South Korean customs officials discover dietary supplement capsules containing ground up baby flesh believed to be a tonic for disease. Dietary supplement and Pharmaceutical companies receive supply from hospitals and abortion clinics. Read this article, this one, and one more. I don’t need to say anything about this disgusting practice, except that it will eventually change how you market dietary supplements.

Marketers in developed countries have long had the luxury of marketing almost exclusively, consumer benefits. In less developed countries like China, marketers must first reassure consumers that their products are safe for them and their families. Once they’ve established safety, marketers can then promote the benefits.

The supply chain globalization will add to the burden of marketers in the US and Western Europe by requiring more marketing effort to the safety and quality of what consumers put in their mouths and in the mouths of their children.

Dry Labs Give Dietary Supplement Industry a Black Eye

NBC Dateline recently exposed the dry labbing problem within the dietary supplement industry, causing all of us in the industry to ask: are labs properly ensuring the safety of dietary supplements?

If the industry wants to continue in a self-regulation environment, it must actively establish and enforce guidelines in not only manufacturing but also in the testing of dietary supplements. I have confidence the industry will do this, but will it be in time before the FDA steps in? I hope so.

Is it time to start marketing what your brand is doing to produce safe and effective supplements, and why it’s important to your consumers? Some brands have been doing this for some time, but most are not. I believe that consumers will respond positively as you take the time and effort to educate and build trust with them.

I welcome your thoughts.

Kashi cereal, long-time maker and marketer of natural soy-based products, was recently exposed to using genetically modified (GMO) soy beans. Anyone in the natural industry knows clearly that using GMO ingredients is generally not accepted as ‘natural.’ However, marketers at Kellogg believe that it’s okay to call something natural when the primary ingredient has been genetically modified by science. Isn’t that a little contrary to the concept of natural?

David Desouza, General Manager of Kashi, told USA Today that Kashi has done nothing wrong since the FDA doesn’t regulate the term ‘natural’. Kashi’s definition of natural is minimally-processed with no artificial flavors, colors, preservatives or sweeteners. This is a great definition that most if not all consumers of natural products would agree with. The problem? Kashi is more concerned if they can mislead and get away with soy that is less expensive and in greater supply, than being upfront with their customers. Desouza is right that Kashi has done nothing illegal, but he forgot the difference between doing something illegal vs. being an advocate for their loyal customers. Desouza forgot that doing business is about the customer, about first DOING NO HARM and exceeding customer expectations with exceptional value and/or service. Business is never about the company. If the company does what is right in the eyes of their customers, their profit expectations will take care of themselves. If they choose to be dishonest and they are caught, they will do significant long-term damage to the brand.

The lesson here to all marketers is that you are in business solely because of your customers, those who buy your product or service. Your responsibility is first to them, then to the company and shareholders. As soon as you confuse the two, your customers find out and you have a problem that may or may not be turned around. In Kashi’s case, I have chosen to not buy their products any longer as have many friends and family. The reason is not just that it has GMO ingredients, but that I feel misled, cheated. I feel that I trusted a brand that said they were natural, when in fact it is not. Yes, it may have better sweeteners than other cereals, more protein and more fiber. That’s all great. The bigger concern is they choose to use ingredients they know are controversial and against the preferences of a large majority of their customer base. They also clearly know that GMO ingredients are not natural, regardless of how the FDA classifies them. Now, they must try and work themselves out of the mire.

First, do no harm. Second, provide value that exceeds your customers expectations at a price and delivery they want and expect. Service their needs consistently and you will have loyal customers. Violate any of these and you will lose customers.

Have you ever been asked the question, “what is my drop-dead date?” Or, even worse, have you asked that question yourself?

It’s one of the most ridiculous questions anyone can ask you, or that you can ask yourself or to others. Why? Because the question is really asking the following:

• How long before I must commit to a decision?
• How long before I need to start working on the project?

You may argue that these are questions to identify and sort out your priorities, what work you should do first, etc. That may be true if you are among the 1% of overachievers.

