Damn- Turns Out the Customer Is Always Right- More Than Ever Before

Running an active outdoor business right now feels like a game of Whack-a-Mole.

  • There’s too much retail- right size yours. Whack!
  • Create product that can be meaningfully differentiated from competitors. Whack!
  • Careful on that distribution. Whack!
  • Manage your inventory and expenses cautiously. Whack!
  • Figure out e-commerce without cannibalizing brick and mortar. Whack!
  • Lower growth economy. Whack!
  • Find and keep enough quality employees. Whack!
  • Most children living with their parents since 1940 (World War II fixed that). Whack!
  • Slow to non-existent wage growth among our customers. What will they/can they buy?  Whack!
  • Close to 10 million American men not in the work force and not trying to get in it. What do we sell them?  Whack!

Whack!  Whack! Whack!  Whack!

I hope to get your attention by saying that these things are pretty much tactical- or in some cases issues you just can’t influence.  What in the hell would I consider strategic then?

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What Is the Value of Advertising?

I read with some amusement as well as concern this article about an apparently still ongoing and massive online advertising fraud.  I imagine you’re all aware of it.  Meanwhile, back in this article, I mentioned the increasing use of ad blockers, especially by millennials.  And within the last week or so, I questioned, as I pointed you to four article on changes in retail, how TV advertising was being received.  What I said was, “Perhaps it explains some of the advertising I see on TV these days where a brand tries so hard to find a compromise message that reaches the sensibilities of more than one group that you walk away not sure what product you just saw advertised or why you should care.”

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Sell the Experience, Not the Product: The Wavestorm Board

I knew about this article on the Wavestorm $100 surfboard before it ever came out. In some ways, it’s old news. Less expensive surf boards of various constructions and materials have been popping up for years now, and the Wavestorm isn’t new. I guess the genie was out of the bottle around the time Clark Foam went bell y up.

So on the one hand it’s old news. It was highlighted on Boardistan, and I kind of decided there was nothing to discuss. But it kept popping back into my consciousness, and I couldn’t bring myself to delete the link to it. I even wrote 500 words at one point and trashed it.

But here I am. It’s Sunday morning and I think I’ve figured out what’s bothering me. That is, I finally know, from a business point of view, why I care.

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Camp Chairs as a Game Changer; Supporting Your Customer’s Experiences

So, in a market where your customer may value the experience more than the product, how do you know that your product improves their experience? How do they find out it will? Why should they associate your product with the experience? What, exactly, is the experience you are improving?

Let me tell you a story

Every summer, a local winery (Chateau St. Michelle) holds a series of concerts.   Various combinations of my friends and family go to see, typically, one to three concerts there.

You can reserve some really uncomfortable plastic chairs a little closer to the stage, but we always buy cheaper tickets for the festival seating. Below is a picture of what it looks like at a typical concert.  The picture below is taken from the back of the festival seating area. You can see the stage and the uncomfortable, white plastic chairs in front.

Camp Chairs as a Game Changer 10-15


Now, it might be that you don’t want to be this far from the stage. If that’s the case it’s either the higher priced, uncomfortable plastic chairs or getting there early. The gates open at 5PM for a 7PM show start. But people start lining up at, well, I don’t know, noon. They bring their chairs, food and drink, blankets, and various other picnicking accouterments, some of which are profoundly clever. The closer to the front of the line you are, the better your space can be when you’re let in. I think the correct strategy is to give a blanket to mark out your spot to whoever is youngest and quickest and send them sprinting as soon as their ticket is taken.

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Market Evolution; Things to Think About from Quik CEO Mooney and My Spin on Them

I wrote about Quiksilver’s quarter maybe a month ago. In the conference call, CEO Andy Mooney had some really interesting things to say about how the market is changing. I set them aside to think about. I felt they were comments that were appropriate to a general discussion of market evolution, rather than the particulars of Quik’s situation, though obviously they apply there as well.

