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What’s Your Bottom Line?

For some companies and individuals this is an easy question. The bottom line is profits, or money, and one must do everything they can to maximize this value. Sometimes it’s in the name of maximizing shareholder value, sometimes it’s in order to support their family, and other times it’s just because they want to drive a Porsche. Regardless of the reason, I really have no issue with those who will do anything to maximize profits. I worked in finance for five years, I’m not one to judge.

But as I continue to figure out what my career post Sloan will look like, I’ve started to really think about what my bottom line is. What is it that I really want to maximize? Companies that have this figured out make every business decision with their bottom line in mind. For Electronic Arts every business decision is asked is this players first, according to Chief Competition Officer Peter Moore. For Better World Books the company asks itself is this aligned with our mission of delivering on its promise of people, planet, profit.

Being a Boston native I now realize I want my career to improve the Boston ecosystem. I want to generate economic wealth, either through creating new jobs, funding local startups, or driving growth of a young company. I’m still trying to find my career, but I hope that at the heart of every decision I make is the advancement of my personal mission.

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Branding in the Information Age

People have strong opinions and love to voice them, especially if there is an anonymous forum to do so. And today, thanks to the numerous social media outlets, blogs, and ease of distribution, consumers are talking more than ever. Great news if people love your product. Terrible news if they do not. 

Branding at its essence is meant to solicit emotions from its consumer base. Thanks to the information age, companies can now use social media analysis to better understand if their marketing strategies are accurately representing their brands. I also believe the focus has shifted from mass marketing campaigns to evangelists with a large number of social media followers. Not only do these evangelists themselves represent a certain image (Jay Z represents something very different than Ellen Degeneres), it is a less expensive way for companies to get their message and imaging out to a large audience. 

That being said, it is imperative that brands remain true to their core values. Because consumers have so much information at the tips of their fingers, a company focused solely on quarterly earnings will have a tough time using social media or any means to project its focus on environmental endeavors. Consumers’ BS radar is at an all-time high, and no amount of social media advertising or mass marketing will be able to change a brand or company’s core values. 

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Volvo Progress Report

@tory-sheppard @TheMsLeslie @Prophetisaiah @Rosanna @Iliketocolor @napcity

Defining the Problem: 

Volvo would like to determine the best way to position its new V90 to luxury buyers. Volvo is well-known for its safety, and customers pay a premium for it, but it is generally not considered to be in the same space as the BMW, Mercedes, Audi, or Lexus. Later this year, Volvo will release the V90, its latest station wagon built on the same platform as the flagship S90 sedan series. Volvo would like to position the V90 to appeal to luxury buyers, but it will have to overcome its current stereotypes as safe, reliable car in order to compete with the other luxury car brands.

Hypothesis 

Volvo is not known as a luxury brand.  What do consumers expect from a high-end wagon?

We plan to design a 2 x 2 graph comparing “Classic / Contemporary → Fashionability / Innovative” vs. “Affordable/Practical → Price / Exclusivity”

We believe Volvo’s appeal is due to customer's’ perception of safety

Pricing:  Low end of luxury? Paying too much for a station wagon?

Should Volvo keep the station wagon name for a luxury vehicle? “Most Elegant Wagon” may not be the best way to represent the V90.

Customers we would appeal to include “lululemon” / stay-at-home moms? 

Primary Research Data:

Ethnography: What is their experience like? How do they negotiate their worlds? Innovation opportunities may be hiding in plain sight. Can be quantitative with coding and “netnography”

Dealership Interviews: What type of people buy a Volvo? Why do they ultimately buy a Volvo? Why do they ultimately not buy a Volvo? When they don’t purchase a Volvo after expressing interest, what do they buy?

Volvo owner interviews: Purchase rationale? Will they buy again? How do they feel about the vehicle? What image do they think it portrays?

Survey: What do they say? What have they done in the past? (Correlation)

Experiment: How do behaviors and attitudes change with stimulus (causality)

Methodology

Multiple Surveys

Important factors customers consider before purchasing a car (rank them, how these rank for Volvo, BMW, etc.)

If you were purchasing a (sedan, wagon, suv), which of these features would be most important to you?

Rank these features (top 5?)

Safety

Environmental Impact

Storage space

Exterior styling

Interior features (cup holders, heated seats, etc)

Performance

Luxury

Social status

Price

Safety

Technology (navigation, connectivity)

Rank these brands from your perception of “best” to “worst” for each of these features 

Volvo

BMW

Kia

Toyota

Lexus

Audi

Interview a Dealer or Volvo owner

How do you pitch Volvos to potential customers?

