Market Understanding Test

One of my clients recently hired a marketing firm to help execute the strategies that Cauvin, Inc. recommended. The firm distributed a questionnaire to my client. In turn, my client had each of his partners and employees answer the questionnaire.

I initially was slightly irked that the marketing firm had ignored the extensive market analysis we provided to them. The market analysis already addressed all of the questions in the questionnaire. Why should we have to answer the questions again?

My client remarked that it would be useful to fill out the questionnaire anyway. When I thought about it, I realized he was right. Seeing how he, his partners, and his employees answer the questionnaire will reveal whether they understand and buy into the strategy I've recommended.

It seems that this sort of "test" is a good idea for all product teams. It enables you to measure the extent to which your employees understand the vision and are on the same page. That way you can identify aspects of understanding that need improvement.

The Old and the New

On her Creating Passionate Users blog, Kathy Sierra has another good entry. This time she contrasts old marketing techniques with new ones. My favorite is where she contrasts focus groups (old way) with ethnographic learning (new way).

Fashion and Gender

Living in downtown Austin and observing the patrons of the numerous bars here, I've come to the conclusion that fashion is easy for males.

In any fashion era, the males who go to the trendy bars tend to wear the same outfits. Sometimes, it's almost as if there is a "uniform" that they wear, with perhaps some variations on it. You can usually go to Gap or Express and find the uniform. I think the uniformity of it is silly, but I've come to accept it.

For females, it doesn't seem as simple. There doesn't seem to be a "uniform"; originality consistently seems to be a bit more trendy than a single style.

Negative Pricing of a Service

Recall the second question I promised to answer:

"How do you determine the 'negative price' of a service?"

Negative pricing is a technique by which you base the price of a product or service on how much it costs for the customer not to use it. How do you go about determining how much it costs for a customer not to use a service?

Your prospective customers have a current way of doing things that will change when they use your service. Clearly define the problems that these prospective customers face in their current situation. Detail the effects and implications of these problems. Quantify the effects in terms of monetary cost. You may have to define conversion factors that enable you to convert, for example, time to money. Add up the costs, and you have the negative price of your service.

Obviously, this process is not an exact science. Trying to assign a monetary value to a customer's time or happiness is difficult. But the point is that your service is only valuable to the extent it solves customer's problems.

Survey Question Guidelines

I promised yesterday that I'd tackle a couple of questions posted in a comment. The first question was, "How do you determine what questions to include in a survey?"

Well, that's of course a complicated question that depends on the product, the market, and situation. However, as I've noted previously, the questions you want answered often aren't the questions you should include in a survey. The reason is response bias.

In addition to some of the traditional advice for avoiding response bias, keep in mind that:

1. The most interesting findings often come from correlating responses to more than one question.
2. Including one or more open-ended (fill-in-the-blank or essay) questions allows for unanticipated answers and findings.
3. You will cause respondents to answer randomly or systematically if you include too many questions in your survey.
4. No matter how much you want them answered, it's pointless asking questions to which your respondents don't know the answers.
5. In general, as a market researcher, you main goal is to understand customer psychographics, not just demographics.

As you can see, surveys are about much more than just publishing a bunch of questions using SurveyMonkey.com or another tool.

Follow-Up on Survey Questions

Commenting on an entry I wrote last month, "Sandra" asks:

"So, how does one determine what question belongs in a survey and one that doesn't and how does one determine the 'negative price' of a service?"

That's two questions:

1. How do you determine what questions to include in a survey?
2. How do you determine the "negative price" of a service?

The answers to both questions are complicated, but I will do my best to tackle them over the next two days.

Stimulating the Mind

Back in April, one of the recommendations I made to a client was to name its product "Cubit". A cubit is a unit of measurement equal to 45.72 centimeters. But the primary reason for choosing the name was that very few people have ever heard or seen the word. We brainstormed over a hundred names and rated them on predetermined criteria. Then we took the top 25 rated names and came to a grudging consensus on the name "Cubit".

