Why would Amazon rush up to a #2 position in a category? (Hint: it’s the money.)

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One of the basic tenets of marketing, (and what almost all of my students are sick of hearing about already,) is that brands need to strive for a leadership position. You may not always be able to achieve category leadership, but you can certainly attain positional leadership: quality, price, availability, etc. Heck, leadership is so important, the concept of loss leaders is a thing.

And while leadership is the coveted spot, there happens to be some pretty cushy seats in the #2 position as well. Just ask Avis, Burger King, and Pepsi how they’re doing. Avis is the quintessential case study here, having turned their #2 status into a promote-able benefit nearly 50 years ago, and successfully positioning themselves in their category. (It turned into some pretty great advertising from Doyle Dane Bernbach, too.) Sure, these companies have never beaten out their category leaders on the key metrics, (revenue, profits, number of locations, etc.) but they have consistently beaten out EVERY OTHER player in the space.

I’m most interested in this positioning battle model since hearing the news that Amazon is entering the video content space with a new platform called “Amazon Video Direct.” This platform will allow users to upload their own content, and will even have revenue-sharing models for those who upload premium content that other users may be willing to pay for. If it sounds familiar, that’s because it’s YouTube under a different name. [PS – if you think you can be a video star, this may be your big chance to get in on the ground floor.  Just sayin’.]

Amazon has made a history (and quite a good living, thank you) by exploring opportunities outside its core competency as an online retailer. While purchases of companies like Audible and Zappos make perfect sense as extensions, development of electronics devices (like Kindle and more recently, Echo,) cellular enablement services (like Amazon Wireless,) and original content (Amazon Studios) really didn’t. That those products may have performed fairly or even very well is beside the point.  T

Just as a sidebar, let’s think on that for a moment:  Amazon, an online retailer, delivers original programming content. Could you imagine if, 30 years ago, K-Mart (a one-time very successful retailer,) launched a dramatic series on television? Who would have ever taken that seriously? So yay for the tech revolution and skewed boundaries!

Video content is really far from what we might consider Amazon’s sweet spot. Sure, Amazon Studios may have a mild hit with “Transparent,” as a piece of original content, but they’re not going to catch Netflix any time soon. And that may be precisely the point.

Nor is Amazon Video Direct going to catch YouTube and its billion-user infrastructure any time soon. But with Amazon’s 130 million unique visitors per month (just let that sink in a moment,) they can rush right up to a cozy #2 spot in the category, maybe disrupt a few long-held market beliefs, and add a few more zeros to their bottom line and their $700 per share stock price.

Seven Guidelines to Setting Marketing Objectives

Seven Simple Guidelines for Setting Marketing Objectives Illustration by Bruce Crilly

Illustration:  Bruce Crilly

As you set out to accomplish any long-term marketing initiative in virtually any business, you’ll be faced almost immediately with the task of setting objectives.  Unfortunately, many companies large and small don’t spend adequate time setting – no less understanding the importance of – objectives. If you don’t know where the finish line is, how can you pass your competitors in the home stretch?  Below, seven simple guidelines to understanding and setting marketing objectives.

1. Embrace Multiple Objectives and Objective Types
Depending on the size of your organization, there may be many objectives, and they should be categorized according to who will be accountable and how they will be measured. Loosely, you can have hard and soft objectives, where hard objectives are directly quantifiable (sell 20 million widgets through the direct channel in the next three quarters,) and where soft objectives are crafted to serve larger goals, like growing the company, or opening new offices, or improving the brand awareness levels. Types of hard and soft objectives include marketing objectives, corporate objectives, operational objectives, distribution objectives, promotional objectives, pricing objectives and more.

2. Be Specific
We’ve all heard about the “SMART” objective acronym, where S stands for “specific.” Since objectives provide a baseline so that performance can be measured, specificity is the most important aspect – what you want, when you want it, what you’re willing to do to get there, etc. “Improve accessibility for our customers” is too vague to align your organization. “Create and deploy a customer support system in the next 18 months that allows our customers to connect directly with technicians and with each other in a format that’s conducive to their trade” is more specific and more useful.

3.  More Importantly, Be Decisive
Sure, you want to accomplish a hundred things, but in the next few months, you should be focused. It doesn’t mean that all your issues are not important, but some will have to wait as you set objectives in a clear order. Even if you are embracing multiple objectives or objective types (see guideline #1 above,) this is not the time to waffle. So decide what you want to accomplish, set an order if you have a lot to tackle, then focus on the first item and get your team(s) (internal and external) moving in a unified direction.

4. Set Up an Accountability Structure
Whether it’s an individual or a team, there must be accountability, and that structure must also have contingencies. If you hire a CMO to turn the reputation of a company around, then that person is accountable to align the teams, manage the processes and meet the objectives. However, if the board of directors holds back the budget, or something unforeseen pops up on the radar, the structure of accountability must be refashioned in accord.

