The good news: Philips Norelco had uncovered a trend. Men had started to shave all over their body, not just their face. The company promptly created a new kind of razor to make it easier for them to do so.

The bad news: Most men were embarrassed about their below-the-neck grooming habits and very unwilling to engage in a discussion about it. That meant getting the word out about the company’s new razor would be tricky.

So half the battle was complete. Phillips had designed a new product that is well targeted, fills an unmet need, but now the key question was how to go to market with it?

Most men were embarrassed about their below-the-neck grooming habits and very unwilling to engage in a discussion about it. That meant getting the word out about the company’s new razor would be tricky.

And to make the challenge even more interesting, Philips Norelco had a limited budget to launch what he decided to call “the Bodyshaver.”

The solution? They would try to reach young men—the target market—through an Internet ad featuring "The Bodygroom Guy”, a man so at ease in his own skin that he had no qualms at all talking about shaving below the neck. (That’s him above.) In fact, he is so comfortable talking about the product—and the fact that his love life has improved as a result—that he doesn't even bother censoring himself when discussing the Bodyshaver. (Philips does it for him.)

The success of the website (http://www.shaveeverywhere.com) was immediate. Back by limited PR support and Internet advertising, it received 900,000 visits within the first three weeks of being live. The average time spent on the site: Over six minutes.

The website has received over 1,000 Blog mentions and there are now more than 13,000 other sites that link to it. Philips is ecstatic about sales—as well it should be. It has not only created a new product, but a new grooming category.

Takeaways:

• Conduct upfront research that identifies trends and unmet needs among target segments.
• Utilize the Internet as a potentially effective way to reach your core audience.
• With a limited budget, relying on web advertising or other non-traditional tactics can still be as effective, if not more effective, than traditional media.   The same holds true if your message is too risqué for traditional media.
• When the message and medium mesh perfectly, sales explode.

Technically speaking:
Which customers will give you the most money?
(or why segmentation analysis is so important) Part I

In the best of all possible words, we’d all have unrestrained marketing budgets that would allow us to spend unlimited amounts of time with every person who might conceivably be finterested in our product.

Unfortunately, we don’t live in the best of all possible words. We live in the real one.

And that is why segmentation and targeting analysis—determining exactly who will be your most profitable customers—must be a key part of your marketing plan.

In fact, it is so important that we firmly embed it in the market-proven process we use to help our clients launch new products or relaunch existing brands.

Why do we place segmentation analysis at the heart of everything we do?
That’s simple. It is one of the most effective tools a marketer has for determining who will be the best customer for a product or service.

There isn’t a single product that appeals to everyone. Certain categories might have almost universal appeal—soft drinks; toothpaste; clothing. But within those categories—diet colas; toothpastes that whiten; mini-skirts—you will find certain people who are interested in buying what you have, and others who won’t.

By definition, products only appeal to certain people and so “the trick” is to find those people—that’s where market segmentation comes in. It’s about placing the universe of prospective and current customers into buckets and targeting your marketing efforts against those buckets that have the highest probability of giving you business.

In other words, market segmentation identifies the prospects and customers who have the highest economic benefit to you. That’s why large and small companies alike need to do it.

In the next issue of Blueprints we will discuss how to approach a
segmentation study using a 4-step process. 

Learn more about segmentation research

Ponder This

Asked to grade themselves (with A for “Outstanding” and F for “Failure”) marketing executives across industries had a cumulative GPA of 2.70 and 2.21 respectively, over the past 2 years, in the all important category of “Developing and launching new products or services.”

Similarly, when asked to grade themselves on the important components of development, e.g., identifying and selling to new target customer groups, repositioning or relaunching an existing product or service, developing and launching a new line or brand extension, the GPA stood at 2.88 and 2.60 respectively.

If their kids came home from school with these kinds of grades, these executives would be very, very unhappy. And yet they tolerate it in themselves. Is something is terribly wrong here?

Interview with the CMO of INVESTools,
Ainslie Simmonds

INVESTools offers a full range of investor education products and services that provide lifelong learning in a variety of interactive delivery formats, including instructor-led online courses, in-person workshops, "at home" study programs, one-on-one and group online coaching sessions and telephone, live-chat and email support. Approximately 248,000 investors around the world have graduated from INVESTools' Investor Education programs.

Markitecture began working with INVESTools in 2003 when they were a $60MM firm. Now INVESTools has a market cap of $469MM. Working with Markitecture, INVESTools created a full product line for their customers and prospects. They now have an integrated new product marketing system in place.

