This guy killed the product and Blackberry. He also reminded us that Nokia once a leader in the mobile handset business has “given away their business” to Apple with the Iphone.

I remember a few years back I missed out on an opportunity to meet Jorma Ollila, then CEO of Nokia. This guy was God! He was invited to all the high level, prominent world conferences as a speaker and meeting him was akin to meeting the Pope if you were in telecoms (well OK… not like meeting the Pope but close). Nokia was on top of the world in the early 2000’s where they commanded at least 60% world market share. Then a little company from Canada called RIM was building steam on the market with the Blackberry and it was hailed as the next best thing and you were missing out if ” you did not have a Blackberry “. Today the table has changed once again: I mean do you know anybody that does not have an IPhone?

Product development and a philosophy of being customer obsessed are key in the smart phone business as you can see. Apple commands now 26% of the app phone market (i.e. IPhone applications) which is the result of 75 million slaving fans and a bottomless app store.

In my MBA classes we talk about “Gaining momentum - the Larreche prescription”. Larreche maintains that momentum is something that can be created by companies and once achieved can be maintained by pursuing a creative marketing approach. Apple, Toyota, Nintendo and Skype have all entered the virtuous circle of continuous growth - “the momentum effect”. A company that “systematically place customers at the center of its thinking and thrives to attain ambitious goals will be able to harness the power of the momentum and deliver exceptional growth.”( J.-C. Larreche, 2008 the momentum effect: How to Ignite Exceptional Growth).

I could not agree more.

Where are you sitting right now with product development for your firm and more specifically is the customer the main focus for what you are trying to create, build and sell?

I want to cover the importance of being competitive and aggressive about product development. In my next article I will talk about the actual phases of NPD (New Product Development) but I can’t do that until I raise (read, remind you of the) importance of:

• 1) Why you always have to be in the right zone of developing enough products,
• 2) Making sure the customer is at the focus of what you develop and,
• 3) Kill a product when it has reached the end of its life cycle.

I don’t care what industry you are in. Customers have become used to “new and improved” and unfortunately for you they expect it. Are customers rational when it comes to buying new products and knowing which product is best? Answer: No. Larreche also tells us that they are not always strictly rational: Their perception is their reality.

Perception is what drives them.

If your products have not had a “face lift” or change and your competition offers something better or perceived better, the customer “will walk” in other words he/she will change products.

Lifestyles have changed and are getting faster .People are more are more time constrained and want immediate results. Does your product offer this better than the competition?

As well, your competitors are probably persuading even loyal customers to come over based on better prices. NPD is another reason to help you get away from the “price trap”.

Have I got your attention now and are you motivated to do something about NPD?

Let me give you a few steps to get you in NPD thinking mode. Let’s first highlight factors that hinder product development:

• • Shortage of ideas
• • Faster required development time
• • Shorter product life cycles
• • Cost of development
• • Capital shortages
• • Fragmented markets
• • Social and governmental constraints

Let me help you with the Shortage of ideas department.
Suggestion: Don’t tackle it only on your own. Get your team/peers to help you.

Here are 10 ways to find great new product ideas:

• 1) Run informal sessions with customers
• 2) Make customer brainstorming a part of company/plant tours
• 3) Survey your customers
• 4) Allow time off for technical people to putter on pet projects
• 5) Undertake ‘fly on the wall’ research from customers
• 6) Use iterative rounds with customers
• 7) Set up a keyword search to scan trade publications
• 8) Treat trade shows as intelligence missions
• 9) Have employees visit supplier labs
• 10) Set up an idea workshop
• Notice how often I mention often the word customer here?

Here are more ways on how to draw ideas from customers:

• • Observe customers using products
• • Ask customers about problems with products
• • Ask customers about their dream products
• • Use a customer advisory board or a brand community of enthusiasts to discuss products
• • Use websites for new ideas
• • Form a brand community
• • Challenge customers to improve products.

As a benchmark Toyota employees generate 2 million ideas per year or 35 suggestions per employee (er…that is 3 idea per month!). Are you encouraging the same in your firm?

On a closing note, Bob Bowles one the best NPD gurus I know in telecoms came to help me with my former employer, essentially a company that could not compete.

We wanted to get NPD off the ground and to become a credible player in the telecoms business, but ironically we found that the team had all the right ingredients. We just needed a structure, a process and the need to ignite the obsession of being customer focused.

The rest is history since my former employer is now competing and generating new products with the same intensity as established industry players. It worked!

NPD starts by having the right mindset regardless if you are a 1 person organization or 5000 people organization. Customers want products that satisfy their needs - all the time.

Use the ideas above to optimize or kick start your NPD approach. In my next article I’ll go over NPD structure and process.

In the meantime get the Idea generating machine going!

