Is Your Marketing Killing Your Consumer Electronics Product?

Every day, multi-million dollar consumer electronics products suffer the consequences of poor, lazy, ineffective, uninspired, unprepared, overly-technical, follow-the-status-quo marketing. Were it not for the intense media and consumer interest in high technology, the industry would be in big trouble. The products at retail are generally good, but the marketing ranges from atrocious to bad.

The consumer electronics industry is succeeding in spite of its marketing.

I define the most successful consumer electronics as those which have the most evangelists — passionate, high-energy communicators — among mainstream consumers. Based on my observations and experience, the most successful products in the industry are various Apple devices (the iPad, the iPhone, and the Mac), the Amazon Kindle, and the Netflix service. These three companies create more mainstream evangelists as a percentage of their total users than other companies. Think of the way these companies are talked about by your friends and family — more than likely you know an evangelist of one or more of these firms.

So, the question becomes, what separates them from other players in their markets?
First, the products share elements that elevate them above the consumer electronics commodity bin: all of them make people feel good, exceed already high expectations, and improve people's perceived quality of life.

But other devices that don't have evangelists also meet these three criteria for product excellence: consider HDTVs, digital cameras, even a good cable service.

So what's the difference between an iPad and a Samsung HDTV? Why does one create raving fans and the other create users? Why does the Kindle inspire a critical mass of mainstream consumers to tell everyone they know how much they love the Kindle, while Kodak digital camera customers simply takes pictures and stay quiet? (Have you ever heard anyone say they don't like their Kindle? I've talked to hundreds of people about it, and I haven't.) The Kodak camera is a great, affordable device, but the company does not enjoy mainstream evangelists.

The difference is marketing.

And while there are many actions that separate the best from the rest, after years of working with top consumer electronics brands as a marketing consultant helping clients brand, position and evangelize their products and services, I've realized that it all comes down to three things: knowing what your customers want, giving it to them, and then communicating about it simply and relentlessly.

Let's look at each one:

Knowing What Your Customers Want

Apple knows what its customers want because of its CEO, Steve Jobs. He has proven that he knows, on instinct, what will succeed with consumers. In fact, he famously avoids customer input and focus groups because he is so sure about his own gut feeling. But because your CEO is not Steve Jobs, you'll have to do talk and listen to your customers like crazy. This means qualitative, one-on-one interviews. They can be brief — ten minutes is often enough. But you must allow yourself the opportunity to probe and ask follow-up questions based on their responses. This eliminates online surveys and focus groups.

Here are 10 questions to ask:

1. Who in your home uses our product?
2. Why do they use it? (Leave it open ended, just like that.)
3. What do you do with the product?
4. What features do you use most? Why?
5. Which features do you NOT use? Why?
6. What's your favorite thing about owning this device?
7. What do you tell your family and friends about the device?
8. How does our product improve your life?
9. Describe our product using three descriptive words.
10. How does our product make you feel?

These questions get you away from technical specifications and move you towards the real-life value of your device.

I often conduct these interviews for clients — big brands, companies you hear about frequently — and I can tell that the findings are almost always surprising to my clients. The language consumers use to describe my clients' devices is simpler and almost entirely focused on the life-improving outcomes of the products. Out of 100 customers, maybe one or two talk about technical specifications, the rest focus on real-world emotional value.

Giving it to Them

In asking the questions, you learn what your customers want. The answers to these questions become the most powerful consumer marketing language you can possibly use. The words of your market are the best language for your market.

I can tell you about any number of my clients who have executed this approach successfully, but cannot elaborate here due to confidentiality. However, if you want an extreme example: Microsoft (not a client) did this recently with its wildly successful "I'm a PC" television advertisements. These were simple, straight-forward, feel-good, emotional and featured real people — happy, hip, pleased with their experience — talking about exactly what parts of a Windows PC improve their life. These were powerful commercials, allowing viewers to immediately identify how a Windows computer might affect their day.

Communicating Simply and Relentlessly

I've found that simple always wins in marketing. The less technical specification the better. In consumer electronics, "simple" is the answer to this question: How does this product improve people's lives? And relentless means you must never stop communicating. Even pauses are harmful. Look what happened to Palm, which, at one point, just stopped communicating with customers. In consumer electronics, if you stop communicating, gravity pushes you out of people's minds. The competition will pass you by in three seconds. You must innovate and execute your marketing relentlessly just to maintain the advantageous position you've attained.

If you've attained a space on retail shelves, I can say fairly confidently that your product is good enough to attain evangelists. The rest, the magic, is in the marketing.