The first thing he says, talking about Europe, is that we’re seeing “…a transition from smaller independent operators to larger big-box formats.” He went on to explain that their management team in Europe saw the decline in the number of independent specialty retailers as normal during a down economy, and that they expected a recovery in their numbers as the economy improves.
But CEO Mooney doesn’t share that expectation. “I’m a little less optimistic than they are because of the impact of – largely of e-comm because I think e-comm in some ways is creating systemic pressure on those smaller independent retailers, which for us is actually somewhat of a blessing because it’s actually less expensive for us to service e-comm retailers – pure play e-comm retailers – than it is to service remote onesie, twosies sub-specialty shops, particularly ones that by definition are kind of undercapitalized, have problems paying their bills, et cetera, et cetera.”
He expects some rebound in the number of specialty shops, but not as much as in past cycles. I also think his analysis for Europe is relevant in much of the rest of the world as well and certainly in the U.S.
However, I don’t think pressure on specialty shops has come only from ecommerce, though certainly that’s a big issue. I’d remind you all of the (apparent) strength of the economy up to 2007 and of the length and depth of the (continuing) recession that followed. Because the good times were as good as we’ve ever seen them, a lot of independent specialty retailers opened that would probably never have gotten off the ground in less favorable economic conditions. That they’ve closed in historically bad economic times and won’t reopen unless things get fabulous again is hardly a surprise and isn’t only about the internet.
One analyst asks if he thinks the action sports market is shrinking globally. Mooney responds, “…It’s not necessarily a contracting market; it’s a transitioning market.” He talks about the impact of ecommerce again, and then goes on to discuss another piece of the transition.
“You’re seeing,” he says, “…fewer more professional players who are allocating their open-to-buy to fewer more professional brands…my viewpoint is that there will be consolidation both in the retail theater, but I think there’ll also be consolidation in the branded theater. It’s that the stronger, more professionally-run companies will continue to gain share in what has historically been a very fragmented industry…what occurs when you’re going through this type of phase is you’ll end up with 4 to 5 major players who will have significant footprints in the specialty channel, and we absolutely intend to be one of those players.”
I assume if he thought it was a contracting market and that Quik wasn’t capable of being one of those four or five major players, he wouldn’t have taken the job in the first place. And, of course, what else is he going to say?
Still, I find his answer incomplete as it ignores a couple of elephant in the room issues that impact all the larger brands in our industry.
First, as I’ve written, the real action sports market is a pretty small market and has always been a pretty small market. Right now, judging from the evidence I have in terms of participation, it is shrinking. So Quiksilver, and any other brand with its roots in action sports of any size, is already competing way outside of action sports in fashion, youth culture, urban or whatever we want to label it as.
The second is that I don’t know what he means by specialty channel. Can‘t believe some analyst didn’t ask that. My assumption is that it includes not just independent specialty shops, but chains up to and including Intersport, Zumiez, Journeys, Tilly’s, etc. It used to be so clear and now it’s not. Is Intersport really “specialty?” I am not sure PacSun is with its new positioning. Maybe it’s correct to say it’s specialty, but in a much broader market. How broad does a market have to get before retailers who serve it are no longer “specialty” retailers?
Andy doesn’t seem to be that concerned about the independent specialty retailers and I don’t entirely blame him from a strict operating and revenue point of view. But some of those shops would say, “Right back at you, Andy.” Quik’s brands are widely enough distributed that I’m not sure shops can really compete with them and certainly they won’t help differentiate shops.
But Quiksilver is certainly a surf based brand. Can you be a “surf based brand” and not be in core surf shops? Can DC not be in core skate shops? Maybe they need to have product in those channels even if they aren’t the fastest growing, most profitable, easiest to work with accounts in the world. It’s not, of course, that Quiksilver isn’t in those shops, but it doesn’t feel like an area of emphasis and it’s fewer than it used to be.
Meanwhile, even if a big action sports brand kills it in the specialty market up to and including the chains I’ve mentioned and their ilk, it’s not going to be enough- especially as a public company. Macy’s, Nordstrom’s, Dick’s, Sports Authority- you can’t decide not to be in them. You can only decide when, with what product, and try to make sure they present you well.
I think Quiksilver, Billabong, and Skullcandy, just to name three, would be much better off if they were private. They’d be able to be more discriminating in their distribution in ways that would benefit their brands and, as a result, I think they’d be more profitable.
From their public discussions, we already know that these three companies are taking steps to improve their operations and become more efficient. Good for them. I have no doubt it will improve their bottom lines. But that doesn’t impact brand positioning (unless it changes distribution?) and leads us to the next elephant in the room.
Who’s the customer? It wasn’t discussed in the conference call.   Brands, we all know, have life cycles. As they grow and succeed, they resonate with a group of customers. If they are lucky enough to be around long enough – not an easy thing to accomplish – they age right along with that customer group. The customers’ lifestyle, shopping habits, priorities and lifestyle evolves. The company evolves with them.
As those customers shop differently, the brand distributes differently. I won’t bore you with specifics you already know, but distribution tends to become broader as brands age. And broader. And broader.
How do you accommodate those customers but be relevant and “cool” enough to attract new ones? Look at the winter resort business. They’ve built facilities and created experiences that appeal to their older, aging customers. But that customer group is only one who can afford that experience. Given the economy and existing resort cost/price structure, who do they replace current customers with as they age out?
When Andy Mooney says it’s “something of a blessing” that they don’t have to deal with so many small shops, I knows what he means. But if a brand doesn’t have product that those stores want to carry and can sell for margin, what does that say about its ability to attract new customers as the old ones “age out?” How, in short, do you follow your customers along their lifestyle curve while still attracting new ones?
CEO Mooney also talks about the product review the company is undergoing and how they are trying to focus on those products where they can differentiate and be a leader. We won’t see the results until 2014, which I’d say is about as fast as we could see the results. I’d expect that is part of their answer to my question.
At some level Vans is the poster child for a brand that seems to be accomplishing this transition. They’ve made their heritage a foundation of growth with new customer groups without, as far as I can tell, alienating the old ones.
It’s important to remember, however, that Vans didn’t manage that without some bumps in the road. They were a $400 million public company in trouble before they were acquired by VF in 2004.
Having the kind of success Vans is now having requires a steady hand, objectivity, and money. The “who’s the customer?” issue has to be addressed early and realistically before pressures from the inevitable market evolution lead to product and distribution decisions that compound the difficulty of making the required changes. This is particularly difficult in public companies, where the correct decisions don’t typically contribute to immediately improving quarterly results. This is why I’m such a fan of what Skullcandy is doing. I think they are doing the right things in spite of the short term impact on quarterly results.
Then there’s the whole ecommerce thing which is changing the playing field in ways we don’t understand yet. At least I don’t. I’ll just say here that I wonder if ecommerce accelerates the traditional brand life cycle- or, alternatively, maybe makes it irrelevant? Can it be that distribution will become less important, replaced by how you connect with your customers at all your touch points with them? Will it still matter if you’re in “specialty” distribution? We’ll all be finding out.
Finally, and still on the issue of who the customer is, Andy Mooney talked, as I noted above, about consolidation in the brands and ending up “with 4 to 5 major players who will have significant footprints in the specialty channel, and we absolutely intend to be one of those players.”
We’ve had a few conversations about consolidation over the years and the path he describes is certainly a familiar one. Snowboarding comes to mind when you think about consolidation. How’s that worked out as far as keeping customers and attracting new ones goes?
Operationally, I understand why CEO Mooney would expect the kind of consolidation he describes. But for me the strategic issue is how a company like Quiksilver, if it becomes one of four or five major players with broad and broadening distribution, positions its brands so that many of the specialty retailers want and need to carry them.
I don’t perceive that has been accomplished very often in the past. I hope in future conference calls (Not just Quiksilver’s) companies explain how they are going to do it with particular attention to who their customer is.