Ainslie Simmonds became Chief Marketing Officer of INVESTools in December, 2005. Below is an interview with Ainslie.

1. At INVESTools, how valuable have new product/service launches been to
    the overall strategy of future growth?

Both organic new products and M&A have been critical to the growth of the company. The continuing education suite that was launched has contributed over $100 million in value, the online education suite that was launched has contributed about $30 million in value, both being new products developed internally or “organically.” The recent acquisition of a brokerage is expected to contribute another $100 million in value.

We have used a very disciplined approach to bring new products and services to market, and at its core is the importance of listening to our customers through rigorous research and insight. In three short years, we’ve gone from practically a single product company to a company that offers a full suite of best-in-class investment education portfolio of products and services to better meet the changing needs of our customer base. We’ve done this by working hard to implement a disciplined process and approach that allowed us to comb through literally thousands of ideas, all the way through to optimizing the right idea, to finally successfully managing it’s implementation.

2. Strategically speaking, what has driven your decisions for large scale
    investments in new product/service development?

Our goal for new products is to remain the market leader in the category – which, by the way, we are defining. We know that the competition – especially in our space – does not stand still. We have to continue to innovate and successfully bring new products to market to drive our future growth requirements and stay ahead of the competition. Our customers, employees, and shareholders all have a keen understanding of our commitment to leadership and innovation.

3. For those who are wrestling with the decision of tackling new
    product/service development internally vs. externally, what would you
    tell your peers to consider?

There are a few factors that should go into whether to hire external help, including:

• How long it takes to bring a new product to market
• The level of commitment you can expect from internal resources given how busy everyone is with their “day job”
• The skill set necessary to bring new products to market

Ultimately, you may need to use external resources to help you with new product development if you factor in some of the above. If you do, it is critical that those best practice processes are transferred from the external organization to your internal organization.

4. How important is it for companies like INVESTools to invest in qualitative
    and quantitative research in the development of new products/services? Why?

It is very important to conduct marketing research on a periodic basis – we need to stay ahead of market trends and tap into customer insights. We also have a very vocal student community that gives us another rich touch point where we can participate in phone calls/emails/chats/discussion boards etc. and gain a good amount of intelligence. Marketing research is an integral part of what we do: from satisfaction surveys to segmentation to concept testing, we consider this an important part of new product development and marketing strategy development.

5. It is no secret that the majority of new products fail. What do you think
    companies are doing wrong to create so much failure? And what can
    companies do better?

New products fail because they are not innovative enough, and as such aren’t addressing unmet needs. The easy route is to create “me too” products rather than deliver true innovation to the marketplace. This is a truly difficult endeavor. As an organization, you need to dedicate the time, resources and energy to focus on new product innovation.

• 2006 ANA Annual Conference: “Masters of Marketing” Orlando, October 5-8
• 4th Annual Financial Services Symposium San Diego, October 11-13
• Innovation Immersion San Diego, October 16-18
• The Market Research Event Los Angeles, October 23-25
• Arts Reach New York City, November 17 - 19

Finding the next big new product innovation stars!
We are on the following campuses for our Star Search.

Retail Board
Markitecture is extremely pleased to announce that the following distinguished professors have joined our Retail Advisory Board:

• Ray Burke, the E. W. Kelley chair of business administration, at the Kelly School of Business at Indiana University. Ray is the founding director of the University’s Customer Interface Laboratory. He is part of a small but growing group of researchers who are attempting to understand how the retail environment affects "shoppability," a term Burke coined. Shoppability is “the capacity of the retail environment to convert consumer demand into purchase.”
• Rajiv Lal, the Stanley Roth, Sr. Professor of Retailing at Harvard Business School. Among other things, Rajiv is the supervisor of HBS’ retailing curriculum. Rajiv Lal's current research is concerned with the future of department stores in America. In addition, he is studying how to build and sustain customer centric retail organizations. He has written extensively on the impact of using the Internet as a channel of distribution on a retailer's pricing, merchandising and branding strategy.
• Walter J. Salmon, professor of retailing, emeritus, at the Harvard Business School. Walter has been a member of the HBS faculty since 1956. His current research concerns trends in distribution, and issues of organization, logistics and information systems in retailing. He is also studying how to balance consumer interests in breadth of selection with their interest in low prices.

Markitecture’s Retail Advisory Board provides thought leadership and advises on client projects. We are honored to have these men join us.

Contact Markitecture

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