June 22nd, 2010
Back in 2008, there was a waiting list to buy a new Toyota Prius. As oil prices surged, hybrid vehicles exploded on the scene. In the first half of 2009, the economy and gas prices slumped, and “Cash for Clunkers” drove automobile demand. Prius sales fell off a cliff (declining by 45%).
For years, idealogs have led the charge for the environmental movement, and environmentally sensitive products have experienced modest demand. While most of us intuitively wish to preserve the planet, the pattern has been that the masses have not been willing to pay a price premium for alternative energy and green products.
Until now, wind and solar power were more expensive than the fossil fuels they were intended to replace. We may be at a tipping point. Regulation is increasing the cost of electricity and coal and technology advances have reduced the cost of solar power.
The state of California (evidently flush with excess cash), is funneling $200 million a year through 2015 into low emission vehicles, including 5,000 charging stations for electric cars. It takes 60-90 minutes to charge an electric car at a charging station (about 8 hours in one’s garage), so the consumer wanting to buy one will certainly have to sacrifice convenience.
The economic realities of the recession have been a setback for the green movement. Fortune 500 companies had upped the ante on vendors measuring their carbon footprint and the like but clearly pulled back in their quest to survive the downturn.
So where do we go from here? My belief is that we are at a crossroads where the most economically viable energy sources will emerge, government will use its bully pulpit to drive consumption, and leading companies will place their gambit on specific energy saving initiatives. The time for talk has probably passed.
The minute the consumer has options that are relatively equal in cost to that of traditional energy sources there will be an avalanche of change. Green represents a set of tradeoffs that businesses and their customers will have to adopt and accept. The green movement has always been a function of leaders who believe, and never in history has there been more opportunity for leadership to make a difference.
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Posted by Marc Emmer, President, Optimize Inc.
June 15th, 2010
Amongst my favorite Seinfeld episodes was that of “The Soup Nazi”. As you may remember the story line, The Soup Nazi banished Elaine from his soup kitchen with his announcement “No Soup for You!” While the Seinfeld clan’s attraction to the Soup Nazi may have been soup of extraordinary flavor, the episode offers marketers a more compelling recipe.
In her brilliant book “Different”, Youngme Moon points out that in a mature market, added features that are not highly relevant to the customer offer little incremental value. She offers the concept of differentiating strategies through “reverse and hostile brands.”
While the Soup Nazi’s fare was surprising good, the service was shockingly bad. I am not suggesting that our clients start insulting customers anytime soon, but there is lesson to be learned from the Soup Nazi. Disrupters understand the need to find separation, even if it means not offering services and benefits offered by the competition. Southwest Air offers no amenities, but does offer free baggage. Where United and Delta says yes, Southwest says no and vice versa.
Menchies and similar self serve yogurt shops have exploded on the scene. Eat all the yogurt you want and we are not going to serve you. By the way, you are going to spend about a third more than you would otherwise. The model is distressing to our waist line but stimulating to our business sensibilities. Tart yogurt flavors are particularly hot as they offer the opposite of what we have been conditioned to expect; as sweet is ying, tart is yang.
For a good laugh with clients, I have occasionally handed out calendars from despair.com. A spoof of the overused motivational posters, they have similar imagery that says things like “Consulting: Why find a solution when you can prolong the problem?” The calendars are popular because they are funny, but also because they are a shock to our senses. When ordering such a calendar you get an email to the effect of don’t bother calling us.
To be different may require the marketer to be entirely counter to the marketplace. The iPad is revolutionary but lacks USB ports and other goodies. Apple is unapologetic, as consumers intuitively understand the tradeoff.
We are drawn to things we can’t have, and thus one potential strategy in value creation is “the take away”. To suggest that your product or service is only available to a select group of customers increases its value. When clients ask us to do Executive Coaching we say no (it is not in our core competency) which makes our Strategic Planning services worth more. Customers know that to get something really good, they may have to give up something in return.
While I am not encouraging anyone reading this to go negative, I am suggesting we need to think more provocatively about creating products and brands that are not only innovative and different but counter to our thinking. That may include cutting out benefits that we naturally assume are necessary, but may just be redundant. I wonder if George would go for the vanilla tart or caramel latte?
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Posted by Marc Emmer, President, Optimize Inc.