Posted by: kevinliebl | July 26, 2009

Why do some products succeed while others fail?

Pet Rock

The Pet Rock

There are clearly many factors that play into this discussion and I am not going to try to cover all of them in this short blog post.  However, recent discussions with my colleagues have made me want to share a few thoughts on the topic.

Product/Market Alignment – Many readers are too young to remember the “Pet Rock”.  However, in the mid-70s a brilliant marketer decided to launch a quirky item in time for the Christmas holiday called the “Pet Rock”.  It was simply a rock with an owner’s manual.  The booklet was the hook because it was well written showing examples of how to care for and play with your pet rock.  As an example, your “pet” rock could be an attack rock – with a graphic showing an arm throwing the rock.  The booklet, while very well written and fairly entertaining, was simple and short.  So, why did a rock and a small booklet sell millions of units?  I would argue because of product/market alignment.  This was a time when the nation was facing a poor economy, gas rationing, a president on the brink of impeachment, and many other significant issues.  As Christmas approached, the notion of such a simple, inexpensive, and quirky gift appealed to the masses.  The product aligned nicely with the needs of the market.  Yes, there was unique marketing and several items that triggered a “tipping point” that all contributed to this national phenomenon.  However, timing played a key role.

Great Marketing – The best products don’t always win.  In fact, I would argue that the best products rarely win.  Why?  It is because often the best products are driven by engineering companies, where marketing is an after-thought.  I have always believed that companies have three pillars of influence – Engineering, Sales and Marketing.  If a company is too engineering oriented, they build a great widget, but no one really wants it because marketing didn’t do the up-front research, nor did they promote it properly.  If a company is too sales-oriented, they are focusing on short-term sales targets at the expense of long-term strategies and investments in building the right product.  If a company is too marketing-oriented, they have great long-term strategies, but often run out of money because they lose sales focus.  There needs to be a healthy balance in any given company between these three areas of influence.

However, great marketing can offset marginal engineering and sales efforts.  Take a look at the late Billy Mays.  Does anyone believe that his products were revolutionary?  No, however he was a master pitchman.  Does anyone believe that the home shopping network has the highest quality or latest technologies or fashion?  No, however their approach to marketing created an entirely new channel of distribution.  Some years ago, baking soda sales were slipping and the marketing teams launched a campaign explaining that people should put baking soda in their trash cans to keep them from smelling.  In other words, “buy our product and throw it away”.  Sales jumped due to this innovative marketing campaign.

Most experts believe that the Mac OS is superior to the Windows OS.  However, Microsoft has out-marketed Apple for years gaining market share and creating barriers that kept Apple in a distant second place.  However, the past 5-10 years have turned the tables.  Apple has introduced new products (e.g., iPod, iTunes, Apple TV), entered new markets (e.g., music, video), created new channels of distribution (e.g., Apple Stores), and launched creative new marketing programs (e.g., I am a Mac/I am a PC) that have, by most accounts, left Microsoft on the defensive.   Time will tell who wins, but if history were an indicator, I would bet on the company with the strongest marketing efforts.

Your thoughts?

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Responses

  1. Great post Kevin!

    Spot on, a winning product/solution/service requires a blend of marketing/sales/technology/production/service and not to mention be priced to meet market/demand.

    In fact there has been a notion that there is no technology innovation today which in fact is not the case, something I did a recent post on my blog about.

    This is an interesting linkage to why so many startups or even established vendors fail, or stall out at a certain point in time or revenue level.

    In some cases it is lack of product innovation and continued evolution, others it the lack of investment in sales or marketing, others it can be too much general and administrative overhead, lack of production quality, server or support.

    Coming out of the dot com era and early 2000s, there was a race to prop companies up for a quick IPO or M&A cash out for the founders/investors.

    Some of those companies spent millions on lavish marketing, or, trying to invent and establish to the market the perfect product, or spending outrageous amounts of money on sales programs that were not able to capture the essence of the product or company, not to mention yet others who spent as much on their headquarters and management dream teams than on the combined sales, marketing, service, support, manufacturing and engineering.

    Some of these companies did in fact IPO and go on to do quite well. Some were acquired even at out lavish prices, some survive today, many have faded away, or not lived up to their expectations, or simply written off and retired.

    Others still languish, being liquidated or sold for pennies on the dollar while others are transitioning their business models to be that of a business for the near if not long term. That is, rather than a business model designed for IPO or M&A, to a business model requiring continued engineering R&D investment, production quality control, effective administration, robust sales and marketing not focused on just the next quarter to meet short term objectives.

    There needs to be a balance, awareness and appreciation of what different groups does or enables in an organization. Marketing needs to appreciate what engineering, production or administration does and why. Sales needs to understand why production, engineering, server/support or administration does things and why, and so forth. Become too centric in one area, and the ship tips over or runs aground.

