Marketing in a tight economy

With the economy officially in a recession and consumers cutting back on spending, marketers face a new challenge. Especially when one is trying to sell a commodity product such as laptops. How does a manufacturer not only keep its market share but demand higher prices in this environment?

Clearly articulating customer value proposition is key to the success of a marketing campaign. It should always be about the customer's perceived benefits, not about the product's features. When a product offers a unique value proposition, customers will vote with their open wallets. In chapter 10 of Marketer's Toolkit: The 10 Strategies You Need To Succeed (Harvard Business Essentials), the author writes that "customers don't buy features, they buy benefits".

GE is selling a washer and dryer set for $3,500 by articulating low resource utilization (uses optimal amounts of water, soap and electricity) and that clothes last longer (stressing that the machines are gentle on clothes). Lexus is pitching their cars as having a "low cost of ownership", alluding to its fuel economy, durability and resale value. See the article "How to Sell Luxury to Penny Pinchers" in the November 10, 2008 issue of Businessweek.

The same issue of Businessweek also has an article about Dell's customizable "designer" laptops and how it is planning to charge a premium price for this benefit. In chapter 8 of the Marketer's Toolkit, the author talks about a "stage-gate" process of continuously prototyping and testing ideas to eliminate weak ones. This is exemplified in Dell's approach to designer laptops. Senior management was wary of Dell's initial test in this space when a limited edition laptop designed by an obscure graffiti artist, Mike Ming, was released. Market reacted favorably and offered a stage-gate validation to extend this into customizable designer laptops with a number of choices available to customers.

Have an Opinion!

I must say the highlight of my orientation weekend was becoming the very first EWMBA student in the class of 2011 to be cold called by a professor in class.

It was a friday evening and I checked into the Doubletree Hotel at Berkeley Marina. Over the next three days, I would be participating in the new student orientation, for the 2011 class of Evening and Weekend MBA students at UC Berkeley's Haas school of business. Soon after checkin, we were each handed a packet with reading material and told to prepare for a case study to be discussed the next day in the classroom.

Fortunately, I had recently re-acquainted myself with the rigors of classroom learning experience. One of the entrance requirements to Haas was to complete a pre-requisite course in Statistics, which I satisfied through UC Berkeley's extension. I had to complete the course and receive a passing grade prior to the start of orientation. I had planned my study such that I was completing each of the 12 course units every week. As a result, my schedule over the past three months had been crazy. Good, I thought; a 5-page business case study to read overnight, no problem!

Friday night's event was a welcome dinner, interspersed with addresses by the dean, associate director and an alumnus's address, followed by informal networking with classmates. My day had started early in preparation to fly down to Oakland from Seattle. My wife dropped me at the airport and after the 2-hour flight, a shuttle ride on AirBART to the Oakland Coliseum station, a ride on the BART to Downtown Berkeley station, a shuttle ride to the hotel and finally a dinner reception, I was ready to put off the case study on Robert Mondavi's winemaking business until the next morning.

Students were up by 8AM the next day for breakfast and after an hour-long talk on leading through innovation, we headed to the hotel's parking lot for a team-building exercise. We were divided into 20 teams and each of us were given identical set of materials and an hour to design and construct a structure that would withstand the assault of really fast-flying tennis balls. The team whose structure has the most number of intact eggs within the structure, ranked by the height of the eggs above the ground, would be the winners. This was our first taste of team collaboration among the students. It was clear within a few minutes who were the doers and managers, visionaries and risk-takers, cautious and impatient types...and those commenting from the peanut gallery. No, the goal of the exercise was not to segment students but I can't help mention. What really stood out was everyone's creative energies, ability to disagree but commit, scramble as a team to win and still cheer competitors.

We then boarded a shuttle to Haas and, after what seemed like an eternity before the photographer snapped a few group photos of the entering class, headed to a 90-minute case discussion in the classroom. As prof.Maria Nandorff discussed the use of a case study as a teaching method, I remembered my recent meeting with a senior leader at amazon.com who had remarked, "always have an opinion on everything, take sides and be able to defend your position". Thankfully I had heeded that advice while reading the case earlier that morning and I wasn't at a loss when prof.Nandorff cold called me to discuss the key issues in the Mondavi case. It is not without reason that the senior leader offered me that advice. Successful leaders are those that make good judgements quickly even in an ambiguous situation. Quality of judgements can only be improved via experiential learning whereby one makes a judgement (takes a stand), evaluates the quality of its outcome and applies the learning into the next judgement. While this feedback loop can take a long time in a real-world situation, a case study discussion short-circuits the timeframe by offering nearly instant feedback on the possible outcomes of one's judgement and alternate possibilities.

