Archive for month: December, 2015

The Incredible Vitamix Story and the Barbell Marketplace

After visiting the liquidation segment of the market last time, for the final blog of the year, I will return to our true mission at TempPro Marketing Solutions Inc. which is creating mid-high to high end profitable businesses.
A constant theme at companies through my career has been the constant and sometime elusive search for success at the premium segment of the market. From the attempt of Sanyo to use Fisher as their high end brand (not successful) to Black and Decker in power tools moving to DeWalt (unbelievably successful) most Marketing groups I have worked in have spent significant sums of time plotting ways to achieve this progression.

Vitamix Booth
The market has evolved to a barbell with the low cost on one side and profitable premium products with accompanying value on the other. The middle has become nowhere land – never good enough to compete with the best and often too expensive versus the value segment. I believe it to be true that over the last 30 years society has split into “haves and have nots” with a more distinct wealth gap, especially in the US. But marketing to the premium segment is more nuanced than that simple explanation. Baby boomers in particular have grown fatigued with disposable products. No product has embodied this trend more in the last year than the Vitamix blender.
On my first trip to China, I was developing a blender that could retail for $39.99, Target FOB cost $13.00 to compete against the Sunbeam blender line, the dominant volume brand then and probably still today. In 2015, we bought a Vitamix from The Shopping Channel for over $500, becoming the 3rd household in our extended family to do so. I admit that paying $500 for a blender after all my experience in the industry took some time to process. If we are going to upscale, why not a Cuisinart or Kitchen Aid for $200? Happy to report, no buyer’s remorse and in fact quite the opposite, I found remarkable value and customer satisfaction.
Using Vitamix as a case study, let’s break down some of the elements which make a successful premium product:

  • Outstanding Quality. Not just words – marketers are confronted throughout their development projects with decisions about quality. A component imported from Europe, a higher grade of material, a name brand motor or control: these are all decisions which impact the life span of your product. Obviously the Vitamix is a 10/10 here. It is truly commercial grade quality at home.
  • Reframe the Comparison. You want the consumer to compare your product favourably to something with highest price and perceived value. While the price of the appliance is significantly higher than average, it is a tool which enables you to make professional smoothies and other foods at a fraction of the price of buying it prepared. It also has many functions because it replaces a number of other products. This further establishes value in the consumer’s eyes.
  • Demonstrate and Sell. The high end requires an explanation of the value proposition. Knowledgeable staff at Williams Sonoma. Demo booths at Costco and Whole Foods. In our case it was TV shopping. We even watched the next appearance cycle for recipe ideas.
  • Pricing is Key. However, not in the way we have been automatically programmed. Here, when in doubt go up. Many premium brands in small appliances have been successful just because they push the limits of what consumers will pay for products. Be bold but back it up with value.
  • Make it Affordable. When you use the TSC Easy Pay program of 12 easy interest free payments of $42.00, suddenly $500 is more attainable to a larger group.
  • Brand Integrity. I don’t think you will be seeing low price line extensions from Vitamix any time soon. A brand that aspires to premium status must never comprise these attributes in price, quality, distribution. Make sure those online reviews and weekend flyers support your brand in the long run. Don’t give those flagship resellers a reason to doubt you.

At TempPro Marketing Solutions Inc. our mission is to create separation from the futile race to the bottom. As “custodians of the long term” we can help you in short or long term engagements build your business on the lucrative side of the barbell.

Barbell-Effect

 

Marketing Lessons from The Liquidator

liquidatorLast week I had the opportunity to meet “The Liquidator”, Jeff Schwarz. As a career Marketer of new products, my world has always been about innovation and the eternal search for the next hit product or big idea. Based on the experience of working on products that have been sold in national chains from Walmart to Williams Sonoma, we never know if we have been successful until that first interaction with the consumer.

 
Its perhaps for that reason that I have found the OLN show ‘The Liquidator” such a strangely compelling TV. It is Marketing stripped right down to the core at the opposite end of the spectrum with Jeff being offered all kinds of distressed and obsolete merchandise, by sellers still grasping at delusions of the value of their goods. The rawness of the interaction between Jeff and the sellers illustrates the old maxim, a good or service is only worth what someone else is willing to pay for it. The consumer doesn’t ultimately care whether or not your factory is in a high cost region, or you forecasted the wrong amount or that feature someone thought was a good idea was really too expensive. The show constantly demonstrates that while the product cost is a major input into your pricing decision process, ultimately it is the market which determines your price. The role of a good Marketer is to understand the market, manage the risk and price the line profitably while optimizing quantity.

 
One of the lessons from the show is “don’t fall in love with your merchandise”. Example: I always believed there was a market for a premium, multi-compartment food steamer. I was dismayed when another company licensed the Richard Simmons brand and even introduced it on an infamous segment on the Late Show with David Letterman (although this could inspire another blog on PR opportunities gone wrong). For competitive benchmarking, I purchased 1 of the 2 display units at my local hardware store. Three years later the other piece was still there at the same original price. My opinion has changed.

 
“Keep the goods moving” is another phrase used in the opening of the show. Even consumer durables have a shelf life . The chances of a buyer who has passed on a unit once, adding it later diminishes over time unless an unexpected event occurs or the marketing plan has been incredibly successful. Canadian buyers can be notoriously cautious about giving new products a try. A strong Marketing department will always have a well thought out product roadmap efficiently uses the company’s capital. A peak performing team needs a mix of creative types to drive compelling product development and Marcomm programs to create winning brands but you also need that quantitative skill set to ensure efficient use of the company’s resources.

 
Jeff is also a master negotiator. Business strategy is often reduced to a game plan to keep as much of the pie between the cost to make something and the final price at the register. The importer, the retailer and factory constantly do a dance over who pays for all the related costs of marketing, quality, service and distribution. In Season 4 the show shifted focus and showcased Jeff sourcing furniture items from Asia (another shared experience). It is an entertaining guide to sourcing and importing. Provided you have a market and channel of distribution, it’s a great lesson on entrepreneurship and doing business today in the global community.

 
At TempPro Marketing Solutions Inc., we help companies create successful products and marketing programs that hopefully never reach the liquidation phase. If you have challenges in your current product line, we can help you develop a new business plan to get back on track. And we will even try to bring you a little of the street smarts of Jeff Schwarz because inspiration can often come from unlikely sources.

A week, a month, a year, we keep you on track!