Why Europe Will Negotiate a Greek Default

As another Euro summit takes place today, with another bailout package for Greece on the table, it's important to realize that what we're talking about is not whether to "rescue" Greece. Rather, we're discussing how the Germans, other rescuing countries, and bondholders and other private investors are going to have to pay the bill and perhaps how big the bill will be. To see why that's so, just look broadly at some possible outcomes to the Greek crisis

If a haircut for bondholders and other investors is required as part of an agreed bailout package, everyone with investments in Greece participates in the hit. The share of the package borne by the public sector in Germany and other strong Euro countries will presumably have some impact on their public finances. A deal of this sort, however, would be attractive because it would allow for some management of the scale and timing of default.

If Greece gets bailed out through a loan package and there is no haircut on bondholders and other investors, the interest burden on the Greek economy would continue, and with Greek debt to GDP at current levels, the Greek economy would be forced into a sustained depression, probably requiring subsidies and aid to fix. The pressure to bail out other struggling companies in a similar way would be intense. The continued bailouts would have to be funded by more taxes or more debt in the rescuing countries. This solution would defer the reckoning but not for long and it would almost certainly increase the scale of the losses for all concerned.

If there is no bailout and investors refuse to take a haircut, Greece can just declare a default, and other investors will take the hit. This would take control of the size of the bill out of investors' hands. That might be good for Greece, but it would involve sacrificing Greece's ability to raise funds on a large scale abroad for the foreseeable future. Greece would have to be perceived as a potential Asian tiger to get investors to come back in. This is not an attractive option for anyone except maybe in the very short term for Greece.

Greece could also simply leave the Euro, converting its obligations back to drachmas. But other investors would still end up footing a bill (through the devaluation of their assets once the drachma went into free float and got marked down in the forex markets) and they'd have no control over the size of it (that would be the markets). This would seem to be an attractive option for Greece, because it could perhaps technically be dressed up as something other than a default, but it's probably not good for creditors in the rest of Europe.

Whichever way you look at the evolution of the Greek crisis, there seems little doubt that a bill has to be paid. Greece is in no condition to grow its way out of its debts unless the debts are reduced. Since Greece has one unilateral option that's arguably economically attractive from its perspective (dropping out of the Euro) it would seem that everyone else has a stake in arriving at a bailout package that includes a haircut before Greece starts to se the economically attractive as politically attractive too. Negotiations about a lot of money always involve a certain amount of bluff and brinkmanship, so we can expect a rocky ride to get there, but we should, in a rational world, expect to arrive. Watch this space

How to Survive a Direct Attack

The annual shareholder meeting of Yahoo! Inc. last month was an "unlikely lovefest" — according to the report of the event in the New York Times — unlikely because the company's stagnant stock price and poor performance against its competitors would seem to have invited a more critical session. The lovefest carried through more than an hour of glowing outlook from the board and management as well as softball questions from the shareholders.

But then, a man called Steve Landry took the floor. Landry identified himself as a personal investor who also advised institutional investors holding more than a million shares of Yahoo! He then proceeded to attack the company in general and its Chief Executive Officer, Carol Bartz, in particular. Addressing her directly, he said, "It came out earlier this week in a blog that the board is secretly talking to other potential CEO candidates. I've heard similar details and believe that it's true." He then went on to say, "the last thing Yahoo needs is a lame duck CEO... The buyout talks of your contract need to start today and a search needs to be accelerated."
According to a transcript of the webcast, Bartz responded:

Thanks for your opinion, the bloggers and the rumors. What else? Wonderful — that was certainly a downer. So again, thank you for coming to Yahoo! We are working very, very hard in this company and managing our assets and we will see the benefit of that.

Reports of the exchange in the major financial press — the Times, Wall Street Journal, the New York Times, and CNET — carried only the central phrase of Bartz' answer, "that was certainly a downer." This left readers with the impression that Landry's direct attack had damaged her.
Bartz did the right thing in ending her answer on an upbeat note, but made two tactical errors at the front end of her response, both of which outweighed and therefore overshadowed her positive effort.
1. She failed to address the issue in the attack
2. She validated the negativity
Instead, Bartz should have said something along the lines of,

Yahoo!'s policy is not to comment on rumors and blogs. What I can tell you is that we are working very, very hard in this company and managing our assets and we will see the benefit of that.

These two issues provide larger lessons for how any presenter should handle tough questions.
1. Presenters have every right to take every opportunity to make positive statements about their companies, but they must first earn that right by addressing the central issue in the challenging question or statement. They may agree, disagree, admit, correct, or deny the issue, but presenters cannot leave it ignored. Yahoo!'s policy is not to comment on rumors and blogs.
2. Negative facts may be sad but true — Yahoo!'s stock price has been stagnant — and presenters can actually be forthright about it, but they cannot validate the negativity by letting it hang, twisting in space: that was certainly a downer.
Instead, presenters can admit to negative facts — so as to be transparent — but then, after a brief, very brief, admission, they must immediately follow it with an upbeat counterpunch. Yes, the stock price has been stagnant, but when you consider the outlook for the new products that you heard about today and the fact that we are working very, very hard in this company and managing our assets, I am confident that we will see the benefit of that.