The rest of the afternoon was spent touring in and around Haas, followed by a rock-n-roll themed costume party dinner and karaoke. By sunday morning we checked out of our rooms and after a couple of hours of talks from the career services and the alumni association, we temporarily parted ways, with a plan to re-unite during the following weeks as classes get underway.

"Are you going to be an owner or a visitor?"

Those were David Gent's parting words on August 10, 2008 as he wrapped up the weekend orientation for new students entering the Evening and Weekend MBA program, class of 2011, at UC Berkeley's Haas School of Business. He urged the class to decide for ourselves how we will spend the next three years at Haas and beyond.

Many years ago, I committed myself to getting an MBA, although my motivations for the same have gone through many reflections and about turns. It wasn't until last summer ('07) that I shifted my aspirations into high gear. MBA application essays require a student to articulate their reasons for pursuing business education. I have listened to many podcasts, read books and articles, all of which emphasized the importance of defining a clear post-MBA plan in order to submit a strong application. On the other hand the alumni and currently enrolled students I had met almost unanimously indicated they were either re-thinking or used the time during the MBA to craft their post-MBA plans.

So, are application essays a creative or serious undertaking, you might ask. Why do these two constituents project diametrically opposed viewpoints on essays? The idea is really to have a clear plan and articulate that in the essays. It is OK for this plan to change over time, as mine certainly has. In fact, it was the very same admissions staff at the orientation who encouraged the entering class to keep an open mind and stay open to new possibilities as we embarked on this new educational experience.

As I researched schools last year, UC Berkeley was the only school I decided to pursue, influenced by its strengths in entrepreneurship and stated mission to prepare leaders who will "lead through innovation". As I have learned at the weekend orientation, it is perfectly OK to change motivations. After all, it is an outcome of learning and increased awareness of possibilities. If you had asked me four years ago, I wouldn't have been able to describe what it meant to be an "owner". However, it is precisely that word presently motivating my pursuit of an MBA, thanks in large part to Amazon.com, my current employer, for generating the awareness. At Amazon, employees are encouraged to think like owners and help structure initiatives that first and foremost improve customer experience and then improve the financial bottom line.

An MBA is not a transaction in which education is traded for time and money. Rather, it is a long term investment that will only pay off by nurturing one's networks and promoting the program's branding, thereby one's own branding. I certainly plan to be an owner, doing everything in my capacity to further the program's and, in turn, my own success.

Full-service gas stations

We were driving back from Portland to Seattle last night when I spied a Costco just off the interstate at Wilsonville. Realizing that we were three hours away from home and it was almost 6PM (closing time for Costco on a sunday), I raced to take advantage of the last opportunity for low-price gas in the no-tax state. I joined the line at 6:04 PM and it took me 30 minutes to fill up.

There were two attendants, servicing 8 pumps and I quickly realized that I was in the last bastion of full-service gas stations. While the rest of the states have evolved and progressed, Oregon and New Jersey continue to distrust drivers to pump their own gas. There are many reasons cited for full-service but I wonder why these reasons are unique to Oregon and New Jersey: (1) gas spillage risk due to drivers topping off their tanks, (2) lost jobs of attendants, (3) saving drivers the trouble of dealing with weather, (4) cheaper gas prices due to lower insurance premiums from lower risk etc. How come these states allow motorcyclists to pump their own gas? Also, what about all the lost time and emissions resulting from dozens of cars waiting too long in line for a fill-up?

Microsoft Narrator

I almost went crazy within a matter of 10 minutes.

The fateful moment arrived when my computer booted up with Windows Vista. My 9-year old son who was standing next to me pointed to a blue icon on the startup screen and asked what that was. Unwittingly I clicked on that icon and he wanted to try this feature called Narrator to which I naively obliged.

Once I logged in, Narrator started up and started reeling of all the text on the screen. Initially it was very funny how it pronounced words. Soon I started to wonder how somebody with visual impairment could find value in the narration. For instance, when I clicked on the start menu, the narrator started reeling off all the options on the start menu one after the other. What is the point in reading off all the options? Better would have been narrating an option only when the mouse hovered over one of them.

