Archive for September, 2009

29
Sep
09

wave hello to Google’s new baby …

The next ‘big thing’ in mass social communications is supposed to be Google Wave, announced in May and due for launch as a public Beta in a few days time.

Google Wave is designed to create a much broader conversation on the internet than you get from conventional e-mail and there is a lot of ‘early user’ enthusiasm which only makes it more difficult for outsiders to assess.

Our first sight of prototypes suggests a genuinely useful tool that acts as a communications dashboard with a serious commitment to privacy and personal control.

The general view from the techies, who are all aware that Google has an appalling reputation for innovations that don’t then become businesses, is cautiously positive – it works and it meets a need.

Widely touted as an Internet Explorer killer, this, rather than any hype surrounding its challenge to social networking, is where interest will lie in the coming months, creating much fun news copy in the Microsoft versus Google wars.

For the record, Microsoft has 67% of the browser market and Google Chrome has only 3%. Microsoft makes negative claims about Chrome security and Google snipes back but if Wave takes off, it might pose a serious threat to the dominant player. The suggestion that Chrome was created to permit Wave looks increasingly plausible.

Our best guess is that the style of Wave, half way between the traditional browser and the social network, will appeal to a segment of the market that is not entirely happy with either ‘extreme’. It wants more functionality on tap than the traditional browsers provide and it wants more control over its conversations than you can get in the social community.

There were, however, reports that it had been crashing at a rate of 25% of Waves with only 6,000 early users.  The initial 100,000 in the limited release are going to have to be reassured that the crash rate is very small.

But all new technologies have these teething problems. The new economic model permits errors to be seen and be managed by the public during private and public Beta phases - a culture very different from the ‘old’ one that tried to cover up failure and offer claims of perfection that never rang true in practice.

However, the ‘spin’ that has centred on its ‘business-friendly’ nature should be treated with a little caution.

The aim, perfectly reasonable, is to get the public out of other tools and into Google’s and use products and services that have been piling up without an adequate central co-ordination point for consumers other than the original search tool.

It has always been a puzzle why the front page of the search engine has never been used effectively to market Google’s full offer. The emergence of Chrome and then Wave might explain this. The search engine is just the biggest tool in the tool-kit but it is not to be confused with the box itself.

There is a bigger picture here. Is a driver for all this also the creation of a mega-integrated platform that the marketing industry can make use of more easily?

Facebook is now used by 83 of North America’s biggest 100 advertisers – that means brands like Nike and AT&T – and this must be unnerving to Google whose massive resources will not protect it in the long run if America’s businesses, if not the world’s, do not use it to reach us on a daily basis.

The prize here is Google ownership of the world biggest integrated meme transit system, transporting all forms of content along its routes. Google is to be to information and service flows what a highway system is to the distribution of goods.

Not a highway but the highway, albeit  in competition as road is in competition with rail, air and shipping. In this analogy, the internet itself is not the highway at all but only the land and sea on which harbours, roads and track are built.

What is transported, of course, is none of the highway’s business, only the Government’s and that of the private individual or business, but Google’s position as the Jay Gould of the post-industrial age is an interesting one. Robber baron or philanthropist like Carnegie?

What Google Wave will become remains uncertain. The promotion of Google Wave as market research tool adds to the business-friendly ambience although little of what we have seen suggests a great deal of credibility in the proposition.

We are not getting overly excited about the claimed business potential. It still strikes us as a half-defensive manoevre.  Google Wave is just another useful tool in the armoury for business but it is not much more than that.

It certainly does not solve the problem of how to get more than a few thousand people clicking in approval on a campaign idea who don’t then forget that they have clicked.

As Wave is presented now, a marketing department might spend many valuable hours having a fascinating but ultimately fruitless debate (in terms of sales) in what may be little more than an entertaining if more efficient forum of the usual suspects.

If there is one thing the early phase of Facebook taught us, it was that mass social network campaigns should not be confused with mass social action.

The paid-for space in the small sidebar on the right hand side of the Facebook Profile page is probably still more valuable for advertisers than Group or Fan Pages that are easily ignored or edited out.

In the end, the claims of the marketing enthusiasts end up meaning more direct e-marketing, a technical and legal minefield if you want new names, or the integration of Wave-related addresses into wider marketing.

How else will you get interested strangers into your Wave? The quality of those being linked to from ‘out there’ might be quite poor unless Wave is used as part of a fairly expensive integrated marketing campaign where its role is, ultimately, ancillary.

Our view – take Google Wave very seriously, watch the space and don’t be surprised to see both some very clever people adapt it to a volatile market and rapid takeup, but don’t allow marketing enthusiasts to experiment with your money, claiming it as the next big thing.

Wait until you have seen two or three good campaigns that make use of it cost-effectively – that may take a fair time yet.

