Branding lessons -How did Intel build a brand around a commodity?

A few years ago, Microprocessor chips, as it was not seen outside the product, were an unknown component of PC for the end consumers. It was a commodity product. Intel was a dominant microprocessor brand in the 1980s with the launch of microprocessor 286, 386 and 486. Soon competitors were catching up with Intel. In 1991, Intel lost its trademark violation case against AMD who had similarly named clone chip AMD 386. Intel realized that to remain as a leader in business for a longer duration, it needs to enter the mind of Consumer and that could be done only through branding. It was a challenge as the product was a component. How has Intel built a brand around a commodity?

UNDERSTANDING THE USERS

Except for programmers, gamers and scientists, the computer was a mystery for many target segments. Many were uncertain about the quality and reliability of the product and they were not aware that microprocessor chip was a critical component. Intel that microprocessor being a critical component of PC sensed an opportunity to enter consumer’s mind.

There was an “Achievers segment” – made up of knowledge workers – who spent the majority of time in gaining knowledge, reviewing information and they were major decision makers in companies and they were not programmers. PC manufacturers like Apple were designing products that were easy and intuitive to use to target this segment.

Intel had to focus their communication, branding strategies to target this “Achievers” segment.

POSITIONING and DIFFERENTIATION

INTEL had already established it as a quality product manufacturer and an innovator among OEM companies – Operational excellence in creating complex new products with speed and good infrastructure. Intel believed that it could position its chips as a premium product.(Matches identity requirements of “Achievers” segment).

VALUE THAT RESONATES

TRUST – Intel needed to communicate that the reliability, quality, speed, consistent performance of PC, is controlled by Intel’s chip.

INTEGRATION – It had to convey that chip was compatible with the Softwares used by target segment and play a major role in smooth functioning of those Softwares.

QUALITY SERVICE – Intel had strong service support center for OEMs which in turn assured end-users of quicker solutions to the hardware problems related to chips.

INNOVATIVE – Stronger infrastructure, Continuos solutions to increase a customer’s experience.

COMMITMENT – The “Achievers” category are like “Early Majority” segment and they would prefer a vendor who were assured to be around for a longer period – They need long term association and commitment from vendors(basically for service support)

Intel instead of verbally communicating the values, made customers to experience the values.

TILT THE ODDS

Intel chose a premium segment where competitive forces were weak. They avoided middle-level pricing as it is a market is for nobody.

As they were dominant for some time, they had funds to spend on advertisements, which competitors lacked(Intel sensed this as a competitor’s weakness). Intel needed to advertise to create brand awareness. But they funds were not huge to spend lavishly – They needed to create a meaningful brand.

Innovations – With the help of huge R&D setup, Intel could launch new products faster than the competitor and create a demand, rather than market dictating. Intel invested aggressively in R&D, which could not be matched by competitors or new entrants.

Standardization – To neutralize the OEM’s power, Intel standardized many of its components so that the component can fit more than one OEM vendor. This mutually benefitted OEMs and Intel for some time due to lowered costs and acted as a competitive strategy for Intel.

Intel developed a low-cost product – Intel Celeron to fight low-cost wars with competitors. Due to the diverse portfolio, Intel could maintain a large market share.

INGREDIENT BRANDING

Ingredient Branding – Promotion of a brand within a brand to end user – Simon, H., and Sebastian, K.

In 1991, Intel began Ingredient Branding program (Intel Inside). The program asked Intel’s partners to present “Intel Inside” logo on the product and in their product advertisements. Each partner received a 6% rebate on its purchases of intel microprocessors, which was transferred into OEM partner’s advertising budget. Advertising for computers exploded due to this program.

Intel convinced OEM partners to create a sub-brand for products having competitor microprocessors. In this scenario – customers realized that they were buying a computer without “Intel Inside”.

OEM partners were happy as they got 10% premium for “Intel Inside” products from end-consumers plus advertising support from Intel.

CLARITY – Can anybody write a better statement than “Intel Inside” – It was written in the language of consumers – Findable, memorable, desirable. The sentence was easier to talk about, easier to remember for the consumers. No buzzwords, fluff. Simple positioning statement. In a cluttered world, a customer wants to get to the facts and buy from a company that makes their lives a little bit easier.

PEAK-END RULE – The peak–end rule is a psychological heuristic in which people judge an experience largely based on how they felt at its peak (i.e., its most intense point) and at its end. Intel team was a brilliant one to utilize this psychological principle. Have you seen PC manufacturer ads? Most of the ads end with Intel Logo appearing at the end and with a nice audio representing Intel. That sound has become synonymous with Intel. Did you think why they chose the end instead of showing the ad throughout or at the beginning? The first thing everyone would remember is the “Ending” part. If you end well on a high note – you create a positive impression, a special place in mind. The sound provides that pleasant sensation. Everyone could remember the Intel Logo and the sound. The logo doesn’t just appear – It gradually grows on the screen. Many of ingredient brands have missed tactics like this in their co-brand advertisements. Placement of your logo in ad – visual and audio play a major role – Psychology helps.

BRAND PORTFOLIO STRATEGY

Intel’s brand portfolio strategy too played a crucial role in “Intel Inside” program’s success. In 1992, Intel wanted to launch a successor to 486 chip, but the competitors would soon come with a similar name. Thinking from a consumer’s perspective – It would be tough for consumers to remember numerals as many other products were following the same path. A text would be easy for customers remember. Instead of calling Intel 586 – the chip was named “Pentium”. Can the competitors call their chip as “Pentium”? Was it easier for customers to spell, communicate and remember?

“Intel Inside” became an endorser brand for the “Pentium” instead of sub-brand so that over a period of time, it could be an individual brand. This strategy avoided confusion among users and helped Intel to launch multiple products like Pentium 2, Pentium Pro, Pentium 3, Pentium MMX and Pentium 4, as Pentium brand has grown among the minds of consumers and people considered them as Intel’s product without Intel’s logo.

In 1998, Intel sensed a demand for mid-range high-end servers and workstations. As Pentium brand was associated with lower-end personal computers for homes, it may not be suitable for business servers and workstations. Intel launched Xeon Brand.

In 1999, as PC market crossed “Early majority” segment and entered “Late Majority”, Value segment emerged and demand for low-cost PCs was on rising. Intel observed that using Pentium brand would have been extremely risky. They launched “Celeron” low-cost brand with Intel as endorsement brand.

In 2001, a new processor has been built from the ground up – entirely new architecture – 64-bit(instead of 32-bit) – capable of delivering a very high performance. Intel needed to communicate that this new chip was qualitatively different from the existing processors. They called “The Itanium” processor instead of “Pentium 5”.

CONCLUSION

Intel Programme raised awareness for both processors and PC in general. Consumers and business decision makers(Achievers) alike started observing what was on the inside of the computer before making a purchase. Intel created an impression that it makes something that worth paying more for. Intel reached market supremacy, created brand equity comparable to the level of consumer goods and still continue to be a leader. Intel showed that In-branding could be possible if it covers other elements too.