However, in my 20 years experience working with small business owners, CEO’s, Senior Vice Presidents, and thousands of others, this question is really a question of procrastination, of not having a clear and concise vision for your business strategy. When there is no vision ‘the people perish’, the Bible teaches. Clear vision, prioritization of activity, clearly sets forth what needs to be done in order to achieve the greatest results, the greatest return on investment as it relates to your strategy.

To be a top producer and achiever in your field, be it as a sales person or business owner entrepreneur, you must know your objective and the activity required to reach that objective. To do this, you must know what the activity is and when it must be done.

• Your chances of success are greater as a BIG FISH in a little pond

Niche marketing as a rule, switches you from a small fish in a ginormous pond, to a big fish in a smaller pond. This is good. For the high-powered ego lacking in smarts and vision, however, this concept isn’t appealing for the obvious reasons. But, for those who understand the concept of leverage and focus (which is this very concept I’m talking about), this should excite you.

As the market leader, the big fish creates much of the market power, momentum, trends, and enjoys greater stability, negotiation and pricing power, profitability, and a more loyal customer base. The big fish is less exposed to the fluctuations of the economy. Isn’t every small business interested in this?

• You will more easily find and maintain customers

The more focused your niche (still meeting our requirement of gross revenue and profitability of course), the more effective you will capture customers, and understand and meet their needs. The customers you capture will be the right customers, customers you can do repeat business with for years to come.

• You’ll have less competition

The niche marketing mindset is difficult to learn because it takes discipline and patience to stay focused. Mastering the niche marketing mindset and strictly adhering to it will set you apart from competitors because most small businesses do not have the discipline nor the experience. I am not talking about a limiting mindset by any means. In fact, mastering the mindset and working it every day is extremely powerful and will put you ahead of your competition and establish you as a market leader.

Market leaders control markets and influence purchasing behavior so long as they preserve their advantage and communicate this advantage (value to the consumer, buyer, purchaser) clearly and consistently in every interactive experience. They are many times the first to set trends, the first to respond to trends, and the first to establish market price. Competition will come, but you will have a strong and established (think of the root system in a 10 year old tree vs. a 1 year old tree) grasp in your market like roots shooting deep and wide.

• You’ll make more money

Generating cash flow, accumulating resources, and changing our lifestyle is our main desire for doing business. Yes, there are some who start a cause and do wonderful things, but they are still broke. I have no intention nor interest in teaching you this model.

Because of the position the market leader holds in negotiating price from suppliers, setting suggested retail in the market based on the maximum profit target the market will allow, your margin and profitability will be much healthier. As your sales volume will be greater as well, you will enjoy lower operating costs resulting from efficiencies.

If you are the first to market and doing the work that you and your competition will benefit from down the road, your advertising and customer acquisition spend will be greater during this phase. Once you’ve established the market, however, these costs will decline. It is simply the cost of doing business as a first-to-market leader.

• Your ability to duplicate and systematize business increases

Once you’ve built one successful niche business and understand the thought process and execution required (been there done that) to market that niche business, you will be more likely to duplicate (and even increase) this success in less time.

Your total business scope and infrastructure in a niche marketing segment is smaller and less intensive. The business model is simpler, more easily understood, and significantly easier to execute. Because the niche marketing mindset must be developed with practice and continually evolves, it is continually on the lookout for new and better ideas that will bring a significant return to you and provide needed value to your customers.

• You will have more opportunity to be on the leading edge of innovation

This of course is maybe the most rewarding and enjoyable part of owning a niche market. Niche marketing understands needs of customers, and many time niche business owners are customers of their own products. They live the same lifestyle their customers do. When your interest or needs shift or change, you know your customers will soon be shifting as well.

As a niche business owner, you must move swiftly and be continually on the lookout for new and better ways of doing things. Your passion and expertise will go a long way in helping establish this niche marketing mindset. Stay disciplined, focused, and do things differently, and you will have a great time and great success.

Same principle applies to us as we desire greatness and success, be it in business or personal. We must focus our thoughts and actions on the desired outcome (our target, goal), and with our plan (business plan, personal plan of action), create sufficient forward momentum to move through the resistance that surrounds us, both as we begin (take-off) and during the long process (think international flight!) to achieve our goal.