Since then, almost every time one of us tells someone the name of the product, they ask, "Why did you name it 'Cubit' "? At first, this reaction disturbed my client. Six months later, my client recognizes that this reaction may actually be a positive sign.

Indeed, I've referred to scientific studies showing consumers react positively to imaginative names. You want to pique the consumer's curiousity. You're in a battle for his mind, and you won't win if you fail to engage it.

"The Concept Carification Effect"

Kathy Sierra has a great post about the way great concepts get watered down during the product development process. It's true that practical realities necessarily affect the viability of a product, and whether product requirements are possible to implement. Yet sometimes it's a lack of creativity and determination that cause great concept products to fail.

Selling Used Items over the Internet

Over the years, I've had good luck selling used items over the Internet. I've never taken out a classified ad in a newspaper, but I've posted messages to the austin.forsale newsgroup many times. Sometimes I have to persistent, reposting the messages several times over the course a month, but I have always been able to sell the items I've advertised.

Living and Breathing

To benefit the company, it's not enough for a product manager to understand the market and specify product requirements and marketing strategies. The product team (designers, developers, marcom, and sales) have to live and breathe the market understanding.

You might, for example, hand a positioning and messaging document to marcom so that they know the key messages to include in brochures and to highlight in all of their PR efforts. What happens, unfortunately, is that marcom quickly forgets the recommendations and inserts their own content.

Being an effective "messenger for the market" requires you to communicate on a regular basis with your team members. It means one-on-one meetings with members in which you build consensus for your recommendations. It means presentations in which you present and discuss your recommendations instead of just handing people documents.

"Measuring a Product Manager's Performance" Presentation

Yesterday I posted a link to the AustinPMMForum, a Yahoo group for Austin product management and marketing professionals:

http://finance.groups.yahoo.com/group/AustinPMMForum

The group's moderator, Bjorn Aannestad, recently led a session (which I unfortunately did not attend) on the topic of measuring a product manager's performance. His presentation included PowerPoint slides that included some of the material from this blog. He graciously credited me and this blog for that material. Thanks, Bjorn!

Members of the site can log in on the web and go to the Files section of the group to access the presentation. The file name is 'PdM Performance 051012.ppt'.

AustinPMMForum Yahoo Group

Austin product management and market professionals have a Yahoo group:

http://finance.groups.yahoo.com/group/AustinPMMForum

Here are the first few sentences of the group's description:

This peer group is composed of Product Marketing Management Professionals in Austin, Texas who are delivering technology-based products to any market space. The goal of the group is to provide a structured learning and networking opportunity by addressing topics faced by Product Management and Product Marketing professionals in a collaborative setting.

The group's members have meetings from time to time.

PMI Certifications

I just finished skimming through a study guide for the Project Management Institute's (PMI) Project Management Professional and Certified Associate in Project Management exams. They are certification exams for project managers. Mind you, project management differs greatly from product management, but there is some overlap.

What a scam! One of the first things the study guide states is that "you cannot rely on real-world experience" to pass the exam. You have to buy expensive study guides and/or take expensive training courses to prepare yourself for the exam. I would venture to say you could be the greatest project manager in the world and still fail the exam.

It seems that this sort of BS is typical of certifications.

Business Plan Credibility, Revisited

Apparently, I wasn't clear in my recent entry about using market research to enhance the credibility of business plans. Merely attaching a market research report to a business plan doesn't add much, if any, credibility. The author of the business plan has to base it on the research. In particular, the results of market research should shape the following sections of the business plan:

1. Pro forma. Market size projections and price assumptions should come from, or at least be validated by, research.
2. Marketing plan. Buyer profiles and messaging recommendations should feed into the marketing plan.
3. Product description. Market research should drive the definition of the product.

Thanks to "mark" for raising this issue.

