When marketers sit around dreaming up new products, they often find the quickest and least problematic path to getting something new on the market is simply to make small changes to existing products and call it new. For instance, a common technique is to extend a current product line by either adding a feature (e.g., new flavoring) or taking something away (e.g., remove ingredient that reduces calories). Marketers following this strategy may even retain the brand name that is associated with the product line so that the new product will be called Brand X's New ABC product. In these cases, the name chosen and displayed on the packaging is usually descriptive of what is now contained or removed in this new product, such as Brand X's New Chocolate-Flavored ABC product.
But, what if the change is relatively minimal? For instance, what if a marketer adds a very, very small amount of a new ingredient to a product, can they now promote the product with this as the new product name or is it misleading to do so?
Well, the U.S. Supreme Court is now hearing a case covering this issues, and their decision has the potential to change how marketers label products. As discussed in this Los Angeles Times story, the issue comes from a lawsuit filed by a relatively small juice-products manufacturer, POM Wonderful, against one of the world's largest consumer-products companies, Coca-Cola. POM is claiming the labeling of one of Coke's Minute Maid brand products is misleading because the product name is Pomegranate Blueberry Juice. However, the product's ingredients clearly show that pomegranates and blueberries make up less than 1 percent of the juice, while apple or grape make up 99.4 percent.
POM claims that labeling the product with the name of ingredients that make up such a small part of the product is confusing and misleading to customers. As one might expect, the reason POM brought the lawsuit is because they have a competitive product with 100% pomegranate and blueberry juice. Of course, Coke takes a different stance saying, essentially, customers are smart enough to know what is contained in the products they buy.
While this may seem to be a straightforward case of one company suing another, the stakes are much higher than just these two companies. Thus, the reason why the Supreme Court has taken on this issue.
Since the early 2000s, when search engine marketing first took off, marketers have been sold on the idea that the key to gaining customers in the Internet-age is through online promotional methods rather than through traditional methods, such as television advertising, direct mail and sales force cold-calling. In particular, marketers have bought into the notion that to be successful means a brand or company must not only advertise on search engines but must utilize specific techniques that will enable their ads to appear near the top of a search results page.
As the importance of doing well in search engines swept across most industries, many marketers and business owners, who possessed very little knowledge of how search engines work, asked a basic question: "How exactly can my ads appear high in search engines?" To help answer this question, a market of specialized search engine optimization service providers was born. For a fee, these providers would apply various techniques that, they said, would improve search engine ad performance. While 10 years ago the number of specialist offering these services was relatively low, today there are thousands from around the world offering the promise of better search engine ad results. In fact, everyday KnowThis.com gets inundated with unsolicited emails wondering if we are interested in these services. While the words used by these service providers vary, the message is almost always the same: "We can get your ads to appear higher in search engines."
For marketers, who already are fully versed in search engine marketing techniques, these solicitations are simply considered junk mail. However, for the uninitiated and, particularly those in smaller businesses, these promises have attracted their attention. Unfortunately, as discussed in this Wall Street Journal story, many who have agreed to use these services are largely left with little improvement in their ad performance and a depleted bank account. The story presents several examples of small businesses who feel they were taken by service providers who, in their minds, never delivered on the promised results. Of course, the providers do not see it that way and their comments offer an interesting insight into their business practices.
As we discuss in the Managing Products tutorial, coming up with new product ideas is a necessary activity for most marketing organizations. As we state: "New ideas are essential for responding to changing demand by the target market and by pressure exerted by competitors."
New products are critical for several reasons. For instance, new products often offer higher profit margins than older products. New products also can help reposition a company into new markets. And, new products allow marketers to fend off competitors by marketing products competitors may not possess.
In many industries, the options for developing products have traditionally relied on in-house research that follows the 7-Step New Product Development process. However, this can be a fairly time-consuming process and, for some industries such as pharmaceuticals and technology, in-house research can be incredibly expensive. It can also be tremendously risky as the failure rates of products under development in these industries are quite high.
Due to the costs and risks of development, many companies are augmenting their own development efforts by acquiring products developed by others. Several excellent examples are presented in this Fast Company story. It discusses how such leading firms as Amazon, Twitter and Apple have found better product development results by acquiring smaller companies that have already created products. In some cases, the products purchased are used to launch new product lines and in other cases used to enhance existing products, such as adding new features to a product the acquiring company already markets.
Each day thousands of small store-based retailers are confronted with a daunting challenge - compete against the low-price strategies offered by big-box stores and online sellers. Yet, for most small stores, competing on price is usually not a good idea as few possess the purchasing power to buy products from suppliers at the same price level as the big guys. Instead, most small retailers have discovered success more often lies in strategies that focus on targeting niche markets with unique or personalized product offerings that are backed by excellent customer service.
As an example, consider a local coffee shop or café. These retailers often appeal to a small group of customers, who prefer freshly prepared food and drink. They are attracted to these establishments because of their convenient locations (often within walking distance), welcoming atmosphere (small, charming interior) and, of course, free WiFi. These customers enjoy sitting for a while as they chat, tweet or play with their tablets or laptops.
For the small café operators, you would think a store filled with customers sitting around talking and playing with their technology is a marvelous thing, right? Well, according to this National Public Radio story, it may not be so good, at least for one Vermont café. This retailer, August First Bakery & Café,has banned the use of tablets and laptops in their store. While this may seem to be an act of business suicide, their rationale for such drastic action is actual quite interesting. From the August First's perspective, customers who cozy up to a table with their tablets and laptops are spending too much time in the store and not spending enough money. Additionally, and probably more importantly, by taking up store space other customers who are passing by, and who may have money to spend, may decide things are too crowded and will not enter.
Initial results indicate August First's owner is likely correct in her decision as sales have risen since the ban was implemented. However, a decision like this can be risky. Unless a retailer already has a sizeable customer-base, a radical decision like this could backfire.
It is safe to say, marketers in almost all industries, and especially those that market products to consumers, must pay close attention to social media. For marketers, social media offers a number of valuable benefits such as quickly getting messages out to their market, conversing one-on-one with their customers, and monitoring market response. However, unlike advertising or personal selling, which are highly controllable by the marketer, social media options generally cannot be easily controlled and, consequently, some aspects of social media can come back bite a company. This is especially the case when there is a controversial issue. Not only will the marketer's social media outlets be inundated with customer reaction, the news will spread quickly through social media operated by others.
Controversy is especially prone to spreading when what is communicated is more than just a text message. For instance, a good target for fast spreading reaction is when advertisements become controversial. With advertisements, it is hard to describe a potential problem without experiencing the advertisement. That is why social media is so effective in building controversy. People can rapidly and easily share the advertisement through images, video and links.
From the marketer's end, there are two schools of thought when it comes to responding to advertisements that generate controversy. One school says the best response is to remove the advertisement as quickly as possible and beg for mercy. The other school takes the position that controversy raises product awareness and, while some people may not like or may even object vigorously to an ad, in the long-run more people will know about the product thanks to all the social media sharing.
As an example, this story from Time reports on a new advertising campaign for Veet, a hair removal cream targeted primarily to women. Some people who have viewed the ad are taking a stance against the message being presented, namely that women with body hair are more like men. Over the next few weeks, it will be worth watching how social media and other media respond, and if things turn negative, which of the two strategies Veet adopts.