FIRST AIN’T GOOD ENOUGH

For those who thought that the first mover advantage is the real thing, here comes a sensational eye opener...

If there was one launch that the entire world had been waiting for with bated breath, it was for the iPhone! Its been one of the most well planned launches in the history of marketing. By deliberately giving scant information about the product, they raised the excitement level to an unprecedented height, with frenzied fans waiting endlessly just to catch a glimpse of the coveted product. Not surprisingly, iPhone created a record by selling 2,70,000 devices, just within the first two days of its launch. Yet, analysts predict that the success run may not sustain. Competition has already begun to work frantically on phones that will look and sound like the iPhone and probably be much cheaper too.

Conventional business wisdom says, being first in the market allows you to set standards. In addition, you can gain economies of scale, get the consumers hooked on to your brand and gain market leadership. But reality is not all that simple. If you thought Hotmail was the first company to offer free e-mail; Amazon was the first to sell books online; eBay was the first auction site; or that Starbucks was the first to start a coffee shop, you could not be more wrong. Instead Juno was the first to offer free e-mail; Books.com was the first online book store (launched in 1996) and Peets was the first to launch the concept of a coffee shop.

Being first is not enough

The brands mentioned above were first movers in the category, yet the world does not remember them. It’s not enough to be the first mover in any segment. It’s not enough to innovate something new and introduce it in the market. Just doing that cannot guarantee you success in the long run. After all it was Robert Fulton who invented the steamboat, but Cornelius Vanderbilt was the one who ran off with the shipping business. Atari created the videogame industry. Some say if it wasn’t for Atari there wouldn’t be a videogame industry or a reason to have a computer on your desktop (in those days – 1980’s – people bought computers to play games). Today, the industry is defunct.

Not that being first does not have its advantages. Consider Coca-Cola – the first mover in the soft drink category. Pepsi is still struggling to fight “the real thing”. Similarly, Hoover was a first in vacuum cleaners. Henry Ford was the first to invent the automated assembly line, which gave him an edge over the competitors. But look closely and you realise that being first does not guarantee automatic success. Silicon Valley is proof to this. During the dotcom mania, the first-movers were the ones with the unique idea, who got all the venture capital, but it didn’t take long for the bubble to burst. Many burnt their fingers pretty bad.

First movers or first losers

Bill Gates didn’t develop the original DOS, he bought the programme from Seattle Computers Works for $50,000. Bill Gates is more a marketing genius than an innovator. It was his great understanding of the market that helped him keep a strong grasp on his market share.

After all, it was not Microsoft Internet Explorer that was the first web browser – it was Mosaic. You need to think fast, you need to adapt quickly to the changing consumer needs and you need to mould your brand constantly. The one who is the fastest, will survive and win. Intuit was faster than Microsoft and today it’s beaten it at its own game. Intuit’s Quiken beat MicrosoftMoney, its QuickBooks beat MicrosoftProfit – and come to think of it, Intuit was the 47th mover in its category!

There’s more. Dell was not the first to invent Personal Computers. It was a company called Osborne. Dell just showed the world a new and innovative way of marketing them and succeeded. Gillette didn’t hesitate to develop Mach 3 which would kill off its own product Sensor Excel, which was a highly profitable product. Cannibalising your own product is a tough call to take, but that’s what survivors are made of – they don’t fall in love with their old inventions, they move on.

Overnight delivery was not a new concept but FedEx gave a whole new meaning to it. The US Postal Service is still reeling from that one. The automobile industry in the 50’s and 60’s was in an enviable position. However, during the 70’s oil crisis, consumers demanded smaller fuel-efficient vehicles and only those who stood up and took notice reaped rich dividends. No wonder, Japanese auto-makers easily captured the US car market.

There is no guarantee of continued market dominance where technological innovation is possible. If you need to survive you need to keep innovating and changing. It’s not necessary to discover something new. You just need to be alert about the best practices and incorporate them. “Shamelessly copy best practices,” says Jack Welch. That’s innovation for you. Throughout its history, Japan excelled at finding the best the world had to offer and then adapted and improved it. It is this that accounted for its stunning economic growth between 1945 and 1985.

Just being a pioneer is no big deal. Nearly 47% of all market pioneers fail. Chucks invented the disposable diapers, yet it’s Pampers (of P&G) which is the leader. It was not Coke or Pepsi that invented the diet cola but a company called Royal Crown Cola. Ericsson was the first mover in the mobile market, but Nokia realised that it was design which appealed more to the consumers. Nokia leads the mobile phone market today. Similarly, Matsushita has always got a piggy ride on other firm’s inventions (like Sony), rarely inventing anything new. It just identifies the winning products, makes them and markets them well.

So if you have not been the first mover or have nor been able to invent something new, don’t worry. Gillette didn’t invent the safety razer, it was a company called Star! Gillette marketed it brilliantly. In fact iPhone is not as good as the original called IBM Simon which was priced at $900 back in 1994 and had most of the features found in today’s smart phones. In fact its buttonless touch screen interface was better than iPhones. Yet, the IBM Simon flopped.