References – Making the invisible visible – Philip Kotler, Sticky branding -Jeremy Miller, Illuminate – Nancy Duarte, Competitive Strategy – Michael Porter, Brand Portfolio Strategy – David A Aaker, Ingredient Branding case study article – Stuart Whitwell.

Design for “Crossing the Chasm”

Many products were moderately successful. Few products were highly successful. How did they get such huge success? How could they attract people on such a scale? Why could some products not sell in high volumes?

Geoffrey Moore explains “Crossing the chasm” as the difference between products being moderately and hugely successful. It is nothing but making the transition from an early market dominated by Innovators, early adopters to Early Majority.

If your product doesn’t cross the chasm and reach the Early Majority Segment(mainstream market) – you are missing out a huge fortune.

For crossing the chasm, the company has to transform from “Sales-Driven Company” to “User-Driven Company – Geoffrey Moore

How to design to attract this “Early Majority” segment? Let us look at some essential factors for crossing the chasm.

POSITIONING

Positioning is to create an impression of our brand or product in a consumer’s mind. We need to provide a reference. Generally, consumers will remember instantly one or two brands/products in any category. Example- Pepsi and Coke in Cola category, Redbull, and Monster in Energy Drink category.

As it is known that “Early Majority” will buy only from a category leader – Our brand has to be a leader in a category. We may have to spend huge money and time to become a category leader in existing market.

Solution – Create a new category. Find a Niche market. Focus on a particular need, work on it and dominate. Smaller the segment, the entire company can focus and easier to meet the needs, satisfy the desires and dominate the market. You are the leader in the new category. Once you dominate the niche market, you can move to larger markets.

Macintosh initially targetted Graphic Artists/Designers in Fortune 500 companies. These designers gave presentations to Marketing professionals/executives – Marketing and sales departments started using Macintosh for presentations to Outside vendors, Publishers, clients – and the idea spread. Macintosh started from a Niche – dominated the market quickly and spread quickly to other markets.

Documentum introduced Electronic Document Management System in 1993. To start with, the company targeted a niche – Regulatory affairs department in Fortune 500 pharmaceutical companies(Where the User pain is high – They need to file a minimum of 250,000 to 500,000 documents). The product’s usage spread from Regulatory department to Research department as both the departments had frequent interactions. The Document management system penetrated to manufacturing floor from research department – From manufacturing floor to plant construction & maintenance – from plant maintenance to external vendors/contractors and then to Regulated chemicals – to non-regulated chemicals & Oil refineries and then to Oil exploration & production – IT department – to properties – to Wallstreet -to swaps and derivative business.

For Crossing the Chasm, Choosing the Niche is essential. For choosing the Niche, rather than looking at a number of people, look at the magnitude of pain that could be solved.

RECOGNISING THE PROBLEM/NEED

There’s a difference between what a user says, what he means and what we hear.

As we had seen earlier that most of the decisions were taken by Consumer’s Sub-conscious mind, we need to use observational research, empathy to find their unarticulated rational/emotional needs, desires and wants.

Until Steve Jobs introduced iPhone in 2007, nobody knew they had a need for a smartphone.

3M, best-known scotch tape brand invented a new bonding agent. 3M concluded it as worthless as the bonding agent had poor stickiness compared to other bonding agents. One 3M research used the new bonding to create “post-its” that could be attached to a letter or a document with a note. He emailed the “post-its” to executive secretaries(Niche Market) of a president of each fortune 500 company and “Post-its” became a most profitable product for 3M.

Palm pilot picked a need and stuck to it – A phone book and a co-ordinating calender. Earlier PDAs were limited in essential functionality – No calendar, Manual phone books, No backup. Apple’s Newton missed those essential requirements. HP’s 95LX was bloated with so many features but had a minimum spec for phonebooks and calendar applications. No wonder those products failed.

DESIGN FOR COMMUNICATION

Once you have designed the product, we need to launch. We need to communicate about the product without the necessity of showing the product to potential users. Design should make it

  • Easy to communicate and create awareness of the product
  • Easy to make customer feel that he needs the product
  • Easy to inspire users to come forward and seek more information
  • Easy to remove uncertainty about the product in user’s mind
  • Easy for one user to communicate about the product to another user without the physical presence of product – word of mouth, typing texts through social media.

Remember Steve Job’s first iPhone launch? – A widescreen iPod, Revolutionary mobile phone, A breakthrough internet communicator – An iPod, Mobile phone, an Internet communicator – He repeatedly stressed.

iPod – 1000 songs, Ultra-thin portable, 99 cents for one song, Longer battery life.

The product needs compelling details to communicate which make you the category leader. Three most important details. Does your product/service has it?

We need to communicate “How to” of the product. It could be “How to Use for certain primary functions”. Have you seen how Steve Jobs demonstrates usage of the product during launch? Users should be made aware of how to use the product in a simpler way – This is possible only when you design the product with less complexity. You could just explain without a device on “how to use the product”. If you could design like that – Hats off!

DESIGN FOR PERSUASION

In the earlier phase, the product/service provided information about the product. This phase of design has to bring a favorable attitude about the products in user’s mind. Influence your consumers.

As we had known earlier that most of our decisions are taken by sub-conscious mind. Though rational mind analyses, it is the subconscious mind which takes the final decision. By focusing on emotions you could attract sub-conscious – Your messages at this stage has to satisfy both rational and subconscious mind requirements.

In 1997, Pampers, though it is a superior baby diaper with an ultimate benefit of “dryness”, was losing their market share to Huggies. After research, Pampers realized that Parent’s concern was Baby’s “Health and Development” than “dryness”.

Pampers changed their communication from ‘dryness’ to ‘Sound sleep for babies, Help baby sleep better, Good health’. They targeted emotional concerns of the mother and showed how they could help the well-being of baby and support in development. They came out with product categories – Swaddlers for infants, Cruisers for toddlers, pull-ups for toilet training.

Volkswagen is called “People’s car“. When they launched Beetle in America, they came out with a tagline “Everyone needs a Better Car” – Note the difference with “Everyone needs a Car”. Former quote is aspirational – Brand is saying that every user deserves a better engineered good quality german car. The tagline shows an emotional concern for the users.

The communication messages, valid benefits/value propositions of the product have to remove uncertainty in consumer’s mind. Did you see how Steve Jobs enacted certain user scenarios of the product’s usage on the Stage? We need to help user to imagine using the product in different future context to achieve a specific task or goal – How the user overcomes various challenges in those scenarios – How the product makes the user a Hero(Your product should never be the hero) – This could happen, when we design our product/service by considering all future scenarios.

Design the product with cues – The cues which a user can see in their natural environment – Whenever the user sees those cues, he could remember your product and buy the product soon.

DESIGN FOR OPTIMIZED MEANINGFUL BENEFITS

Do not promise a better product, but promise a better life. Create a new meaning for user’s life.

Does your product meet the most important needs effectively? Does your product involve less risk? Easy and Intuitive to use? Does your product save time & effort better than what they have been doing earlier in meeting the needs? Does your product provide social identity and economic profitability? Does the product provide clear meaning?