Why do people choose station wagons?

What we want to get out of this:

Why people are loyal to Volvo?

When people come, why don’t they choose Volvo?

Experiment

Disguise car images

And then test car images with the brand names

Phrase/Word association with logo

Test which ones represent “soccer mom”, high-end, luxury, cool factor

Test which ones you view are for families, for single person, for professional, etc.

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Stop Buying Burberry - We Need to Increase Sales!

Burberry is in danger of failing due to its success. Unfortunately that becomes the fate of higher end brands that are falling into the mass market. As Burberry expands, it needs to maintain its distinguished place next to the greats of fashion and stay out of the TJ Max discount bin (not that there’s anything wrong with that). Mass market retailers have it easy - simply appeal and market to the common person. But once a luxury brand loses its “sex appeal,” it is extremely difficult to climb back to the top. 

Burberry in the early 2000′s did a fantastic job of making itself a premium brand once again. But with this success and growth, consumers are beginning to find Burberry items in retail stores not consistent with the imaging and messaging that made it a success. Burberry must focus on controlling its licensing agreements and distribution channels to maintain its premium image. If it does want to appeal to the masses, it should do so using a product line that doesn’t prominently feature its iconic check image. In this way, it can offer slightly discounted items that are not associated directly with the brand. I believe at all costs it must maintain the image of its check and brand, and items that feature this must be considered luxury. 

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The Curious Case of Twinkies

Brand worth is often very difficult to quantify. How much is that Nike swoosh worth, or the Coca Cola logo? Analysts and investors look to Goodwill on the balance sheet for a monetary value. Thankfully for Twinkies, bankruptcy court was able to put an exact number on the brand. 

How did Twinkies wind up in this scenario? I would argue they defied all odds by maintaining its iconic brand status yet still filing for bankruptcy. As consumer tastes changed and healthier choices were made in the grocery store, Twinkies couldn’t simply put out an organic bar to keep pace with trends. How can a company adapt and evolve its brand when that product is inherently unhealthy? Kit Kats introduced new and exotic flavors and were rewarded with heavy losses, and that was simply new flavors! Twinkies managed to maintain its iconic status, but its value of customer equity was greatly diminished. When a product’s consumer value disappears, but its iconic image remains, what is a company to do? 

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SIA: A Lesson in Class

Singapore Airlines (SIA) built a reputation for being a leader in class, elegance, and customer service within the airline industry. Post 9/11 the airline industry was at a crossroads with decreased sales and increased costs. SIA needed to reevaluate its strategy: should it double down and improve its first class and overall customer experience, costing millions in the process, or should it postpone some of these initiatives and focus on value and decreasing costs? 

Changing a company’s stripes is near impossible. Every aspect of SIA is revolved around providing the utmost customer service and experience. From its hiring methods, training programs, customer feedback, and planes/interior design, SIA prides itself of being the top of the industry in class. Cutting costs and focusing on value will destroy the brand it has built. I believe if they do want to offer a value ticket, it must be done under a different brand name to preserve what SIA has built over the years. If the airline needs to cut back on costs it should do so by limiting the number of routes and trips and not by changing its customer experience. SIA can and should remain true to its brand image of elegance and class.  

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And You Call Yourself a Wine Connoisseur

Next time you have some free time and spare money, I encourage you to do a blind wine test. The majority of the public will be able to pick out the supposed “better” wines at about the same rate as Shaq’s career free throw percentage (for non sports fans, it’s not good). Personally I enjoy the taste of Malbec. I’m somewhat comfortable in saying that having tried various types over the years. Beyond that, yikes. Argentina is known to produce great Malbecs, so let’s pick up a bottle with that country located somewhere on it. From there I perform a fairly scientific experiment - I order the second cheapest. 

Unfortunately the above example is not too far from reality. The truth is price is the great signaler of quality to the average consumer in this industry. The perception is a $5-$7 bottle of wine is of the lowest quality, whereas something selling in the teens or higher I could likely get away with on a date. It may not be accurate, but in this case perception is reality. 

