Marketing Technology – Building a Better Consumer Relationship

Marketers love to find the latest technology to help their brands stand out, communicate with the consumer and, ultimately, build sales.  New technology looks exciting and is fun to put into the marketing plan.  It promises to build awareness and generate interest on a new product. Sometimes these new technology tools work well, results are measurable and deliver sales payback versus the costs.  Sometimes, however, the technology is used as a means to be more intrusive and simply shout a message louder than everyone else.   

What marketers should really be looking for are the tools that engage the brand with the consumer to build a stronger relationship. Communication that engages is not one-way; it invites input in order to build a relationship. The “we sell, you buy” relationship turns into “we offer, you tell us what you think” or better yet, “tell us what you need, we will build our offering around that (and then you can let us know how well we did)”.

Your marketing plan should definitely include the tools of engagement with the consumer.

TiVo – A Brand Tied To a Single Technology

The stock markets are buzzing about a possible TiVo takeover.  The company, which has been an underperforming stock and losing money, won a patent infringement lawsuit settlement from Dish and EchoStar in May for $500MM.  It is also looking for another $300MM more from ATT & Verizon settlement.  Rumors are that Microsoft and Google might like to purchase the company – perhaps to integrate the technology into expanded in-home offerings.

TiVo is  a company that created a technology 10 years ago - a really cool technology – allowing  consumers to “time-shift” their live television viewing.  This “time shifting” technology was a huge game-changer for cable TV, broadcast and even the advertising industry. The brand, itself became synonymous with time shifting.

Fast forward to 2011.  TiVo has lost money in all but one year since it was introduced.  It began to license its technology and equipment to cable companies that were placing digital video recorders (DVRs) into homes around the world.  But TiVo makes very little money on every one of those licensed boxes according to its financials.  It’s stock traded at close to $60/share ten years ago and now is trading at around $10/share.   Cable companies now place generic DVR players into homes.  Cable TV itself is under pressure as consumers are beginning to watch video directly from the internet or movie subscription services such as Netflix. TiVo subscriber base has shrunk from 4 million to less than 2 million since 2007.

What TiVo did upon introduction, was great marketing and branding.  It launched a surprising and delighting technology to the consumer and branded it very well.  Its technology delivered a strong consumer benefit, allowing the consumer to consume  programming on their own terms whenever they wanted.  This benefit tapped into a consumer insight that threatened to make television less relevant in an increasingly internet-enabled world.   This benefit of programming that can be “consumed on my terms” was a much bigger benefit area in the long run than simple time-shifting TV programs.  

TiVo allowed the industry to borrow the technology and deliver it on its own.  They also allowed newer players such as Netflix and web-based video streaming to push it aside and deliver the consumer benefit in a new way.  And finally, it could not price the technology in a way that made sufficient profits. From a marketers standpoint, TiVo is a real example of tying a brand to a technology and not a consumer benefit.  TiVo could have been the next Netflix, delivered new ways to stream video, etc.  The brand was big enough and known by all consumers.  The brand began with a technology, but was ultimately bigger than the technology.

TiVo may live to complete the story.  Some needed cash, a win in court and bigger partners or owners may take it forward.  But the lesson for marketers is this: building a brand around a technology is not nearly as strong as building a brand  around a consumer benefit and using the technology as merely one of many steps of delivery against the ultimate benefit.

The Decline of the Netbook–Selling Less for Less

There was an interesting  article in the New York Times about Netbooks.    (Thanks for sharing, Larry)
Netbooks Lose Status as Tablets Like the iPad Rise 

Remember seeing that little netbook in the big box electronic store? It is the $250 laptop alternative that lets you surf the web and do some cloud computing without the size, and weight of a standard notebook (laptop) computer.  Of course the price was also great with the potential of opening up many more users to computing (think kids at school, or less affluent parts of the world, etc.).
 
This device, when introduced, really put a scare into the notebook industry with the result being a drastic reduction in the price of a notebook computer from an average of over $1,000 a couple of years ago to less than $500 today.

The manufacturers of the first netbooks picked up one very strong consumer insight.  Consumers want portable technology that is lightweight and accomplishes the basics pretty well.  But as the NY Times article states, sales slipped this past holiday by –38% versus last year.  So what happened?  The answer to this question can be found by looking at  consumer insight, marketing and competing technology. 

For consumers, electronics purchasing decisions are based on a clear priority.  First comes “cool and wow” (lots of features, applications and great product design).  Only after that does the price factor become important.   Certainly you hit the jackpot when you offer “cool and wow” for cheaper, but only after the coolness has been widely accepted.  For a while, the netbook was legitimately cool.  But it was soon seen a product of tradeoffs – sort of a “less for less”.  That, unfortunately, fights the consumer priority order and is is not workable in the fast evolving world of computing. 

From a marketing standpoint, there was no interest in dialing up any cool features with advertising buzz around these devices either.  The dilemma for the manufacturer is obvious - if you market this product to anyone, you are taking a potential notebook purchaser and downgrading them to a netbook.   Can anyone think of any cool applications (apps) for these machines?  Personally, I think that it would not have been hard to tout potential unlimited access to all your business software, gaming, file sharing, Skyping, etc on the net.  Isn’t that what an iPad is anyway? Just seemed like the industry had no interest.  

The final nail in the netbook strategy came from competing technology.  Ebooks, and Ipads and the beginning of the so called “slate” screen interface have made the netbook (and soon laptops) out of step.  These newer interfaces will soon replace the “flip open” screen technology in the years to come. And the consumer will be asked to pay top dollar for these newer interfaces.   If you understand the consumer priority of purchase decisions (wow first, price second), consumers will be happy to pay.