History is proof that it’s not the largest, strongest or fastest that survive, but the ones who are ready to adapt. And sometimes it’s actually good to be the second best. As Avis once stated in its ads “We are No. 2, that’s why we try harder.”

Spot a winning product, a winning trend, keep an eye on customers needs, be flexible and don’t sit on your initial successes, for competitors are always keeping an eagle eye on you. Keep moving, try a lot of things, but keep only those that work and quickly discard those that don’t. Henry Ford once said “I believe, the best strategy is to be the first person to be second.” After all, first ain’t always good enough!

Give and you will receive

There was a time when capitalism meant making profits, philanthropy be damned. But times, they are a changin’...and how!

This is an area which is not new to Indian business houses. Long before Bill Gates, Microsoft’s Chairman committed millions of dollars for various social causes, Jamshetji Tata and his family have been following the principle of “give back to the people what you have earned from them.” Back then charity was a headache – something that the government was supposed to do. Yet the Tatas worked tirelessly towards the upliftment of the community. They were the first ones to think of Maternity Benefits and got it enforced as a law in 1946. In 2004, they spent Rs.45 crores on social service. Small surprise that India’s most loved and respected corporate house is Tata.

Today, a lot many corporates are understanding the positives of being socially active. Bajaj believes in the teachings of the world’s greatest leader – Gandhi. They have instituated the Jamnalal Bajaj Awards which are given every year to people following the Mahatma’s principles. Not just this, Bajaj Electricals has developed special lighting equipment keeping in mind the people at the bottom of the pyramid. At the World Economic Forum in Davos, myriad corporates stressed that these initiatives were today becoming mandatory for survival, giving them a cutting edge over other brands in the market.

Payback time

Corporates are realising that its now time to give back to the people who have worked for them and bought from them. The soda companies have for long been blamed for encouraging unhealthy eating habits & child obesity. Last year, Pepsi decided to do something about it. They launched the PepsiCo S.M.A.R.T programme whose aim was to provide a great place to play within walking distance of every child in America.

ITC of India has become a water positive corporation (recycling water from waste) through its agro forestry programmes. The company has made about 30,000 hectares of wasteland cultivable and planted over 10 crore saplings. Its chairman Y.C. Deveshwar is committed to making his company a ‘zero solid waste’ organisation with the help of recycling techniques.

A large number of corporates are today fighting a lot of these social and environmental problems and taking on collective responsibility. They want a sustainable development which takes care of them and their consumers. Today CSR (Corporate Social Responsibility) has become an important reputation measurement for a company. Maruti changed the lives of million of Indians by providing them an affordable car. It made their dreams come true. Today it’s a company close to the heart of millions in India.

Not just marketing

The home page of Tata Motors website says “We Care”. ITC has launched a “Sunfeast Hara Banao” campaign to make children more environmentally alert, by using less measure of plastic bags, helping make a “Butterfly Garden” and many more such initiatives. P&G has realised that today’s mother values education more than anything else. So it launched a “Shiksha – Secure Your Child’s future” programme. You could now buy any of P&G products like Vicks, Whisper, Ariel, Tide, Head & Shoulders & Pantene and win either Rs.2 lakhs toward graduate education fee of one child or Rs.50,000 as one year tuition fee of a child. P&G wanted to show that it did not only make great products but wanted to improve the life of its consumers too. A novel way to build brand loyalty.

Nestlé came out with a “Stick of Hope” where ice-cream lovers could write a few words of inspiration, a favourite joke on a virtual pop-stick. For every message Nestlé would contribute 25 cents to the City of Hope Cancer Centre to help children with cancer. Banana Republic started a “Drop your pants” campaign where you could donate your gently worn cast-offs. They got an incentive to clean out their closets and felt good about helping someone.

MAC cosmetics does various programmes to benefit children with AIDS. Its “kids for kids” programme sells greeting cards made by children and the proceeds go to benefit children with HIV/AIDS.

Cause marketing campaigns are today transforming the market. Everyone admires and expects from them. After all if you want to grow consistently and be loved by all, you gotta follow the golden rule – give and you will receive!

Go Green

If you thought that the colour of success was red, blue or pink; think again, my friend! It’s positively Green...

Madonna will “speak to the planet” at Wembley stadium in London. She would call for mass global change to reduce carbon emissions and to tackle the “climate crisis.” Former US Vice President, Al Gore, has turned into an environmental campaigner and has started a spectacular series of concerts across the world called “Live Earth” to raise awareness about global warming. The world’s biggest stars would perform across all the seven continents (even Antarctica!) to appeal to the world to reduce its “carbon footprints”.

In fact, Carbon footprinting is the latest buzz among environmentalists. It is a way of measuring how much impact you, as an individual or a corporate, have on the earth in terms of units of carbon dioxide produced. You can now calculate your carbon footprint (how much you have contributed to polluting the earth); you can even offset your carbon footprint. You could plant a tree in Kenya to help reduce CO2 emissions. In fact, your wedding too can now be customised to become “carbon-neutral”. Instead of receiving 10 juicers or 5 toasters you could ask your guests to donate trees to organisations like carbon footprints.com at the cost of £10 per green tree.

