Static versus changing products.
In the last issue of the Harvard Business Review, among the breakthrough ideas, there is a new marketing approach (or rather a general thought) worked out by a group of HEC scholars. The main idea is that the firms, especially those in the cosmetics industry, would be better off (both in terms of market share, customer loyalty, costs to maintain clients) if they started to market and produce goods that will follow the targeted groups of customers as they advance in age. These products are supposed to be moving rather than static products. Currently, these firms market and produce goods for a given, particular group of individuals (women aged 25-30; women aged 30-40; women above 50; etc.) – the static approach. The authors’ suggestion is to work out another marketing strategy targeted at the groups of individual varying and changing in time – the initial targeted group would, for example, be the group of women aged 20-30. The product is going to follow this group as it advances in time and evolve and adapt to their changing needs and requirements. I personally do not see much difference between what these firms are doing now and the proposed effect – as these groups advance they will simply fall into the market niches explored by the existing products – women aged 20-30 now, when they are 40-50 will simply fall into the current product designed for this particular group of women. Can someone say more about this issue?
Best regards.
Answers (16)
It's interesting. The fact now is that brands have a life cicle... if you move with your consumers, then you'll die with them... Now, what we do is to search a positioning (wich implies age carachteristics) and then we stay statics looking for several generations (ideally), I mean, Coke is always young. Doing a changing product would take us to many products depending on targeted consumers. For now is easier to have a single product for each age group, search loyalty to the brand and then expect consumers to stay with this brand products all theirs life long.
Michael S
Desert-Island Problem Solver, Web Consultant, Digital Technology Enthusiast and Trendsetter
Best Answers in: Computers and Software (1), Web Development (1), Using LinkedIn (1)
Investment companies have been doing this for years with things like retirement funds that mature with their owners. I don't think the idea fits nearly as well for physical products like cosmetics. The niches are already there, and you don't need the extra overhead of keeping a single product line in line with its current set of customers. Your R&D and Marketing are already busy trying to create "the next big thing". It's going to be hard on them if you ask them to start adjusting existing products on a continuous curve.
I see how this idea is attractive and, from an Information Technology perspective, even elegant. I just don't think it applies well to physical products that cannot be inherently dynamic.
Taken to simplicity, you are right. It is the same thing. However, as you know, it is all about the cellophane wrapping. Meaning, you need to create and maintain customer loyalty. The statement described above basically suggest you will maintain your customer base and ensure your offering is dynamically changed as they move on in life. So you might have the same set of products branded slightly different, but the brand value has to be maintained to ensure maximum value (and wallet share) is captured
In the cosmetic industry, as much as with every other industry, there are two foci: to maintain existing customer base, and to break new market position.
By moving products to cater to one group of people, seems to denote that their primary attention is focused on just one demographic. It misses out on the rest and as such will not be able to maintain business after their existing customers are no longer around.
The idea of having a successful business is to be able to expand their products in future to cater to their aging customers, whilst able to capture new grounds with their existing products. That way, you make sure your customers are being replenished, so to speak. If the company is unable to cater to such requirements, especially in fast moving consumer goods, forget long-term business. Do a "hit-and-run" approach and move on.
Peter N
Wealth Creation Innovator (omnidigitalbrain@yahoo.com)
Best Answers in: Career Management (23), Using LinkedIn (12), Mentoring (11), Starting Up (9), Business Development (8), Professional Networking (6), Organizational Development (5), Small Business (5), Staffing and Recruiting (4), Change Management (4), Planning (4), Job Search (3), Ethics (3), Education and Schools (2), Advertising (2), Public Relations (2), Business Analytics (2), Customer Service (1), Government Policy (1), Internationalization and Localization (1), Intellectual Property (1), Internet Marketing (1), Corporate Governance (1), Project Management (1), Product Design (1), Business Plans (1), Computers and Software (1), Information Storage (1), Telecommunications (1), Web Development (1)
Anything or any strategy is possible in business, if it flows from your core.
If the company is good at marketing, then it makes sense to sell more to the same unchanging market (that is, a market with a clearly defined Central Demographic Model or some other similar market marker).
If the company is good at innovation, then it makes sense to continously try to satisfy new needs (including the needs experienced by people as they move to a new stage of life -- a new demographic bracket or a new lifestyle, as when a person gets married).
