1. The name should be easy to remember.  Not so easy that it can be easily forgotten .  iPOTT has a finance software called INCOME. (Hey sorry to ask..are you serious about your product?)
2. It is should be easy to pronounce
3. Easy to read.  Without thinking how will you read this name… whorepresents.com  and how about herapistfinder.com   (it is actually Who represents and Therapist Finder)
4. Easy to spell.  Just because domain names are not available, do not use misspellings. Not every misspelling can become Google.
5. Best brand name is a single word.  Don’t try a brand with 2-3 words. Best breed light tool? Ooops.
6. Don’t make the name controversial just for the sake of being different. How would like to buy a software called KILLER tool?
7. Do not use numbers in your brand name..

Ok that will do..

Lets now come to the critical question.  Why take all the trouble for just a name.  Because brands are built that way, when efforts are taken to arrive at a name the following is taken care automatically.

•  The name will be unique
• The name will be closely associated with the product or service
• The name will have a story behind
• The name will have the capability to be protected (trademarked)
• The name can have a domain of its own
• The name will build credibility.  It will actually be a evidence to the user that you mean business
• Last but not the least.. you will love it.

Start-ups and smaller companies must realise the importance of spending time and efforts in the naming process.  It is not necessary to hire branding companies to name your product or service.  Brainstorming within the team also can produce results.   This is much better than ‘no efforts’.   See if any of these  ’name stories’ below will inspire you to set up, immediately, an in house brainstorming session to arrive at a ‘fantastic name’ for your product.  Take the first step into building your brand.

GOOGLE

” 10^100 (a gigantic number) is a googol, but we liked the spelling “Google” better. We picked the name “Google” because our goal is to make huge quantities of information available to everyone. And it sounds cool and has only six letters”  from Goolge corporate page.

BLACKBERRY

The buttons on the device looked like tiny seeds in a strawberry. A linguist at the firm thought “strawberry” , but wasn’t quite the right fit. Someone else suggested blackberry and there it was.

KIWI (of course the fruit..)

It was originally called the Chinese gooseberry.  One day a user said to a vendor “you are never going to sell a fruit with this name.  Since it looks so much like kiwi, the native bird of New Zealand, call it that”. The rese is marketing history.

COLGATE MINI Brush

Colgate has recently launched a disposable mini toothbrush. You can carry the toothbrush with you, use it in a cab or an airplane and then toss it out.  Keeping the small size of the brush, it would have been easy to name it anything associated with small. But they have associated it with lightness, softness, gentleness etc.   The group of professionals brainstormed names in different languages about metaphors, sounds, and word parts that connote lightness.  Thus was born Colgate WISP.

iPOTT

Alright.. alright not now, not here..later

WOW, look at all the examples, how well they fit into what is product is all about.   Just remember great names can make a big big difference.

PS: Would you like to share your name stories. We would love to publish it. Please mail it to me  info(at)ipott(dot)com.

Hence targeting markets and planning around the target markets is for company of any size. But they focused!  Even the biggest of biggest players work on target markets.  Bigger the company more focused is the target market.   I will take eg: from non IT segment, for a change

Bajaj motor bikes can consider the entire Indian Market as its Target. But they focused!  All of us will remember the ad “discover India with the power on 1 litre”.   What is the target market here.. the segment of Indian customer who is cost conscious.  Can you imagine this ad without the “power of 1 liter”, it would be just another bike ad? Identifying the target market and segment bought in the focus.

So is the “har friend zaruri hai” ad of aritel.   The target segment is very clearly marked by the ad.  By the way.. the new ad of Airtel around the same theme has changed its tone to a positive one.. noticed it? We will discuss this later.

Two more brilliantly targeted ads,  before I close.. surely no marks for guessing which is the targeted segment.

While we have spoken about the “Marketing Overview : Top 5 questions” in our earlier post, we will look at the top 4 questions on the Product & service in this post.   The top 4 would be..

1. What are the benefits of your product / service
2. What is the USP of your product / service
3. Which is your winning product
4. Which product will drain your overheads

(use Boston Matrix model to arrive answers for 3 & 4)

The most important factor (also the most ignored factor) about a product is to know the product like no one else does.  One must have answers to the all probable questions which a user / client can ask.   We are not just talking about the Product information as in, backend, front end, etc.,  external factors like the market, the trends, the competition, the edge over competition,  alternate products, etc. all become an integral part of the product information.

Lets talk benefits of the product.   At the cost of repeating, features of the product are not equivalent to the benefits of the product.   Upload data into an application from xls is a feature.  Uploading from xls with a single click and using a back ground process saves time by X hours is a benefit.   Application has intelligence to match data without human intervention is a USP.   Also list out benefits from the perspective of your customer.   Do not consider general application benefit as your customer benefit.   The application is developed using the latest technology..so?  The application is developed in technology which will use less of your system space and memory..ohh yes!

