Age of the Smartwatch?

All the hype around smartwatches these days has got me thinking about the launch of the iPad a few years ago.  Back then, the media kept speculating whether or not this was the "age of the tablet." Now, they are speculating whether or not this is the "age of the smartwatch."

How can we determine whether this new device will be a huge success or a flop?  Well, what makes the difference in whether or not a device, any device, will be successful in the market?  Is it the features and specs - processor speed, the amount of RAM the device has, or the resolution of its screen?   If you read the tech blogs, you would think so.  However, in industry after industry, we know that this is not the case.

The product or service that wins in the market is that one that actually helps people get various jobs done better than alternatives.  The iPad has done well because, with all the apps that have been written for the device, it has become for many their go-to computing device. 

It has not put an end to the PC, because the PC still helps people get various jobs done (like creating presentations or building sophisticated spreadsheets) that tablets are not that good at, yet.  PC sales have slowed, no doubt, because the iPad and other tablets are better than PCs at helping consumers get some jobs done (like surfing web pages, reading ebooks, or playing games).  For many consumers, this is all they need from their computer.  As a result, the iPad has done well in the marketplace not because it "out specs" PCs, but because it does some jobs that people value better.

This brings us back to smartwatches.  All the news about the device is focused on the features and specs of the device.  I have yet to read anything that talks about what jobs these oversized watches will help me get done better than what smartphones can do.  Ok, it may be more convenient to glance down at a device strapped to your wrist to get the time or see that someone text you than go through the effort of pulling something out of your pocket or purse.  However, is this compelling enough to get folks to spend $150-$300?

I predict smartwatches will do well in the marketplace when someone can explain to consumers what job(s) this helps them get done better than what they can do today with their plain old smartphones. When someone can do that, then we have entered the age of the smartwatch.

Stand Out from the Competition by Stepping Back

Now that you have successfully developed an innovative new product or service, how do you stimulate market demand? Your customers are overwhelmed with the number of product and service choices that exist in the market today and the volume of marketing messages that bombard them. It is estimated that the average American is exposed to hundreds of advertisements a day and this number is only growing. The only way to stand out from the competition is to step back and establish a clear and credible point of distinction.

Most marketers know that the process of uniquely positioning an offering is the key to driving profitable growth. However, positioning is not about what you do to your company’s products or services, but what you do in the mind of the customer.[1] To effectively position an offering, you must begin by understanding how your company’s brand is currently perceived by the customer and what windows of opportunity exist that your brand can fill. One of the primary challenges to doing this correctly is discerning what metrics should be used to measure the brand’s current position as well as those of competitor brands. Another difficulty that causes problems in positioning is that most companies do not know what customer needs they should use to create differentiated value propositions.

So, what is the best way to do this? Fortunately, we know that customers hire products and services to get jobs done and that they measure success in getting these jobs done by specific metrics or desired outcomes. By uncovering the functional and emotional jobs customers are trying to get done and learning which desired outcomes are important to them – but not well satisfied – marketers can find the “holes” or opportunities in the market. If their products or services address these needs well (or at least better than the competition), then marketers will be able to develop a unique and valued position for their offering that successfully resonates with the customer. They will own that position.

Microsoft's release of its new Windows Phone 7 operating system is an interesting case study in positioning. They are clearly trying to reverse market share losses sustained over the past few years by establishing their new offering as the “always delightful” solution that helps users get tasks done quickly and get “back to life.” If these are unmet desired outcomes customers have when using their phone, then this is a solid foundation upon which to spend more than $100 million on a new advertising campaign to make that position known.

Will customers buy in to this claim and help Microsoft climb back as a mobile technology leader? The problem is that Microsoft's reputation is not in congruence with creating products that are quick and delightful to use. In fact, they are often derided for how complicated and technology-focused their products are compared to their more user design-focused competitors. So, customers will have doubts Microsoft can deliver on their promise given their current positioning. I believe this will be a hard bridge for them to cross. As a result, I don't think they will have much success winning back the market share they lost to Apple and Google in the smartphone war.

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[1] Ries, Al and Trout, Jack, Positioning: The Battle for Your Mind,McGraw-Hill, 2001, page 2.

Is Xerox Wasting Their Money?

The Wall Street Journal announced last week that Xerox Corp. is launching its most expensive advertising campaign in two decades with the hope of repositioning the company away from being just a copier maker and expanding into business services.  In fact, Xerox has already purchased outsourcer Affiliated Computer Services to help it do just that.  It now faces the tough task of changing the perception customers hold of Xerox.