The company Concha y Toro has an interesting dilemma: perform a “bottom-up” analysis and slowly leave the lower end of the market, or perform a “top-down” analysis and leverage its premium brand to sell into the lower markets. I tend to believe that most consumers of wine are simply not looking for the cheapest bottle, but for the most value per bottle. A “top-down” approach threatens to damage its premium image by associating the brand with $5 bottles of cheap (and thus terrible) wine. By separating itself completely from this bottom feeding category through the “bottom-up” strategy, Concha y Toro has the opportunity to not only establish itself as a premiere brand, but to represent Chile as a top tier wine making country. 

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Product Diffusion: Predicting the Future

If I was able to predict the next big consumer product, I likely wouldn’t be writing this blog. Without the proper tools, predicting consumer product adoption can be a lot like throwing darts at a dartboard while blind folded and spinning in circles. Fun? Sure. Effective? For sure not. But utilizing market research, analyzing comparable product trends, and conducting beta tests can all help make throwing darts a bit more accurate. Roger’s Five Factors are also also a useful tool to analyze product adoption: relative advantage, compatibility, complexity, trialability, and observability. Let’s have some fun and quickly examine four new product innovations. 

1) Peanut Butter Slices: fairly cool and nifty idea but I believe low likelihood of success and mass adoption. It’s solving the major issue of having to use a knife to spread peanut butter. Since when was this a big inconvenience? I imagine this might have a cool factor for some consumers and parents, but will be very difficult for health conscience consumers to be convinced to use peanut butter from wax paper. The time savings is really minimal so I’m not sure what will actually have consumers making the switch from traditional jars. 

2) High Tech Band-aids: of our four products we are examining, I believe this has the highest likelihood of adoption. Buyers of band-aids want to have the best product possible given its use case. If one band-aid is proven to work better than another, you better believe I’m opting for the better one. This product has some interesting business model hurdles give the company’s lack of salesforce, marketing prowess, and need to educate the consumer. For mass adoption I would suggest licensing the product to a major brand who has had success in the past and is a trusted name to consumers. 

3) Satellite Radio: great idea, years away from mass adoption. This is an instance where consumers will not know the huge benefits of satellite over traditional radio until the product is tested. Yet at this point consumers need to buy expensive satellite radios to be exposed to the product. As technology continues to improve, and cars become equipped with satellite ready radios, consumers will have the opportunity to test before they buy. Given this is a big improvement on an existing product, this test period will be imperative to mass adoption. 

4) PC Scent Maker: bringing the sense of smell right to your computer! A major hurdle for this product is the fact that PC sales are declining as consumers are migrating towards personal laptops. Laptops are often used in public places, and let’s be honest, do you really want to expose the entire Starbucks to the smell of that mulch you are thinking of purchasing? PC’s are more often than not used in the business world, and there is really no use case for this product professionally. Unless advertisers and companies can see a direct correlation between increased sales and smell, and therefore push this product hard to PC makers and consumers, I believe this will be a difficult sell. 

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Product Diffusion: Predicting the Future

If I was able to predict the next big consumer product, I likely wouldn’t be writing this blog. Without the proper tools, predicting consumer product adoption can be a lot like throwing darts at a dartboard while blind folded and spinning in circles. Fun? Sure. Effective? For sure not. But utilizing market research, analyzing comparable product trends, and conducting beta tests can all help make throwing darts a bit more accurate. Roger’s Five Factors are also also a useful tool to analyze product adoption: relative advantage, compatibility, complexity, trialability, and observability. Let’s have some fun and quickly examine four new product innovations. 

1) Peanut Butter Slices: fairly cool and nifty idea but I believe low likelihood of success and mass adoption. It’s solving the major issue of having to use a knife to spread peanut butter. Since when was this a big inconvenience? I imagine this might have a cool factor for some consumers and parents, but will be very difficult for health conscience consumers to be convinced to use peanut butter from wax paper. The time savings is really minimal so I’m not sure what will actually have consumers making the switch from traditional jars. 

2) High Tech Band-aids: of our four products we are examining, I believe this has the highest likelihood of adoption. Buyers of band-aids want to have the best product possible given its use case. If one band-aid is proven to work better than another, you better believe I’m opting for the better one. This product has some interesting business model hurdles give the company’s lack of salesforce, marketing prowess, and need to educate the consumer. For mass adoption I would suggest licensing the product to a major brand who has had success in the past and is a trusted name to consumers. 

3) Satellite Radio: great idea, years away from mass adoption. This is an instance where consumers will not know the huge benefits of satellite over traditional radio until the product is tested. Yet at this point consumers need to buy expensive satellite radios to be exposed to the product. As technology continues to improve, and cars become equipped with satellite ready radios, consumers will have the opportunity to test before they buy. Given this is a big improvement on an existing product, this test period will be imperative to mass adoption. 