Customers buy benefits and not features.   Just like any other consumer product the features are known to a customer, features is something you sell, they are more interested in what they derive from these features.  To put in simple terms benefits is what will the customer get by using the features you provide. And USP is what is that your product can do better than the others or what does it do which the others don’t.  (USP can be a feature / benefit )

Product / service checklist

1. List your product & service you sell (seriously list out).  Use  Boston Matrix model  to reorganize, regroup,  redefine etc.
2. List the purpose of each product / service. What gaps are you filling?  What needs are you satisfying?  This will surely help arriving at target markets / verticals and segments.
3. List substitute for your product.  Not just direct competition all possible substitutes.  What would be the substitutes to GPS  system?  Biggest would be the petty shops on road sides who guide you in your directions.. By the way MS Excel is the substitute for most software in market today.
4. List the benefits of  your product / service.
5. List your product USP
6. List against each product if it adds to your turnover or drains your overheads

 Arriving at answers to above will enable companies set a base for the marketing plan.

It has various utility and applicability.  I am taking a very simple example.  Lets assume you have a set of products, positioning the product in the quadrants below will help you plan and spend appropriately for your marketing activities.

Cash cow - The rather crude metaphor is based on the idea of ‘milking’ the returns from previous investments which established good distribution and market share for the product. Products in this quadrant need maintenance and protection activity, together with good cost management, not growth effort, because there is little or no additional growth available.

Dog - This is any product or service of yours which has low market presence in a mature or stagnant market. There is no point in developing products or services in this quadrant. Many organizations discontinue products/services that they consider fall into this category, in which case consider potential impact on overhead cost recovery. Businesses that have been starved or denied development find themselves with a high or entire proportion of their products or services in this quadrant, which is obviously not very funny at all, except to the competitors.

Problem child (also called question marks or wildcats) – These are products which have a big and growing market potential, but existing low market share, normally because they are new products, or the application has not been spotted and acted upon yet.  This is likely to be an area of business that is quite competitive, where the pioneers take the risks in the hope of securing good early distribution arrangements, image, reputation and market share.

Gross profit margins are likely to be high, but overheads, in the form of costs of research, development, advertising, market education, and low economies of scale, are normally high, and can cause initial business development in this area to be loss-making until the product moves into the rising star category, which is by no means assured – many problem children products remain as such.

Rising star - Or ‘star’ products, are those which have good market share in a strong and growing market. As a product moves into this category it is commonly known as a ‘rising star’. When a market is strong and still growing, competition is not yet fully established. Demand is strong; saturation or over-supply do not exists, and so pricing is relatively unhindered. This all means that these products produce very good returns and profitability. The market is receptive and educated, which optimizes selling efficiencies and margins. Production and manufacturing overheads are established and costs minimised due to high volumes and good economies of scale. These are great products and worthy of continuing investment provided good growth potential continues to exist.

When it does not these products are likely to move down to cash cow status, and the company needs to have the next rising stars developing from its problem children.

Try answering various questions around the software product before starting to plan marketing.

For more detailed reading on the subject visit http://en.wikipedia.org/wiki/Growth-share_matrix

There are many ways to set marketing budgets.  One of the most popular is to set a % of projected sales.    A profit making company  can  set a % of previous year’s gross margin.  Generally the spend is anywhere between 2% to 10%.  Some products have seen a marketing spend as high as 20%.    A new company, a new  market or a new product will need a higher marketing spend.  Larger companies and established products have a different spend pattern. IDC’s annual Marketing Investment Planner, which analyses technology  marketing spending based on a survey of 95 large tech companies reports,  average MBR (market budget ratio) of 4-5% of revenue on marketing,  with software vendors spending the most at 5.5%, hardware makers spending 2.3%, and IT service firms at  1.1%.  Equally important is to decide on how to spend the marketing budget.

A successful marketing budget has two parts, a fixed budget and variable. You can also define the ratio of fixed : variable.  Below is a simple checklist for marketing budget.

Marketing Budget Checklist 2012

Download xls file from here..

Any company which aims at a perfect market plan, should answer every question with diligence.  Believe me there is nothing like the right or the wrong answer.  Also there is never ever a final answer.  The perfect marketing plan will always be changing.

STEP 1: Marketing Overview : Top 5 questions

Question 1  What business are you in?

