Sunday, December 31, 2006

Marketing of value

Being an internet startup company I wanted to write a blog about the marketing potential of my serive, a webenable engineering service for product development. So for example a vendor of motors also helps the customer to see it the motor fits in his application and determines what the performance of the motor will be in the application of the customer. This saves customers a lot of engineering time. So this appreciation should be made cashable in some way for the vendors. After all, vendors will only get enthousiastic about benefits for their customers if they also benefit from it in some way, that is the way the world works.

So I am being so bold to call my ideas on web engineering "real value" as supposed to a lot of other marketing techniques that deliver a lot of talk, but are really just empty shells. My intended message of the story was to bring value to customers instead of empty shells, a comparision that I will win fair and quare, end of story. Things are a bit different ...

I was doing a little Google-research on which marketing ideas to attack head-on in my blog, where I stumled on a book from Seth Godin called "All marketers Are Liars: The Power of Telling Authentic Stories in a Low-Trust World". You might think I found the perfect person to kick to, my "real value" versus a liar who also says all marketers are liars. But I am not going to challence his views of marketing .. because I think he is 100% right.
What he is saying to me is that it is not the value that you impose on it that sells the product, it is the story in which you wrap it that sells the product. He tells that marketing is all about story telling, if you tell a good story people will believe you and buy the product along with the message, if you do it poorly than people do not.

That is the reason why people buy Pumas of $200 instead of sneakers of brand X for $20. That is why wine drunk from a Riedel glass of $20 tastes better than a glass of $1. You sell a story that people love and the story is the experience that people pay $180 extra for those Pumas.

Now I read an excerpt of the book on Amazon Online Reader and only got the first part of the book (of course, I have to buy the book to get the full story, great marketing-technique for books though). But I am inspired to continue the book as if I was the writer. Well, this is my blog so I can do what I want. Being inspired by his start I want to elaborate my thoughts on this, so here goes ..

For this marketing to work you need to be able to uphold the believe in the story, otherwise the story looses its function and customers will perceive it as a bad story and will not buy the message. So your product ultimately has to deliver the message/image you are spreading. A little though experiment:
Puma marketing spreads the image of quality, sports and social acceptance and this view needs to be confirmed in the perception of the customer. Well, Puma's will survive 2 years of walking on them (so does every shoe over $20), sport celebrities wear Puma's (sponsoring) and all friends wear Puma's so that story holds true. For Riedel glass it is the perception of quality and exclusiveness. The glass is thinner than a normal glass, shaped differently so this covers the quality aspect, it is exclusive because it is priced higher so you won't find it in any trailerpark. So the image of exclusiveness is sustained. Meaning all the expectations that are created by marketing (creating the image by telling the story) are validated. Because the Riedel glass is shaped differently it marks quality, even if scientific reasoning may indicate otherwise. I mean really what has shape to do with quality? That does not matter, the story told is swallowed because the customer sees the evidence of the perception that is being created.
End of the new book. I am curious if this is the actual message that Seth Godin preaches, I just have to buy a copy of the book to see..

Now back to my engineering service, with this new wisdom I just uncovered or created how am I gonna benefit from it. The perception I want to spread is that the service brings a more efficienct marketing, more sales and better customer support. These expectations are sustained by increased sales, less costs in the customer support department and more leads. Oh wait, how can you get a perception of increased sales, or more leads? Sales are a figure on a balance-sheet, there is only one perception of sales, you can only look at it one way ... the figure itself behind the $-sign. There is no emotion that lets you perceive it in another way. It does not have the emotional charge of the social acceptance by wearing Pumas, or the perception of exclusivity. It's perception is objective and not subjective.

The difference is that the perception of the value in the cases Godin describes can be shaped by a marketer, some perceptions can not. So to uphold the perception of the higher sales you need a product that really sells more products. You have to sell it for what it is, you have to market the "real value" of the product if you want uphold perceptions that are not shapeable.

I conclude that my marketing message should stay close to the real value I deliver because I can not add some emotional perception to it. So for engineering service I need to deliver the "real value" for what it is and I advice other people to do when they deliver products and services which value is perceived by objective criteria.