24
Sep
09

economic prospects – alphabet soup and weeds in the garden

One year on from the financial meltdown that rocked the global economy, the Financial Times has been reporting that the UK may be heading out of recession. The signs seem positive with industrial output, imports and exports increasing during the last quarter. 

Are these ‘green shoots’ giving us false hopes? Are they giving us an indication of the shape that this recession will take?  Be aware that the Bank of England, even as we write, is trying to dampen down any excess of exuberance … it asks us not to get carried away

Typically recessions follow four shapes: V, U, W and L. But, this may be no ordinary recession. The conditions that contributed to the downturn, and the stimulus packages and quantitative easing methods put in place by Governments in response, mean that we could be witnessing a market correction that re-writes the rule book.

In a V-shaped recession, the economy experiences a sharp decline, followed by a sharp upturn. After the market bottom, recovery is relatively swift. Typically, emerging economies that are less reliant on credit markets follow this pattern.

This is also what the Government and industry hopes that we are experiencing. Chancellor Darling certainly hopes that the stimulus measures the Treasury has put in place will enable the UK economy to follow this curve.

A U-shaped recession is very similar, but the bottom is less defined. A recession following this pattern could see the market remaining in a state of flux for several years before there is a sustained upturn in the economy. This is how some more pessimistic analysts see things developing for the UK.

A W-shaped recession, also known as a ‘double-dip recession’, is characterised by a sharp decline in economic activity, followed by a short rebound that is not sustainable. The economy then falls back into recession again before slowly climbing out of it and then returning to growth.

An L-shaped recession is the most severe. This shape demonstrates an almost instant free fall in GDP, followed by a flat market for a long period of time.

In an L recession, markets may many take years, even decades, to return to pre-recession output levels.  The Japanese recession from the early 1990s, often referred to as the ‘lost years’, is a typical example of this.

So what shape will the recession follow? France and Germany have already announced that their economies have emerged from recession and are returning to growth, suggesting that they have followed a U-shaped pattern that we may now be mimicking.

Economist Nouriel Roubini, on the other hand, claims that the US and UK economies could be heading towards a W-shaped recession where economies relapse following a period of growth. The worry of many analysts is that commodity prices will rise on growth in the emerging world and then cut off developed world growth with a bout of inflation just as spending is being cut.

In his article in the Financial Times Roubini claimed that extracting fiscal stimulus, such as quantitative easing, from economies, coupled with rising oil, energy and food prices could create another economic contraction.

This begs the question whether France and Germany have called the end of their recessions too soon? The silence surrounding the troubles in the Eastern economies and the shenanigans over de facto protection of car manufacturing in the run-up to elections to the Bundestag do not suggest that all is as well in Middle Europe as may be being claimed.

Alternatively, we might experience a new shape for this recession, along the lines of the Nike ‘swoosh’, where decline is relatively rapid and growth very slow but sustained, albeit not at levels we have been used to. This is somewhere between the U and the L and might be regarded as a ‘sustainable’ model in which policymakers put in safeguards that manage down ‘exuberance’.

All this speculation tells you something important – nobody knows! Even the statement that ‘gone are the days when businesses and consumers have easy access to credit and can afford to expand/live beyond their means and where high risk drives excessive rewards’ may be premature.

After all, a nice V-shaped recovery without time or a political consensus for reform might simply encourage politicians and bankers to ‘go for growth’, clean up a few obvious abuses and think they can go on as before. Yep! This might work but it might also lead us into an even more devastating crash further down the line.

The political focus seems to be on long-term, sustainable recovery but that gets hard to offer the world when several nations are trying to manage domestic electorates on different political cycles in a globalised economy.

The GM Europe deal shows how national interest will trump any attempt to share the pain of restructuring and the lack of economic co-ordination below Central Bank level until now is quite startling.  The current G20 Summit may change this lassitude but the signs are not good.

Whatever the shape that the recession in the UK economy takes, one thing is certain: the UK has enormous national debt levels that need to be plugged.

The argument for not starting the process of spending cuts and tax rises is ostensibly because such a policy might stop recovery in its tracks but the suspicion is that there is a political reason as well - it might stop the Government being given any chance of re-election.

If so, and the reckoning is merely being deferred, any faltering in recovery [W or L] after the election could prove a very serious matter indeed with no further funds to fall back on and a new Government forced into draconian policies to avoid a fiscal melt-down not seen since the 1930s.

Even if the UK economy corrects itself and returns to sustainable growth, no matter the shape of the recession, it will be the public who will be paying the price for many years to come.

As for business, the problem is uncertainty – a V-shaped recession suggests investment, an L-shaped one suggests retrenchment. The Bank seems to suggest that the cash is not there to lend if demand suddenly rises.  