Relaxed Fit

Maybe a month ago, I was walking through a local mall visiting all the usual retailers to see how things looked. I stopped at a PacSun store and was attracted to a table with some Volcom shorts on it in colors I really liked. There was a sticker on the shorts that said, “Relaxed Fit.” 

I paused for a moment, looked around the store to clear my head, and then read the sticker again. Yup, it said “Relaxed Fit.”
There was a moment of mental paralysis, then the thoughts all poured out at once. “This must be some sort of cool marketing trick I just don’t understand, the stickers are there by accident- some clerk is screwing around with my brain (and it’s working), is this really where our market is going, there’s some kind of new trend I don’t know about, yes, that must be it, maybe it means to be fit and relaxed, Kering (Volcom’s owner) is making them do this, no, wait, somebody slipped something in my soda…”
I walked out of the store determined to pretend this had never happened. But three weeks later, in another mall in another city I made the mistake of checking again and there the shorts were with that same diabolical sticker. My attempt at denial was foiled.
But happily I was saved by my ever vigilant research department that sent me this New York Times article called “Three’s a Trend | Men’s Shorts That Are Loose, but Refined.”
“Loose, but Refined” is conceivably a perfect (and hopeful) description of Volcom owned by mostly high end fashion company Kering. Grabbing at straws as I am, I’ve decided to believe that Volcom’s “Relaxed Fit” sticker is just a bow to this fashion trend shaped by their large corporate owner. See, I don’t know a lot of surfers, skaters and snow sliders that need relaxed fit clothing.
Okay, I’ve had a little fun with this, and I’m sure Volcom isn’t the only one doing it. I suppose I need to recognize that all our customers can’t be teenagers and that body shapes change with age (not mine of course). Yet in our push for growth, we get further and further from our roots. The ASC conference the day before the Agenda Show celebrated the importance of authenticity, but I wonder just what kinds of customers we can make product for before we begin to lose it.
I hope Volcom can stay loose.