5. Tie Strategy to Objectives
The fulcrum of every marketing initiative is the strategy with which it will be executed. But the center of every strategy should be tied to objectives. It’s pointless to set a strategy without this critical connection. A strategy can be conceived of as a road map, and its efficacy should be judged in terms of the extent to which it meets the destination outlined by the objective set.

6. Don’t Confuse Tactics with Objectives.
I’ve been in many meetings where someone says they have an “objective” of creating a Facebook page. While that may be a desire, it’s not an objective. It’s one tactic (of many possible tactics) that’s really only a means to an end. The objective, (if it included details like timing and other specifics,) in this case, is to create a structure and a location to enable a social conversation around the brand. A Facebook page, as an example, provides a fine tactical solution to meet that objective.

7. Be Flexible/Embrace Creativity
As you can see, there are many reasons to stay focused and stay on course, but there is also an important caveat. With so many factors outside of your sphere of influence (competitors, geopolitical developments, economic fluctuations, emerging technologies, etc.) you must also develop the skill to be flexible, adaptive and even quick to embrace new models as opportunities and threats alike may be poised at the gate. This is also a time to let creativity run its course and let ideas evolve and embrace the magic of improvisation and performance. Once the cameras are rolling, or the mic is live, or the program has rolled out, anything can happen, and often what happens is simply a different “version” of what you expected… that doesn’t make it better or worse. But as long as it’s still on objective, the entire enterprise is elevated by and in the moment. It’s craft at its highest level. Enjoy it when you get there.

Article first published on Technorati

10 Reasons to Hire an Agency: Reason #5

Reason #5: We have no marketing department.

Admittedly, this reason is generally limited to smaller marketers, as marketing can get lost in the shuffle of so many other business activities.  This can be true of all types of companies, from single-offering entrepreneurs (bakers, candlestick makers,) to high tech or Internet startups.  These businesses are so focused on making a great product or offering a unique service, that marketing – capital M – is often relegated to “we’ll get to that when we have some sales.”

So they go out in search of an agency to basically “outsource” an array of singular marketing needs, usually focused on promotion activity like website development or advertising or packaging.  In some cases, the limited funds (that precluded the marketer from establishing a marketing department,) tend to produce difficult choices.  Should we build a website first, or run some ads?  Should we fix up our product line or invest in finding the right distributors?  Should we sell direct or through intermediaries?  All of these functions would typically have been scrutinized by a marketing team and then decided on and cross-referenced with company/brand objectives.

A troubling problem with this approach, of course, is that marketing is often misunderstood, even by fairly accomplished businesspeople.  More accurately, it’s often only partially understood, and tends to be limited to activities that sound a lot like “promotion.”   What most smaller companies don’t understand is that marketing is way more than promotion, and should be everyone’s business, at virtually every level of every company.

So an obvious pitfall of hiring an agency because you don’t have a marketing department is that not all agencies can provide end-to-end marketing advice.  As we saw in post #3 in this series, many agencies have chosen to specialize:  some are great at advertising.  Others at direct marketing.  Others at branding.  Some are very competent digital or social shops. Additionally, the relationship between a company without a marketing department tends to get started off on the wrong foot, since the charge from the marketer is usually very specific.  They start asking around, and saying something like, “I think I need an agency to help with PR.”  Naturally, they’ll find PR agencies vying for their business.  Further, it can get a little icky for senior executives when an outside party comes in and starts asking real marketing questions, like “how did we arrive at this pricing strategy?” or “What are the plans for line extension?” or “How are we planning on expanding operations as we grow?” That can get a little too close for comfort for an entrepreneur who’s poured his or her soul into something for the last six years.

Conversely, there are many advantages to hiring an agency if you don’t have a marketing department.  Generally, someone at an agency (a senior account executive, or management executive,) or an independent consultant is usually well versed in the marketing functions.  Also, if the agency or consultant is a specialist in your vertical, you’re more likely to get road-proven advice that will lead to effective executions.  And let’s face it, every larger company that HAS an internal marketing department hires an agency (or several) anyway.  They can’t be that far off-base, can they?

Internally, any good business worth its salt is going to have to vet every marketing challenge:  the product line, the features, the accessories (if applicable,) the service plan, the pricing plan, the distribution strategies, the operational infrastructure.  A lot of un-sexy, un-advertising stuff.  But these are the basic building blocks for a successful business and a clear grasp of them is absolutely critical to building a brand with any merit.  If an agency can help you explore these concepts, it’s probably the beginning of a very profitable partnership for both parties.

Tomorrow:  Reason #6:  I know someone at an agency.

Marketing Egypt – Four Sets of Objectives

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The next phase for Egypt will be a telling one.  And if the country and its people are to actually realize movement in a forward direction, now must be the time to set intelligent objectives.  Marketing Egypt will be a tall task, which is why defining clear objectives is so critical at an early stage.