The earlier personal computers were so complex and meant for hobbyists, gadget lovers, engineers, and scientists. Individuals who bought home computers didn’t have any software/hardware expertise. They had a tough time, got frustrated.

Ford Edsel –Ford motor company did not see the shift in the cultural movement of consumers – People were looking for smaller cars – exposure due to the launch of Beetle, Nash Rambler, Studebaker Lark. Consumers were also moving towards Cheaper models and fuel efficient cars- Ford missed this point completely and Edsel was a “fuel guzzler”. Tele-touch transmission demanded a new behavior and at the same time, it was conflicting with another habit. The transmission buttons were kept at the place of horn – People were accidentally shifting gears when the intention was to honk.

PDA market was struggling for many years till Palm Computing came with “Palm Pilot”. Palm Computing focused on Niche market of a management team of high-tech enterprises who spend 10% of their time in meetings and on travel. The target segment with a major pain point. This user segment needed the support of contact applications, calendar coordination in setting up meetings. As we are aware that early adopters like to try a new product when they could use some of their past experience – The high management team was exposed to high-tech PC applications – Any product which could use this experience would be easy to use for this market segment.

Products like Casio, Sharp wizard had manual phone book but did not have the calendar, Back-up of contacts. HP’s 95LX had a calendar, phone list – But they ran Dos, Lotus-1-2-3, and a word processor. They had a full keyboard, PCMCIA slots, RAM – Basically, they were making another PC – It cost a bomb to buy this product.(Economically not feasible). Apple’s Newton had minimum specifications for phone book and calendar applications(The most important need). The design was more of a brick and tough to fit in a pocket. Pen recognition software performed very poorly.

Palm pilot had comparatively better Phonebook and Calendar applications could be synchronised effectively with PC Softwares, had an intuitive interface, compatible with Mac and Windows OS, Fit inside a breast pocket – Convenient docking stations – easy to download/upload – restricted pen movement, but worked effectively as expected to do the essential work and affordable price point.

DESIGN FOR COMPATIBILITY/INTEGRATION

Is your product compatible with user’s existing attitudes, values, past experiences and cultural values? If you are designing a behavior changing product, then the product has to inculcate the new behavior gradually. So, any product designed without knowledge of their existing values, experiences, habits will not succeed.

IKEA is known for a low-cost household innovative furniture manufacturer in Europe and USA. But in China, IKEA’s cost was still considered premium and local competitors copied its designs. IKEA observed that Chinese consumers were fond of western products since it provides an aspirational value and social identity to the user. IKEA adopted an “Aspirational Brand” strategy and redesigned the furniture slightly to fit inside smaller sized apartments and reflect local culture retaining western influence. In Europe, they stores were located in suburbs, near highways, accessible by cars. In China, their stores were located near to public transport facilities like railway stations as most customers use public transportation.

STARBUCKS and CHINA – It appears risky to sell coffee to a country of traditional tea drinkers. Starbucks established a relationship with local partners who brought local expertise and insights into the tastes and preferences of local Chinese consumers. Starbucks did local extensive taste analysis to create unique blends and introduced beverages with popular local ingredients. In U.S cities, users can sit right next to a stranger in a community table without giving it a second thought. In China, people come in bigger groups – They would like to pull chairs from the neighboring table – creating an instant group seating arrangement. Starbucks interior was designed to meet the behavioral requirements of Chinese culture.

QWERTY Keyboard design has been in use in all electronic devices – It was one of the Non-User-Friendly design – The layout was designed to avoid jamming of those metal arms – The commonly used adjacent letters were kept apart intentionally – A pure mechanical engineering design, than user-centric design. Better keyboards have been designed along the way to replace QWERTY. A notable layout is ergonomically efficient Dvorak Simplified Keyboard by Dr.Dvorak, designed with “Humans” in mind and based on scientific principles(Time and Motion Study). The reason for Dvorak Keyboard’s failure is the inability to break the strong habit of QWERTY keyboard usage over the years.

If the product is too radical, the user may not adopt the product. The more compatible the product with existing behavior, better the adoption of the product. If you are designing a product that requires a change in behavior – start with activities which are compatible to the user and guide them to change.

Research by EMPATHY and Observational research will help in assessing the needs, attitudes, and behavior.

DESIGN FOR OBSERVABILITY

Refer the LinkedIn article

https://www.linkedin.com/pulse/design-subtle-observation-shah-m-m

DESIGN FOR TRIALABILITY

The product should be designed in such a way that it could be easy for a user to experiment part of it. Encourage the user to try out the product in partial basis. Did you visit Apple stores and tried out the products? Did you check what applications kept for you to try? Test drives, rental cars providing offers. Many software products provide a small and essential part of the software for users to use. If the experience is good, solves a pain point, they will start using and it will soon become a habit. The 30-day trial software aims these things.

Products that are available for trial are generally easily bought by the users. Many of our home appliances do not have this feature – Trialability provides an instant experience, which leaves a mark in mind. Trialability should focus more on providing an experience – a positive emotional feeling – to target the subconscious mind.

DESIGN FOR CUSTOMIZATION

Can you let your product to be modified or customized by the user to adapt to his requirements, feelings? Quality control is a concern to let re-invention. But if you could design n such a way that part of your product could be customized, the product has a better chance in the market. Social media platforms allow us to change the background image, profile texts to make it more creative and a host of other customizations. Too many options are going to spoil the experience. Interiors of cars and accessory options. More than manufacturers providing options, if you let customers make their own options and implement in the product – the chances of success is high.

Post-its notes were successful for 3M because it allowed users to find their creative ways to use the product. Short Messaging Service(SMS) – Customers found new ways to use the service – Emoticons, shortened words and so on.

References – Crossing the Chasm by Geoffrey Moore, Diffusion of Innovations by Everett Rogers, Starbucks-wired magazine article by Liz Stinson, Playing to Win by AG Lafley, Habit by Neale Martin, The Innovator’s Dilemma by Clayton Christensen, Ford Edsel Wikipedia, Richard Feloni-Businessinsider.com, What great brands do by Denise Lee, Positioning by Al Ries and Jack Trout.

“Crossing the Chasm” and “The Early Majority”

After spending 250 Million dollars in development over a 10 year period, followed by a heavy investment in yearlong teaser campaign, Ford launched “Edsel” brand car in September 1957, with an assured air of overconfidence in creating a revolution – expected to make inroads into market share of competitors – Ford discontinued EDSEL production in 1960.

Sony introduced BETAMAX a technically superior recording format in 1975. By 1988, Betamax conceded defeat to VHS.

Apple’s NEWTON – considered technologically advanced and innovative on launch, but failed miserably.

The Touchpad was HP’s attempt to compete with Apple’s iPad with powerful processing capabilities, but could not succeed much. Similarly, JooJoo came out in 2009, gone in 2010.

The NOOK e-reader – a worthy competition for Amazon’s Kindle, launched in 2009 by Barnes & Noble is on life support. Kindle is growing from strength to strength.

