Nov 22, 2009 | Demand chains, Management, Operations, Sales
If you want a prediction, go to the lady in the tent at the local fair.
If you want a forecast, talk to those who have an intimate knowledge of the drivers of the outcomes you are seeking to forecast.
Good forecasting is an iterative process, the more you do, the better you get, so long as you understand why the forecast is (almost) never right on each occasion it is done. Continuous improvement techniques are the core functions of good forecasting.
Forecasts are also improved when you leave aside some of the algorithms that manipulate the past into a forecast, and look instead at the drivers of demand, sometimes a qualitative input, to get a better picture of the sales that may come along. If you are selling ice-blocks, it is useful to look out the window to see how hot it may be, and factor that into forecasts, not just rely on sales over the last few weeks.
Nov 19, 2009 | Innovation, Marketing
The innovation process has many faces, the one becoming increasingly accepted is that of constant, small scale experiments to see what works in the market, and what can be learned to improve the next iteration.
Sometimes when you experiment, something completely unanticipated comes up.
In the 80’s pharmaceutical giant Pfizer was conducting clinical trails on a drug they had called Sildenafil, which was designed to address the chest pain associated with angina.
It was only marginally successful, and never went to market, but during the trials, a curious, and completely unanticipated side effect became obvious, and Viagra was born.
Nov 18, 2009 | Branding, Change, Marketing
Market research now has a pretty sophisticated set of tools, all sorts of ways to tell you what to do, to provide a crutch for decision making, to take away the responsibility for making a courageous decision.
However, it boils down to the option of qualitative, collecting behavioral patterns, and quantitative collecting numbers.
Many years ago, as the one responsible for the marketing of Ski yogurt in Australia, I struggled with the reality that we were number two in the Australian market, just ahead of a swag of alternatives and the leader had nearly three times our share. Whatever we did, however much we spent, the number did not change much. One day, in a supermarket talking to a young Mum buying yogurt in a 1kg container, I noticed she had to use both hands to pick up the round container of Ski, complicated by the fact that her youngster was insisting on being carried. The solution was blindingly obvious, use a rectangular container, she could pick it up with one hand, and the side benefit was that it now fitted in the door of a domestic fridge, and gave retailers better shelf space efficiency.
The result of the launch of the new rctangular pack was a huge increase in Ski’s market share, and an appetite for innovation that enabled several other ideas to hit the market, resulting in leadership in a relatively short time.
The lesson is that the quantitative data did not tell us this stuff, it told us consumers, both the ones who preferred Ski, and those whose loyalty was to Yoplait, the market leader, were happy with the product, loved the taste, consistency, packaging, and so on, but the approval of the product just did not translate into sales beyond a modest market share. However, the behavioral insight coming from just watching how the product was handled, qualitative data, gave us the insight, it answered a question we had not thought to ask, and with which the consumer had no experience, as all tubs to that point were round, and nobody had suggested any alternative.
Nov 17, 2009 | Marketing
The notion of marketing to “friends” on social networking websites has great superficial attraction, after all it is a free audience, with presumably something in common.
This has led to an explosion of banner ads and offers of various types on these social sites, but is it a good use of resources? The research indicates the cost often outweighs the result, as click through rates are very high, pretty obvious when you think about it, people go to social sites to connect, not to be the target of an unsolicited ad where they have the choice to ignore it.
On the net the word “friend” can mean someone who is simply too sensitive to push the “ignore” button, but who has no connection to you at all, so they are not friends in the sense that they have any sense of mutual affection or obligation.
The net has enabled hordes of random people to become “friends” but it really means nothing until there has been a meaningful exchange of some sort. It is possible to have millions of friends, but who needs them!
However, social networking opens the opportunity to connect to people who in pre-net days you would have had no chance of meeting who share something that makes the opportunity to “meet” potentially valuable to you both, but to create the value, there has to be an exchange.
I guess we need another word, one that means “friends on the net who we have not necessarily met in person, but with whom we have a connection we both value”.
Nov 16, 2009 | Change, Innovation, Marketing
Not just the “bits”, the original target of Moore’s Law are halving in price every couple of years, lots of other things are as well.
For many goods and services, the whole notion of charging at marginal cost has been thrown on its head, because in many cases marginal cost has become negligible.
The internet has created the most competitive market the world has ever seen.
Barriers to entry are almost zero, and the marginal cost of production is zero. Therefore, how do you price this product, as price has always followed the marginal cost in traditional models.
The consequence is that over time, as things evolve on the internet, the for “free” component will increase, and the audience will increase, in numbers, but those who want “depth” will still be prepared to pay for it.
Disruptive innovation has used this model for 150 years.
Jell-O, effectively dried granulated gelatin in a box was given away in the 1880’s as a means to develop a market.
Linux software is the best known recent example of free stuff on the net, but it is every where, so the marketing challenge is to evolve a business model that enables you to make money when giving it away.
On of my clients has a unique information product that offers useful generic information covering an industry, but then has the scope to generate very specific and competitively useful information for individual enterprises and situations at a much deeper level of analysis. The debate about the best pricing model is proving to be very interesting indeed.