Seth's New Rules of Naming

Seth Godin writes a long entry in his blog about naming products and companies.

First, he reiterates his opinion that descriptive names make poor brand names:

"It quickly became clear, though, that descriptive names were too generic, so the goal was to coin a defensible word that could acquire secondary meaning and that you could own for the ages. That's why 'Jet Blue' is a much better name than 'Southwest' and why 'Starbucks' is so much better than 'Dunkin Donuts'."

"The entire point of 'secondary meaning' is that the first meaning doesn't matter at all (especially since you picked a name with no meaning to begin with). Over time, a surprisingly short time, your unique word, especially if it sounds right, will soon be the one and only word."

Then, he lays out new guidelines:

"Find a name that came up with close to zero Google matches."

"The structure of the words, the way they sound, the memes they recall... all go into making a great name. Starbucks is made of two words that have nothing at all to do with coffee (except for their profits!) and the reference to Moby Dick is tenuous for most of us. But over time, the shape of the letters, the way they sound and the unique quality of the word makes it close to perfect."

"[D]on't use a placeholder name. People will fall in love with it. Find your name, use that name and that's it."

"[D]on't listen to what your friends and neighbors and colleagues tell you about a name. We had a placeholder name (yikes), I had to change it and everyone hated the new name. For weeks! Now, it feels like it couldn't be anything else."

UPDATE:  More advice from Seth Godin in his classic blog entry, "Naming a Business":

"[A] brand name is a peg that people use to hang all the attributes of your business.  The LESS it has to do with your category, the better."

Interesting Optical Illusion

Check out this interesting optical illusion.

Business Plan Credibility

One of Cauvin, Inc.'s current clients is a start-up. The founder of the company writes business plans for a living, so naturally he wrote the business plan for his company. A key reason for hiring us was to give credibility to the overall business plan. We conducted a market analysis and provided him with a report, which he attached to the business plan.

A business plan that doesn't base its premises on solid market research does little more than speculate about:

• How the company should market the product
• The size of the market for the product
• What the product should do

If you're a CEO, one of your responsibilities may be to pitch the story about your company's products to investors. You'll have a lot more credibility, and have a more convincing story, if you have solid market research to back it up.

Eric on the 22 Immutable Laws

If you've been reading this blog for a while, you probably know by now that I consider Al Ries to be the master of positioning and strategic messaging. If your unfamiliar with his writings, you might be interested in Eric Sink's examination of The 22 Immutable Laws of Marketing. You can find it here.

Law of Focus

Every once in a while, I feel compelled to dig up a classic quote from Al Ries. Today I found this gem in Ries and Trout's The 22 Immutable Laws of Marketing:

"No matter how complicated the product, no matter how complicated the needs of the market, it's always better to focus on one word or benefit than two or three or four."

Following this advice requires a great deal of discipline.

Positioning and Distinctive Competence

You're trying to decide on the key themes and messages to use in your product marketing campaign. As I mentioned in my article, "How to Formulate Marketing Messages", you can use three approaches to identifying candidate messages:

1. Portray your product as an antidote to a prospect problem.
2. Highlight the strength within your product's weakness.
3. Attack the weakness within your leading competitor's strength.

It just so happens that weaknesses and strengths often derive from a company's distinctive competence. A company's distinctive competence may be a patent, its personnel, or an established position in the marketplace. These competencies do not always directly benefit customers; sometimes a distinctive competence merely enables the company to better deliver some benefits to customers.

When considering how to attack the weakness within your leading competitor's strength, keep in mind that your competitor's strength may simply be its distinctive competence. When you attack a weakness within that strength, you strike at the competitor's core. Any attempt by the competitor to deny the weakness implicitly denies its core strength.