Citeste articolul Fara Produse noi, va pandeste falimentul din revista Biz aici: http://t.co/ahkDYjFW

If you are selling your products/ services (let’s call it “product” moving forward) by using a “shot gun” approach and you’ve been successful…great. However over time unless you have a meticulous understanding of your customers you will “lose them” too.

The most fundamental question for any marketer is: Who is my customer?
If you know this, then you are doing fine. In fact the more you know this and the more you know about who is NOT your customer the better you stand a chance of identifying new sources of revenues.

Segmentation is the buzz word when it comes to understanding current customers and new ones. It would take a few chapters to explain all the relevant aspects of segmentation but let’s see if I can summarize this fascinating aspect of marketing in a few lines.

Definition: The aim of Segmentation is to identify and selectively target prime groups of customers and potential customers, to understand their preferences and to respond with different marketing strategies that are appropriate for each chosen segment.
Any form of segmentation requires a lot of analysis such as:

• - Evaluation of external data/trends: Economic, competitive, market dynamics, sizing/opportunity, etc.
• - Evaluation of internal data/trends: sales, repeat purchases, churn, retention, loyalty factors,
• - Understanding what drives the customer experience with sales, product, and customer care which translates into the value propositions.

The importance of segmentation results from the fact that buyers of products are not a homogenous group. Actually, every buyer has individual needs, preferences, resources and behaviors. Since it is virtually impossible to cater for every customer’s individual characteristics, companies group customers to market segments by variables they have in common. These common characteristics allow developing a standardized marketing mix for all customers in this segment.

Ok… so how do you group them?

There are least 5 common ways to group your customer by segments after you’ve done your research:

• 1) Geographic segmentation,
• 2) Demographic segmentation (Age, gender, income, generation, social class).
• 3) Category -based segmentation
• 4) Needs based segmentation
• 5) Psychographic or lifestyle-based segmentation

Geographical is self explanatory; Demographic segmentation is used mostly by retailers and banks: Psychographic segmentation (more common method in business these days) divides buyers into different groups on the basis of Values and Lifestyle (VAL). Factors that describe individual lifestyles are:

• 1) Activities
• 2) Interests
• 3) Opinions

People buy things based on their needs but they are influenced by a variety of factors. Psychographic segmentation identifies those reasons and groups these particular customers in clusters which indicate the propensity to buy/not buy your product, or to influence other clusters to buy /not buy.

Seems pretty simple right… But how do you get there?

You can try to establish these clusters on your own but you would need a strong, analytical research team to embark on this exercise, or you would need to work with a research firm to help you indentify these clusters while your team maintains the lead on fine tuning the results. Third alternative; you could use a consulting firm that manages the research, identifies the clusters and provides you with a roadmap to drive revenues.

Case: Market sizing and segmentation

Let’s look at an example to show the output of such a research.
To make it easy to understand let’s assume that you are the new CEO of MSM, a new residential real estate developer, a greenfield project in the heart of Cluj. You can basically build whatever you want however you must address potential demand and meet revenue and ROI KPIs (Key Performance Indicators). To be successful your residential concept also needs to incorporate other elements to attract residential owners: Offices, large employers, schools, retail, professionals, fitness centres, public transport etc.

The research company you hired came up with an extensive research and analysis on the addressable market in Cluj:

• - You know that there is an annual demand in the city of Cluj to build approximately 14.000 housing units annually.
• - Very few people live in houses currently, but there is high demand for single-family residences. Nearly 35% of those who intend to purchase a residential property would like to purchase a house.

Residential market segmentation

Income is the most critical predictor of ability to pay for say, high-end housing. You assumed the target market for housing in the MSM development is concentrated in the segment >1.100 EUR/ month net income. In Cluj county, there are currently 7.800 households meeting this definition. Ten years from now this is expected to rise to over 20.000.
The research company combined income and social class with other factors to create a more complex, needs-based segmentation to help illustrate demand. This analysis delivered the following five segments:

• • “Young Rich Kids”: Both young and successful entrepreneurs or children of wealthy parents who are studying in Cluj.
• • “High potential students”: Students or recent graduates who have an above average level of interest in real estate and improving their living conditions
• • “First Time Home Buyers”: Young adults in their mid-20s or early 30s, they have generally started their first home with a partner. Many have young children, socially and physically active, have their own cars, are online and more sophisticated consumers:
• • “Happy families”: Middle-aged families in their 40s, married with older children at home or who have begun to move out of the house. Significant household equity - 16% intend to get a new home < 12 months, 80% of those want to buy a house, but only half intend to get a mortgage. Less active than younger segments, fewer tendencies to go out and be socially active:
• • “Empty nesters”: Older couples in their 50s/60s whose children have moved out, accumulated wealth and want to buy a place to enjoy their twilight years. Currently own a place, typically larger, with 3 - 5 rooms. They do not go out to bars and restaurants but enjoy culture, sports matches, having friends over, etc:

In addition there are two other segments for which there is no data available.