All the above companies had a lot of publicity to start with, spent a good amount of money on marketing, promotion, product worked reasonably well, but could not become a huge success.

iPod killed MPMan. Microsoft launched ZUNE to counter iPod and could not create a dent.

In 1980’s Every swiss brand was struggling from the onslaught of Japanese Quartz watches, but SWATCH creates history.

Facebook arrives, survives, dominates – Orkut, Myspace vanishes.

INTEL – a product not visible to consumer’s eyes – is a phenomenal success whereas their competitors struggled to create a brand awareness.

Many products were moderately successful. Few products were highly successful. How did they get such huge success? How could they attract people on such a scale? Why could some products not sell in high volumes?

Geoffrey Moore explains “Crossing the chasm” as the difference between products being moderately and hugely successful. It is nothing but making the transition from an early market dominated by Innovators, early adopters to Early Majority.

(Image Courtesy:: The Internet)

If your product doesn’t cross the chasm and reach the Early Majority Segment(mainstream market) – you are missing out a huge fortune.

For crossing the chasm, the company has to transform from “Sales-Driven Company” to “User-Driven Company – Geoffrey Moore

Moore explains that the psychographic profile, needs, wants and desires of “Early Majority” segment is completely different from the “Early Adopters”. It is important to design your product/service with those in mind.

  • Early Majority segment users are pragmatists.
  • They are thoughtful people in accepting the change.
  • They are the one who has funds, disposable money to provide you with a huge fortune. They appreciate value for money.
  • They look for a new proven product to improve productivity, reduce efforts or cut down cost. (Early adopters may like to experiment – But Early majority has clear goals).
  • Seamless integration of the product with their existing life/process/routine – They will not buy, if everything is new in a product and not compatible with their past experiences.
  • They would like to refer from their own segment to buy the product/service. Nobody will buy without consulting others in his or her segment.
  • They prefer to buy from a category leader.
  • They are process-oriented people.
  • They are risk averse.
  • They need assurance that vendor would be around for years to decide on buying the product – They look for long-term commitment from vendors.
  • They would like a network of support services.
  • They are very loyal and once you have got their support, they will help you to keep succeeding and remain as a leader. They act as a “Threat of Barrier” for your competitors to enter into your market.

To attract “Early Majority” and convince them to use your product

  • The product should be easy to use, very intuitive (Ford Edsel’s transmission switch at the center of steering wheel was a dampener)
  • It has to meet the basic needs (Synchronised calendar, phonebook, and Pocket size – Apple newton failed to meet these requirements)
  • Seamless integration (Apple Newton had troubles with integration with PC)
  • Lesser cognitive load (No complex procedures, procedures which need to be recollected from memory) (Newton’s handwriting recognition software was a mess).
  • Marketing messages to Early Majority segment have to be completely different from “Early Adopters” segment.
  • The way of selling has to be different.
  • The product needs to be reliable, of higher quality and work smoothly. They do not prefer to face bugs. (Apple Newton’s
  • A habit-forming product enables them to use the product subconsciously reducing considerable cognitive load and freeing their mind. If they are habituated, resistance to change increases.

References – Contents from “Crossing the Chasm” by Geoffrey Moore.

9 Factors that influence “Design for Selling”​

We all want to sell more. We want selling to be easier. We want to sell faster. We want to sell in cost effective way. Can “Design Thinking” contribute in achieving those requirements?

  1. Have a Beginner’s mind – The first part is to make your product/service as excellent. To make it, you need to understand existing flaws, strengths. Without blank mind, you cannot do it. Throw away existing assumptions about users, pre-conceived notions, do not apply your previous experiences so soon as every experience is unique. Remove authority bias, question everything. Don’t be afraid of generating stupid ideas. Who knows, some of those ideas may turn out to be relevant. Be Dumb.
  2. Ignore your industry benchmarks and competitor benchmarks. Anticipate trends rather than following the trends. Your industry experts may have opinions, not answers. Look at alternate industries, parallel industries. Understand your strength, skills and match them.
  3. Research – Not your industry, not your ego should define the product’s requirements. Only your users should define. Understand Consumer’s needs, wants, desires, emotional aspirations and their contexts. Study Non-Customers. Ask, Observe, Empathise
  4. Reframe – If we did not identify the right problem, then the solution will fail. We need to question the problem. When diaper sales were struggling, P&G realized their earlier communication focused mainly on technology(Most absorbent diaper), but their ethnographic research showed that Mom had other concerns like Softness, Easy-to-use tabs, a snug &comfortable fit, feel, and a fun design. if you ask a skin care manufacturer, he would say that they are in the business of helping women have healthier, youthful and beautiful life rather than saying of making a line of skin care products.
  5. Build a Brand – Brand builds promise and makes it easier to sell by providing shortcuts for a consumer to buy. Brand building is to “Create a FOCUS”, build “Differentiation”. “Go where Nobody has gone” – Everything to Everyone is of no value – Position your product or service by creating a new category. Create a positioning statement. Have a creative name. The distinctive name implies distinctive product/service. Generic names mean generic business. People cannot remember, recollect and refer your name to others.
  6. Design a product/service – Sorry, Don’t design a product/service, Design an “Experience” – Don’t just meet the needs, wants – Go beyond what customers have imagined – Surprise them -Connect these with your passion, strengths, skills. Make the product/service easier, intuitive, less risky, Design for Quality, Design for ergonomics, Design for persuasion, Design for easy to implement and use the product/service, Design for Emotion, Design for the Peak-end rule, Design for observability, Design for Re-Invention, Design for building habits, Design for Communication and Design for cost constraints.
  7. Build Internal Brand Culture – Brand’s culture is shaped by the Vision – the system of guiding principles that communicate values to employees, inspire them and help them to know how their roles create an impact. Employees of a company act as brand ambassadors, they are the interface between internal and external environments. They influence the powerful perception of the brand in consumer’s mind. Everyone in your company is a marketing guy, and his or her every act is a marketing act upon which a company’s success depends.
  8. Business Success is in details – Great Brands continuously seek out opportunities to express their brand. All customer touch points are potential opportunities. Work on all customer touch points, even a minor touch point – optimize for a wonderful experience. Great brands believe that finest detailing in those minor touch points communicate a valuable message to the consumer and helps to build an emotional, loyal bond.
  9. Sell Emotions, Relationships, Experience and not the product/service or expertise. McDonald? Fast food category? No, they originally meant as a place for families to have fun. Happy meals with games, puzzles and small toys, play parks, clown – while competitors focussed on food offerings. Consumer’s decisions are based on how products make them feel, what identity the brand makes them experience and express. PROMISE A BETTER LIFE.

The Meaningless value of “Customer Satisfaction”

“To perform consistently and deliver value-added services to our customers with the highest level of quality. In the process meet or exceed customer expectations.” – Mission Statement of a company.

“Our mission is to continually develop our service to meet and exceed customer expectations” – Another company’s mission statement.

“Delivering Customer Satisfaction is about providing timely, responsive service with integrity, simplicity and a passion for excellence while meeting or exceeding the customer’s expectations” – Vision statement of one more company.