Whether to Laugh or Cry; Tommy Hilfiger Debuts Surf Line

It’s Friday evening, my wife is out of town, and a friend sent me this article from May 20 announcing the debut referenced in the title. I’ve had a glass of wine and think I’m going to break a rule and have another one as I write this. Or more. God knows what I’ll end up saying. If you search the subject, you’ll find some additional information.  

According to this article, the line will include limited edition surfboards as well as men’s and women’s apparel and accessories “…including beachwear, footwear, sunglasses, watches and bags.” I guess that about covers it. If it catches on, I’m sure there’ll be an SMU for Costco.
Here’s what another article says. “Tommy Hilfiger is launching a new collection that finds inspiration in the carefree, seaward lifestyle: The"Surf Shack" capsule features gorgeous, après-surf lifestyle pieces — colorful, breezy, and always with that trademark prepster twist.”
“Expect cozy, striped Baja pullovers, lightweight anoraks, crisp shirtdresses and chambray playsuits, plus a line of accessories like watches, shoes, scarves, and bags. (Prices are reasonable, too! A pretty striped clutch clocks in at a cool $68; a bikini at $128.) And, for those who might actually make it off the sandy sidelines and into the waves [Damn few I imagine], the collection also includes a range of surfboards created by American artists Lola Schnabel, Richard Phillips, Scott Campbell, Gary Simmons and Raymond Pettibon.”
They’re featuring artists, with shapers apparently an afterthought- or no thought at all. Okay, I’m going with laugh, because my other choice is throw myself off a tall building, and I got a lot of stuff to do tomorrow. I’d really be laughing if we didn’t have Hollister as an example.
I don’t know why I’m bothered by this. I’m supposed to be a business guy and I’ve spent a few years telling anybody who’d listen that it’s not different this time (or any time), that business cycles happen and that growth in the wrong way can be dangerous. But with all the issues in the surf industry and some of its companies right now this is just the last thing I needed to hear.
As an industry, surf starts to lose credibility as soon as it moves beyond its core consumer.  There is, of course, a balancing game there for each company; how far towards fashion and aware from surf  can you move and how quickly and still be credible with the core.  You can do that for a while, but there’s a limit.  Tommy Hilfiger doesn’t care about the core I’m guessing.  Their target consumer won’t be surfing.  But they are happy to take advantage of the market opportunity that’s been created by the surf industry until it’s not an opportunity any more.   
I suppose that as an industry the only thing we could have done to prevent this is not grow beyond the core surf market. Then we could have maintained our distinctiveness and some more brands could maintain a competitive advantage. But that wasn’t going to happen in surf any more than it happened in skateboarding or snowboarding. Every company does what it perceives to be in its own best interest.  But the longer term result is that the core companies create the opportunity that the large fashion based companies can take advantage of and with whom the core companies have trouble competing for the customer who’s more distant from the core.
So we’ll go through (are going through) what I guess is, unfortunately, the inevitable cycle where the styles represented by surf (or skate or snow) won’t  be very differentiable and won’t attract all the nonparticipants who don’t really care about surfing (or skating or snowboarding). We’ve got companies like Tommy Hilfiger yelling “More Cowbell!” And if you don’t know the Saturday Night Live skit I’m referring to, here’s the link where you can see it.
People who want to surf, skateboard, or snowboard are going to go right long doing it. And happily, they’ve all got great product to do it with. But meanwhile, we don’t need "More Cowbell!"  We need less.
I hope that analogy sounds goods in the morning.



More on Winter Resorts Targeting Baby Boomers: I’m Not the Only One Who’s Worried

You may recall (or not) that about a month ago I wrote an article expressing some concern that winter resorts were targeting baby boomers. My point was that dependence on high income baby boomers couldn’t be an exclusive, long term strategy because, inconveniently, those people are going to get older sooner and stop snow sliding. When that happens, it would be nice if we had some other customers. 

