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Is there any force in the money-making universe more profitable than that of a beloved brand? Some companies just seem to nail it so well that they create a direct pipeline into their customers’ bank accounts. And there’s nothing nefarious about this– the customers are more than happy, proud even, to fork money over to their dearly beloved.

Consider Whole Foods. I’m moving in with Whole Foods. (I love Whole Foods. I want to marry it. nails the way that so many people feel about this… supermarket? Who woulda thunk a grocery store could generate such passion. The writer takes some time out from her ode to Whole Foods to list a few generalized goals which any company could seek to apply to its business. Goals presented here, with my comments:

• cater to your niche (after all, it’s your niche which will care about and tout you the most)
• business is theater (I highly doubt that anyone really shops at Whole Foods for the food. They’re there for the feel-goodness of it all, the see-and-be-seen-ocity. They shop there because it makes them feel smart and cool.
• hire for attitude, train for skill (your employees make or break you, and you can’t ever make an employee care)
• let your fans spread the word digitally (go viral, young man!)

Excellent post: (If we can’t beat ‘em, we’ll join ‘em and other bad ideas) on companies’ frustrating tendency to not “dance with the one who brung ya”, as they used to say. In other words, you got rich and successful by doing X, so why would you now want to start doing Y? You own a niche, your competitors own a niche. Trying to own your competitors’ niche as well is a) unlikely to be successful, and b) likely to confuse your own customers and in the worst case threaten your hold over your own niche. It’s not that you can’t grow and do new things… invent a brand new niche to enter, where by default you are #1 since no one else is in it. Just make sure it doesn’t conflict with your core moneymaker.

Interesting goings-on at Dell lately. After losing all their mojo in past years and getting surpassed by HP as #1 computer company, they’re making all kinds of changes. Just the other day came news that they were abandoning the direct-only model and starting to sell some models at Wal-Mart– for $700 or thereabouts, which makes you really wonder how much they must be selling those machines to Wal-Mart for? $150?

Perhaps even more interesting, Dell finally broke ranks with Microsoft and is now offering models with Linux installed, as they announce on their website. From the perspective of Linux’s positioning in the market, this certainly has to go a long way towards establishing legitimacy amid something broader than the X-treme Geek crowd.

Obviously Microsoft has noticed since their army of lawyers is trumping up all kinds of patent lawsuits which Linux allegedly violates. Patents on the blue screen of death perhaps? Actually, Linux probably wouldn’t ever violate that one.

In any case, you would expect that Linux may start to get exposure to a somewhat more mainstream audience now. And just a few years ago it seemed that Microsoft would control the world for all time.

This keeps coming up, but I just posted the other day about the danger of using a business model where your profit stems from policies like causing your customers to hate you. For example, being a monopoly and selling buggy, crash-prone software.

I apologize if I occasionally blog about Wal-Mart, but the thing is, it’s an interesting company to discuss. First off, it has an economy bigger than most of the countries in the U.N., and if you totaled up its security guards, it would probably have a larger standing army than most as well. Secondly, it single-handedly changed retailing in the U.S. in the 90’s as it took over. Thirdly, ever since it ascended to the dominant position and prompted all kinds of people to declare that eventually we’d all work there, it has pretty much devoted itself to a) mediocre performance and b) pissing people off through one PR disaster after another:

• let’s lock the illegal immigrant employees inside the store for the night!
• let’s hire a blogger to write ridiculously positive things about us, but not tell anyone she’s on the payroll!
• let’s re-arrange the employees’ lives on a weekly basis!
• let’s fire our podunk ad agency and that dopey smiley face and hire a real marketing professional… and then let’s immediately fire her for doing what big city marketing pros do, which is wine and dine one another.
• … you get the idea…

So there you have it. The company everyone feared rapidly becomes yesterday’s news. And suddenly, the big question is whether Wal-Mart has begun its long slow descent. It’s a big question for me, anyways, since I own the stock.

But then I saw this article in the NYT, It’s Not Only About Price At Wal-Mart, and it seems to exude a glimmer of hope. Wal-Mart seems to have analyzed its customer base and taken pains to identify exactly who its customers are, and why they shop there. On the face of it, it seems like some good insights were reached. They break their shoppers into 3 groups:

1. Brand aspirationals - ie. people who want to buy the top brands but can’t afford it.
2. Price-sensitive affluents - ie. the cheap rich.
3. Value-price shoppers - ie. people who try to live on the sort of salaries Wal-Mart pays.