Many firms have “Customer Satisfaction – Meeting customer’s expectations as a goal” in their mission statements. Thousands of books were written to guide us to meet customer’s expectations.

Organizations have surveys to know the satisfied customers and they use that as an indicator to value their internal resources and future sales.

Today, Ford’s customer service representative called me for feedback on Ford Service – They had series of questions to answer over the phone – Do they understand the context where a person would be? Do they understand how a person would answer over the phone or over a face to face meeting? Do they understand how a person would behave under cognitive load? Those questions are a heavy cognitive load and as a normal person, we all would like to avoid those loads. If I rate poorly, they would take action against service center representatives – But there is a problem with their process. I cannot blame their service representatives or even the dealer there. The problem was with the ford’s central process. I gave all questions 10 ratings. Based on my reporting – Can the Ford tell whether I would purchase FORD again or recommend FORD to others? They asked me whether I would recommend FORD to any of my friends. I told them that I would, but at present nobody in my circle requires a car? According to their records – I’m a fully satisfied customer.

Is there any problem if we have goals to meet Customer Satisfaction?

“The only problem – customer satisfaction tells us almost nothing about what our customers will do in the future” – Philip Kotler

Customer Satisfaction does not guarantee “Re-Purchase” – It is a poor indicator.

Research shows that 75% of customers who switched brands were satisfied or fully satisfied with the brand they left. Brands lose 20% of their customers every year. Retention of customers is becoming critical considering the huge acquisition cost in adding new customers.

I was buying a particular brand(Assume Brand X) of jeans for a couple of years from “Lifestyle” store. One day Lifestyle store introduced another new brand(Brand ‘Y’) and kept those stocks next to Brand ‘X’ stocks. I saw the price of new Brand ‘Y’ jeans double that of Brand ‘X’. For next 4-6 months, the price difference remained same. One day, the Brand ‘Y’ announced discounts of 50% and the price was slightly higher than Brand ‘X’ after discount. I purchased a couple of jeans immediately. I was fully satisfied with my earlier Brand ‘X’ – But still, I shifted the loyalty.

I was using Ola Cabs for a couple of years – I thought I was fine with the service – No major complaints. The experience was good compared to ‘Fast Track’ cab services which I had used earlier. Last few months, some of my friends have been talking positively about UBER – Also, the prices are lower than OLA – Ok, I’ll try then – Last 4 months, I have not opened OLA and using only UBER.

SHELL petrol pump stations – Their service is good – Very reliable service – friendly people – Best compared to all other petrol pump stations. On the way to office from home, I go and fill the diesel. One problem I faced – To reach the Shell, I need to avoid a flyover and go into the side lane. (This shell is located in the Side lane of the flyover). After filling, I get stuck in traffic for some time. After few trips, I located another petrol pump(Not Shell) and stopped going to SHELL, though they provide good service.

Satisfied customers will keep using your product/service, till another firm comes along. I was satisfied with Fast Track Cab service, till Ola came. I was happy with OLA till UBER came along.

A product or service satisfies a customer if it does what a customer expects it to do. You can ask – Customers will shift brand loyalty if we just meet his needs. We need to exceed his expectations – We need to delight him. Oh! Thanks for the valuable advice!

Delight – Tough to measure, it is very subjective – hard to maintain and communicate to employees. How will you train your employees to delight the customers? Tough Choice.

Companies trying to exceed customer’s expectations are getting into a vicious self-destroying tornado. Do you know once you exceed expectations of a customer, he would adjust his expectation accordingly the next time? Yes, companies have to keep running to meet the expectations of the customers.

We would be happy and delighted for One day Delivery of Amazon’s services for the first couple of times – Later, Amazon’s one-day delivery on time would become a basic expectation – How a brand would exceed the expectations here?

When I used OLA the first time, I was delighted to track the car, know the status, find out the details of the driver, driver’s ratings, taxi reaching on time. Over a period, those have become my basic expectations – it was merely satisfying my expectations, not delighting or exceeding my expectations.

Can you survive if you focus on exceeding customer’s expectations every time?

Customer Satisfaction is not the right parameter/indicator to measure business success and value employee resources.

Were you satisfied with Microsoft products? They might be better off these days, but they were prickly troublesome. They crash very often including their applications like word, excel, and powerpoint. They had so many security loopholes, which were exploited. Microsoft products were defective. But they were a huge success.

How did they succeed? Though I had shifted to Mac OS four years back, I still use MS word, MS excel and MS ppt in Mac – I got used to the product – Habituated. Yes, Microsoft has built a habit. Even in MAC, the word documents are slow and crashes once in a while, but then I work around and use them.

QWERTY Keyboard design has been in use in all electronic devices – It was one of the Non-User-Friendly design – The layout was designed to avoid jamming of those metal arms – The commonly used adjacent letters were kept apart intentionally – A pure mechanical engineering design, than user-centric design. Better keyboards have been designed along the way to replace QWERTY. A notable layout is ergonomically efficient Dvorak Simplified Keyboard by Dr.Dvorak, designed with “Humans” in mind and based on scientific principles(Time and Motion Study). The reason for Dvorak Keyboard’s failure is the inability to break the strong habit of QWERTY keyboard usage over the years. People can type without seeing the keyboard. They got used to this layout. None of the keyboard designs could break this habit.

CONCLUSION

Instead of focusing on “Customer Satisfaction”, focus on “Customer Habituation”. Try to build habits. Habit forming products, services will help in building longer, healthy customer relationships and provide longer customer lifetime value.

References – Hooked by Nir Eyal, Habit by Neale Martin, Emotional Design by Don Norman, Design for behavior change by Stephen Wendel

Great Brands Embrace Rival Brands

1958. IBM passes up the chance to buy a young, fledgling company that has invented a new technology called xerography. Two years later, Xerox is born.

The late 1960s, Digital Equipment DEC, and others invent the minicomputer. IBM dismisses the minicomputer as too small to do serious computing and, therefore, unimportant to their business. DEC grows to become a multi-hundred-million dollar corporation before IBM finally enters the mini- computer market.

The late 1970s, Apple, a young fledgling company, invents the first personal computer as we know it today. IBM dismisses the personal computer as too small to do serious computing and unimportant to their business.

IBM enters the personal computer market in November of 1981 with the IBM PC.

1983. Apple and IBM emerge as the industry’s strongest competitors, each selling approximately $1 billion dollars worth of personal computers.

It is now 1984. It appears IBM wants it all. Apple is perceived to be the only hope to offer IBM a run for its money. Dealers, initially welcoming IBM with open arms, now fear an IBM-dominated and controlled future. They are increasingly and desperately turning back to Apple as the only force that can ensure their future freedom.

IBM wants it all and is aiming its guns on its last obstacle to industry control: Apple. Will Big Blue dominate the entire computer industry – the entire information age? Was George Orwell right about 1984?

Steve Jobs’s Keynote Speech, 1983, before introducing the famous 1984 Apple Macintosh Ad.