Convergence and the Motorola ROKR

In a Slate article, Paul Boutin examines the (at best) lukewarm reception to the Motorola ROKR. He opines that convergence - combining the functionality of multiple devices in a single product - isn't a formula for success:

Motorola CEO Ed Zander recently defended his phone—and slammed the Nano—by saying, 'People are going to want devices that do more than just play music.' I think he's wrong. If Gadget A does one thing well and Gadget B does another, combining them doesn't make for an instant improvement.

Perhaps convergence is yet another marketing instinct that product managers must battle?

Aim High

I mentioned in a previous entry that a significant amount of what a product manager does is recommend strategy that contradicts basic instincts. I listed four examples of such instincts.

One of the instincts I failed to mention, however, was the seemingly unstoppable temptation to lower prices or offer temporary discounts to stimulate demand for a company's product. In most cases, a good product manager will advise the opposite - maintain a stable price that reflects the value of the product rather than offer discounts.

I've mentioned that John Moore, in his Brand Autopsy blog, recommended that company executives visit the Brand Autopsy Discount Detox Center when they become addicted to price discounts.

Skimming through one of my favorite classic books on marketing, Al Ries and Jack Trout's Marketing Warfare, I recently came across these passages (excerpted from pages 90-92):

"Psychologist Robert B. Cialdini tells the story of a jewelry store in Arizona that couldn't sell an allotment of turquoise pieces. Just before leaving on a trip, the owner scribbled a note to her head sales person - 'Everything in this case, price x 1/2,' - hoping to get rid of the jewelry, even at a loss. When she returned a few days later, every article was gone. But because the salesperson had read the 1/2 in the scrawled message as a 2, the entire batch had been sold at twice the original price, not half. For many products, high price is a benefit. The price adds credibility to the product."

And later:

"There are two good reasons why high price represents more of a marketing opportunity than low price. One is the tendency of the prospect to equate quality with price. 'You get what you pay for.' The other is the potential for higher profit margins with a higher price. The higher margins allow you to finance the critical 'pursuit' stage of a flanking attack."

Brand management isn't about instincts, it's about well-established branding principles.

Licenses and Certifications: Enemies of Innovation?

One of my peeves has always been government-mandated licenses and certifications. Doctors, lawyers, accountants, and interior designers all require these kinds of certifications. In my opinion, such certification requirements have the following kinds of negative effects:

1. Stifling innovation. Getting certified typically requires immersing yourself, sometimes for years, in established ways of doing things and thus discourages people who thrive on innovation.
2. Shortages. Certifications result in exclusive "clubs" that prosper by keeping competition low. The "clubs" typically help define the certification requirements, and the members of the club have a vested interest in making the requirements stringent.
3. Expense. With shortages come expense. When you restrict the supply of people providing a service, the cost of the service stays artificially high.

A friend of mine who grew up in Mumbai (formerly known as Bombay), India told me that quality medical care is much cheaper, and much more plentiful, there than in the U.S. Apparently, you can walk down a typical block in Mumbai and pass several doctor's offices. If you have strep throat, you can spontaneously pop in for a $5 or $10 visit and come out with antibiotics.

India requires certain training for doctors, but the number of years of training are significantly fewer than in the U.S.

How to Shorten User Stories

In my last entry, I mentioned that it should be possible to implement user stories within a short period of time. But then I asked, "[A]long what lines to you divide the user stories so that they are each sufficiently small?"

You have two alternatives.

One alternative is shorten the development effort by abbreviating the "span" of the story. Take a word processor as an example. Instead of a story encompassing the entire process of creating a new document, composing and editing its contents, saving it, and printing it, you might pick just one step. You might, for instance, choose composing the document as the user story, and leave out the creation of a new document, saving it, and printing it. I generally don't recommend this approach.

The approach I usually recommend is to maintain the "span" of the story but simplify some of the steps in it. For example, still implement the functionality to create, compose, save, and print, but make it so that the user only types raw text and cannot do any formatting.

It really doesn't matter much whether they are "user stories" or "use cases", you still can reduce the level of effort so that it is possible to implement them in a single iteration. I mentioned some of the approaches in an entry in August.

