Marketing 2.0

What's Wrong at GM?

Lately, the jackals have been circling General Motors. Even in the boardroom, restless shareholders are pressuring to bring in new leadership or take dramatic action to stave off bankruptcy. How did a venerable American institution get to this point?

There are lots of explanations going around — healthcare costs, high labor rates and burgeoning pension obligations have all been blamed. No doubt these are major factors that are hurting the General’s bottom line, but I think the biggest failure is one of marketing. GM is simply not building enough desirable vehicles.

There are certainly pockets of strength within GM’s product lineup — think Corvette, Cadillac and some of its trucks and SUV’s. The problem here is that high gas prices are turning many consumers away from these thirsty vehicles. When buyers look for cars and not trucks, the General comes up short in comparison to offerings from Toyota, Honda and other manufacturers.

It’s funny how brand loyalty can last a lifetime. Most of my early vehicles were Chevrolets including a 1951 sedan (it was older than I was), a 1966 Impala convertible, a 1976 Vega (the worst car I ever owned), and a 1980 Monte Carlo. I still feel a connection to the brand but I don’t know which model I would buy today. The only option I would consider is a Cobalt for my teenaged daughter. For myself, there just isn’t a Chevrolet I would want to own right now. I don’t claim to represent the majority of American car buyers but apparently many of them feel like I do.

There are some hopeful signs. The new Buick Lucerne looks great, at least on the outside. I don’t think I’m old enough for a Buick but hey, you never know. The Pontiac Vibe is an efficient little package that looks like fun. The Cadillac CTS would be a big hit with my son. Beyond that, there’s not a lot that appeals to me.

In the short-term, someone will probably come in and cut costs to save the company from insolvency. The real challenge, though, is to cut through the brand clutter and create distinctive models and identities. Some of GM’s nameplates may have to go in the process. Can the company succeed? Well, they certainly have designed some great autos in the past. Think about the 1957 Chevrolet Belair and the 1963 Buick Riviera. These cars are classics that have stood the test of time (at least in terms of design).

It’s up to the designers and marketers to create new classics that will attract a new generation of buyers. As a loyal but lapsed Chevy customer, I’m hoping they can do it.

Sales Reps and Marketing Hype

Sales reps hear a lot of hype from their marketing departments. In the end, it's the reps who have to get face-to-face with customers and persuade them to buy. That's a lot tougher than it sounds to the product manager sitting in head office. Product managers don't make it any easier when they try to B.S. the sales force. Here are a few of their favorite lines and what they really mean for the sales professional:

• "The product sells itself" — Okay, let's just set up a display in the customer's lobby and write up the orders. Unless you're selling water in the middle of Death Valley, chances are the sales reps need to do a lot of selling to make your product a success.

• "We really don’t have any competition for this product" — Uh, oh. Someone hasn't done any research. Everyone has competition these days and products look more alike than ever.

• "There’s huge, pent-up demand for this product" — Maybe if you are first to market with a product like Viagra, that's true. Most of the time, the world is not waiting anxiously for your new product.

• "Customers will pay a premium for this product" — Unless you have an established reputation and position as a premium brand, this is almost never true. Many products actually cost less than ever and increased competition coupled with flat demand is only pushing prices lower.

• "The sales targets are aggressive but doable" — If all of the stars and planets are in perfect alignment and you have a career year, you just might hit your target. In reality, most of you don't have a prayer of making plan.

• "The potential market for this product is in the billions" — Check that Excel formula, will you? While you're at it, stop drinking that funny Kool-Aid.

Auto Design Winners and Losers

Design is always a subjective consideration. What looks great to one person can be atrocious to another. This is especially true of automobiles. While some people buy strictly for utilitarian reasons, autos represent an emotional purchase for many consumers. If not, BMW and Scion would not exist.

Being an enthusiast, I’ve made some observations of the current state of automobile design. In my view, some brands are heading south while others are rising in design competence. The winners and losers may surprise you a bit.

Winners:

Toyota – For years, this company had the most conservative, plain-vanilla designs in the industry. Look for a Camry and you were sure to see a senior citizen driving it. Now things are changing. The new Camry is an emotional piece of work. It looks aggressive and chunky. I can’t believe I’m saying this but it actually looks cool. I’m not sure I would buy one but they have come a long way. The Sienna minivan also has a pleasing style and the Avalon has morphed from a car for your grandfather to a great looking (and performing) vehicle that is a legitimate rival for the typical luxury vehicles.