In 1980s IBM and APPLE were arch enemies. This rivalry was the focus of 1984 ad. Steve Jobs projected IBM as the main competitor, the big brother who would like to control every human being and Apple as the savior. Though the AD never shows IBM, it had subtle references to big brother-controller of technology and bluish colors. Was there any need to talk about the competitor? Why could not he just talk about Apple Macintosh? Yes, the competitor provided the needed dramatism, so that people could remember. Were there any other reasons behind?

Apple designed products looking at the consumers than competitors, but then why need to mention the competitor?

It’s not just Apple-IBM – Many companies rival each other to make consumers buy their products. Every field, every category – we could see two major brands fighting each other to secure market leadership.

Energiser – Duracell, Budweiser – Miller, Visa – Mastercard, Adidas-Puma, Ford-GM, Toyota-Honda, Maruthi-Hyundai(India), Microsoft-Apple, Playstation-Nintendo, McDonalds-Burger King, P&G-Unliver, Coke-Pepsi.

The brands use “Contrast Principle” weapon to manipulate people’s mind without the appearance of manipulation. The contrast principle affects the way we see the difference between two objects if presented one after another. As a human being, we don’t make absolute judgments and use shortcuts like comparing with something else to judge. Brands exploit this to enter our mind.

Do brands need business rivalries? Are there any additional benefits?

GROWTH BENEFIT

Was there any market for cola before coke launched? In the 1990s, we could see a lot of Coke and Pepsi ads in Indian Televisions. What would have happened if only we could see only one brand promotion in Indian TVs? Do you think that Cola category would have become famous? Awareness and reach of Red Bull are limited in India compared to Coca-Cola? Would launch of competitor brand “Monster” would have spread the category and increased per capita consumption of “Red Bull”?

Promote Category Not Brand

Al Ries, states “To sell any product, you need to influence people’s mind. To influence, you first get your brand to get into their minds. The easy way to get into their mind is being first. To be the first means that you are the first in a category and in fact you are the one who created the category – In other words, starting something new”

Coke created Cola category, Red Bull created Energy drink category, Paper Boat created traditional juice category, Maggi created noodles category in India.

Al Ries adds “A brand to be a leader should promote category rather than the brand. Category promotion broadens the market segment, increase the target audience”

Can a brand promote the category single-handedly? Will it not be very expensive? Pepsi actually helped Coke in promoting the Cola Category. Pepsi ads, their stocks at supermarkets, small shops-reinforced the Cola category and improved subconscious awareness of the Cola in people’s mind – Per capita consumption of Coke went up due to increased awareness.

When two supermarkets compete for a neck to neck in an area, a lot of small shops wound up in that region. The supermarkets were not trying to attract customers of each other – They were indirectly broadening the target segment and attracting the customers of those small shops – mutually benefitting each other.

Most of us are aware of the places where similar businesses are clustered together – Electronics market – Hardware market. Are those shops worried that they would lose business when they were located next to their competitors? We could see that businesses are prospering. The congregation of similar businesses in one neighborhood attracts more customers due to the availability of opportunities for comparison shopping.

Paradox Of Choices

More the choices, more the brands, more the varieties, more confusion, the poor experience for consumers – The market becomes a commodity market – Nobody gains.

If there is no choice for your brand in your category, customers would be suspicious and think that you might charge high, try to exploit them, as there is nothing to compare with. People may feel that they were forced to buy and resistance builds up. They try their best to delay or avoid the purchase when there are no choices. If there is a choice, they feel that they have more autonomy and are in control of their decisions.

Choice Stimulates Demand.

Great Brands understand the concept of benefits of “Business Rivalry” for their growth and indirectly welcome the competitor.

UNDERSTANDING OF CONSUMERS

Business Rivalry not only promotes growth but provide a more meaningful life for Users. No Rivalry – Cars would not be evolved – you would not have smartphones – you would not have got such high-end computers.

Good products are designed to lift a consumer’s life – For better design, one has to understand the user and business rivalry forces a brand to understand the user to remain as a leader.

When diaper sales were struggling, P&G realized that they have lost touch with the end user and deep understanding of mother only could help in brand revival. Their earlier communication focused mainly on technology(Most absorbent diaper), but their ethnographic research showed that Mom had other concerns like Softness, Easy-to-use tabs, a snug &comfortable fit, feel, and a fun design for the product. P&G created a new product based on new requirements and within consumer’s affordability – Product was a massive success.

INNOVATION

Business Rivalry forces a brand to be creative and innovative. Innovation drives both top-line and bottom-line growth.

Innovation is nothing but adding new meanings to people’s life.

In-depth understanding of customers helps in making meaningful innovations. Apple made a breakthrough innovation with iPod – iTunes store was a major factor in the product’s success. Apple integrated User’s understanding and Innovation to transform the life of people who listen to music and who sell music.

GE, for decades, grew by developing high-end products for developed countries, selling them globally with some adaptations to local conditions. Business Rivalry and market’s economy condition forced GE to create low-end products specifically for emerging markets. China or India’s rural economy could not afford GE’s sophisticated ultrasound machines(Used for Cardiology, Obstetrics, General Radiology). Conventional ultrasound machines were costing in the range of $100k and above. GE’s China Team working with local population created a portable ultrasound machine in the range of $15k, which could be used in rural clinics and also had typical uses like spotting enlarged livers, ambulance squads in the US.

As success breeds success, innovation in product breeds innovation in marketing, sales, business model and every connected field – Denis J.Hauptly

UNIQUE ACTIVITIES

Delivery of unique value proposition to customers derive from the hundreds of activities a brand performs – Example, procuring materials, machining, assembly, molding, packing, stacking, transportation, marketing, advertising, customer service.

Business Rivalries force a brand to turn some of those activities into unique activities, which cannot be copied by a Rival Brand, thus establishing competitor strategy.

For example, Southwest airlines offer short-haul, low-cost, point-to-point service between smaller cities and secondary airports in larger cities. Southwest has tailored all its activities to meet the low-cost model – No meals(save time in loading/unloading meals), No assigned seats, No premium classes, no interline baggage checking, No travel agents, Automated ticketing – All these activities result in faster turnaround time at the gates – keep planes flying longer – low cost – few manpower resources – frequent departures.

IKEA – Global furniture retailer that sells low-cost household furniture for middle-income earners. To achieve this, IKEA has deliberately chosen set of activities that are differently from their business rivals. Ikea uses Self-Service model(No Sales personnel)-Clear, self-explanatory, in-store displays – design and manufacture its won products – modular, ready to assemble, easy to assemble -Volume production due to standardised sizes – designed for efficient packing and transportation – retail showroom and adjacent warehouse to help users to pick up products on their own-Spacious showroom – Showroom located far away from city center- lower rental – good car parking – Showroom’s extended late night working hours to target working middle-class family – facilities like in-store child-care, food court to meet the needs of target segment while shopping.

All those activities need to have some kind of fit among them to have a sustainable competitive strategy. The activities have to be consistent, reinforce each other and could be optimized(Operational Efficiency).

These activities result not only result in enhancing consumer’s life but also work towards social responsibility, less energy consumption, improving the standard of living, sustainable environment.