Now, a gentlemen I’ve never met named Roger Marolt, a columnist at the Snowmass Sun in, unsurprisingly, Snowmass, Colorado has written a really good rant (I mean that in very positive way) on the same subject. He makes some points I didn’t make and it’s a pretty fun read.
So here it is. Go and read it.     



My Wife’s Cosmetics and Skateboarding

My wife uses Bobbi Brown cosmetics and I doubt most of you really care. Like me (and I’m guessing all the guys who read this), until right now, you’ve probably never heard of Bobbi Brown. Maybe some of my women readers know it. 

I care that my wife looks great but not what brand she chooses.
Hmmm. That sentence is probably worth some discussion, but first I’d like you to check out Bobbi Brown’s foray into skate. It’s seems they made some pink skateboards “…to empower women to try something that isn’t typically thought of as a woman’s sport.” They got pro skater Eli Reed “To teach a bunch of fashionable newbies how to skate in two hours’ time.” It doesn’t look like too bad a job.
Anyway, go take a look at the brand’s blog post on the subject. If you don’t hit your mute button, you’ll have to listen to “I Feel Pretty” from West Side Story as the background music. Oh what the hell- don’t mute it. You ought to get the whole effect (The music on the actual video of the session is better).
First I laughed. I mean, it’s not like this is the first time any of us have seen skateboarding used in a way that’s not precisely consistent with its roots as most of us think about it. Then I got a little morose and thought about how much I missed skateboarding being kind of dark, underground, urban, mysterious, exclusive. Maybe that’s a long way to say core.
Finally, I got around to thoughtful and thought, “Hell, if something is getting new people to skate, do I really care what it is?”
Now it gets complicated. I guess if I’m a core skate brand, I do care. Because “getting people to skate” doesn’t mean they are going to go out and buy a branded deck. A skateboard won’t be a statement to most of these people. It will be a tool they use to do something they enjoy. Like, I suppose, a snowboard has become. Or a basketball? Or golf clubs? Pick an activity.
It is the duty of every brand manager to convince her customers and potential customers that her brand is “better” than the competitors’ brand even, or maybe especially, when meaningful differences are hard to discern. But as quality improves (plateaus?) and distribution broadens it gets harder and harder to convince people that product differences, even if real, matter.
The skate industry spent many years and a whole lot of money explaining to people that a “real” skateboard was made of seven plies of laminated Canadian maple and nothing else. They succeeded. Then two things happened.
A lot of people said, “Well, we can laminate those seven plies of Canadian maple too, and we’re willing and able to sell it for less.” And they did.
And some skaters, especially those just discovering the sport (and they did think of it as a sport- not a lifestyle) said to the industry, “You’re right- a skateboard is made of seven plies of laminated Canadian maple just like you said and just like these cheaper decks.” Excuse me if I don’t go through the entire industry lifestyle cycle, product becoming a commodity argument again here.
That brings me back to my earlier comment about caring how my wife looks, but not what brand of cosmetics she uses. The only thing I experience with cosmetics is the result. I don’t care about Bobbi Brown, its secret sauce, or the fraternity of users. My wife, on the other hand, could tell me in so much detail that I’ll never ask (though maybe I will now just to see what answer I get) why she uses the product. Part of the answer may be that she got a good price on it, but that won’t be the whole answer.
There is, of course, and will always be, a “core” skate market. That market, I expect, will come and go with demographics, because it usually has. And it won’t include just people who buy branded decks.
But now that product quality is high and distribution broad, a lot of, new skaters will experience skating like I experience cosmetics. As long as it works, I just don’t care about the details.
Bobbi Brown, I assume, is interested in selling cosmetics- not skateboards. They just decided, “Oh this might be fun. Look what we’re doing.” It could have been something besides skateboarding. I’m sure it will be in future blog postings. Was there a business calculation there? Of course.
Bobbi Brown’s skateboarding experiment felt inclusive and nonjudgmental. They were just having fun which I think is what you’re supposed to do when you skate.
Remember when we all (including me) mocked scooters when they came out? I thought they’d be a flash in the pan. They went through an amazingly accelerated business cycle and became a commodity. But it seems that some kids don’t care about that and just think scooters are fun. Somebody is making those things and selling them for, I’m guessing, a profit.
What if some core action sports company, skate or otherwise, had branded those things and started to sell them with a longer term perspective? Big risk? For sure. Leads to being mocked by your peers? Probably. Alienates some of your existing customers? Almost certainly. But who knows what might have happened. Business is a risk.
The core skate market has always had a sort of insular arrogance to it that was part of its marketing positioning and, for a long while, served it well. But the whole action sports industry, if that’s what we still are, has evolved to a point where being inclusive and nonjudgmental makes a whole lot more sense.
Longboards come to mind. They came out of nowhere, were kind of ignored in a “You’re not cool wish you’d disappear” sort of way by the core skate market and are now a big, big chunk of the skateboard market. Half? Part of that is because of demographics. But part is because they are inclusive and nonjudgmental. However you want to ride down a hill and whatever strange looking contraption you can design is fine with them. In fact, they will probably want to know more about why, exactly, your  contraption is strange looking. This does something to advance the technology and keep the product fresh. As I’ve written before, it feels a bit like the bike market.
Cosmetics is a cut throat industry with, as far as I know- and that’s not very far, most product differentiation created by marketing. And they have the advantage of every woman in the world wanting makeup. I gained great insight into this when my mother, fresh out of hip surgery and still groggy from anesthetic, asked for her makeup kit. I don’t understand it, but I acknowledge it.
Maybe inclusive and nonjudgmental has become more important than “cool.”