BMW – I know that Chris Bangle’s designs have been widely criticized but I think he is the most creative and influential designer out there. His redesigns have made the BMW models far less conservative, much more emotional and unique. Yes, it looks radical to some but great design always looks jarring at first because it breaks the typical mold. Then, over time, we familiarize ourselves with its new lingo and we love it. The true measure of great design is when others copy it. Take a look around the industry, especially at Toyota’s Avalon and you will see Bangle's design concepts like the squared off trunk copied by other manufacturers. I saw a black BMW 550 in the parking lot yesterday and it is just so much better looking and distinctive than anything coming from Mercedes or Audi these days.

Honda – They make the list on the basis of the brilliant new Civic. It looks contemporary, not retro and forges a new direction in fuel-efficient but stylish vehicles. It doesn’t get any better than a black Civic coupe whether you are 16 or 60. Now Honda doesn’t do everything right — see the loser’s list.

Chrysler – It’s funny how some things never change. When I was a kid, Chrysler made great looking cars like the Challenger, Charger and Roadrunner. The only problem was they were built like crap. My dad bought a Charger once and ended up putting three transmissions into it. He swore off the brand for life and later became a devout Camry owner. Today, Chrysler builds some of the best looking cars on the road. They took a chance with vehicles like the PT Cruiser and the 300 and they hit home runs in both cases. Their designs look so much fresher than their main domestic rivals. I don’t think they are particularly well made but they look good and they’ve sold well too.

Losers:

Honda – Honda makes this list on the basis of the redesigned Accord. They started with a soft, curvy front end that’s not too bad and they grafted on a back end stolen directly from the Chevy Impala school of design. This is without question, the ugliest Accord ever built, a discordant, unrealized design exercise that looks like someone welded two different cars together in the middle. Yeah, it’s that bad. Speaking of bad, the Ridgeline is absolutely the ugliest pickup truck on the market. Trucks are no beauty queens so this is quite an accomplishment on Honda’s part. Park a Ridgeline next to an F-150 and you’ll understand what I’m saying.

Volkswagen – They’ve written the book on how to screw up a good niche brand. Take a look at the Jetta — what is it now? They threw out the funky, chunky, small vehicle that was popular with many young people and replaced it with a bloated, non-descript body and a rear end lifted directly from the Toyota Corolla. There was a time when the Japanese used to copy German designs but it has now come full circle. As for the new Passat, it’s simply hideous— too large, too long, too clumsy. Say goodbye to fahrfignugen.

Audi – They used to build the world’s most elegant vehicles. The last A6 was like a piece of automotive sculpture. The new A6 suffers from the outlandish, over-sized grille and a pedestrian rear end. You have to go back two generations to find the last great-looking A4.  The current A4 looks like a Subaru. The only decent looker in their current lineup is the A3 — a clean, uncluttered design that actually integrates the big nose. As for the newly released Q7 SUV, I have just one piece of advice for Audi. The Ugly SUV party is over guys. How far the mighty have fallen.

Ford – I defy anyone to articulate the Ford design ethos. Their vehicles look like a collection of autos you’d find on a used car lot, not a coherent design statement. When they do produce a nice looking car, they brand it with a horrible name like Zephyr. Seriously guys, do you think an upwardly mobile young professional is going to say, hey check out my new Zephyr?  J. Mays is widely profiled as a design guru but judging from his body of work I’d say he is not suited to carrying Chris Bangle’s briefcase around. His recent Thunderbird and Mustang designs have been slavishly retro without a hint of clever interpretation. I honestly cannot tell a new Mustang from an old one. I don’t think the idea here is to just dust off the old body and slap it on some new mechanicals. As for the Ford Five Hundred, it looks like a last-generation Passat that gained weight. I think this guy is living off his reputation. Ford’s sales results support this.

Trying Harder:

General Motors – Give them credit for the Solstice, Lucerne and the Cobalt. The General is starting to wake from its long design slumber and produce some good-looking vehicles.

Hyundai – The Sonata is so elegantly designed, it’s everything the Honda Accord should be, but isn’t. This is a company on the rise.

The Age of Transparency

Back in the day, pricing used to be a confidential and closely guarded secret. Prices were negotiated between sales rep and customer and no one was the wiser. While consistency may have been more common in the retail market, business-to-business sales were controlled and negotiated by sales reps and managers. Often, there were as many prices or special deals as there were customers.

Now, we live in an age of transparency, where everything you want to know about a product or company can be found within minutes and with a few mouse clicks.

The Internet has enabled global aggregating and sharing of information in an open forum accessible to everyone. It’s not just the established review sites, magazines and industry professionals who are commenting — it’s regular customers who are posting their opinions and ratings of your products and your organization.