References – What is a strategy by Michael Porter, Influence by Robert Cialdini, Something Really New by Denis J.Hauptly, HBR’s 10 must reads on Innovation, The 22 immutable laws of branding by Al Ries and Laura Ries, Playing to Win by A.G.Lafley, Article in Inc.com by Jill Krasny, Steve Jobs by Walter Isaacson, lybio.net-steve jobs’s 1983 keynote text, Positioning – The battle of your mind.

“Ford Edsel” Brand Failure – A Design Thinking Perspective

After spending 250 Million dollars in development over a 10 year period, followed by a heavy investment in yearlong teaser campaign, Ford launched “Edsel” brand car in September 1957, with an assured air of overconfidence in creating a revolution. Unfortunately, the car flopped so spectacularly, and it had become a timeless case study for brand failures. Failures may not show what could be the right way to do things, but it would indicate the pitfalls in a path, avoiding us to re-invent the wheel in certain scenarios.

It’s not just Ford, many other brands had learned from the “Edsel” brand failure. So, what are the takeaways for us?

CUSTOMER CENTRIC

Back in 1956, Ford Motor Company realized that there was a void in their selections of mid-size automobiles – Customers who upgrade from Lower end of the market to Medium end of the market.

In the medium segment, Ford had only “Mercury” brand, whereas GM and Plymouth had brands like Buick, Pontiac, Oldsmobile, Dodge, Desoto, Chrysler. The perception was that Ford was losing customers to other manufacturers when the time came to trade-up from the lower end segment. The options from competitors in “Medium” segment enabled “Ford” lower end owners to shift loyalty and move to other brands.

FMC needed a new car line between Ford and Mercury to compete on a level playing field. The design of the car was to be completely unique – distinguishable from any angle with distinctive promotions and advertisements.

By looking at competitors rather than customers, Ford wanted to create a brand in “Medium Segment”.

Benchmarking Competitor’s product to understand market signals, market behavior, market trends, is a noise and a distraction from a brand’s core activities. Product data about the market can be gathered more successfully by studying the users.

Following were the objectives for FORD management team during launch of EDSEL

  • To ensure greater retention of ford upgraders

It is the beginning of end if we start thinking about preserving old customers than attracting next generation customers

  • To keep more customers in ford family
  • To add More dealers to Ford Family so that we can sell more ford cars
  • Aim is just not to sell more Edsel cars but should help to sell more ford cars by “Halo Effect”

What do you feel by reading the above objectives? Does it not appear like – only about Ford, rather than people or consumers? Does it not talk about profits for Ford than consumers? It appears like Ford Centric(Indirectly – Product-Centric) than Consumer Centric objectives.

Customer focused company – If you ask a phone manufacturer, he would say that he is the business of connecting people and enabling communication any place, anytime rather than saying they are in the business of making smartphones – AG Lafley

Theodore Levitt identifies this as “Marketing Myopia” –

  • Companies spend billions of dollars making their new generation of products just slightly better than their old generation of products – Ford’s teasers with tagline “Car of the Future” created a huge hype, increased consumer’s unrealistic expectations. But when they launched, people could not find a huge difference in value propositions from other brands. Yes, there were a couple of notable innovations from Ford’s perspective – but consumers did not consider them as highly valuable.
  • Ford management team used entirely internal measures for success/progress of the project – example, Technical Achievements like Teletouch, floating speedometer, Self-adjusting brakes, transmission lock, electronic hood release. – They should have used external, customer-centric measures for success of a feature.

The product-centric view makes the brand focus on materials, engineering and takes them away from the customer.

GREAT BRANDS ANTICIPATE TRENDS

In a free market scenario, success or failure of a brand is in the hands of the consumer than the manufacturer. As Ford Motor Company was product-centric than customer-centric, they completely missed the changing consumer trends, attitudes.

“When the Edsel was first developed it looked like big was the way to go,” says Ellsworth, “But by 1958 people were thinking more along the lines of smaller economy cars. The public’s interest in huge, big fin cars with glitzy chrome was just about over,” he notes.

Ford motor company did not see the shift in the cultural movement of consumers – People were looking for smaller cars – exposure due to the launch of Beetle, Nash Rambler, Studebaker Lark. Consumers were also moving towards Cheaper models and fuel efficient cars- Ford missed this point completely and Edsel was a “fuel guzzler”.

Ford started Styling of Edsel in 1955, the year in which two million units of “Medium Sized” car were sold. Ford used this sales data to justify the design investment and blindly followed the trend. If Ford had launched this car in 1955, the brand would not have failed. By 1957, market and consumer attitudes had changed.

https://www.linkedin.com/pulse/how-great-brands-anticipate-trends-shah-m-m

BUSINESS MODEL INNOVATION

Research could provide required “Value Propositions” -We cannot satisfy every need or want of a user – But how to finalize the required value propositions? Decisions should be based on a brand’s core strengths, capabilities, resources, key partnerships, vendors, distribution channels, cost structure and the revenue streams. Design Thinking uses “Business Model Canvas” to solve this problem.

  • Ford motor company used same assembly lines for Edsel and Mercury cars – Workers were uncomfortable to switch from one set of parts assembly and sequence to another set -Confusion of parts with other brand models in the assembly line. In some of the cars kept at dealers, parts were missing. Some parts were kept in the boot with a note to help dealers assemble the parts themselves.
  • Ford employees did not feel the ownership of Edsel vehicles – They took a little pride in their work – This affected quality of products.
  • Ford added new dealers exclusively for Edsel – with the main aim to have dealers network to match competitor numbers. Ford failed to leverage their existing dealer network.
  • Dealer’s mechanics were not equipped sufficiently to deal with the mechanical/electrical problems of the car affecting the customer experience. “Tele-Touch Transmission” though a big innovation, was the most problematic.

ATTENTION TO DETAILS

The best user experience is in small details. If you are a consumer oriented company, you would be focusing even on a small customer touch point and provide a delightful experience.

https://www.linkedin.com/pulse/difference-between-good-brand-great-attention-detail-shah-m-m

Tele-Touch Transmission – Ford was promoting the “Tele-Touch Transmission” as the foremost innovation – This gear shifting arrangement needed a change in User Behaviour – Location of gear shift mechanism and way to shift the gears.

Unfortunately, the gear shifting transmission is kept at a traditional location of the horn button – Users inadvertently shifted gears when the intention was to sound the horn – The system was not good for driving in streets. Teletouch too had overload problems with the electric motor.

Tail Lights – Ford Edsel had Boomerang shaped lights – They missed an essential subtle detail – The boomerang shape was placed in reverse fashion – direction opposite to turn being made. Example – For right turn signal, the boomerang’s arrow shape pointed left.

PROTOTYPE AND TESTING

A product’s success lies in “Prototyping” and “testing”. Whatever assumptions, ideas, insights we have got could be validated by some form of prototyping and testing with a small set of actual users. A prototype could be an inexpensive model, scaled down version, to help real customers to understand the design or solution. Testing with real users helps us to optimize the design, remove low-value proposition features, enhance good value propositions and get what customers think and feel about the product.