So, with a strange twist I come back to my original statement. I deliver "real value" as supposed to a lot of other marketing techniques, but Godin is right when he says it is the message that is important. But when the message you spread can not sustain a subjective image you can not lie about your product because people will not believe you. So I'm glad I can stick to the truth. Or am I afraid I am destined to tell the truth? It is all a matter of perception.

Wednesday, December 27, 2006

Quicker engineering result; Laying the foundation for webbased engineering tooling

How sweet it would be to be able to download bits of productinfo from different vendors, connect them together as you see fit, and show the resulting behaviour of the products in your application instantaniously. For example a drivetrain, you connect info of a leadscrew from vendor A to a reduction of vendor B and lineair guide from vendor C plus electric motor from vendor D. Automatically the amount of friction of all those elements are determined right away and also is checked if the acceleration and maximum velocity are no problem for the motor. Print the results and order the parts, 15 minutes spent....

This would save a tremendous effort in calculations, and gathering of information. The problem is that a calculation model is needed that is not provided by the vendors themselves. Also it is necessary that is that the information provided by the vendors need to fit the correct format to be able to fit in the calculation model. Info from different vendors lack unifomity so that is another problem to overcome.
If those obstacles out of the way you have finished your working day and the next day you can finally get the results of your effort.
So it is save to say that if vendors provide the calculation models and the correct data it would dramatically speed up your time-to-market and promote product transparancy.

This not only benefits the engineer and the company he (engineering is still dominantly male) is working for, but also the vendor. Quicker time-to-market is quicker sales, also more sales if the competition does not offer the same time-benefit, and even higher sales! According to a study of N. Granados (TRANSPARENCY STRATEGY IN INTERNET-BASED SELLING, 2003) an increase in product transparency is associated with a decrease in the costs of information search and, consequently, it also increases consumers’ willingness-to-pay. How true for the engineering effort as described above. The study by Granados does not focus specifically on engineering products like motors or drive-elements, but that is the place where a lot of time can be saved. Also study from Bakos (1997) consideres the time saved a consumer surplus, or in other words added value in the pocket of the customers.

So we can conclude it aids both product vendor and the engineer who uses the products.
So how should we do it?

All engineering departments have some people that build models and re-use them in a similar situation. All those models have a limited use, and an even a more limited amount of users. They are rarely documented so the use for 'other' people, let alone vendors, is too limited.

The initiative to create and distribute such models has to come from the vendors themselves, or from a shared (open source like) foundation that promotes this initiative, and has backing from the industry. The foundation has to set standards so companies can share them, and consequently make it possible that the models of the different vendors can 'talk' to eachother.
This would also open up the possibility of a lot of commercial activiteits.

First is the time to tell the vendors the good news. They can participate in a new venture which will increase their profit, and improve customer-satisfaction. Win-Win.

Secondly to create the foundation. What kind of people we need? At least some enthousiastic professors from faculties of Mechanics and Electronics who have the people to create the models and set the standards (while we are at it, it needs to be multi-disciplined) and some big companies who see the light (aka dollar-signs). Also marketing brain-power (university) is necessary to be able to think of ways to exploit this idea to the fullest, and at the same time allow the companies to plan for a decent ROI from this venture while allowing the hard-core academics enough opportunity to make something beautifull.

Well, I'm game for it. It is all dependant on the industry. I have not seen anything like this idea yet. I think that is because nobody thought about it yet, but maybe there have been some attempts that failed. If so it is interesting to know why.

So much for my thoughts. I am gonna sleep over it a few days (this is fresh from the mind) to let it sink in and maybe I'll post later some ideas of the goals and methods of the foundation or that I have a real good reason to abandon this idea.
Cheers.

Tuesday, December 26, 2006

My 1st blog

Currently I am busy with the startup of a new company that brings engineering services to the web. This means I aid engineers, the people that create nifty machines, in their work by bringing them valueable tools.

The whole idea is to be able to reduce the development effort, and thus time-to-market. As an engineer I feel that development could be aided big time by enabling valuable tools on the internet and providing them for free.

I have a lot of ideas on how to do this, and this blog will be my way to 'spread' the message and also to comment on current developments in engineering and 'Ways of Working'. The internet is an exciting place to be these days, and I predict that it will become indespensible in future engineering.

Currently the tools available on the internet for some serious engineering are close to zero. If anybody disagrees and has a bookmark full of cool tools than I am very interested, just post a reply to this message so you can share them with your fellow-engineers.