Within a couple of minutes, I realized that I had unleashed a demon. The narrator rapidly transitioned from being funny to annoying. Naturally I poked through all the options on the Microsoft Narrator application window that had popped open upon my login. True to the Vista spirit of unintuitive UI design, I found every option but one that would disable the narrator feature.

My next stop was the quickhelp option and then the windows help option. By now I was frantically typing "turn off narrator" in the help search field while the narrator's female voice was obdurately reeling off every word on the screen. Good grief Microsoft, none of the help topics described how to turn off the feature.

Duh, why didn't I try running a Google search to find help regarding a windows "feature"? Its search results bring up a slew of links where posters were livid with desperation due to their inability to turn off the @#&% feature. As is yet another classic Vista trait, the solution was obscure: go to the Start menu, then Accessories, Ease of Access, Ease of Access Center, Use the computer without a display. Now, uncheck the option for Windows Narrator.

Phew! I slumped back in my chair and enjoyed the next few moments of silence..

Polls, statistics and lies

Running a survey and computing statistics is like walking on a ridge, with bias as the two steeply sloping sides. Conducting an objective study is rife with opportunities to skew the results. Intentionally or unintentionally, an experiment can be designed to yield the desired results. A truly objective experiment should start with a probabilistic method for selecting a sample, gather data without inducing any bias into the participants, classify and summarize the data accurately and present the data in a clear, honest and unambiguous fashion to support the decisions reached.

Literary Digest predicted a landslide victory for the republican Alf Landon in the 1936 presidential elections while the incumbent Franklin Roosevent actually won by a wide margin. During the 1948 presidential elections, polls predicted that Thomas Dewey would defeat Harry Truman. More recently, polls predicted that Barack Obama would defeat Hillary Clinton in the the New Hampshire primaries. If actual results do not match desired results, marketing machines tend to distort the facts to suit their objectives. A recent Business Week cover story discussed how manufacturers promote cholestrol lowering drugs by presenting half truths and seeming facts.

Literary Digest tallied the 2.3 million respondents from the 10 million polled and arrived at their conclusion favoring Alf Landon. Peverill Squire in his 1988 article in the Public Opinion Quarterly 52:125-133 entitled "Why the 1936 literary digest poll failed" posits a theory. First, the sample was selected based on telephone directories and automobile registration records. The sample was thus not representative of the population; the poor who backed Roosevelt could not afford telephones and automobiles. Second, the response rate was less than 25% and based on the results from a Gallup poll trying to investigate the discrepancy in results, among the non-respondents, a very high percentage favored Roosevelt.

In 1948, it was Gallup's turn to incorrectly conclude from its poll that Dewey will defeat Truman in the presidential elections. Sampling error was to blame. Pollsters adopted quota sampling where a fixed sample size was selected from each strata of society, instead of random sampling. Secondly, pollsters got cocky and stopped polling a few weeks too soon. Finally, the polls were conducted over the telephone and the poor who didn't have access to telephones swayed the election in Truman's favor. Popcorn and feed polls (items on sale were printed with donkeys and elephants and buyers urged to purchase the item printed with their party affiliation) targeted the lower income strata of society and such polls correctly indicated Truman as the winner. However, these polls were not published widely and those conducted by Gallup and others had national outreach with major newspapers. In the last few weeks leading up to election day, Truman's campaign style helped him reach out to the poorer voters, unlike Dewey's.

ABC, CNN, CSPAN, Gallup, Reuters, USA Today, Washington Post, and Zogby polls all had Democratic candidate Sen. Barack Obama winning the 2008 New Hampshire Primary against Sen. Hillary Clinton. This was perhaps the biggest error in polling results since Chicago Tribune prematurely proclaimed Dewey as the winner in the 1948 presidential elections. Once again, sampling was inaccurate but it was also compounded by a larger margin of error due to a significant 18% "undecided" vote in the exit polls. Poorer white voters tend not to participate in surveys and they generally have an unfavorable view of black candidates. Women voters who overwhelmingly supported Clinton also outpolled male voters in the primary, which could have upset the sampling.

Ventures and Dynamic Leaders

Tom Byers, in his talk at the Entrepreneurial Thought Leader speaker series, discusses how a CEO should evolve as a startup goes through its phases. He quotes Randy Komisar in drawing an analogy between a CEO's evolution and types of dogs. As a startup is just getting off the ground, the CEO should be like a retriever, seeking venture capital and trading equity for ideas and dollars. As the startup matures, the CEO should be like a bloodhound, sniffing a trail and setting a strategy for the company. Once the startup is established, you need a husky as a CEO, one with temperament and high-energy for the long haul.