Resistance will hit us from on-lookers who doubt we will achieve what we say, our lack of financial resources, our lack of expertise, our own self-doubt, you name it. To achieve greatness in any aspect of your life, you must move through this resistance until you land at your destination. Know what you want, surround yourself with those who believe in the same thing you believe in, and focus everything you have until you achieve it. Imagine a fun, fast ride in your favorite convertible and the wind blowing in your face.

What’s the problem, you ask?

Being an innovator in your category and creating great marketing strategy and products or services is about doing what the market wants or needs. It’s knowing where the trends are moving and making sure your marketing strategy can capture the trend. It’s skating to where the puck is going, not where it is, in the words of Wayne Gretzky. If you have sufficient capital, it’s putting your company in a ‘first-to-market’ situation and being in the market before the trend monetizes. Your marketing strategy must be brutally honest and clear. You should read this article.

Your core competency is a lazy reflection of what you’re good at now. No one cares what you’re good at, not now nor in the future. Consumers want their needs met and they don’t care if it’s you or your competitor who gets their business. As the basis of competition shifts (market needs, pricing), you as a leader and your company must be willing to learn new things, i.e. the new model the channel and customers want, instead of relying on what you do well.

The only value to looking inward…

…at your core competency is to see if it aligns with where the money will soon be.

IMPORTANT NOTE: There are times if a trend is in the early lifecycle stage that going to where the money is NOW is essential. It seems, however, that for most brands they aren’t so fortunate. Most brands are late bloomers, afraid of being early adopters to new concepts. The result is they approach a mature market with a commoditized product concept. For this brand demographic, I have written this article.

Now, where were we? Right… If your core competency doesn’t align with the trend, you need to expand or change your core competency. Clayton Christensen rightfully points out in The Innovator’s Solution: “The challenge for incumbent companies is to rebuild their ships while at sea, rather than dismantling themselves plank by plank while someone else builds a new, faster boat with what they [the incumbent company] cast overboard as detritus.”

Yahoo may be a great example

Speculation has it that Yahoo may adopt affiliate marketing to their marketing strategy. Yahoo CEO Scott Thompson said that he “wants to push the Internet company away from its advertising roots and get more of its revenue from fees and commissions.” This change to marketing strategy would drive traffic through their own affiliate links rather than selling traffic to display advertisers. Is adopting affiliate marketing as a core marketing strategy going to pay off? Time will tell. Interestingly, Google, Facebook, Pinterest are all very successful with the paid advertising strategy while Yahoo’s revenue from display ads has flattened. This could signal a more fundamental problem for Yahoo that can’t be resolved with a simple shift in strategy. Because display ads still represent a major portion of revenue, Yahoo must perform well in the display ad business while expanding revenues from affiliate marketing. How to do this without interrupting display ad revenue? Why not break the latter into a separate growth-oriented business unit? Maintain focus on the majority revenue stream from the current business model (display ads), while growing new affiliate revenue through dedicated resources.

MonaVie is expanding their core competency to better serve where they believe the direct-selling market trends are heading. The company reached $1 billion in revenue quicker than any other, but lately has seen revenues decline. Chief Marketing Officer, Jeff Cohen, is creating a self-contained, independent, in-house marketing agency that will allow full-service productions for both their own business as well as servicing external customers. Will this allow them to expand their marketing strategy into Infomercials like direct-selling TriVita? Though the new entity will not likely provide game-changing revenue for the several hundred million dollar company, it will allow the company to better control their output (on-air, print, PR, packaging, events). Time will tell.

What does this mean to you?

First, take the time now (yes, I mean now, today, not tomorrow) to LOOK OUTWARD and analyze where the trends in your category are heading. Use market data if you have it, talk to lots of people in your industry with whom you have a close relationship. Use your experience and the experience of others you trust. Secondly, LOOK INWARD and analyze if your core competency, your assets (people as well), match up to the trends. If they don’t, ACT NOW to align them. Finally, assuming you have a written marketing strategy you actively and closely follow, update that plan and begin implementing immediately. If you don’t have a plan, then write it now and stay close to it.