However, it's not a debate about "static" vs "changing" products. All products HAVE to change and evolve, because even within a clearly defined demographic group, the needs are evolving, and there are always NEW needs. So all products must change and evolve to satisfactorily respond to market needs WHILE respecting the strategic trajectory of the company -- i.e. keeping in mind its core competencies, talent base, industry specialization, etc.
Everyone here has given good answers. I will therefore attempt to approach this question in a different way. I believe that while the products would eventually move into existing markets as time passes, the motivation behind a changing product makes it different from a static product offering. Why?
Although not the best example, I believe many people like Google, at least a number of their products. Their products are not complete when first introduced. From what I know, they never are. They are tested and evolve as users provide feedback. There are existing solutions that already exist out there that are often better than Google's new products. Yet, people stick to it, help to change it and grow it to beyond what competitors can offer. Google's products offer solutions that follow their customers. The power in changing products is the benefit of additional brand loyalty because consumers feel that they are more of stakeholders than for static products.
However, that being said, I do not believe that changing products are as easy as they sound, profitable or even feasible. Non-technology based solutions are more difficult to evolve due to various lead times in development. Getting the feedback or information to change the product fast enough to keep customers would be very difficult if it is significantly easier for them to switch. Furthermore, it is harder to experience or evaluate the improvements or changes that are supposed to follow the product group as they are often not as visible or tangible, unlike in say, Gmail's new features. Furthermore, technology products' evolution can easily be differentiated in comparison because most of them can perform functions that have never been done before. For markets where most products cover all the different niches and people only shift from one static product type to another over time, it's much harder to see the product changing.
They say it's cheaper to keep existing customers than acquire new ones. So, if you could just get the customers to see how much the company is trying to evolve its products to suit them, you might just be on to something. But of course, if changing products are too expensive to sustain, then obviously you would be better off having multiple static products instead. To me, it's not really that new as an end result, but a different way of keeping your customers.
Static product startegy works well with the Cosmetic Industry as customer loyality with the brand matters a lot in this industry. Here, customers dont change the brands often, after the product got used to his/her body. Hence, the customer will use the same product, which is targeted to a age group of 20-25, even after he/she crossed that age group long ago. This behavior is observed in the Indian market.
James F
CEO, Comfort Care & Resources
Best Answers in: Change Management (1), Planning (1), Retirement and Estate Planning (1)
Aleksander:
The difference between static and dynamic approaches is subtle but I believe valid and critical. In a sense I interpret the article to mean that you can not assume that the next generation of 20 to 30 year olds will be the same as the current. For example, the baby boomers' likes and dislikes, buying patterns, etc. are very different then their parents, who many of them lived through the great depression, WW II, etc.
Though there is very little in the way of practical implementation suggestions in the article, the approach is spot on. Once you invest time, money, and resources in this particular group of 20 to 30 year olds, move with them. Follow the customer that you have already built a relationship with and watch how their needs change. You have invested in understanding (atleast I hope you have) the underlying psychology and emotions of that particular group, those things have tremendous value that can be leveraged in marketing, distribution, pricing structure, etc.
Essentially, because a person's complection changes when they turn 40 doesn't mean they fundamentally change who they are and what messages they want to hear from a company.
Hope this helps.
Jim
Ray V
Social Media Strategist, Speaker, Corporate Community expert
Best Answers in: Using LinkedIn (20), Web Development (4), Staffing and Recruiting (3), Business Development (3), Career Management (3), Job Search (2), Mentoring (2), Corporate Governance (2), Change Management (2), Professional Networking (2), Starting Up (2), Commercial Real Estate (1), Regulation and Compliance (1), Education and Schools (1), Corporate Taxes (1), Risk Management (1), Compensation and Benefits (1), Offshoring and Outsourcing (1), Advertising (1), Public Relations (1), Sales Techniques (1), Non-profit Management (1), Distribution (1), Professional Organizations (1), Small Business (1), Blogging (1), Enterprise Software (1), Computers and Software (1), Computer Networking (1), Telecommunications (1)
I totally agree to that Aleksander.
Be informed that I already have made a modle for targeted at the groups of individuals varying and changing in time...