Must-reads to prepare you for a career in business

I recently listened to a podcast from MBA Podcaster titled MBA Must Reads: Experts Share Their Top Recommendations on the Books that will Prepare You for Your Application, Business School and Your Career Beyond School. Following are the books cited in the podcast:

1. The Structure of Scientific Revolutions by Thomas S. Kuhn
2. Costing the Earth: The Challenge for Governments, the Opportunities for Business by Frances Cairncross
3. The World Is Flat: A Brief History of the Twenty-first Century by Thomas L. Freidman
4. The Seven Spiritual Laws Of Success - A Practical Guide To The Fulfillment Of Your Dreams by Deepak Chopra
5. How to Become CEO: The Rules for Rising to the Top of Any Organization by Jeffrey J. Fox
6. Winning by Jack Welch, Suzy Welch
7. How to Win Friends and Influence People by Dale Carnegie
8. The One Minute Manager by Kenneth H. Blanchard, Spencer Johnson
9. The Brand You 50 : Or : Fifty Ways to Transform Yourself from an 'Employee' into a Brand That Shouts Distinction, Commitment, and Passion! by Tom Peters
10. The Trusted Advisor, by David Maister, Charles Green, and Robert Galford
11. The Seven Habits of Highly Effective People by Steven Covey
12. The Tipping Point: How Little Things Can Make a Big Difference by Malcolm Gladwell
13. Freakonomics : A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt, Stephen J. Dubner
14. Emotional Design: Why We Love (or Hate) Everyday Things by Donald A. Norman


15. The Medici Effect: Breakthrough Insights at the Intersection of Ideas, Concepts, and Cultures by Frans Johansson
16. Songbook by Nick Hornby
    

Is iPhone the next PC?

On March 7, 2008, Apple announced the launch of an iPhone Developer Program. Software developers now have the ability to develop, debug and distribute applications for the iPhone and iPod Touch. Kleiner Perkins, the famed Silicon Valley VC has set up a $100 million fund to invest in companies building applications for the iPhone. In addition, Apple announced an entry into the enterprise market, which could deal a huge blow to RIM's Blackberry. Is this finally going to catalyze the long awaited convergence of mobile devices and make the iPhone as ubiquitous as the PC?

Mobile devices have been open to developers for a while - Palm, Windows Mobile and Symbian. Apple has a distinct advantage in that it is capitalizing on its incredible momentum first with the iPod and then with the iPhone. Also, Apple's timing is impeccable; simultaneously announcing the availability of the SDK and its plans to enter the enterprise market. The buzz created in media is enormous. Secondly, Apple's offering takes care of not only the development of third party applications but also provides a platform for its distribution. While all the other comparable platforms enable development, they fall short on offering a distribution mechanism, which is critical to drive adoption.

Finally, if I can read all my eMails, browse the web through a full-featured browser, listen to music, watch videos and take advantage of really cool third-party apps to come, all through my iPhone, I no longer have to carry any other mobile device. Which starts to beg the question, can I also make do without my laptop in most cases?

Green Apple

I just watched a trailer of an episode from PBS's e2 series on energy, entitled "Green Apple". David Owen, a journalist for The New Yorker contends that suburban sprawls, by design, are energy unfriendly due to the necessity of driving everywhere. He talks about New York being the greenest city, using Manhattan as an example and citing the proximity of resources and amenities that make it possible to either walk or take public transportation to your destinations, thus helping conserve on fuel usage.

Gaming the Prius

If you drive a Toyota Prius hybrid, tell us honestly how much time you spend staring at the real-time mileage indicator on the center console. I consider the display a ground breaking innovation. For the first time, drivers are getting instant feedback on how their driving habits influence fuel consumption. Who doesn't want to play the game and score high points?

In the last two months that I've owned the Prius, I've seen my gas mileage steadily inch up to over 50 at the moment. Here are some tips that I've seen work favorably:

1. Use the cruise control as much as possible, even on back roads if you feel comfortable. With the cruise control engaged, the car intelligently uses auxillary power from the electrical engine, maximizing gas mileage.
   
2. Use the break assist when coming to a halt. Anticipate breaking and use the break assist feature to slow down. This helps recharge the batteries as well.
3. Start and stop gradually. Very soon it will become apparent to you that flooring the gas pedal adversely affects mileage.

A california non-profit group, CalCars is pushing the Prius further by adding a plug-in option. This extends the gas mileage to over a 100.