Twenty years ago, the process of selecting a product was fairly straightforward. You spoke to a salesperson and looked at some product literature. The price was whatever the retailer posted or the salesperson asked you to pay. You might read a review in a trade magazine to gain more information. You might find a friend who owned the product and get her opinion but it was generally hit and miss. If you had the time to trek to a few more stores, you could do some comparison-shopping.

Now, you log on to Amazon and right underneath the product description you find user reviews. These are reviews from real people who have shelled out hard-earned money for the product and are posting their opinions and experiences.

As for price, there are any number of sites that aggregate all of the lowest selling prices for a product and post links to the merchants. You can see everyone’s price at the click of a mouse. In other words, everything is now transparent in the global marketplace.

This transparency has profound implications for sellers. Here are a few:

• Price pressure – with everyone’s price posted, there’s enormous pressure to lower prices and keep them low. In a sense, it’s a like a global fire sale and only the most efficient sellers can survive in this environment.

• Customer support – the cost of low prices is often less customer support or none at all. Something has to give in the race to the basement for pricing and support is the usually the first to go. It’s becoming a self-serve world for transactions and after sale support.

• Advertising – why spend money on traditional advertising when potential buyers are linked to current customers in a global market? Your message is being subverted by user opinions and expert reviews anyway. If your company or product is new, then advertising to create awareness might be an effective strategy. In most cases, companies are turning to viral alternatives to spread their marketing message to bloggers, review sites and opinion influencers.

• Design – ever wonder why all the products from all the companies seem to have all the same features? Transparency has resulted in manufacturers and designers making products that look and operate the same.  It makes me long for the quirky, “insanely great” products of yesteryear. Even Apple, one of the best design companies in the world, now makes its computers with the same processing specs and internal components as its Windows competitors.

The bottom line for marketers is this — it’s getting harder to differentiate your products and services, and nearly impossible to control your marketing message. What’s needed are new communication strategies and a stronger emphasis on delivering a positive customer experience before and after the sale. One way or the other, they’ll be talking about you. In the Age of Transparency, one customer’s opinion is now heard around the world.

The Top 10 Lies of Buyers

No doubt you have heard the expression “buyers are liars.” Every sales professional has a list of favorite whoppers they have heard from customers. As competition  heats up in the marketplace, it seems that the truth is often replaced by corporate doublespeak. Without further ado, and with credit to Guy Kawasaki for inventing this format, I present the top 10 lies of buyers along with their true meaning:

1. “Your competition is offering me a better deal.” Sometimes this is true but hey, if the deal was really good why didn’t you take it? Translation: Give me a lower price and I’ll lie on my back and let you rub my belly. (Sorry for the bad visual!)

2. “The product never worked right from the start.” In other words, I’ve changed my mind and want to return your product. There’s nothing really wrong with it but I want to blame you instead of looking like a dithering idiot.

3. “Our volume is going through the roof and we need a better deal.” Based on one or two big orders, mister big stuff now wants a lower price. Just as soon as you drop the price, his orders will start tanking.

4. “We’re looking for a supply partner.” Translation: We’re hoping to find someone submissive who we can abuse for special favors, low prices and additional services. Want to become our supplier bitch?

5. “You’re still in the running for the contract.” You are absolutely toast but we haven’t finalized the deal with your competitor yet so we need to keep you warm just in case.

6. “The packaging was damaged when the product arrived.” We accidentally ran over it with our fork truck but we’re not owning up to something dumb like that. Send us a new one.

7. “The product doesn’t meet specification.” We cooked up a new CAD drawing to try and weasel out of the purchase agreement.

8. ”If you give us 90 day terms, we’ll pay in full after the IPO.” Successful start-ups often drop their loyal suppliers when they hit the big time. Most start-ups just don’t succeed. So in the unlikely event that a VC finances us, you’ll get paid.

9. “We’re looking to optimize our supply chain.” We’re looking to drop you like a hot rock and buy direct from your supplier.

10. “We don’t pay finance charges.” We are slow payers or total deadbeats so we now have a policy for all of our suppliers who charge for overdue invoices. We don’t pay the invoices either.

Bonus. “I used to be in sales but I prefer the buying side.” I couldn’t sell so they fired my ass and this is the only job I could find.

MacBook Test Drive

I spent over an hour at the local Apple store today, test-driving the new MacBooks along with the MacBook Pro. Are you considering buying one of these new laptops? I am in the market so here’s my road test report.

