trench coat didn’t become my favorite. I didn’t like wearing the ubiquitous check.

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Dove: In Search for Real Beauty

When I was reading about brand manifold, one brand came to my mind. When I first encountered Dove products they belonged to a mass market. There was nothing unique about those shower gels, lotions and deodorants, except for may be a distinct fresh scent which I remembered since childhood.

But then one day I saw this billboard on the streets of Moscow:

That billboard, together with other similar ads feturing women who didn’t look like super models, but yet were very cute, looked new, provocative and intriguing to me. Then a friend shared on her Facebook page a video of Dove Real Beauty Sketches which went viral at that time and has over 6 mln. views to date:

In these ads and videos one doesn’t see shower gels, lotions or deodorants. Dove products are neither shown nor discussed. The campaigns are all about women, women’s beauty and self-confidence. They were co-created together with ordinary women, typical Dove customers. To me, these campaigns changed the essence of Dove’s brand. From the mass market quadrant it started moving into the iconic segment.

From the brand manifold point of view, with these campaigns Dove started innovating and evolving external embodiment and perceptions (the top right sector). Or, in Karl Popper’s terminology, it directly affected World 3, the realm of our cultural knowledge.

The brand started changing. Before it was just another brand of soap. Now it symbolizes empowerment, healthy self-esteem, honesty and many other things that are important to women. With these campaigns Dove spurred curiosity, ignited new conversations and gave itself a very long-lasting new powerful dimension co-created together with its customers.

Image source: http://uploadrb.ru/upload/archive/img/content/officelife/rfghj.JPG

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Givenchy, couturier, caviar, champagne and seatbeds

While I was reading the case I caught myself thinking that for me companies that associate with exceptional customer service - like Zappos, Trader Joe’s or Southwest Airlines - also offer affordable goods or services.

Singapore Airlines (SIA) is different in the sense that it doesn’t use exceptional customer service to compensate for the lack of certain amenities that lead to affordability for other companies (like no in-flight meals at Southwest Airlines). Rather, its exceptional customer service justifies its premium prices. And it’s only possible for them to do that because they know their target customers - premium class passengers - really well.

SIA’s outstanding customer service has several components to it:

the youngest and the most modern fleet

luxury items surrounding in-flight passengers (uniform designed by a French couturier, gourmet meals cooked by chefs, serviceware designed by Givenchy)

perfectly-trained flight attendants (Singapore Girls who went through a 4 month boot camps and had at least 17 additional days of training every year), fluent in English, expert in wine-food pairings

human software: a database of all premium passengers with their preferences for a personalized service by flight attendants (a precursor of Netflix recommendation system?)

exceptional service on the ground.

Within the company the outstanding customer service was supported by a robust system for tracking, reviewing and responding to customer complaints as well as an employee recognition system rewarding exceptional customer service.

The combination of these elements made SIA brand associated with premium service which justified price premiums. That allowed SIA to be the third most profitable airline in the world, while remaining on the 17th place by revenues.

Installing new seatbeds even in spite of the crisis in the industry is absolutely consistent with the brand of SIA - a monolith of impeccable service even in the sea of chaos.

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Wines and cars

In Concha y Toro case there is an interesting analogy between marketing strategies for wines and cars. The “bottom-up” strategy, or the strategy of reinforcing premium and ultra-premium brands is compared Ford’s unsuccessful attempts to market premium brands Scorpio and Granada. Toyota was more successful with Lexus, but only because for a long time consumers didn’t suspect that it was a Toyota brand.

The “top-down” strategy, or the strategy of leveraging the prestige of premium brands to expand into a basic segment, is compared to BMW 1 marketed in Europe as a car for younger first-time buyers. In Russia, my home country, BMW 1 was a huge success. I remember how several of my friends went out and bought BMW 1 because - well, because it was a BMW - and at the same it was a relatively affordable stylish city car.

Remembering the success of BMW 1 in Russia, my recommendation for Concha y Toro would be to pursue the top-down strategy. The company already has a solid presence in the basic market. Based on the fact that for Concha y Toro price per exported case was lower than the average for the Chilean market, it is possible that Chilean wines were globally associated with the premium rather than the basic market. Chilean brands were also known for their “value for money,” and perceived by consumers as high-quality and yet inexpensive wines. This fact, too, speaks in favor of the top-down strategy of expansion into the basic market. In this market, the overall perception of high quality of Chilean wines will be further promoting individual brands including those produced by Concha y Toro.

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The best thing since sliced bread

The readings for the tomorrow’s class leaved me puzzled by the mystery of peanut butter slices. To me, the product created in 2001 by a team from Oklahoma, met most criteria to be adopted by a mass market. However, even a cursory search in Google shows that the last mentions of P.B. slices (P.B. stands for peanut butter) were back in 2008 and since then the product was discontinued. Let’s look more closely at the factors which pointed towards a potential success of the product and try to understand why it failed.

Let’s test the P.B. slices against “Rogers’ five factors,” a framework created by Everett Rogers to explain product adoption via “product differences.”

1. Relative advantage: P.B.slices are much more convenient to use than a jar of peanut butter. They are portable, less messy, don’t require a knife to spread peanut butter onto a slice of bread. Increased relative advantage predicts an increased adoption.

2. Compatibility. This factor is tricky. One may argue that some people just love the way they can spread sticky, greasy peanut butter onto a slice of bread, that that reminds then of their childhood years, that they refrain from using P.B. slices because this product generates more waste from plastic wraps than a good old jar of peanut butter. However, people got used to Kraft Singles which were around 1949. So the way of dispensing a spreadable slice from a transparent plastic wrap shouldn’t be something unheard of to consumers.