Let’s be clear:  “regime change” is not an objective in and of itself.  It’s certainly a goal, and the sum of hundreds of thousands of protestors, rocks, hand-written signs and a zillion tweets and Facebook posts.  But a suite of objectives could help the process of democratic transformation take shape, and could provide a road map to the next chapter in Egypt’s storied history.

So what kind of goals should Egypt be setting at this point?

Operational Objectives
Obviously, there are innumerable logistical considerations.  Operational objectives must outline what the desired outcomes will be for electoral systems, governmental systems, infrastructure systems, military stability.  Chief among these, of course, are all the financial systems that must be monitored, maintained and scrubbed for security.  These include tax codes, regulatory systems for Egypt’s stock market, the maintenance and sustenance of Egypt’s chief revenue producers:  the Suez, agricultural exports and tourism.  The culmination of these objectives would likely be outlined in an amended Egyptian Republic constitution.

Political Objectives
Of course, political goals are nearly as important as the operational objectives.  Egypt currently maintains a high profile on the world stage, despite its warts.  The next government will have to lay out a specific agenda for its political objectives.  How it will represent itself at the United Nations.  Where it will stand on the myriad issues that face the Middle East.  How it will contribute to global efforts facing the environment.  Where it will draw a line in the Saharan sand on women’s rights.  And a host of others.

Product Objectives
Most marketing objectives I’ve helped formulate usually involve an element of productizing; helping my clients draw fact-based conclusions on what products will drive revenue, or drive new opportunities for engagement.  For Egypt, the product plan will likely involve two phases: expanding its current line, and developing new products the world desires.  Its current line of agrarian exports can be expanded.  Cotton, rice, wheat and others are a very good start.  But there are tens of millions of people who could be gainfully employed building equipment, or refining sugar, or planting new citrus crops near the Nile.  And for that matter, new contributors to GDP are just waiting to emerge:  there are equal numbers of engineers who could help build assembly plants; refineries, distribution centers, healthcare infrastructures and more.  This may be the most exciting of all the objective-setting plans ahead for Egypt.

Brand/Image Objectives
Naturally, any entity that has been the focus of so much media coverage will have to undertake great effort to repair its image.  The brand objectives will first be a combined effort of artfully bragging about the success of the aforementioned objectives coming to fruition: Yay – a new government!  Yay – new GDP sources!  Yay – equal representation under the law!  But beyond that, Egypt will have to go a long way to lull back tourists to its resorts and attractions.  Egypt will have to enact new programs to prove that it’s a safe and friendly place to visit.  That it’s a worthwhile (and legit) country for investment.  That it can stand up again and take the next step in the evolution of a great nation.

On the horizon:  strategies.
The combination and consideration of these objectives will begin to form the vague shape of an Egypt of the future.  But getting there will require sound strategies.  Those in an upcoming post.

The Law of Negative Identification

One of the cornerstones of brand identification is choosing a strategy for your company.  This can be an incredibly difficult task for many small to midsize companies, because their leaders (or boards, or branding agencies) may have varying views about what gives them the strongest advantages in the marketplace. So “choosing” the strategic path always creates a fear of leaving something out, overlooking something really valuable.  You might hear “if we decide we’re a service-oriented company, how can we communicate our ability to develop great products?”  Or “if we go to market on our great distribution abilities, how can we also get the message across about our great prices?”

When making the difficult decisions about how to communicate who and what you are, it can sometimes be easier to assert & identify who and what you’re NOT.  I call this the Law of Negative Identification.  This law is a perfect place to start when having the “who are we?” or “what should we be doing next?” conversations.  It also helps you position yourself against and among your competitors.  If you happen to be a company that has a great distribution strategy and also has great prices, it may also be true that you are NOT an excellent manufacturer.  Now that you have that important nugget in hand, you can go club your nearest competitor (who may happen to dabble in manufacturing) over the head with it.

Remember Porter’s postulate:  “A company go outperform its rivals only if it can establish a difference that it can preserve.”  In an endless sea of business categories, flush with same-ness, the differences are what enable you to get noticed.  If every one of your competitors is wearing a shade of red, you could really stand out by NOT wearing red…imagine how visible you’d be if you wore the FIRST green in the category, the first yellow, the first blue.

So how to decide what you’re not?  We usually start with the important stuff, like “where do you make most of your money?”  Or “where do you make the best margins?”  That usually wins most debates, but not always.  Sometimes, companies put brand first, or stick with their core strengths, even if the grass looks greener on the other side of the ROI fence.  That’s okay, as long as you’re not considering – not even remotely – becoming something you’re just not equipped or designed or engineered to be.  Look long and hard at your balance sheet.  Look long and hard at your people. Find the strengths and exploit them.  Find the weaknesses (or pure absences in some cases) and use those as the first pieces of your strategy puzzle.

So, who are you?  Or more appropriately, who are you not?