Form Factor – I think the MacBook offers the perfect form factor, a great compromise between screen size and portability. It’s roughly the same width as the previous 14” iBook but not as deep and significantly thinner. It really is ideal, unless you are looking for ultimate portability and light weight. Compared to the MacBook, the MBP looks and feels like a behemoth. The MacBook will still fit on the table at your favorite coffee shop while giving you more screen real estate. Very nice.

Colors – I expected black to be the sexier choice but after closer viewing I prefer the traditional white finish. The white case is the same as the previous iBook and should resist dirt while the keyboard is a nice matte finish. It looks very familiar and yet very classy and clean. The black book has a matte finish on the outside and while it really makes the white logo pop, it looks more like a plain IBM or H-P laptop to me. Color is a personal preference but I definitely would not pay a premium for the black book.

Screen – The glossy 13” widescreen is very nice. I like having a bit more real estate than the old 12-inch screens. It’s bright and the colors are very rich and vibrant. I played a trailer from the upcoming Pixar film “Cars” and it looked spectacular. Photos also look great.  On the downside, the screen is reflective and in the Apple store with fluorescent lights directly overhead, you could clearly see your reflection in the screen at almost all angles. Given the choice, I would opt for a traditional matte screen but I could definitely live with this one. In lower ambient light environments it will be great.

Keyboard – The keys are spaced much wider than the previous iBook and the current MBP. They are light and feel a little spongy much like the last generation board. I did appreciate the wider keys and anyone with bigger fingers will definitely like it. The keys on the MBP have a better tactile feel but all in all, this is a good keyboard and I’d call it an improvement. It looks great too.

Speed – The biggest surprise was that both the MacBook and MBP models were a lot slower than I expected, especially after all the 4x faster marketing hype from Apple. My benchmark is a G4 dual 867 desktop that I’ve been running for the past 3.5 years so it’s hardly the latest or greatest of the Power PC generation. I played around with Microsoft Word and PowerPoint and they are just slower on the Intel platform. Word takes 2-3 times longer to load on these machines. On the MacBook it was painfully slow to the point where I would not consider using it. On the MBP, it was similar to my desktop and was definitely useable. I discovered that all of the MacBook demo models had the 512 MB standard memory configuration while the MBP had 1GB. Let me say categorically that you should not buy a MacBook with less than 1GB of memory if you want to use Microsoft Office.

As for the universal apps such as iLife and iWork, they seemed to run about the same or slightly faster than my G4 desktop. In fairness, I did not do any video or photo editing so maybe the gains are more dramatic when you do some serious work. I couldn’t really assess the difference between the integrated graphics on the MacBook and the dedicated card on the MBP. The Apple rep advised me not to count on running Final Cut Express on the MacBooks.

iSight Camera – I tried this out with the Photo Booth application – it’s pretty cool. I’m not sure if I would use this feature though and I would certainly trade it for a lower price given the option.

Magnetic Latch – This is a terrific feature. The MacBook opens and closes with a precise feel that is a joy to use. I actually found this to be the most innovative and useful design feature on the new books. By comparison, the MBP’s latch feels positively primitive.

Trackpad – I found the wider trackpad functioned quite well. I have to admit that I have worked exclusively on desktops for the past 5 years so I would definitely buy a wireless mouse and use that. The two finger scrolling trick is pretty neat, though.

Miscellaneous – The MacBooks did not feel excessively hot to me. Their cases were noticeably cooler than the MBP. Sound was difficult to assess in the Apple store. I think with any laptop, you want to use some type of headphones. Airport reception could not be measured but the iBooks have typically been the best performers in this area. The MacBooks felt and looked very well made, especially for a consumer laptop.

My Summary – The new MacBooks are very nice and offer excellent value at the low end of the model range. I would buy the 1.83 GHz white book with 1GB ram and end up with a great little machine for $1,200.  Keep in mind my dictum that 1GB of RAM is necessary. The mid-range book will run $1,400 with that upgrade. I would pass on this one because I already have an external DVD burner. If you don’t have one or you want to burn DVD’s on the go, this model offers pretty good value for the price. The black book with 1GB RAM is going to be $1,600 and I think that’s far too much for a consumer machine with a slow graphics card. At that point, I would pony up for the MBP.