3. Complexity. Again, complexity isn’t high due to the existence of Kraft Singles which introduced the same type of innovation (a more convenient packaging of a spreadable food).

4. Trialability. It should have been very easy for the creators of the P.B. slices to test the product in their home town first before a roll-out to national grocery chains.

5. Observability. The P.B. slices are highly observable. One kid brings them to school in his or her lunch box - the next day the entire school wants to have the same!

All of Rogers’ five factors point to a high probability of fast adoption of P.B. slices by consumers. So why did they fail? I’d hypothesize that the product itself didn’t live up to consumers’ expectations. Peanut butter is deeply rooted in American culture. There is an entire ritual of spreading it onto bread. People boast growing up on and being loyal throughout their lives to a specific brand of peanut butter. Texture is as important as its taste or smell. When people were given a solid square of something that looked different from peanut butter and were told it was peanut butter they might have felt deceived. 

Other 3 out of 4 Ps besides Product - Placement, Promotion and Price - may have their own influence on customer adoption. There is no data in the case though on how the P.B. slices were priced or promoted. The placement - in grocery stores like Walmart - seems to be the right choice, however the exact location in the supermarket (next to peanut butter jars? sliced cheeses? spreads?) would also matter.

Image source: http://foododdity.com/wp-content/uploads/2012/11/peanut-butter-slices.jpg

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Building Brands. Heineken vs. Corona

I’m not a beer drinker, but I came to appreciate this warm-colored beverage after Professor Pindyck’s class on beer markets. In that class I learned that beer markets can be identified using attribute space. In case of beer, two most relevant attributes are taste attributes: sweetness and bitterness.

Both Heineken Lager and Corona Extra belong to the market of imported lagers and share the same attribute space (not too sweet, quite bitter). Judging by the attribute space, there is not so much difference between these two brands. However we also discussed in class that another attribute which may place a beer into a separate market is its brand or cache.

In contrast to Heineken Corona seems to have a more distinct brand. It owns the imagery of beaches and has a strong association with parties, fun, student spring breaks in Mexico. It uses its Mexican origin as a strong differentiator.

Judging by the ads in Exhibit 8 of the case Heineken has a more reserved (and, in a way, trivial) imagery of a beer bottle and beer glass. The focus of Heineken’s advertising campaigns for a long time was on the quality of the beer supported by its European origin and long history.

Heineken’s vulnerabilities therefore are:

focus on beverage quality which doesn’t really resonate with younger US population

uncreative imagery, no ownership of specific imagery

no appeal towards a specific segment of population (vs. Corona’s appeal toward Hispanic population)

premium price

competition from both domestic and imported brands.

Creative marketing campaigns could protect these vulnerabilities by helping Heineken develop a stronger brand appealing to a younger, more affluent, customer segment. That would also help Heineken increase customer loyalty and protect their margins. Finally, that could strengthen their position in competition with Corona, by creating recognizable imagery attributed to a European imported brand.

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Black & Decker Case

In this post I’d like to share my thoughts on the power of a brand in relation to Black & Decker case.

Brands can be powerful in a good way. An example is Tesla. Customers buy Tesla models regardless of their high price and lack of infrastructure for electric cars in order to signal their awareness about environmental issues and relation to the tech / entrepreneurial world.

Brands can also be powerful in a bad way. My favorite example comes from an MIT professor Scott Stern. In his lectures on entrepreneurial strategy professor Stern likes to mention a startup Whistle which created a neck fitness wearable for dogs, but found it hard to expand into the market of neck wearables for people because of strong brand associations with dog accessories.

The Black & Decker case is about brand perception that can hinder a brand from expanding into a different market. Black & Decker (B&D) has a strong, respected, powerful brand in two segments: Industrial and Consumer. Unfortunately, the third segment, Tradesmen, in which B&D desperately tries to increase its market share, is more familiar with B&D being a player in the consumer segment. Professional craftsmen don’t want to be associated with laymen-level goods. As one tradesman notes: “Black & Decker makes a good popcorn popper, and my wife just loves her Dustbuster, but I'm out here trying to make a living. . ."

In spite of B&D having a strong brand in the Industrial segment, tradesmen aren’t aware about it since industrial B&D products are distributed via a different channel: primarily via distributors like W.W. Grainger versus independent stores and home centers like Home Depot where tradesmen would typically buy their tools. That explains how Makita could outsell B&D 8 to 1 (the statement which opens in the case most likely comes from a Home Depot manager). This difference in channels and awareness also explains why B&D’s shares in Industrial and Professional (Tradesmen) segments are so different.

In order to grow its market share in the Tradesmen segment, B&D should pursue Option 3 presented in the case and drop its name from that market instead introducing DeWalt brand. That should please all the stakeholders:

Tradesmen will be pleased that they don’t have to buy tools associated with vacuum cleaners and popcorn poppers. DeWalt’s association with large stationary woodworking equipment gives this brand solidity. It has a higher awareness rating among tradesmen than B&D. Professionals will be proud to use new bright-yellow instruments that demonstrate their expertise and knowledge of tools.

Retailers will be pleased because due to higher awareness and interest in purchasing DeWalt tools exhibited by tradesmen, these tools will be selling out faster and not sitting on the shelves like B&D tools.

Nolan Archibald and Gary DiCamillo will be pleased because a higher interest in purchasing DeWalt instruments should translate into higher profits for the company.

Pursuing Option 3 should allow B&D to overcome the “bad” influence of their powerful brand in Consumer segment and create a new powerful DeWalt brand leveraging B&D’s perceived strengths in manufacturing and distribution.

Image sources:

Tesla: https://www.teslamotors.com/tesla_theme/assets/img/support/model-s-red@2x-png8.png 

Whistle: https://tctechcrunch2011.files.wordpress.com/2015/01/fpo-11.jpg