    Good bad or indifferent, let’s use a certain very large and very successful storage/data management company as an example. I hear from some they are dominated by their sales, yet from others I hear they are dominated by marketing, from others by their legal, yet from others I hear they are dominated by their server, finance, manufacturing or engineering groups, all of which may be true from different viewpoints.

    However what I see having been a customer, competitor, partner and an analyst covering that company and being able to learn more about their internal workings is that they really are balanced, even to the point of moving people around/across groups. A particular group within that company may have dominance, and even have been convinced they have dominance to empower them to be the best they can be. However the groups also compete and work together, an example of a balanced ship, again, good, bad or indifferent.

    Back to your point, the best engineered widget may not be the best and winning product if it can’t be produced economically, marketable, sellable and supportable. Likewise all of the kings horses and men won’t be able to sell and market something long-term if it can’t be produced in a stable and workable condition.

    The best laid out marketing plans may end up being a house of cards if sales, engineering, production, finance and admin have not done their jobs, unless the virtual product is just that, a virtual product. Lest not forget the revenue prevention department, that is the group who is perceived by the other groups to be the ones getting in the way of prosperity, revenue and profits when the finger pointing begins when the numbers are missed.

    The a simple formula can be: Product success = Revenue (Sales) + Awareness / oppourtunity (Marketing) + Product (Engineering) + Availability (Production/Support) + Profitability (Administration)

    Cheers – gs
    Greg Schulz

    Author “The Green and Virtual Data Center” (CRC) and http://www.storageioblog.com

  2. Hi Kevin,

    Good article. Agree that market alignment is very key or else you remain a R&D/product development project. In fact, one doesn’t need to wait for the product to be ready to do good marketing or seek market alignment. It starts well before the product specs are written. It’s the pulse of the market need that results into a leading product. Most of the time the gaps between the current products and customer needs are well known but no one cared to come out with a compelling product to address that unmet demand or void. For example, the whole mobile industry knew the pain of walled garden and how it limited consumer choices. They also knew how difficult the navigation and browsing was on the phone. This is what iPhone addressed very well by open OS, Safari browser and even today unbeatabel UI. So, to most people it may seem like the iPhone success was a fluke or pure market alignment when it was launched. No doubt market timing is important, but such alignment is planned than fluke for the successful products. Having built couple major wireless systems, I know the important of customer needs and timing. And it’s rarely an accident that right product hits the market at right time.

    What I am caution entrepreneurs is to stay away from the notion of “selling” the hype, both to raise money and to market their products. Yes, one can buy expensive TV ad slots and market like crazy, like many products on infomercials do. Many of them do get a traction too. But quite a few of these products don’t live up to the hype and customers find themselves caught into “impulse buying” zone. The products eventually make their way to the garages where they collect dust for years. So, the strategy works to create temporary sale, but will fail to launch the product to become part of consumer lifestyle unless it does what it’s intended to do – serve the very purpose it was bought for and that also in a high quality way. You may want to use TV and other media to “launch” the product where select group of customers come to know about it. But after that, the real value the product brings will become the marketing itself. How many ads does Apple need to put out for iPhone? When the value proposition is phenomenal, the product sells like pancakes. Agree that people got to know about it, but that can be achieved for a relatively low budget spent smartly for a high quality product addressing the unmet and burning need.

    Tarang Shah

  3. Greg, Tarang,

    Great replies – both. There is no short-cut for market research. At the end of the day, the market requirements need to align with the product offering. If the product doesn’t solve a customer problem (and a significant one at that), then the product/service will fail.

    Once the product/market alignment is addressed, the proper marketing campaign must be designed and implemented. Tarang – you are absolutely correct, TV ads are likely the wrong tool for a startup. However, inexpensive focused social media tools where the startup can focus directly on a community of target customers may be the perfect tool.

    Great comments.

    Thanks, Kevin

  4. Kevin,

    I really enjoyed this article. It made me think about infomercials too…chances are most infomercial products are not the highest quality or most impressive, but when placed in the correct time slots (midday for items that will appeal to moms, Sunday morning for do-it-yourself type products for guys etc) and with a good spokesmodel, a catchy pitch and a few awe inspiring demos, and you’ve got a sale!! Actually, you have many sales!

    Of course, in today’s society of blogs, social media and instant feedback, the product does need to meet a certain level of quality, otherwise word gets out fast. The marketing pitch can certainly work early on, but if everyone starts talking about the poor quality of the product sales are sure to drop. Just as Apple’s marketing has helped hoist them up in recent years, I have to think that also some of Microsoft’s software and application failures helped bring them down a bit.