OK, I’m having a little fun with my summaries. But the fact is Wal-Mart could be on the right path. Once you have clear customer profiles, everything else starts to fall into line… what products you need to carry, what price points you need to hit, what messages you want to convey. Wal-Mart has made previous attempts at moving upscale, and I always thought that seemed doomed to failure. Getting from ‘cheap’ to ‘luxury’ in your customers’ minds seems like a bridge too far. But the reality is that, as the article points out, there is no shortage of BMW’s in the parking lot. So once you know that they’re not there to shop for Gucci but rather to cram the trunk with stuff and brag to everyone at the country club about the great deals, you’ve got knowledge you can put into execution mode. It’s the execution mode where Wal-Mart has traditionally run rings around everyone else, so this might be good news for long-suffering stockholders.

Last week an internal memo by Starbucks chairman Howard Schultz leaked to the net. In the memo, he wonders if somewhere along the path of growing from 1,000 to 13,000 stores, the company might have lost its way and commoditized its brand. He cites a number of moves which eacg seem right individually, but viewed together, give him pause:

Many of these decisions were probably right at the time, and on their own merit would not have created the dilution of the experience; but in this case, the sum is much greater and, unfortunately, much more damaging than the individual pieces.

Some of the decisions he questions include:

• installing automatic espresso machines, which allows customers faster service, but moves away from the ‘hand-made’ vibe which Starbucks is known for
• moving away from scooping fresh coffee right in the store in favor of using ‘flavor-locked’ packaging. Faster, more efficient, but it’s no longer apparent the company grinds and roasts its own coffee, and it also reduces the stores’ familiar coffee bean aroma
• Store design moving towards more of a ‘chain’ and less of a ‘neighborhood’ feel

It’s interesting to see how someone at the very top of the food chain ultimately struggles with many of the same issues we at the bottom must deal with daily. The only difference is a few extra zeros on the revenue number, and if I write a memo, it doesn’t wind up on page 1 of the Wall Street Journal.

For me, the takeaway from this memo is: Beware of slow creep. You’ve gone to the trouble to define a brand, and to build a brand image, and your brand concept has been validated by the market. But then one day, you make a compromise out of expediency. A few weeks later you make another. And then another, and so on. At some point, you look back, and you’ve renamed your business McStarbucks.

If you’re interested, I’ve previously made some comments on Starbucks here.

I watched some of American Idol earlier tonite (along with most of the rest of America, so I guess I don’t have to be too apologetic). Some modicum of singing talent is needed to get anywhere on the show, but in the end, this is, quite by definition, a popularity contest. It’s interesting to see the different approaches which contestants take towards branding themselves. Round 1 gives them 1.5 minutes to ‘position’ themselves in the minds of an audience of millions. Quite the task for any marketer, never mind a 20 year old who also has to sing on key.

Some of the singers really try to go for the center of the bell curve.  I put in this group every one who’s doing a Justin Timberlake impression, generally creating a weak fascimile of a star who is himself a weak fascimile of a star. Lots of attempts at the r&b singing style, which is great if executed perfectly, but loses points fast if it goes astray.

Then on the other hand, you have the guys who aim to go narrow. For example, this dude. (I wanted to put his picture in, but it seems to be prohibited by Fox’s Terms of Use - great way to be viral, guys!). Anyways, here’s some guy who looks like no one else, and doesn’t really care. My guess is he’s likely to develop a pretty strong cult following. Playing to a niche is not the sort of thing which makes you an American Idol, but it gets you through a few rounds, and also makes for a pretty strong music (or business ) foundation.

Interestingly enough, Seth Godin just did a post on what he terms Micro Hysteria with an argument along these same lines, except better executed than mine. In a nutshell, you can shoot for the moon, and there are long odds you might hit it, but better odds you won’t succeed. On the other hand, you can shoot for a smaller, more focused target, with better odds of not just succeeding, but also ‘owning’ a position with that audience.

So the next logical question is… if your business were a contestant on American Idol, what would its approach be? Are you edgy, or mainstream, or just lame? Are you mimicking your betters in the big leagues, or blazing your own trail? Are you aiming to be Coke, or Dr. Pepper, or Yoo Hoo? It’s always good to know where you stand, so that you’re standing where you want, and you’re not surprised when the judges call you on it.

An article in today’s Wall St Journal discussed an attempt by Payless Shoe Stores to boost revenues by tweaking its image to appeal to a more style-conscious customer willing to pay more for a pair of shoes. Holy cow, the last time I was in a Payless, it struck me as if the shoe department from Kmart had branched out on its own.