• • “Foreign expatriates”: Upper managers of current and future investors in Cluj will be present in the city for 2 - 4 years and will demand the highest quality housing. Expatriates generate the need for supplier companies (law firms, consultancies, architects, advertising agencies, etc.) There could be 300 - 500 such individuals living in Cluj at any given time.
• • “Repatriate Romanians”: Roughly 2.5m Romanians have left the country since 1990. As incomes rise and economic opportunities increase, this trend may reverse and some portion of these individuals may return and buy property. You estimated this could total 3.000 - 5.000 individuals over the next decade.

So what?
Now that your research generated what is called “Primary” data - data that has been researched and paid for (whereas “secondary” data is what you find in reports or the web, usually free), you now know that there are different categories or segments of customers to address and target.

Then what?
Once you have done the research and identified the clusters, the next task is to target the right product/message with the best media - this is called „hunting with a telescopic sight ” vs. using the shot gun approach. At my last employer ( Romtelecom) once we knew our segments, we targeted them with laser precision by offering them a product which we instinctively knew they would buy.

Results:

My direct mail (DM) campaign gave me a 12% success rate ( unheard of in the business) versus the usual 2-3% success rate.

Why were we succesful?

• 1) We surprised (read shocked) the segment since they had never, ever received an offer from Romtelecom.
• 2) They were targeted -almost a perfect fit with the new product (hint: I could see their consumption behavior based on their current usage).
• 3) Our media or advertising campaign was incredibly cheap. Instead of using TV, radio or print, we used envelopes, stamps/courier service and a few follow up calls from the call centre.

All this because we did a bit of research, grouped customers with cool descriptors called segments, made a few assumptions and tested a different approach.

Ta Dah!! There lie the benefits of Segmentation!

Now I also need to admit that our product was indeed what they wanted. How did we know that? Well because all that research that we had commissioned in the first phase indicated to me that they were interested in buying. All we had to do was to “action” the research with a real campaign.

Ok now you are saying OK Paul… how much does this cost?

Well the cost of the research (Segmentation) was approx 60K Euros or a small percentage of my yearly research budget.

Now realizing that your company may not have that kind of budget the process is the same and you should also attain the same results. If your business is small then you need to use www research (web). The people in your team are critical. Any good research analyst will understand Segmentation even if they have never really prepared one. This was the case with my team - we learned from each other.

Now I need to emphasize that my segmentation discussion was more in line with the classical approach which stands the test of time. I would need another article to explain newer approaches to getting primary data through “permission based” or “inbound” marketing” techniques in order to gather info about segments.

With the explosion of Social Media more and more companies in Romania will start dedicating a greater % of their marketing budget to Social Media because of its dynamic nature of getting feedback from customers. However Social Media is not the “Be all, end all” solution either, in other words only doing Social Media is not recommended. You need both classic and dynamic when it comes to Segmentation.

On a closing note, when Jim Hubley our CEO first told me “Paul…Set up segmentation for us” I said “of course ” walking away and not having a clue how to do this in Romania.

After 9 months of building the team, setting the direction, getting buy-in as well as convincing top management the merits of Segmentation we were able to deliver a 12% sales rate on our Direct mail campaign.

So as you can see it took time but it was an investment in people, processes and getting a better understanding of customer segments which enabled Romtelecom to become more strategic in their approach. It paid off!

Spending the time to really understand who your customers really are will ensure that you don’t “lose them” too.

Happy hunting!

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Source: Financial times April 14, page 3: “IMF sees steady economic recovery”

As my father used to tell me” I hate to tell you so… but I told you so”.  He would always take great pleasure in reminding me that he was right on some advice he had given me a few months (or years) prior.

Well I hate to tell you so … but I told you so: The recession is over. OK you may not feel it, you may not see it but this is how it works.

You see headlines like the one mentioned above on page 3 of the Financial Times, (not the front page); some politicians have tried to convey better news about how the economy is recovering, returning salaries to their original levels, independent bodies like the World Bank or IMF making studies and publishing these good news stories and quietly, yes quietly things seem to get back to normal.  Translation: You are not going to see a TV campaign or  a YouTube viral that goes around the world and tells you …”HEY the recession is over”

It just is!

Looking back on the materials I had produced (see my How to survive a recession presentation) to entertain my fellow Romanians and anyone  interested on the topic,  I guess this recession or Criza was the second longest after the great depression in terms of  length - wait for the official duration from reputed sources but it  lasted probably 27 months.