You can read more by Clayton Christensen here.

Two Extremes

The market has two extremes in relation to product functionality and price.

On the left side of the market, product functionality or technology lags behind what consumers need and are willing to pay for. On the right side of the market there is plenty of functionality, price is still at a premium or maybe has already began its decline. Does your marketing strategy deal with these extremes? Do you know which side your market(s) currently reside?

Marketing Strategy Must Identify

On the Left Side..

Technology doesn’t give what consumers want and are willing to pay a premium for. Innovation is critical at this stage. First adoptors abound. Opportunity is found in creating a vertically integrated product with proprietary technology and a great story with premium pricing. ‘Premium price’ is relative so do your homework to determine the price your consumers are willing to pay. First to market, first in your customers minds is an absolute must. Apple, of course, is a great example.

QVC’s incorporates a ‘proprietary’ marketing strategy in a very non-transparent way. Look at skin care. The best-selling products have proprietary technology, patents (some more legitimate than others), a dermatologist that is a ‘specialist’ in some technique, and healthy product margin. The reality? Few of the products are really different in terms of results they provide from lower priced pharmacy or mass products. It’s a smoke screen strategy, a very successful one. Of course, the products that work well, perform the best and stay on air much longer.

Voice recognition technology that allow hands-free launch and navigation of applications on cell phones and notepads is a good example. Let’s use Siri. Demand for hands-free technology is strong though functionality is weak. The next two or more years will deliver much of the functionality we expect, then likely move to the right side of the market where the basis of competition drives price points down. In the mean time, price points will reflect the limited supply and high demand.

On the Right Side… Marketing Strategy and Obesity

The right side is plagued with lots of products, ‘good-enough’ functionality, sometimes too good based on what consumers are willing to pay. As soon as there is a surplus of functionality, there is downward pressure on price points. The products become a commodity at this stage. Trying to collect premium prices on the right side is very difficult without differentiating, left-side technology.

Saturated with me-too functionality, most diet products don’t do what they claim to do. Frustrated consumers. Obesity rates skyrocketing. Roughly 65% of all Americans are FAT, 35% OBESE. Though awareness of dietary modifications on fat loss and overall health is at an all-time high, the temptation to eat too much and of the wrong food is also at an all-time high. Multinationals like Pepsico spends millions on developing tastes and smells that make us want to come back for more. Pepsico’s dominating marketing strategy and product development has produced 22 brands with $1 billion in revenue or more. Diet Mountain Dew just reached this milestone. They are great marketers backed by food scientists who understand the human brain. Watch 60 Minutes special on this.

So Where Is the White-space?

I believe brands who educate consumers and engage in social responsibility will become very successful in this space. Brands that promote lifestyle habits (read ‘changes’) to achieve wellness, optimal body composition and energy levels, not miracle pills like Zantrex-3 (and others) who pound caffeine and other stimulants into pills, over-delivering on energy and under-delivering on weight loss. The Biggest Loser did a great job capturing white-space by turning the dieting industry on its heels, making everyone accountable for food and exercise choices. They connected with people, hand-holding them along while viewers understood how to change their eating and exercise habits and then rewarding them for success. The Biggest Loser inspired and motivated everyone who watched, showing that a little knowledge, discipline and hard work could transform a person, physically and emotionally.

There is still tremendous white-space for a dietary supplement brands that figure out how to kick-on our internal furnaces without lacing us with dangerous levels of caffeine. Alli (owned by GSK), with FDA-approved claims, made a big entrance into the market though has stalled a bit, thanks to miracle pills claiming that Alli causes stomach and bowel upset. Watch this funny video by one of Alli’s competitors. Is it true? It doesn’t matter. No one wants to be caught in public with ‘poopy’ pants. Alli’s marketing strategy changed the launch paradigm of diet brands by promoting lifestyle changes into their consumer program. Look for more products in the future that openly promote lifestyle modification.