This announcement begs a question to be asked.  Why do some companies, such as Apple and IBM, have such great success reinvigorating growth through market repositioning while others like Xerox, Polaroid, and Kodak struggle?

All of these companies have a few things in common.  They have all had success selling their products and, as a result, are known for something.  Once their growth rate slowed, each of them invested in launching new products and services.  Some, like Kodak, have even won awards for them.  However, the market has not rewarded all of their efforts equally. 

We all know how Apple has transformed from a computer company to a mobile device and entertainment company with their slick iPod, iPhone, iPad, and iTunes products.  As a result, they are now the most valued technology concern on the planet.  Similarly, IBM moved from being predominantly a hardware/mainframe business in the 1990s to being one of the largest IT integrators/outsourcers.  Their reputation for being technology experts has given them the right to do this in the minds of their customers.  In contrast, Xerox has tried for years to move from being a manufacturer of photocopiers to a document management services company.  They have had marginal success.

I believe the answer lies within how these companies repositioned themselves.  Both Apple and IBM found an important problem the customer was struggling to get done, developed a superior and sustainable solution, and then provided clear and credible points of distinction to help build their “story” in the minds of their customers.  They connected who they are to how they can help customers get other jobs done.

On the other hand, Polaroid and Kodak, both known for early innovations in photography, have failed to carve out a valued position in the digital world.  They have struggled to develop new products AND tell the world why their products are superior to other solutions already on the market.  To customers, there was no clear link between what they were known for and the new solutions they had launched.

Now, Xerox is planning to launch a very expensive ad campaigns to do just that – tell the world why they should consider Xerox for help with mundane business processes.  Will they be successful?  Have they “earned the right” to do this from the customer’s perspective?  This depends on whether or not they help customers see how a copier manufacturer can be much more than that.  If they don’t, then they are just wasting their money.

Why Apple's iPad is a Success

A few months ago, I predicted that Apple’s iPad would not be a success.  To summarize the reason I made this prediction, it appeared at launch that Apple was simply going to position the iPad as a device that sits between the mobile smart phone and the laptop.  As I stated at the time, I did not believe that consumers would want to purchase yet another hand-held device.

In hindsight, I was wrong.  The iPad has been a runaway success and has compelled others to create new tablet devices.  However, even though I was wrong in my prediction, Apple was also wrong in how they saw the iPad being positioned in the minds of customers.  The iPad is not perceived by consumers simply as a device in the middle-of-the-size continuum.



Despite it’s form factor, consumers judge products based on the jobs it helps them get done.  As a result, the iPad is being grouped in the minds of consumers with other portable electronic reading devices like the Amazon Kindle and the Sony Reader.  What all these devices have in common is that they enable people to read books and keep up with information while on the go.

My theory about why the iPad is selling so well has to do with this grouping.  When we begin to seek out a solution to a job we are trying to get done, it is because we want to get that job done.  However, when we make decisions about what product or service to purchase, we do so by comparing one option against alternative options.  We then base our purchase decision based on how well we believe the solution will allow us to get the job done.  This includes everything from making the purchase to learning how to use it to maintaining it and, ultimately, disposing of it. 

As a result of the iPad being grouped with these other devices, consumers are choosing to purchase the iPad because of it’s perceived superiority in how it gets the job of reading books and keeping up with information done.  It’s intuitive user interface, numerous apps that seamlessly sync desired content, and high resolution color screen are all often given as examples of why it is a desirable solution over the Kindle and Reader.

From Apple’s advertising and marketing campaigns, I do not believe they intended to have consumers pair their new device with these other e-readers.  Rather, consumers have done this on their own based on the job they are hiring these solutions to get done.  As a result, Apple has a product consumers are choosing to buy more often than not.  The only question that remains in my mind is whether or not Apple could have even more success with the iPad if they purposely positioned it in this way.

Repositioning Financial Services?

An interesting article in the WSJ today talked about whether financial services are headed to a new venue.  That is, the supermarket.  The article speculates what might be a sign of things to come based on a recent deal by Sam’s Club to offer small-business loans up to $25k in stores through a partner lender.

What’s interesting is that this idea is not new.  Sears bought Dean Witter back in the 1980s to combine retailing and financial services.  Also, banks have had branches and ATMs in supermarkets for years and H&R Block has offices in strip malls throughout the country.