Until an election is out of the way, the scale of the economic damage is known and we have a better perspective on this alphabet soup of possibilities, green shoots are likely to look a little stunted – weeds as much as flowers.

15
Sep
09

brand alienation, gratuitous innovation and the tyranny of ‘healthy eating’

We are a B2B operation rather than a B2C business but we often get involved in issues that drift over the line a little. What often puzzles us as reputational marketeers is how often loyal B2C customers are treated like laboratory rats. Something works well enough but, for some unfathomable reason, somebody has to change it …

This posting from one of our team is presented as an example of the type of unhappiness that will increasingly be expressed in public as the new social media allows the ‘loyal’ consumer a platform for their frustration. We decided not to name-and-shame: others will not be so considerate.

Last Thursday, I opened the first of six cartons of our regular brand of soya milk  with the new carton design offering the prospect of the ‘best taste ever’.  That should have been a warning, but it was lost to me in our weekly mountain of assorted groceries.

For the first time in years I was prompted to look at the ingredients and nutritional information on the carton.  This was more of a twenty-first century consumer reflex action than a serious attempt at understanding.

I hadn’t committed the previous ingredients and nutritional information to memory. Neither am I in the habit of keeping spent cartons of milk. The bin men had just been and gone. So I didn’t have anything to compare the new formula with.

But I do remember being impressed when we settled on this brand years ago that it was free enough of ‘bad’ additives. I believe in moderation in all things, including E-numbers, so ‘free enough’ was fine. 

I was sure it had added calcium and maybe a few vitamins and a bit of sugar to mimic the natural sweetness of milk. It might have been fruit sugar at that.  The important thing was that we liked it.

But I didn’t much like this new-and-improved version.

What gave the new stuff a gravy-like texture and a taste closer to evaporated milk than fresh milk? Maybe it was maltodextrin, a starchy gluten-free glucose syrup that can be made of a natural carbohydrate like potato, corn or wheat.

Was it there before? I didn’t know what colour maltodextrin is – or even if it really was the offending ingredient. But the ‘new’ formulation was also yellower, so something is also giving it that new hue that Dulux might call ‘buttermilk’.

Just to be sure it wasn’t just me being an old fogey set in her ways, I got my son (18) and daughter (14) to have a taste.  They didn’t like it any more than I did. I was annoyed and wanted to get to the bottom of it so next morning I called them up.

The thicker texture and colour, I was told, is because they had decided to use the whole soya bean instead of protein extracts to enhance the nutrient content.  They tested the new formula not only on existing consumers, but also consumers of competitive brands and people who don’t drink soya milk.  This motley crew apparently gave the new formula the thumbs up. 

But the nice lady I spoke to did admit that they were getting a ‘mixed’ response from people who’d been drinking their soya milk for years – in other words, their loyal following.  It seems our views were not given any more weight than those of the man in the street.

Wearing my marketing hat, I can guess what happened. The whole thing was a technically proficient exercise in gauging the market for a new product line.

But it wasn’t a new product, it was a successful old product that many people bought in quantity on a regular basis.

Do I mind? Yes,  Ido.

In a world beset by uncertainty, one of the things that a brand behind a staple product can offer is permanence.  When you have your corn flakes in the morning, you expect it to be the same as the cornflakes you had yesterday.  Companies should keep that in mind when they decide to innovate.  

Coca Cola made the classic mistake of confusing the laboratory test with public perception in 1985. Let Wikipedia take up the story:

On April 23, 1985, Coca-Cola, amid much publicity, attempted to change the formula of the drink with “New Coke”. Follow-up taste tests revealed that most consumers preferred the taste of New Coke to both Coke and Pepsi, but Coca-Cola management was unprepared for the public’s nostalgia for the old drink, leading to a backlash. The company gave in to protests and returned to the old formula under the name Coca-Cola Classic on July 10, 1985

Coke eventually managed to make a virtue of a mistake with Coke Classic. From a cynical sales point of view, of course, I can see why they bothered with Diet Coke, even though there was Tab, but why Coke Zero when they had Caffeine-free Diet Coke?

Again wearing my marketing hat, I know it’s all about claiming market share – spreading different brightly coloured beach towels over as much beach as they can cover.  But a bit of permanence is a good thing that people might just pay good money for. Leave the nasty surprises to the bankers!

Should the soya milk producer in question mind? Probably.

My family and I are obviously just one point of view. Some old users will actually like the new version, and new consumers will be won over.  But they’ve lost a 6-8 carton a week customer, and from what I was told this isn’t an isolated case.  

We’ve already been experimenting with other brands and think we’ve found a new one we can settle on … until some clever product development manager, aided and abetted by his marketing colleagues, decides to ignore their core customers yet again.




 

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©2009-2010 The Pendry White Partnership Limited. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Pendry White and Whiteboard with appropriate and specific direction to the original content.
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