Conclusion 

If functionality is more than good enough in the market, and price points are still at a premium, opportunity may lie at the low-end of the market. Your strategy to capture some white-space would be to bring good-enough functionality with a much lower price point, and pull away consumers from your competitors. Ideally, you will create a new market by capturing previously non-consumers who were kept away because of the high price points. If prices have already dropped, stay out of the market and look for another opportunity. You can’t spend your way to success in this market. Asking the right questions is key at either side of the market. You may want to read my article on this.

I would love to hear what has worked and what hasn’t for you.

Flash forward

Though still important, email is no longer the #1 driver in smart phone purchases. Multimedia, apps, and social media are the new darlings. RIM didn’t update their marketing strategy as market demand changed. They arrogantly and naively relied on their previous success thinking the market would never change, that a Blackberry user would always be a user. They didn’t ask the important questions every marketing strategy requires. They ignored two things: First, people constantly change and want something new and different. New and different becomes better by default. Consumers are finicky and rarely satisfied with what they have for very long. Second, Steve Jobs and the technology cult movement that has swept the creative, rebellious types away from anything traditional.

RIM’s Marketing Strategy

1. RIM needs a creative tech visionary as CEO that has the unsettling nature of needing to be the best at all times. If Thorsten Heins isn’t that CEO, they need to replace him with one who is.
2. RIM must regain their core values and competencies which are still market relevant. I loved Blackberry for its steadiness, reliability (rarely a dropped call because my hand was in the wrong place), productivity, security, and easy IT integration. My iPhone doesn’t even receive calls at times, and I don’t find this out until someone texts me that they just tried calling and my recent missed calls shows nothing. This is part AT&T I’m sure, but I never had so many problems with my Blackberry which was also on AT&T’s network.
3. RIM will never compete and win against Apple and Google as long as they play their game… coolness. RIM must identify Apple and Google’s weaknesses and position themselves as the alternative. As a former Blackberry user and current iPhone lover… RIM must win back the hearts of executive leaders (myself included) by reaffirming through phone and OS features and company culture, their commitment to helping executives achieve greater success. In a time of overload, RIM must position themselves as the brand that helps executives get more done, do better quality work, have more transparency into their business while away from the office, and use IT dollars more effectively. They do this by partnering in greater depth with business application developers for native integration with core software applications such as help desk, sales, project/product/productivity management (atTask, Wrike) software… providing full functionality of all critical functions. If they already have this, it becomes a positioning and messaging problem. Current Blackberry users could chime in here since it’s been three years since I’ve used mine.
4. Become a small business advocate by offering native integration with small business needs. Create a RIM Small Business Package that includes every application preloaded on the phone and tablet, ready to be configured. Out of the box ease and success becomes the message. Make being a small business owner easier and they will come to you.
5. The Blackberry tablet’s only reason for existence, is to manage the business in a more convenient and productive manner than what can be done on the phone. It doesn’t feature compare with the iPad because it will loose. It shows the same coolness and functionality for non-business usage, but its focus remains on its ability to help executives be more successful.
6. Build a developer network dedicated to building business apps. Incentives may be required.
7. The Blackberry must equal the great graphics and usability of the iPhone and Android.
8. It’s design must be unique, different than what is already on the market. So unique, that people will double look and maybe even ask you what it is. It can’t be the same BB design. It’s got to be the mini Cooper or Humvee of technology.

Blackberry will unlikely regain its position in the business world as I don’t see them making the hard change that’s required. They seem to believe they can play next to the big boys of smart phones. A deadly mistake.

What of these seven points? What would you change or add? Would you be willing to go back to Blackberry? Will Blackberry regain prominence in the business world?

I recommend Fritz Nelson‘s (of Information Week) article as well.

Question Success

You must understand that market conditions will change as they always do. Sometimes quickly, sometimes gradually. What is for sure is that change will come. Your marketing strategy and corporate structure must capture and embrace this. Questioning your success allows you to understand why you are #1 in your category, what got you there, and how to stay on top. Taking your success for granted as the prize resulting from your own or your company’s brilliance, will quickly get you displaced. You are not in control. The consumer has dominance over you. The market (ingredient or component availability, supply, political climate, natural disasters…) has control over both the consumer and you.