User Stories

Let's see how some folks define "user story":

"A user story is a very high-level definition of a requirement, containing just enough information so that the developers can produce a reasonable estimate of the effort to implement it. A good way to think about a user story is that it is a reminder to have a conversation with your customer (in XP project stakeholders are called customers) . . . . [U]ser stories are small, much smaller than use cases. In XP a user story must be able to be implemented by two people in a single iteration/cycle, therefore if you’re working in one week iterations each user story must describe less than one week worth of work."

A user story is thus similar to a use case but "smaller". It's smaller in the sense that it should be possible to implement within a short period of time. The final product that you deliver to customers will be the result of implementing many such user stories.

Therein lies a challenge: along what lines to you divide the user stories so that they are each sufficiently small? I'll explore the alternatives in a future entry.

"Delivering Product"

In a previous entry, I mentioned that, when you use an agile product development process, you deliver "a working version of the product for review" at the end of each iteration. I mentioned in a later entry that Alistair Cockburn criticizes organizations that claim to use agile methods but don't deliver product at the end of their so-called iterations.

What does it mean to deliver a working version of your product to customers? What is the point of iterating if you "deliver product" after the first iteration?

The crux of the matter is that you should be able to demonstrate at the end of an iteration how a customer would use your product to address customer problems. So "working version" doesn't mean one that is ready for sale to the customer, but just one that is ready for demonstration. For a software product, that demonstration might include showing some hard-coded mock-ups in place of screens developers haven't yet implemented.

Contradicting Instincts

Talking to a colleague on the phone about a month ago, I remarked that a significant amount of what a product manager does is recommend strategy that contradicts basic instincts. The basic instincts of marketing seem to include:

1. Strive to make your product appeal to as broad and diverse market as possible.
2. Ensure your product has all of the same features as the competition, plus more.
3. Choose a name, logo, and web domain name that are as descriptive of your company or product as possible.
4. Try to hide or play down your product's weaknesses.

Yet these instincts are generally the opposite of how you should be managing your product.

Instead of striving to appeal to as broad a market as possible, you often should carefully select a single segment that is sufficiently large and focus on it. Rather than worrying about me-too feature comparisons with competitors' products, you should concentrate on solving your target market's problems. Scientific studies show that names and logos bearing little or no resemblance to your product are more effective than descriptive names. Finally, you should be embracing your product's weaknesses in order to highlight its corresponding strengths.

Embracing your Weakness

I mention in my article on positioning and messaging that one way of formulating a theme for your marketing campaign is to identify your product's biggest weakness and highlight the strength within that weakness.

Since your product can't be all things to everyone, it will have weaknesses. To be really useful and appealing to your target market, your product will inevitably turn off, or at least not appeal to, some people outside your target market. The key is to embrace this weakness and show how your target market benefits from it.

For example, are you marketing a software product that is targeted at power users? If so, ordinary users will probably have a hard time using it. The difficulty results from satisfying the complex needs of the power users. That's okay, however, since power users by definition are able to deal with this complexity. You might therefore choose "power" or "sophistication" as the theme to trumpet to these users.

Product Manager as Student

We typically think of an education setting involving a school and teacher who determine the lesson plans. The students in these settings are passive; they listen to the teacher and perform the activities he prescribes.

A product manager turns this approach on its head. Product managers learn about the market for their products through proactive learning. We can't rely on someone to come to us with a lesson plan. We create our own lesson plans.

Thus a product manager can't just be a good student. A product manager must be a special breed of student that specializes in proactive learning.

Password Peeve

Slashdot linked to an article claiming that requiring employees to juggle multiple passwords is costly for businesses and actually decreases security.

A particular peeve of mine has been the requirement by some companies that employees change their computer network passwords every month. I got so upset one time that I taped a Post-It note to my computer monitor with nothing but my password written on it, in large bold type.