If you recall the first news of recession started in Q3 or Q42008 in the US at the height on the subprime loans. The delayed effect from the US to reach Romania was probably 6 months and we started to feel it in Romania around Feb2009. That same delay is apparent now. Obama made a statement in Q3/Q4 2010 that the recession was over and it has taken about 6 months to reach us here.

Still don’t believe me? I speak to a lot of investment funds, angel investors and banks. Let me give you some anecdotal feedback:

1)      Some foreign money is coming in to kick start residential Real estate business - I didn’t say a tsunami of money but some money nevertheless.

2)      Mega Image as an example has 60 stores in Bucharest (yes 60) and they wish to open another 30 in Bucharest. Now I reminded you in my recession’s blog that food retailers are recession- proof but the Delhaize Group continues to grow in Romania.

3)      In addition to the Saudis and the Chinese investors who are meeting Romanian politicians, there is continuous interest from long standing investors in Romania such as the Germans, Austrians and Turkish interests indicating that there is still opportunity in Romania.

4)      Did you happen to notice how many outdoor ads/posters are empty? Answer: None. That tells me that media costs have bottomed out and now companies want to get their product messages across.  I remember in July 2009 there was a great deal of empty outdoor ad structures without any advertising.

5)      Conversations have changed - people don’t talk about how bad things are but they getting busier, companies have opened their training needs, more quotes are requested and customers are making more demands.

Believe me.  We are in recovery, the economy is growing once again and moving away from the bottoms experienced at the trough or its deepest level. Employment, production and income are undergoing a period of growth and the overall economic climate is good.

Besides, it really does not matter if you believe me …history proves it.

Question is: Are you ready for the good times?

This mess started by a lack of confidence and it has ended with renewed confidence.

See you in 7 years when I dust off and re-publish my How to survive a Recession articles and tell you then: ” I hate to tell you so… but I told you so”.

I read a great article in Wall Street Journal about layoffs but more specifically to trim costs on a broad based manner - ask your Assistant to print it for you. It gives examples of reducing salaries, unpaid vacation and even cutting back on expenses such as travel and mobiles phones. You may very well get more benefits by cutting ‘across the board’ on expenses rather than shedding critical staff. Here are a few examples:

Hewlett-Packard, which was already cutting 24,000 jobs following a big acquisition, cut salaries by 2.5% to 20% and reduced contributions to employee 401(k) plans (i.e. pension plans). Last year, HP asked employees to take unpaid vacation days and extended a planned holiday shutdown to two weeks.

Test-and-measurement equipment maker Agilent Technologies Inc. is taking a similar approach. It subsequently linked a portion of all employees’ base pay to its financial results, so costs fall automatically when profit declines. In December, Agilent trimmed salaries an additional 10% and said it would eliminate 500 full-time positions, freeze hiring, limit travel, cut temporary workers and mandate unpaid vacation.

Last idea: Ask your employees where to cut! You cannot possibly know all areas where fat can be trimmed. Executives at Commercial Vehicle Group in the US asked four employees to devise a plan to save an additional $50,000 USD. The group identified $600,000 in potential savings, including office supplies and cellphones, which it presented to CEO. “They went after everything,” the CEO said.

Difficult times require you to sharpen your own skills. Take classes, read books and network with others in your industry so you can learn from them.

In one minute during my last networking meeting, a Marketing Director of a Global hotel chain gave me his top tip that they were implementing. They were proactively calling corporate customers to reduce the corporate ‘per night’ rate - even before customers were calling. That provided me with me inspiration, a new idea for my web site and a reminder that ‘you need to get out of the office and talk to people” that is, networking.

Get involved in your Business association and make sure you are on top of your game. Look for joint venture opportunities.

Make yourself more efficient by outsourcing services that consume your valuable time. For example, if you are doing the bookkeeping for your business, hand that off to someone else so you can have more time to focus on what you do best. Determine your priorities. Where should you be spending your time? What can you do to make your company bigger, better and stronger? Leave the worrying to your competitors and instead seek out opportunities and stay positive.

When you put the right energy and focus into your business-despite the economy-the results can extraordinary.

What are the lessons learned:

• 1) It makes sense to do research and development counter-cyclically.
• 2) Recessions can be really useful strategic opportunities.
• 3) Everything is cheaper during a downturn, including the cost of labor, materials, and office space.
• 4) There’s less competition, both from incumbents that are trying to put out their own fires and from startups that find it harder to raise money.
• 5) Tough times force entrepreneurs to work on their business models earlier, so they end up reaching profitability more quickly than when money comes cheap. “The companies are tougher because they were tested during a tougher time”.
• 6) In the case of Lotus software - another survivor, the owner said “If a product meets an unmet need, it doesn’t matter if the economy is bad”.

Last message: Even money saving customers need to get your attention; they are trying to survive too!