Vol. 10, No. 7 – May 17, 2010

May 17, 2010

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The 8020Info Water Cooler

Highlights from the latest information
for managers, leaders and entrepreneurs

1. How To Change Customers Fixated On Price

Many customers act as if only one factor matters in a buying decision: Price. But in Harvard Business Review, Marco Bertinia of the London Business School and Luc Wathieu of the European School of Management and Technology say that to jolt your customers into considering the full value of your offering, you paradoxically need to send a message through price:

Use Price Structure To Clarify Advantage: The first option is to revise your pricing to call attention to the full value your product or service delivers. Goodyear, for example, found customers unwilling to pay a premium for better treads until it started pricing its models based on the miles they could be expected to last, starkly highlighting the consumer advantage.

Wilfully Overprice To Stimulate Curiosity: Setting prices higher than consumers might expect attracts attention. If all GPS devices in a store cost $200 except for a single $300 model, customers will likely explore the advantages that higher-priced version offers.

Partition Prices To Highlight Overlooked Benefits: Break the price into its component parts, as cable television does, and highlight different benefits or dimensions of differentiation that might otherwise go unnoticed.

Equalize Price Points To Crystallize Personal Relevance: Steve Jobs chose a counter-intuitive approach when he decided to charge 99 cents for every iTunes track rather than, say, $1.29 for current hits, $1.09 for classical, and 99 cents for country. The higher sales generated, according to research, would suggest uniform pricing led people to focus more on their desire to consume music in general rather than worry about price savings.

2. Managers Should Stop Being Victims

When Ohio State University Professor Jeffrey Ford asked some managers to list their three persistent challenges, they fell into the following categories:

Poor Planning: Frequent changes in priorities and assignments, or things not well thought out in advance (67 per cent of responses).

Difficult People: People who are unresponsive, uncooperative, or just plain hard to work with (63 per cent).

Lack of Teamwork: People I need to collaborate with do not communicate as needed (61 per cent).

Poor Quality Work: The work I get from others is incomplete, inappropriate, or wrong (44 per cent).

Work Overload: I have more to do than I can get done yet telling people that doesn’t seem to matter (40 per cent).

Insufficient Support or Resources: I can’t get the support or resources to get my work done (40 per cent).

Lateness: I get things late from others (39 per cent).

Other: This covered matters like “poor communication,” “lack of accountability,” and “poor management” (25 per cent).

The pattern, he notes, is that the managers believe their problems come because of “them” — other people. But that just makes those managers victims.

“It denies them the possibility that many, if not all, of their particular challenges can be significantly reduced, if not eliminated, through appropriate communication. Appropriate communication requires a willingness to consider oneself at least partially responsible for the persistent challenge,” he writes on his blog, ProfessorFord.com.

3. Why Are You Trying To Save Time?

Much of our life these days seems to be a race against time — a race to save time. But in his Productive Flourishing blog, Charles Gilkey says “the counter-intuitive truth about gaining more time is that gaining it doesn’t necessarily add value, and, in fact, there are plenty of cases when having more time causes more problems than having less time.” Having time on our hands can lead to boredom, so we then fill up our day with more busyness.

The way out of this cycle, he advises, is to switch from just thinking about saving time to thinking in terms of saving time in order to do some specific thing. “So,” he concludes, “why are you trying to save time?”

4. The Importance Of Non-Profit Work By For-Profit Executives

Harold McGraw III, CEO of The McGraw-Hill Companies, says that non-profit board service is a key qualification for any executive he might hire or promote. If he doesn’t see such a record, it discourages him, signalling the candidate is not a complete person.

He shared these thoughts with consultant Alice Korngold, on the Fast Company Experts blog. She notes McGraw also believes that, as a CEO, he needs to be a role model through his own community service and non-profit board participation, or he won’t be taken seriously. And although he is running a Fortune 500 company and can now serve on major boards, he started in the community by volunteering on blood drives, the United Way, and the local YMCA.

The message: Working on community groups can expand your horizons, offer you additional skills, and prepare you for an executive role in a for-profit company.