That leads to my other major conclusion that Apple has a hole in their portable range right now. The MacBook, based on my preliminary test drive, is not an adequate replacement for the 12” PowerBook. That means that anyone wanting a pro level book that can handle video/photo/audio editing has to spend at least $2,000 and lug a very large laptop around. It would be great if Apple offered a MBP in the 13” form factor with the aluminum case. The problem is they don’t have much room in their current pricing scheme. The black MacBook is sitting at the $1,500 level. Maybe the 13” MBP could slot in at $1,750 or else they could drop the black book down a bit and position the new MBP at $1,600. That’s probably wishful thinking but I’m betting that other customers will feel the same way once they’ve completed a test drive.

Buying Advice - Is the MacBook right for you? If you don’t edit video, play a lot of games or if you have another computer that can handle these chores, then I would strongly recommend it. If you are looking for a portable machine for word processing, presentations and the basic iLife applications, this machine should perform just fine. If you stick to the white books and configure them with 1GB of memory, the price/performance proposition will fall clearly into the good value category.

But is it just too early to buy a MacIntel laptop? If you have a functional PowerBook or iBook, I would suggest waiting until mainstream applications from Microsoft and Adobe run natively. Within 12 months, I think most useful applications will be ready. In that time period Apple will undoubtedly debug the early problems with the MBP, increase speed across the line and who knows, they may surprise us with another model – either a 13” MBP or a cool sub-notebook for road warriors. You can probably bet the MacBook’s graphics will get improved in the next 12 months.

Since the only laptop in my household is a PowerBook 1400 with a dead battery, I am going for a new MacBook. See how easy it is to rationalize buying a cool new machine? Now that I’ve convinced myself, I’ll get to work on my wife. If I can persuade she who pays the family bills, I’ll report back on my real world experiences with the new MacBook.

New MacBooks Released

Apple released the highly anticipated MacBooks yesterday, replacing both the iBooks and the 12" Powerbook. While I have not seen the new books in person yet, here are some preliminary obervations based on the publiched specifications and prices.

The white books offer good price/performance value. The combination of the dual core processor along with the 13" screen, mag safe connector and other features make them attractive. I will probably end up buying one of these units once I test them at the Apple store.

The black book looks great but I resent the $150 price premium for color (after factoring in the larger hard drive). Since this is the best color for business, it means that corporate customers will have to shell out $1,500 for a basic laptop - a pretty steep price compared to the PC competition.

Apple has raised the entry level price by $100 while removing the display connectors and the Apple Works productivity suite. You can no longer buy an Apple laptop with all of the basic software you need. This was a nice incentive on the iBook line, especially for students.

Here are three preliminary conclusions based on the specifications of the new MacBooks:

• Apple has abandoned the important psychological price point of $1,000. I think this will be a problem especially in the education market. The MacBooks are simply too pricy and offer too many high-end features for students and teachers.

• There's not much of a difference between the mid-range white MacBook and the 15" MacBook Pro. Except the price. The MacBook Pro has very similar specs but is priced $700 higher. That's a lot more to pay for the aluminum case and a larger screen. At the current prices I think the MacBooks will cannibalize the Pro book sales.

• Finally, all of Apple's recent marketing efforts have focused on leveraging iPod popularity to get  people to switch from PC's to Mac's. The MacBook price points are not likely to attract a lot of PC converts.

In the end, the MacBooks follow the tried and true Apple marketing strategy - extract maximum profits for the faithful Mac community in return for pretty cool machines.

Stay tuned for my next posting after testing the new MacBooks.

The Me2 Revolution

Richard Edelman has posted an excellent essay on his personal blog. The essay deals with the shift from the traditional top-down, one-way messages that constitute corporate communications. Edelman advises outreach to key constituents and spreading the message in a viral fashion among trusted peers. With all of the recent corporate and government scandals, trust in our institutions is rapidly declining. The future belongs to empowered stakeholders, according to Edelman.

Link: Richard Edelman - 6 A.M.: The Me2 Revolution.

Robin Good's New Media Predictions

Robin Good is an excellent resource for communication technology and new media tools. Here, he presents his major trends for 2006. Marketers should take note, 2006 will be the year of video according to Good. The Internet is rapidly evolving into a collaborative, interactive environment. You can't afford to ignore these trends and continue focusing on the old solutions - traditional advertising, direct mail, etc., to reach your constituents.

Link: New Media Predictions 2006: What Will The Web Future Bring? - Robin Good's Latest News.

New TV Technology: The Situation Room

Good article here from Wired on CNN's innovative Situation Room. This news program incorporate new technologies such as RSS feeds and web conferencing along with unconventional sources and bloggers to create a different kind of newscast. Some feel that it's information overload. I think it's an innovative approach that works. How about you?

Link: Wired News: CNN Hacks New TV Technology.