Suggestion: let’s just pause the social media bandwagon, just for a moment, to reflect on some important differences between products and services. And suggest that what works for a lot of one-person expert businesses might not work for mainstream product businesses. Particularly with social media.
From what I’m seeing in twitter, twitter chats, blog posts, and Facebook, it seems like the one-person expert business is leading a social media marketing charge. That makes sense, of course, because this new business landscape is powerfully slanted towards the new artisan economy, the solopreneur, and John Jantsch’s new definition of marketing as getting people to know, like, and trust you.
So here I am loving twitter and blogging a lot, thoroughly enjoying it, but thinking that as we supposed experts write about this stuff, we need to differentiate better between products and services. New media change just about everything about marketing an entrepreneurial expert business; but much less for products, especially products through channels. So here’s my attempt to sort through some of the critical differences, products vs. services, in new marketing.
1. Social media or not, selling products through channels is a very different business from what most people are doing with social media. You have to know the territory.
Mainstream channels have powerful gatekeepers, usually distributors. Most of the big stores and chains of stores have lots of hoops that new products have to jump through. They buy through distributors they like. They want consolidated bills. They don’t manage products one by one. They want big companies, not small companies, for sound management reasons.
Mainstream channels are bucking some tough trends. Online buying, for example; think about what that means for shoe stores, book stores, computer stores, clothing stores, and so on. How does it affect their behavior.
Margins shrink as they go through channels. The more tiers to distribution, the lower the margin. Standard margins tend to vary by store and product type. If you don’t know how it is in your industry, find out.
Don’t even think about mainstream channels without knowing these three basics.
2. For things sitting on shelves, packaging is critical. This goes for all of those products that come inside boxes or cans or bottles or cases. You can still fail with good packaging, but it’s really hard to succeed with bad packaging. Think of the poor product sitting inside it’s package on the shelf. It’s trying to send you telepathic messages, “buy me, buy me.” The package has to sell the product. But what makes you decide? Think about how you choose a can of soup in the grocery store, or a pair of shoes in a store. Or a car. Most of the time people are choosing the product based on a combinations of packaging and reputation, sometimes positioning, sometimes special promotion, but rarely personality or persona of the company that makes it. It’s a rare product (iPhone maybe, Mini-Cooper?) that has a personality. And even rarer, a manufacturer company with a personality. Get your packaging right.
3. Advertising is splintering into a lot of long tails that make it harder to market mainstream products. The trend is towards ever more narrowly defined audiences, which is great for a finely targeted and differentiated product, but not for mainstream. Focus makes advertising more realistic.
4. Channels are splintering too. Look at health foods stores, running stores, underwear stores, battery stores. Focused channels are easier than mainstream channels. They’re targeting better.
5. Social media can help a product manufacturer, but it takes more planning and definition. the watch successful mainstream manufacturers with working social media. For good examples, follow @zappos or @intuit in twitter. Watch what they do right. I think you’ll see that there’s room for social media strategies related to establishing a favorable persona for customer service, managing product reputation, leading opinion leaders. Even the winners in this field are struggling with finding a voice, personality, and authenticity. Word of mouth gets magnified in reviews and online chats. As a manufacturer, you can follow the flow easier than directing the flow. Set your objectives realistically. Social media is people to people; products to people feels pretty much like spam. So where’s the people side? It’s there, but you have to figure out how to make it authentic. The strategies that seem to be working tend to revolve around people in the companies, not the companies themselves.
In other words, think it through, don’t entirely forget the fundamentals in the rush to social media marketing. It’s not all the same, and it doesn’t apply equally to product businesses.
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Tim Berry, Entrepreneur and Founder of Palo Alto Software, bplans.com and Borland International About the Author: Tim Berry is president and founder of Palo Alto Software, founder of bplans.com, and co-founder of Borland International. He is also the author of books and software on business planning including Business Plan Pro and The Plan-as-You-Go Business Plan; and a Stanford MBA. His main blog is Planning Startups Stories. He’s on twitter as timberry.