It is the 5 pointed star mentioned on my website: www.vandenbel.com
I beleive that marketing and sales in this century need to be flexible and targeted to individual and group communication styles. That is the whole basis of my webstrategies. Currently I am building a group of creative people around me on the Open Networkers Movement to that purpose:
www.opennetworkers.blogspot.com
It is not accidental that I have mentioned this on the frontpage of the Open Networkers Movement:
This Open Network Group is for people who share an idealism in online networking: The Open Networkers help each other in quality networking by informing members about online networking best practices in order to promote business and personal objectives. You can find us on LinkedIn, Xing, Ryze, Myspace Ecademy, Second Life, Soflow, CollectiveX, Yahoo Groups, Doostang, Tribe.net and lots of other interesting portals.
I believe that Self-consciousness and being Present (Tolle) is the first step towards true individual creativeness and being open to collective strategic thinking and Leadership.
Therefore I coach people to communicate and network effectively on Web 2.0 and web 3.0 in order to create a global network of strategic and creative thinkers with their own models and ideas comparative to mine above.
Chris W
Owner at The Wireless Man
Best Answers in: Using LinkedIn (30), Business Development (9), Wireless (9), Web Development (8), Staffing and Recruiting (7), Advertising (7), Starting Up (6), Internet Marketing (4), Career Management (4), E-Commerce (4), Computers and Software (3), Internationalization and Localization (2), Viral Marketing (2), Organizational Development (2), Manufacturing (2), Small Business (2), Customer Service (1), Education and Schools (1), Freelancing and Contracting (1), Job Search (1), Mentoring (1), Venture Capital and Private Equity (1), Economics (1), Government Policy (1), Exporting/Importing (1), Treaties, Agreements and Organizations (1), Intellectual Property (1), Guerrilla Marketing (1), Public Relations (1), Sales Techniques (1), Writing and Editing (1), Business Analytics (1), Project Management (1), Quality Management and Standards (1), Personal Investing (1), Industrial Design (1), Professional Organizations (1), Computer Networking (1), Telecommunications (1)
The idea of having a life-time product brand that 'scans and projects' itself along the life-time of the user has been a topic I've discussed and debated before - for brand junkies it's one of the top topics of debate.
The problem here is that companies spend millions on a brand that is branded specifically toward a certain demographic mainly starting off with the age portion of that demographic. If a company were to launch a scanning brand based on life-time use the brand would by it's very nature die off with the users.
The other problem this raises is that branding and marketing promote the very human nature of aspiration. 10 year old girls don't want to use cosmetics (staying with the scenario posed in the question) that is targeted at them, they aspire to use what their older sisters use, and so on. BUT....it also works in reverse - a woman of a 'certain age' doesn't want to use the brand that is marketed at them - they aspire, in reverse, to that that their daughters use - young people aspire to be older and old people generally aspire to look younger.
Marketeers, on the whole, understand this and can use this to their advantage. Having a scanning-projecting brand that stays with the consumer through there life takes away this aspirational quotient.
So the idea raises more problems than it intends to solve in my view - take away the aspiration in consumers and you are creating a huge problem.
Ryan T
"The simpler our means, the more we communicate."
Best Answers in: Public Relations (8), Using LinkedIn (8), Business Development (7), Non-profit Management (6), Advertising (5), Internet Marketing (5), Staffing and Recruiting (4), Career Management (4), Web Development (4), Guerrilla Marketing (3), Viral Marketing (3), Writing and Editing (3), Corporate Governance (3), Change Management (3), Organizational Development (3), Branding (3), Ethics (3), Purchasing (2), Accounting (2), Government Contracts (2), Government Policy (2), Government Services (2), Tax Law (2), Graphic Design (2), Supply Chain Management (2), Distribution (2), Business Plans (2), Starting Up (2), Regulation and Compliance (1), Education and Schools (1), Certification and Licenses (1), Job Search (1), Conference Venues (1), Offshoring and Outsourcing (1), Corporate Law (1), Intellectual Property (1), Lead Generation (1), Sales Techniques (1), Business Analytics (1), Planning (1), Inventory Management (1), Manufacturing (1), Project Management (1), Market Research and Definition (1), Positioning (1), Professional Networking (1), Small Business (1), E-Commerce (1), Computers and Software (1), Information Storage (1), Telecommunications (1), Software Development (1), Wireless (1)
Cosmetic/skin care industry already put this in play. Think suncare products, especially by marketing around SPF factor and "age defying" effects. This hits babies, active youth, boomers, glam set, seniors, men & women, etc...