5. Zingers

Workplace expert Joe Takash says you can improve your retention of top staff by asking specific questions to determine their motivation: (a) Are you happy where your career is headed? (b) What would you like the next step in your career to be? (c) How can we help you get there? (Source: Managesmarter.com)

Rolex requires dealers to display their non-digital watches with the hands showing 10:10 because it looks like a smiling face. A recent American Express ad started with a number of everyday shots of unhappy faces before switching to smiles. Does your business or non-profit have a smiling face? (Source: Brandingblog.com)

Marketing consultant Eric Rudolf suggests limiting your e-mail subject lines to 35 to 40 characters in direct marketing efforts. Double-check that the message is succinct and easily understood by looking at it in your own inbox. (Source: RainToday.com blog)

Stanford University Professor Bob Sutton likes the expression: “Your lack of planning is not my emergency.” Unfortunately, he notes that the hallmark of a bad boss is treating their own foul-ups as everyone’s emergency. “They keep their people in a constant state of suspense and paranoia because they keep springing one vile surprise after another on them — and then act like their followers are difficult or incompetent when they resist or protest such absurd last minute demands,” he observes. (Source: BobSutton.typeface.com)

Marketing guru Seth Godin often looks at the Encyclopedia of Clichés to find clichés that inspire opposites. The secret is to point to a cliché and then do the opposite, which attracts attention. Richard Branson turns the cliché of the stiff, formal CEO on its head. Apple points to products like a laptop, desktop, or an MP3 player and then turns the cliché upside down with a new product. (Source: Seth’s Blog)

6. Q&A with 8020Info:
Moving Beyond The Core

Question: Our customers are seniors. If we can’t find a younger crowd, should we be worried about our future?

8020Info Associate Harvey Schachter replies:

This a common concern, in businesses, non-profits, and government to the extent that politicians bemoan the lack of interest amongst younger voters.

Obviously if you sell something that your client buys only once every two decades — a refrigerator, say, without any service package — you might have reason to be concerned. But even then, there are potentially a lot of people who could be attracted to your product, given that seniors are the fastest-growing segment of our population.

Don’t give up on them too easily. They often have money and time and enthusiasm. And although you may worry about them eventually dying off, that will take time, and they will be replaced by others who hit the age that seems golden for your company. You won’t run dry tomorrow — or even in ten years’ time.

Your brand reflects your customers, and what you do that brings those people to you. Don’t shake it up without careful thought. It can sometimes be difficult to bring old customers and young customers to the same brand — look at CBC Radio in that regard, as it becomes ever more hip, and turns off many long-time listeners.

In business, that strategy is described as moving beyond the core of your business. And strategist Chris Zook, of Bain & Company, found that of the 25 most costly business disasters from 1997 to 2002 (excluding those caused by the dot-com business bubble), 75 per cent involved a failed growth strategy whose unrealized goal was to move profitably into new adjacent areas surrounding the core business. So while moving beyond the core can seem attractive, it can also be folly.

Beyond The Core

In his book Beyond The Core, he asks you to study five factors when eyeing a new market: Whether the two areas share or don’t share the same customers, competitors, cost structure, channels of distribution, and “singular capacity” — the brand, asset or technology that gives the core business its uniqueness.

Count one point each time there is a difference between the core and adjacency on one of those five dimensions because you are taking a step away from the core. “We found that the odds of success declined precipitously as an adjacency moved two of more steps away from the core business’s greatest strengths,” he warned.

So perhaps going after younger customers is just one step from what you are doing now, and a canny move that refreshes you for the future. But maybe it’s not so wise if, using his formulation, you divert resources from your main audience, bring on new competitors, have to sell in a different way, and dilute your brand.

7. News From Our Water Cooler:
Mental Categories

It was a pleasure to join executive directors, board members and other non-profit leaders last week as we presented a workshop on marketing strategy for the United Way Leadership Development Series.

We focused a lot on the psychology of making choices and the importance of “mental categories” — how positioning, stereotypes and expectations influence the marketing of services. For example, terms like “community-based”, “government sponsored” or even “non-profit” influence perceptions of what you might have to offer. The mental category of “going to the movies” leads people to expect popcorn to be available; a different set of expectations apply to watching a movie at home.

How clients, funders and volunteers make their choices and decisions is also complicated considerably by how human minds work. For more on this issue, take a look at: Sway — The Irresistible Pull of Irrational Behaviour by Ori and Rom Brafman, Daniel Pink’s Drive — The Surprising Truth About What Motivates Us, or Predictably Irrational by Dan Ariely.

8020Info helps teams develop, communicate and implement their marketing communications, research and strategic plans more effectively. We would be pleased to discuss your needs and welcome enquiries at (613) 542-8020, or by email at watercooler@8020info.com.

8. Closing Thought Top

“If you don’t sell, it’s not the product that’s wrong, it’s you.”

— Estee Lauder