So can you get There from Here? Can you alter your positioning? It seems to me there are 3 factors at work:

1. Is the new desired position believable in light of the existing position? It’s understood that you actually understand what position the market believes you hold, as opposed to the position senior management things you hold. A colleague of mine refers to this as ‘passing the laugh test’– if you suggest it, and everyone laughs at you, that’s a good sign it won’t work.
2. Do you have enough marketing funds to promote the new position? Because you might be needing lots of cash.
3. Can the operations people back up the new positioning? If there’s one thing that people don’t like, it’s a phony. Personally, I’m sick of airline ads where they talk about friendly skies and show all the happy passengers. Air travel is like a never-ending root canal, except the chair at the dentist’s office is a lot more comfortable. If the marketing convinces people to give you a try, and they discover that you haven’t changed anything, you’ve just wasted all your money. So clearly, these decisions can’t be made in a vacuum, and have to be coordinated across the entire organization.

A few questions to ask yourself when designing your next product:

1) What products will mine compete with, and how are they positioned?

You need to know what’s out there before you do anything. Otherwise, you’re just reinventing the wheel or wasting your time.

2) How will my product differ from those already on the market?

Why will anyone want to buy your product? Define your positioning relative to your competition. No competition? Then define your positioning relative to any possible substitutes. I like to attempt to capture the relative positioning graphically:

3) When you get right down to it, what is my value proposition?

Can you sum it up in 10 words or less? Encapsulating the message like that goes a long way towards getting the rest of your development team on board, and keeping them focused. Plus, it gives you a head start on crafting the marketing message.

4) What are the most important features my product needs to contain in order to hit the target set in #3 above?

They call the front end fuzzy for a reason. Things will change, the sands will shift. But you should be clear on what goals are non-negotiable, ie. if you find you can’t hit them, you need to look at cancelling the project. 

If you’ve got a big fat budget, you can hire a few focus groups to help you answer these questions. No budget? Then gather a few friends, customers and co-workers to get their input.  No friends? Then just answer the questions yourself, to the best of your ability.

Then write it all down!

Keep the list handy, so you can refer back to it along the way. Still on track? Great. And then, when you think your product design is complete, check the list one more time, just to be sure.

It’s not a perfect process, but hey, it’s a start. And it’s a whole lot better than sailing without any rudder at all.

I posted a few days ago on Blowing up the business model, how Netflix was planning to avoid obsolescence of its business model. In an article in today’s New York Times, David Pogue gives the details on the Netflix movies-by-internet scheme. Thought this was interesting to flesh out the details in that earlier post. Can’t wait to try out the new service, could be fantastic for business travelers with time on their hands.

I spent this weekend devouring a really thought-provoking book called The Culture Code by Clotaire Rapaille. I highly recommend this title for any marketing or product development professional.

Rapaille is a cultural anthropologist who advises Fortune 500 companies on product and promotion design. His specialty is ‘archetypes’- he seeks to distill the essence of a particular people’s innermost feelings about a particular topic. Rapaille works to get beyond what people say, and to the heart of what they really think. If consulting for a beauty products company, for example, he will conduct thorough research into the target market’s feelings about Beauty. He distills his findings down to one- or two-word ‘Codes’ which represent the essence of the belief.

It’s fascinating stuff. Rapaille makes the case that most of us don’t know why we do what we do, because much of our life is driven by subconscious beliefs and feelings ‘imprinted’ upon us as children. If the Codes behind those feelings are cracked, it’s possible to create products which dramatically resonate with the market. He’s used his theories to drive the development of the PT Cruiser, among many other successful products.

Here’s a taste of one of his conclusions — in studying what the ‘Code’ for food is in America, he concludes the answer is ‘Fuel’. Food is something Americans use to keep themselves going, rather than something to spend time with and savor, as in other cultures such as France. With this insight in hand, food marketers might focus on messages of nutrition, fast preparation, and energy in order to stay on target with the market.

Rapaille spends a lot of time comparing and contrasting different national cultures around the world, particularly American vs European cultures. This is where I think there is a lot of insightful information. Maybe not the answer to every question you’ve ever had, but a lot of material to get you thinking about things in a different way.

In these days when doing business across borders is becoming the norm, even for smaller companies, it’s increasingly important for us to understand the cultural differences which can stand as barriers to success. Americans tend to be much less savvy with this understanding than other cultures, partly because of our geographic isolation, but also due to our somewhat US-centric attitude. I used to work in the travel business, and always found it remarkable that first-time American travelers to Europe would be amazed that people there did things differently that us at home.

Rapaille believes that for an American company to sell into France, for example, it needs to understand both the French view of Americans, as well as the French outlook on whatever the company happens to be selling. That shouldn’t be shocking to anyone, but Rapaille has a way of taking disparate concepts, each of which we may have encountered before separately, and coalescing them into a single statement which nails the bigger picture.

If you’re into marketing and cultural differences, and if you desire to better focus your product designs, it’s a thrilling book.