4) PC Scent Maker: bringing the sense of smell right to your computer! A major hurdle for this product is the fact that PC sales are declining as consumers are migrating towards personal laptops. Laptops are often used in public places, and let’s be honest, do you really want to expose the entire Starbucks to the smell of that mulch you are thinking of purchasing? PC’s are more often than not used in the business world, and there is really no use case for this product professionally. Unless advertisers and companies can see a direct correlation between increased sales and smell, and therefore push this product hard to PC makers and consumers, I believe this will be a difficult sell. 

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Black & Decker: #1 in Quality, #3 in Market Share

Despite holding a nearly 30% U.S. market share and enjoying considerable success in the Consumer (45% share) and Professional-Industrial markets (20% share), Black & Decker has significantly lagged its peers in the Professional-Tradesman category (9% share). Blind studies confirm the products are of the highest quality, and the company enjoys the luxury of being a top 10 U.S. brand. So what is the reason for the lack of traction in the Professional-Tradesman category, and how can the company address this specific segment? 

B&D’s brand recognition is actually inhibiting its ability to gain traction in the Professional-Tradesman category. With very little brand differentiation between its product segments, professionals view B&D professional products as similar to those for use by individual households. Professionals place a large emphasis on having the best tools to complete the job, and their tools serve as a signal of competency. Therefore, being seen with a tool for consumer use is unacceptable in this field. B&D needs to increase its product differentiation, and can do so by developing tools under a lesser known but high quality brand name and by changing the look of the product. 

I recommend B&D sub-brand its Professional-Tradesman products. Buyers want to purchase products from a trusted brand name given the safety implications and the nature of the industry. But by sub-branding it allows B&D to create a new category brand image, separate from the consumer segment. I also recommend the product color becomes yellow. This is a strong product image differentiation and would be the first of its kind in the market. 

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Corona vs Heineken: Find Your Beach

Simply claiming you’re the best doesn’t make you the best, Heineken.

Corona’s simple, consistent, and national marketing encouraging consumers to “find their beach” elicits quieter, simpler times to share memories with friends and loved ones. While one might think this campaign encourages only warm climate consumption, I believe the brand image goes beyond the seasonal component and encourages beer drinkers to grab a Corona whenever they are ready to hang with friends. Finding your beach means just that. My beach might be at my father’s recently renovated “Man Cave,” whereas your beach may be on a loved one’s patio. Regardless, the image is one of fun, relaxation, and memories to be made. 

Heineken’s marketing attempted to rest on its laurels, and if you’ve ever had a Heineken, you will likely agree that is a bad strategy. In the U.S. market with seemingly limitless beer options, Heineken chose to try and differentiate itself based on its flavor. To quote Dodgeball, “It’s a bold strategy Cotton, let’s see if it pays off for them”  https://www.youtube.com/watch?v=9HVejEB5uVk There was nothing beyond the flavor of the beer, nothing to conjure the need to grab a Heineken for a special occasion or event. Beer consumers more often than not purchase based on marketing, and if Heineken is simply marketing flavor, its market share is up for grabs. 

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Black & Decker: #1 in Quality, #3 in Market Share

Despite holding a nearly 30% U.S. market share and enjoying considerable success in the Consumer (45% share) and Professional-Industrial markets (20% share), Black & Decker has significantly lagged its peers in the Professional-Tradesman category (9% share). Blind studies confirm the products are of the highest quality, and the company enjoys the luxury of being a top 10 U.S. brand. So what is the reason for the lack of traction in the Professional-Tradesman category, and how can the company address this specific segment? 

B&D’s brand recognition is actually inhibiting its ability to gain traction in the Professional-Tradesman category. With very little brand differentiation between its product segments, professionals view B&D professional products as similar to those for use by individual households. Professionals place a large emphasis on having the best tools to complete the job, and their tools serve as a signal of competency. Therefore, being seen with a tool for consumer use is unacceptable in this field. B&D needs to increase its product differentiation, and can do so by developing tools under a lesser known but high quality brand name and by changing the look of the product. 

I recommend B&D sub-brand its Professional-Tradesman products. Buyers want to purchase products from a trusted brand name given the safety implications and the nature of the industry. But by sub-branding it allows B&D to create a new category brand image, separate from the consumer segment. I also recommend the product color becomes yellow. This is a strong product image differentiation and would be the first of its kind in the market. 

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