You Don’t Have All the Answers

Yes, I know, a shocker to have to tell you this. Have you ever worked for someone who didn’t need (or want) your opinion? Someone who intimidated you if you were bold or honest enough to challenge an assumption? Someone who quickly decided the strategy before hearing all the facts?

Making a decision too quickly before hearing and analyzing all the facts is a clear sign you do not understand the long-term ramification(s) of your decision. Take the time to make a great decision. I’m not saying to be indecisive and slow. I’m saying to gather all the necessary data, consult whomever is needed, and make a decision… then sleep on it before announcing it and before implementing it. Your ability to make better decisions will improve and you will have less adjustment down the road as your decision plays out and you see the effects from it.

As a CEO, be bold and courageous to hire employees smarter than you. Make sure they are complete with integrity and loyal to the success of the company and do not share hidden agendas. Give them the room to share their perspective and advice from their own experience. Allow them to make decisions and hold them accountable for their success and mistakes. Great employees want to be accountable and they want to learn and progress. You, as a CEO, can be a great mentor to them. As you assemble a great team, put your ego behind you and watch your success grow.

Adjust Often. Update Marketing Strategy.

I am not referring to major changes in marketing strategy or implementation. Major changes should not be required if you managed the initial process correctly. Customers need consistency in core product and brand image. However, if major changes are needed, then by all means embrace it and implement it.

More applicable is the willingness to make adjustments as needed. There is no shame in adjusting your marketing plan to account for unexpected or unforeseen events. Put your ego aside and do what is best for the brand. Ignore shallow criticism that will likely come, saying you are not up to the task. Airline pilots understand this very well and change (adjustment to flight plan) is built into their training. When they approach turbulence, they increase or decrease altitude and speed depending on what will achieve the desired result: safe arrival first, on-time arrival second. Take the same approach and plan for changes. In fact, look for necessary changes on a regular basis. This doesn’t mean you will make changes on a regular basis, but be aware of your surroundings and make sure you are receiving immediate and accurate feedback whether your course is on target.

Tried and True Does Not Exist

What worked before will likely not work again. Modifications are almost always needed. Some small, some large. The market changes. Consumer preferences of last year are different than today. Product features that were desired and needed 12 months ago are likely different, especially in technology. If you aren’t moving forward, you are likely about to get run over. Progress and success requires innovation. Seeing better ways of doing things, hitting quick and hitting hard.

What do you think?

Why Leadership Fails

Why? Unless the Captain truthfully unveils his motivation and decision process, we may never know for sure. It seems apparent, however, that the Captain believed he was ‘untouchable’. One of the most common decision making mistakes many leaders face, is being overly optimistic and confident in one’s ability and even believing rules and processes don’t apply to you. It becomes an intoxicating disease that is difficult if not impossible to control. Leadership will fail in this environment.

Corrupt Leadership Tolerated

This tragic decision reminded me of an experience several years ago with a CEO of a $200 million company. He had a big appetite for risk and little use for ethics and morals. This CEO and the Captain had much in common it seems. I sat in a meeting with this CEO and others listening to a proposed marketing campaign using a tag line that made an outrageous product claim. Only the most desperate consumers would actually believe the tag and would guarantee a visit from the FTC. The CEO asked the question to the Chief Marketing Officer and the lead Counsel: “How much money will we make before we’re sued, what will be the legal costs, and what is our net? I was surprised hearing the question and even more surprised when the company went to print with the tag. Yes, they were sued as they were on many other things. Yes, they made millions of dollars even after legal expenses. The legal process for them was part of their business model. They planned for it and managed it very effectively. One could argue this CEO had mastered the process and was indeed above the law (untouchable) as the company’s net net made them millionaires. Fortunately, other CEO’s using similar tactics have not been so lucky. Read Kozlowski among others.

Fortunately, there are many great CEO’s that are great leaders who are not intoxicated with themselves and who respect others and the law. They understand that success results from a great product and great marketing, great relationships with their customers, great decision making and efficient internal processes. These CEO’s provide leadership and mentorship. They navigate their companies on a long-term journey of financial reward and provide great value to their customers. They master the art of asking the right questions. If you’ve not read my article on asking the right questions, you can read it now.