The world is getting more and more carbon literate, especially with the scare of global warming looming closer and everyone wanting to leave a greener earth for their children. Many are busy calculating their carbon footprints by measuring the amount of CO2 they are producing through consumption of gas, heating and electricity. Even the means of transport – not just cars, but lights too emit CO2 and cause environmental damage – and people across the world are doing their best to cut it down as much as possible.

Superstars like Madonna and Kate Moss, thanks to their private jets, their super luxury cars and their ultra lavish lifestyle are among the worst polluters and have the largest carbon footprints. This is no small matter and companies are now under pressure to reduce their green house gas emissions, and come out with more carbon-neutral products, services and even events. No wonder even “Live Earth” concerts are being lambasted for causing immense emissions. With stars jetting in from around the world, fans arriving in gas guzzling cars, thousand of tonnes of rubbish, and sound equipment using so much power, these events are slated to become big polluters. Ironical?!

Green Marketing is Smart Marketing

Companies are now developing products keeping the environment in mind and marketers are using “environmental-friendly” as the new trick to sell their products and make them look more attractive. Running short of ideas? Well, you could get great ones by just brainstorming with an environmentalist. The Arm and Hammer brand of baking soda for 7 years had no growth in sales. Then they decided to market their products as an environmentally preferable cleaning agent. Sales rose by 30% in 35 months!

Toyota and British Petroleum too are big organisations that have realised the power of eco-innovation and green marketing. Toyota has beaten its domestic competitors, hands down, by introducing new automotive eco-innovations. Its eco-friendly cars like Prius are slowly eating away into the competitors’ market share. British Petroleum’s advertising campaign “Beyond Petroleum” highlighted the company’s support of renewable energy recourses. It is one of the very few companies that mention climate change in their annual reports.

Shareholders are today demanding that companies reveal more about the environmental impact of their products and explain what they are doing to make them more environmentally compatible. Ireland’s largest insurer “Irish life and Permanent” has launched “green loans scheme,” designed to reward borrowers, who wish to borrow money for environment-friendly improvements to their homes by offering them a 1% discount on the normal lending rate for its personal loans. Similarly, HSBC had started a “green sale” that reinforces the bank’s commitment to environmental issues. It would donate £0.50 to WWF for every customer who signs up for internet banking during the period of sale. It expects to raise £1 million this way. Such schemes have helped HSBC to become the world’s first carbon neutral financial service provider.

Wal-Mart too is testing an energy-saving retail store design. Philips has introduced energy saving bulbs. P&G’s new laundry detergent – Tide Coldwater is designed to clean clothes effectively in cold water, & hence help the consumers save energy. Steelcase, the world’s largest office furniture manufacturer has come out with a “Think Chair”, which is 99% recyclable – its presence symbolises a smart socially responsible office! Xerox promotes its solid ink printer as being non-toxic and producing 90% less waste than laser printers. McDonald’s is doing all it can, to show to the world that it cares by incorporating a series of environmental and social initiatives. Early this month, it announced that it would turn its spent cooking oil into bio-diesel fuel to power vans in the UK. Its menu now has coffee, soya, et al, that is sourced from companies, which do not destroy rainforests. Its décor of bright red & yellow is slowly being changed to dark green to reinforce its environmental faith and have a positive influence on consumers.

Pret-a-manger, a sandwich chain in the UK today has 1.3% of the sandwich market eating out of its hand. It snatched the share from Marks & Spencer (the original inventors of the sandwich for lunch concept). They did this by using only natural ingredients and minimum preservatives and making sure everything in their shop was recyclable, as also caused minimum waste (of paper) & damage to the environment. GM too launched a campaign “Live green, go yellow” to promote its flexible – fuel vehicles & its support of ethanol-based gasoline.

Green: Colour of money

It’s the youth that are turning more “green-conscious” today. According to a poll done in America, 50% of the respondents from the age group of 18-29 years, said that they were ready to spend more on products that were organic/environmentally-friendly or fair trade. It shows that Generation Y is obviously more environmental savvy than its seniors.

No wonder, the very popular website among the youth called “Second Life” where people create virtual doubles of themselves, has launched a competition for the best idea to redevelop an area in the city and make it more environmental-friendly. People from everywhere participated, which shows that people want to do something for their surroundings, if given an opportunity. Countries that have suffered environmental disasters like the Bhopal Gas Tragedy (India), the Exxon oil spill, the Chernobyl disaster (Ukraine) that caused radioactive contamination are today demanding their pound of flesh. They want better, safer products & don’t mind paying more, but they want to put an end to these man-made disasters.

Green is the new mantra. Anything “green” sells, even the green Ogre “Shrek”! It raked in more than $600 million and created history as the largest domestic debut ever for an animated film in the USA. Remember how Popeye, the cartoon character, solved all his problems by gulping down a jar of green spinach – well, if you want to win and watch your competitors turn green with envy – go green!