Heinz’s New Ketchup; New Product Introductions and Social Media

I came across this a few weeks ago (actually, my wife sent it to me and if I don’t give her credit, I’ll hear about it), but have been busy reading quarterly filings. Heinz, it seems, has introduced what it considers to be upmarket ketchup blended with balsamic vinegar. Read the article here. No, no, no, there’s no surfer on the label or anything really stupid yet amusing like that.

What’s interesting is that they have introduced it and made it available initially only on Facebook, where they have 825,000 followers. At $2.49 for a 10 ounce bottle, it’s $0.60 cents more expensive than their standard product.

And the question I find myself asking is whether this product would even be introduced if it wasn’t for the internet and social media.
Heinz, the article says, has 59% of the ketchup market and has been making the stuff since 1876 so I guess they can do anything they want. It will show up in stores in late December and be available through March as a “limited edition.” If it’s selling well, they’ll make it a regular offering. I guess it will become an “unlimited edition,” so to speak.
The development and packing costs are the same no matter how they introduce it.   But if there’s no social media, they have to distribute it, they have to advertise and promote it, they have to follow up with the supermarkets they tested in to see how it went, and they get no direct consumer feedback and unless they work really, really hard to get it. There’s a lot of cost there.
By introducing it on Facebook, they get immediate consumer feedback on the concept (though it will take some work to find out if they liked the taste), and they don’t have to distribute it immediately to markets. There’s not necessarily an advertising program. For all I know, they don’t even have to bottle the stuff until they get orders. Hopefully, when they do put it in the markets, it’s already sold well enough that there’s some demand from “committed” Heinz fans, whatever that means. If only because they charge $2.00 to ship each $2.49 bottle if you buy it online.
I don’t expect that Heinz’s bottom line is going to move much even if limited edition balsamic ketchup succeeds beyond their wildest dreams. (If I wanted balsamic ketchup, I’d probably just mix a bit of balsamic vinegar with my ketchup and see how it tasted, even though I’d be missing out on a limited edition). But this makes me think about the process and rationale for introducing a new product and the evolving and increasing impact of electronic interconnectedness.
I wonder if companies might start introducing new products because they can. With the cost of test marketing, if you want to call it that, so low and the feedback so immediate, what do they have to lose? Well, I suppose they might get laughed at if it’s a lame product. Negative opinions are transmitted just as fast or faster than positive ones on the internet. But there’s always that risk with any new product.
I’ve written over the years that there’s some value in products that everybody talks about even if they don’t sell that well. Maybe the internet lets new products have an advertising and promotional component that could justify the lower expense even if the product doesn’t turn out to be hit.
But then again, there’s a danger of introducing too many new products if it’s that easy (probably is for ketchup, toothpaste, deodorant, laundry detergent, etc.) and creating some consumer confusion.
You also have to wonder if your Facebook followers represent more than a small segment of your customers. I imagine they do in our Action Sports/Youth Culture market, but maybe not in ketchup, where 97% of people have it in their homes.
Most of you know a hell of a lot more than I do about using the internet and social media. I’m sure what Heinz is doing isn’t unusual. But I can’t help but think that there’s a danger in introducing a product just because you can and technology has made it cheaper and easier to do. No matter how cool the technology gets, it still matters that you offer value to your identified customer base. Make sure your version of limited edition balsamic ketchup does that before you fling it on the market via social media.