The observation that it's important to ask "why" first is right.
I'm wondering if "dynamic" products can't eventually become static themselves, particularly because they're so targeted in their broad range and use that they're not allowed to sink or swim and find additional niches in the marketplace over time due to marketer resistance.
Parallel thought: Wouldn't a "dynamic" product line merely be a more targeted brand extension?
This is an interesting approach, but I believe that consumers like the feeling and the excitement of changing product lines.
A blended approach has been done by many companies, where multiple similar products are created with different product names under a brand name with solid recognition.
The consumers at the top-end of the demographic can move to the next product targeted to an older group at their leisure. This way, the consumer does not feel “forced” to change products, and the company has greater flexibility to target specific products to specific groups.
Is this issue not related to brand loyalty.
Surely if you are brand loyal in your 20-30's you are likely to be brand loyal to the same brand when you are in your 30-40's. There is no need for the product to change with you, as already mentioned companies and marketers already have their segmentations.
The financial markets do this best, in creating a lifelong alliance with their customer (normally because we are so overdrawn we cannot switch :)), but they create goods for us as children through to retirement.
It is true that what applies to todays 30-40 year old will not apply to tomorrows, but any marketer worth his money will know that and so develop their brand accordingly.
This article mentioned nothing new and is only re-hashing what we all know already. Our wants and needs change over time.......
In cosmetics the older you get the more you want to hide those lines and wrinkles, and thats what the cosmetic firms tell everyone in their marketing. They are selling the same creams to their customers, just when you are older it suddenly has new properties.
Synical, yes, but why would a company spend extra money (thus negating the benefits mentioned) in creating specially tailored products for all of its customers - unless that is its business!!!
Erich N
Risks, Issues, Start-Ups and Business Development
Best Answers in: Business Development (2), Customer Service (1), Offshoring and Outsourcing (1), Sales Techniques (1), Distribution (1), Career Management (1), Small Business (1), Starting Up (1), Using LinkedIn (1)
Hello Aleksander,
I haven't read the article, and it posts an interesting angle when it comes to products - but the consequence for the company is being 100% reactive. If a company goes down that lane, my first association is that it will lose its integrity (read: brand) and companies losing their integrity are almost as a rule losing their customers.
But when it comes to the cosmetics industry, don't they do it already? I am not in the habit of diving into my wifes cosmetic bag, but I guess that most serious cosmetics companies already have offerings for a wide variety of ages with the aim of following the client's cycle. At least it looks like that when you go into a cosmetics shop. And as Michael posted, investment companies do it for their customers - as do banks.
You have a great day,
Erich N
PS. It would have been interesting to see the demographic background of the HEC Scholars: gender, age, etc... in order to evaluate the approach.
Kern C
Vice President, Private Wealth Management at Financial Analysts, Inc
Best Answers in: Graphic Design (1)
Interesting approach. I got to speak with the CEO of Lexington Home Brands several years ago, and they had a strategy that may lend itself well to this type of strategy. They managed multiple brands (Nautical, Tommy Bahama, etc) that fit a certain demographic or market segment. I don't see why this would not apply to multiple market segments. Basically, the individual brands follow their target market and die off with their customers. The benefit is the company continues to develop new brands for each generation.
I think the challenge comes with staffing and operations. My assumption would be you would have larger staffing needs to manage multiple brands depending on the size of the company.
thoughts, comments, disagreements?
Tom S
Executive Manager
Best Answers in: Career Management (4), Job Search (3), Staffing and Recruiting (3), Government Policy (2), Customer Relationship Management (2), Organizational Development (2), Market Research and Definition (2), Engineering (2), Product Design (2), Enterprise Software (2), Education and Schools (1), Certification and Licenses (1), Occupational Training (1), Resume Writing (1), Economics (1), Sales Techniques (1), Change Management (1), Non-profit Management (1), Quality Management and Standards (1), Supply Chain Management (1), Personal Investing (1), Distribution (1), Pricing (1), Ethics (1), Small Business (1), Starting Up (1), Blogging (1), Computers and Software (1), Software Development (1), Web Development (1), Using LinkedIn (1)
Interesting discussion! Thanks, Aleksander for a great Q. Just a quick thought. Can't add much at this point.
"Changing" may make sense for consumer consumables and other products that are purchased based on personal preference. But in others such as PC's and products sold B2B, I don't find any traction.
