SAN FRANCISCO Strategic branding expert Thomas Ordahl challenges you to explain the difference between developing a product and marketing it. He believes technology is quickly blurring the line between the two functions.
The founder and co-partner of Group 1066, Ordahl cut his teeth in the interactive group of Siegel & Gale and now he helps Microsoft, MasterCard and other brands integrate their marketing strategies into the development of their products. He explains to Adweek senior writer Joan Voight how the definition of "product" is changing and how you can expand your thinking and hiring practices so you don't get left behind.
Q: Are there precedents to the way you see technology systemically changing business practices?
A: Yes, business has gone though game changers and disruptions like this before. The creation of the interstate highway system allowed the Wal-Mart chain to thrive around the country. The proliferation of air conditioning prompted Atlanta to grow into a hub of commerce. Smart organizations can recognize when fundamental systems are changing and grasp the opportunities that result.
What is the main disruption affecting marketing today?
Building awareness of the brand is no longer the primary challenge of marketing. Typically, 75 percent of the marketing and advertising effort would go into that, and those practices are ingrained in the current workforce. Now marketing is converging with product development. Instead of spending so much time trying to come up with a value proposition in the marketing of a product, brands need to spend the time adding more value to the product itself.
OK, in this new environment how do you define a "product"?
A product has become bundle of services, technology functionality and hard attributes. For instance, a credit card helps you buy a cup of coffee in Glasgow, but it also helps you borrow money, provides travel insurance, offers a rewards program and more. A product is now like a producer who puts all the components together. Here's another way to see it. Before, if you wanted to dig a ditch, you could buy a shovel or hire a ditch digger. Now products, such as software, exist that essentially combine the shovel and the ditch digger. Cars now come with Onstar services and GPS capabilities. They are not just vehicles that take you from place to place. I like to take this definition even a little further. To me, the last step of product completion is not done by engineers or marketing teams, it takes place in the consumer's head.
So every consumer is a product developer? How does the consumer's perceptions complete the making of a product?
Most of the makeup of a product is a commodity. For instance, all mobile phones do about the same things; cars are not that different from each other. It is only the final 1 percent or so of a product that makes it different from the others. That small part is what makes a consumer pick one product over another. The often-intangible 1 percent is what the consumer perceives that product to be, compared to other similar products. That is where marketing and product development converge. The consumer perception is the last phase of product creation and first phase of marketing.
Can you give other examples of product and marketing being the same thing?
Commerce Bank made a policy to be open on Sundays. Was its service on Sunday part of its product and service offering or was it marketing? It was proof to consumers that it was a bank that was willing to upset the apple cart and that it cared about customers. Even if a consumer never needed to do banking on a Sunday, he got the message. Another obvious example is Apple. Apple products, including the iPhone, are not that different from other electronic products. But they offer design and intangibles that give them an identity and create an emotional relationship in the consumer's head. The product development is completed in the customer's head.
Does it help marketers that parts of these bundled products can be adapted quickly?
Certainly. In the old manufacturing model it took a lot of time and capital to manufacture hard products. But when service and perception is part of the product, perhaps the most important part, then there is room to play with the pieces, it is easier to be adaptable. Winning companies will take advantage of that new adaptability. The untold story of Apple is its willingness to go beyond adaptation and to cannibalize its own products. It commoditized its iPod, lowered the price and offered new models to compete with its original model. It understands that the marketplace will turn its products into a commodity, so Apple does it first. Most marketers can't do that. They defend their premiums and adopt a siege mentality when their premium products come under attack. Ironically, consumers seem to get the adaptation process instinctively, they are faster at it than most marketing companies.
But in reality aren't product teams and marketing teams quite different, with different cultures?
Very much. In some cases they are hostile and antagonistic toward each other. But to survive they are going to have to learn to play nice. To help that, marketers will have to stop hiring the people that come from their marketing channel. For instance, if a company does a lot of TV advertising, it tends to hire marketing people that are good with TV work. Instead, companies need people who understand how to integrate the two disciplines in a holistic way. We've found that those types of holistic thinkers often have an interactive or e-commerce background. For them, working on a Web site was both a product and marketing exercise.
Are there organizational changes a company can make to speed the convergence of product and marketing teams?
They can put together teams that are organized around a product, rather than a discipline. Microsoft did that with the Xbox. The Xbox [development] group flew a pirates' flag and separated themselves from the rest of the company. Their allegiance was to the product. It all depends on where your loyalties lie. To take a tradesman's view is very limiting.
What brand do you have an attachment to, that blends product improvement, marketing and consumer perceptions well?
The Filson clothing and equipment brand, based in Seattle. I like their luggage; they make my briefcase. They are high end in craftsmanship and quality but are not luxury. Rather, their products are classic and utilitarian. Plus, they make them in the back of the retail store. You can see them being made while you shop. My appreciation of their quality is part of the product they offer me.
What's next in the blending of product and marketing?
Taking the integrated approach to tribes, which are small groups of people who self identify. The Internet allows like-minded people to cluster around their interests and become little marketplaces. Flexible marketers can now cost effectively market and create customized products for these small, specialized groups.