  • Ford did not “Test Market” any prototypes with potential “Real Buyers” until vehicles had been fully designed, new dealers were established. Prototype testing would have solved some of the problems associated with “Value Propositions”.
  • When consumers were looking for cheaper models, Ford’s first launch was most expensive, top of the line models. The rule is to start with cheaper models to encourage people to buy. Prototype testing would have guided them.
  • Every brand launched new cars in the month of November. When Edsel was launched in September, it was competing with 1957 models with discounted price before next year models pushed into the showroom.

PARADOX OF CHOICE

More the choices, worse the user experience. Design Thinking advocates fewer choices for the customer.

“As the number of options increases, the costs, in time and effort, of gathering the information needed to make a good choice also increase. It increases our cognitive load. People prefer other loads than cognitive load.” writes Schwartz. “The level of certainty people have about their choice decreases. And the anticipation that they will regret their choice increases.”

Ford Edsel had 18 models to confuse consumers – Ranger, Pacer, Corsair, Citation – 2 to 4 door-Hardtop – sedan -wagon -convertibles – 6 or 9 passengers – People had tough time in differentiating a top line model, lavishly equipped, 345 hp “Citation model” and base, with shorter wheelbase, 303 hp “Ranger” model.

CONCLUSION

Ford learned a lot from “Edsel’s Failure” and they turned “Customer Centric”. It was one of the reasons for their “Mustang” success. One of the main reasons for Edsel’s failure was unprecedented “Pre-Publicity” – Self-assured advertising – creating unrealistic expectations. Pre-publicity was the first step for failure – So, Ford Edsel was destined for failure before anyone saw the car.

References – Ford Edsel Wikipedia, Richard Feloni-Businessinsider.com, Edsel Story-Youtube, Jame Page Deaton-how stuff works, Edsel.com, Tony and Michele Hamer-thoughtco.com, Play to Win by AG Lafley, What Great Brands do by Denise Lee, Paradox of Choice by Schwartz.

How can Design Thinking Re-invent a Brand?

In 1990s P&G’s largest and best-known skin care brand “Oil of Olay” was struggling and the company needed domination in skin care to be a credible player in the beauty business. The “Oil of Olay” was seen as old-fashioned and no longer relevant. The Skincare market had the potential to provide “Halo Effect” for the brand in other beauty categories like hair care, cosmetics, and fragrances.

How to be a leader in a Skin Care Market? P&G team realized that only innovations could help in becoming a leader in the market.

The management team had to do something to gain the market share – They had three strategic choices in front of them -Should they launch another new brand? Buy an established Skin-Care leader? or Re-invent the Olay Brand?

How to decide the choice? Who will answer the above questions? – Yes, Only your customers. If the management team answer the questions, based on their past experiences, they would be blocking innovations for the product. Only innovations can increase the market share. How would you get answers from the customer? Through Design Thinking or User Focused Thinking.

Design Thinking is to think from a User Perspective – Be a User to understand their attitudes, behaviors, actions – Learn to get into the mind of User and Understand his thought process. The first step in Understanding your consumer’s mind is “User Research”

USER RESEARCH

The P&G team did a detailed work to understand the consumer and concluded the following based on the research insights

  • Consumers were well aware of “Oil of Olay” brand name. It appeared that the brand had potential, especially with the right push behind it.
  • Olay’s existing customers are price sensitive(Older women aged fifty-plus – who use Olay Brand for fighting wrinkles)
  • The users minimally invested in skin care and would not pay premiums for skin care products
  • Every other competitor was focusing on this segment and opportunities for growth appeared limited.

The conclusion is to use the Olay Brand Name itself, but need to reinvent the brand and Reinvention is possible only through innovation.

EXTREMES AND OUTLIERS

To Innovate, one of the wonderful “Design Thinking” tools – Look at your Non-Customers.

Focusing on existing customers will break the existing market into finer segments, forcing us to tailor the offerings further, and reducing the market further. To break away from this, the first step is to shift your focus from “Customers” to “Non-Customers”

W.Chan Kim and Renee Mauborgne, in their “Blue Ocean Strategy”, divides those “Non-Customers” into three tiers.

  • First Tier – “Soon-to-be” non-customers who are on the edge of your market,
  • The second tier – “Refusing” customers who consciously choose against your market
  • The third type – unexplored non-customers who are in markets distant from others

Focusing first on the third type of customers will provide ideas for innovation.

How would you locate your third type of Customers? Not by asking questions, but observing them. Observe to locate customers with sizeable pains, unarticulated needs, pains that have emotional attachments like anxiety, fear, and social implications.

P&G team observed that many women in mid-thirties were still using hand and body lotions on their face. They were cleansing, toning, moisturizing their skins by using day creams, night creams, facials and other traditional treatments.

P&G research team did a deeper research to understand the reasons

  • In mid-thirties, consumers notice their first lines and wrinkles in face
  • At this moment, they are vulnerable, anxious than the older segment
  • They apply those lotions to keep their appearance youthful
  • They are worried about keeping a Healthy Skin.

P&G felt that women in mid-thirties are highly committed to skin care and are more willing to pay for quality and innovation. Moreover, the users had taken the effort to solve this problem by applying those lotions. This had reinforced the potential opportunity. Another aspect – Frequency of use – The customers were using those lotions 2-3 times in a day – This target segment appeared to remain loyal if their rational and emotional needs are taken care of.

REFRAME THE PROBLEM

P&G team reframed their skincare as a business of helping women to have healthier, youthful and beautiful life rather than saying of making a line of skin care products

P&G understood that they could not just focus on “Wrinkles” alone. Thirty-Five plus women had other concerns for skin. In research, P&G team unraveled other needs – Dry Skin, Age spots, Uneven skin tones, Appearance of skin – No brands were focusing on those needs. These unarticulated needs of your customers are the “value propositions” of our new product.

Blue Ocean Strategy calls this as “Value Innovation”.

“Value Innovation” is nothing but creating a leap in Value offerings to buyers/users, thereby creating new uncontested market space, making competition irrelevant

BOS says that Value without Innovation is an incremental innovation, which will not help you stand out in a marketplace. Innovation without value to user tends to be technology driven, often shooting beyond needs of buyers or what buyers can afford. So, Blue Ocean Strategy suggests “Value” for User with “Innovation” is a “Radical Innovation”  to achieve growth leadership in the market.

P&G scientists set out to work on sourcing and developing better skin-care compounds to meet the new value propositions.

P&G launched “Olay Total Effects” as a masstige(between mass and prestige segment) product in 1999, redefined the market of what anti-aging products could do. They followed up with an even more expensive brand, with a better ingredient-Olay Regenerist. Later they launched Olay Definity and Olay ProX. Olay had double-digit sales growth, with extremely high margins of profit, and a loyal growing consumer base.

References – Playing to Win by A.G Lafley, The Innovator’s Dilemma by Clayton Christensen, Blue Ocean Strategy by W.Chan Kim and Renee Mauborgne