The idea goes something like this.  Consumers shop in retail stores.  Consumers need financial products like checking accounts, mutual funds, and loans.  So, put these together and we have an “innovative” approach to selling financial services.

The question that needs to be asked is, “Are these really related in the mind of the consumer?”  In other words, do consumers really see financial services as part of their weekly grocery shopping experience?  It is understood that having them physically located in the same place makes sense from a convenience perspective.  That’s not really what I am talking about.  Rather, in the mind of the consumer, does Sam’s Club “have the right” to offer financial products.  Is the Sam’s Club brand connected to financial services?

Many companies try to make this leap by extending their brand to other product categories.  Some are quite successful, like Virgin Group extending from record labels to transportation (airline, trains) and video/game stores, while others fail miserably diluting their brand value by confusing their customers.



In financial services, the WSJ article reasons that it makes sense to combine products that have largely become commodities (like mutual funds) with either trusted retailers or financial information-providers, such as Microsoft and Yahoo, who have built up goodwill and a brand name with their financial websites.  However, if I were an executive in one of these companies, I would really want to know how the brands are connected in the minds of the target customer before I spent billions acquiring companies hoping to extend into financial services.  What do you think?

What makes a great market position?

The short answer is a position that is important to the customer, can be satisfied in a superior and sustainable way, and provides a clear and credible point of distinction.

There are several paths available from which companies can choose to reach this preferential destination.  One is to both innovate around the core job your customers are trying to get done and around the “consumption” of the products or services your company provides.  Some examples of this include Apple (their products are clearly innovative, but their stores, web site, and App store are remarkable for their ease of purchasing) and Google (they are innovative in both helping people search for information and consume the ads/information as a result of a search).

Another approach companies like Progressive and Enterprise Rent-A-Car have used is to innovate around the delivery of products/services and to stake a position on that.  These two examples have not fundamentally changed the solution required to address the core job of protecting yourself from financial loss as a result of an accident or hiring a car to get from point A to point B, respectively.  They just make it much easier to consume auto insurance (through Progressive’s rate comparison process, on-site claims, and concierge service) or to rent a car (through Enterprise’s ubiquity and pick-up service) once a consumer decides that is the solution they need.



As a result of their efforts and market positioning, Progressive has become the fourth largest auto insurance carrier and doubled the number of new policies it has written in the last 3 years and Enterprise, with its iconic wrapped car, is the largest car rental company in North America with over 91% of “local” car rentals going through them.

As a consumer of auto insurance and rental cars, can you see how these companies positioning passes the test of “great” (important to you, superior to other solutions, sustainable in their delivery, clear positioning, and credible marketing claims)?  What other companies can you think of that have also taken this path towards growth?  What do you think is stopping many others from pursuing this?

Communicate the Position

Armed with a clear idea of how the company’s product or service is positioned in the market and a compelling customer value proposition, you are now ready to begin promoting your offering. The ideal messaging will help your customer understand how your company’s brand delivers on its promises at all levels in the brand-promise hierarchy as follows (starting from the bottom):

• Product or service features are tied to specific under-served functional jobs and outcomes that they address


• A link between what the customer is trying to get done and how they want to feel or be perceived as a result of getting a job done is effectively made


• The customers’ values, personality, and lifestyle are taken into account to understand their frame of reference when selecting solutions and executing the job

A great example of this type of communication comes from PNC.  Their Virtual Wallet product was created to address unmet customer needs when managing money.  They are targeting younger savers who do not think managing money is fun and have better things to do with their time.  To compensate, they created messaging that is upbeat and straightforward, connects with their target audience’s lifestyle, and explains what jobs and outcomes they are helping customers satisfy.


To achieve your desired market position, your marcom team needs to formulate a communication plan by connecting the functional and emotional needs of the target audience.  This includes making a number of decisions:

• What are the objectives of the planned campaign? What do you want to happen as a result of your marcom activities?


• What message are you trying to convey? What do you want your target audience to know?


• Which communication medium(s) best convey your message?


• At what points in the customer buying process do you want the message to be released?

	Customer Buying Process
	Figure out needs	Identify options	Evaluate options	Choose an option	Purchase	Modify the choice	Re-new
Objectives
Message
Medium

As a result, a detailed communication plan can be prepared that allows you to develop a winning winning market position that resonates with customers, align internal and external stakeholders on the value of a brand so that messaging is clear and consistent, and own a repeatable and sustainable process for developing focused and effective marketing campaigns.