    Rachel

    • Rachel,

      Excellent point regarding the conversations of quality on social media. I have blogged about this one in the past. There was a time when companies could release a 1.0 product and “test market” the release. They would find problems and fix them in version 1.1 or 1.2. In many cases, companies were well known for this and much of the marketplace wouldn’t actually adopt the product until version 2.0. This was very common in software development.

      However, social media changes the rules of the game. We now must release rock solid products. If version 1.0 has problems, the word travels fast and vendors often cannot recover from the negative press.

      Great point. Thanks!

      – Kevin

  5. Hi Kevin,

    Enjoyed your post and the subsequent comments. (Are you a Pepperdine Alumini?)

    Although it makes logical sense to identify first a need (via marketing research), and then develop a product, and do sales – there are sometimes ‘happy’ inventions – that is, discovery of an elegant method or solution as a bi- product of a task which had an entirely different goal (‘3M Post It Notes’ story comes to mind here). In this case, market research, and sales come after the product creation. Many say that it is like putting the cart in front of the horse. I agree that it is not a good situation.. but happens frequently, especially in IT!

    Cheers,

    P.J.

    • P.J.,

      Yes, I am a Pepperdine alumni – MBA 1990. I completely agree with your comments on bi-products. There are many accidental products that become great success. I wouldn’t even call them accidental as much as mid-course strategic changes. The passion for success and unwillingness to fail is what make many products ultimately succeed. Great comment.

      Thanks, Kevin

  6. Hi Kevin,

    I had replied back at LinkedIn, thought maybe I should put a copy of my reply here too.
    ——
    Depends on what type of product we are talking about. I am a Product Service strategist and if the product we are talking about is a service or a website I would say it is the amount of change in behavior required that dictates how easily it would take off, or if it will take off at all. Marketing would fill the gap if it needs a change in behavior, by showing why the extra effort in changing the behavior is worth it, or what rewards will it bring the user.

    A good example of this is “Connect with your friends”, “Express Yourself”, etc. YouTube, Twitter or Facebook or anything else that we see as a standard mode of communications now had to wait for some sort of adoption that brought the user’s behavior closer. Before these types of services/sites would be successful in taking flight, they had to have predecessors. Before Facebook, Flicker and MySpace had to be there. It was an incremental change after those sites to convert over to Facebook or LinkedIn for that matter.

    While Facebook took off, right past MySpace, because it opened it’s operating system to developers, I think Twitter took off because it is so similar to Text Messaging that people feel it’s easy to use to keep their friends/colleagues/followers/customers/etc. in touch. Although the real big spike in users should be attributed to the big push by people in the media and their need for instant feedback from the audience dictated. Oh yeah, Ashton Kutcher had a little bit to do with it too 🙂

    But if we are talking about a product like a widget, great Engineering coupled with a good price will help it take off slowly but steadily (although good price is a subjective term), and if it is a sustainable product, it will eventually get good following and be a staple in the space like Snickers, Nike, Rolex, Coke, Levi’s etc. While these products do have a way of achieving success on their own, marketing and sales will sure turn the afterburner on.

    The behavior aspect does also effect real products. Just two examples, Levi’s and McDonalds. Levi’s was having problems keeping up with the new Blue Jeans companies that were eating their lunch, so they looked at the consumer’s behavior, and launched Khakis (Dockers) which, coupled with the proper marketing, not only helped them become very profitable, it also saved them from bankruptcy.

    In the case of McDonald’s, the McDonald brothers had already seen the trend of people needing fast food on the move and responded to it. But it took a master salesman and marketing to make it take off exponentially.

    While a little wordy, I hope it helps in seeing a Product/Service specialist’s viewpoint in why some products take off while others stagnate.

    Diran Afarian

  7. Kevin,

    I remember the Pet Rock and it came out about the same time LaMaze classes for pregnant women became popular. I remember because my PET became my companion when I went into labor. The nurse asked me to bring something to focus on (to take my mind off the pain). Well that didn’t work too well, but the Pet Rock became the talk of the hospital.

    It really was such a simple idea that caught on like wildfire.

    Reminds me I will have to feature it on my Quirky marketing Calendar Blog at some time.

    Thanks for the great content.

    Regards,

    Heidi Richards Mooney

  8. Hi Kevin,

    Bang on.. great thought .. I completely agree that a product is a mix of engineering, Sales & marketing…

    But what drives is the Marketing Strategy & the absence of right or proper strategy leads to failure of many great products & innovations.

    But as many of them feel that advertising is a solution & spending big way help but thats not the final answer. There are various of approaching ur consumer & understanding them is more critical. Also more over innovation or new products will always require a good marketing thought.

    Marketing can make even a simpler product an instant hit & connect with consumer… More monies need to invested in understanding the market & need of the consumers.

    Regards,
    Rohan Ekbote


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