Generally when a business is started with a business plan this question is already answered.   Most of the times the answer looks simple,  but just try telling your customers and see how complex it can get.  The answer to “what business you are in”  should cover the following details:

1. What is your  product or service
2. Who is your customer
3. Why they buy from you
4. How are your different?

Let me take an example of how iPOTT answers the “what business are you  in?”  question

iPOTT is a unique (why buy from us), unbiased platform  (how we are different) for software product companies world wide (who is our customer)  to reach their target markets

iPOTT is an end to end provider of innovative & cost effective services in the areas of  knowledge management, sales enablement and consulting. (what is our  service)

The definition of your business will drive and determine the direction of the company.  This is the beginning of a brilliant marketing plan.   But this 4 line answer is what will get elaborated into the detailed Market plan.

Question 2  What do you sell?

Sounds a little odd.. after defining it above.  Is it software, is it service, is it both?   This question needs a very detailed writing.   So I will talk about it in the  upcoming posts.

Question 3 What are your target Markets?

The answer to this is most critical. Lets take an example of a Product for manufacturing segment. It is nice to have all Manufacturing units in the entire country as the target market.   But this should be the vision not the plan.  With limited budget to market, narrowing on the target market is the only way to start marketing.  Narrowing down can be based on one or more of the following parameters

1. Local
2. Ease of sale
3. Profitability of sale
4. Cost of marketing
5. Hottest prospects
6. Needs and habits, etc

Target markets change as the company grows,  as fashion changes or  the market changes.   Another point to be noted is that, target marketing is not company specific, it is product or service specific.

 Question 4 : What are your marketing goals

Marketing goals are not just numbers or unit sales (that’s sales goals right?),  other components which forms the part of a Marketing goal include improved market share, reach a new target group, enter a new market,  leave an existing market, move to a new technology, improve brand, online promotion, new pricing strategy etc.

While one has to be general, all small to big goals should be covered, as each of it needs a Marketing budget & time to execute.

Question 5 : What is your marketing budget

Now we have reached the most tricky question of a marketing plan.  I will address this in tomorrow’s post.

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One of the biggest reasons for cannibalization is when the criterion based on which segmentation is done is very narrow, limited and can easily be violated.

For instance consider a software company who has segmented market based on consumer’s access to technology. It realizes that there is an edge if it customizes the products to suit individual segments and release them into individual target markets. This works out really well initially. But at some point the difference between the segments will start diminishing which could be due to wrong market penetration techniques adopted or wrong marketing styles used to spread awareness about products or due to improvements in technological adaptability of people in a segment. At some point, the condition set for homogeneity of sub sets maybe invalidated due to the spread of awareness and improvement in technology resulting in changes in response towards similar products with slight customizations and price differentiation. This results in dilution of segments and products may be cannibalized due to price differences, brand value differences, etc.

A few marketing tactics that are already in vogue to avoid this include associating the new product with a dissimilar or evolved name and highlighting those features that are not highlighted in the product that previously existed in market. In the process two similar products are sold in the same market as two different products. The idea is that while marketing people look at features and buy. By highlighting different features and associating a matching name the crowd could be led into believing that they are two dissimilar products from the same company. Segmentation has already resulted in a homogeneous subset that responds similarly to features. Therefore when a new similar product is being released with a different name, it is still assured of a share in market on grounds of segmentation. However, this will not assure products of loyalty and there is every possibility of customers realizing, which can damage the brand name. It does ensure short term sales, but cannibalization is still visible at certain stages.

Another common trend is to allow the new product to run as Saas or Software as a service. The idea is that the way a product is marketed affects the longevity and sustenance in market. A few common mistakes committed in this area include removal of existing features in existing product to highlight that removed feature in the ‘new-but-similar’ product to attract the customers of the existing product. This is one common area where most Product managers go wrong. Observing buyer trends and their opted features is critical to avoid mistakes and blunders in this area.

If a company opts to remove a feature to avoid cannibalization by differentiating based on offerings, it must make sure that the feature being removed had either been a liability to company, is cost-incurring, is not adding value to product or is not used by customers. But there is no one definite way of avoiding two similar products from cannibalizing each other after it has been released into market unless there is a totally different service attached to it, which can make it stand out of crowd as an “option” and is priced accordingly.

Looking at it from marketing perspective, to make it simpler, let us assume that there are two types of products – one that can be mass produced and one that is highly specialized. For instance, AntiVirus toolkit can be mass produced for different configurations of systems, but certain ERP or CRM products are customer orientated. This implies that off the given set of features, a few may not be required by the consumer depending on the nature of company, its business, etc. Marketing therefore should reflect this choice of consumer base.

Let us consider a 3D video game which can be mass produced and sold along with play stations or maybe sold individually in a retail store. This industry is strongly influenced by demographics and psychographics. For instance, a 10 year old boy’s choice is obviously different from 35 year old man’s choice. Segmentation reflects these choices in consumers to group their products and offerings. There are different ways of arriving at segmentations. Increasing number of companies are depending on data warehouses and cluster analysis to arrive at a consumer’s individual characteristics or attributes which creates a homogeneous subset of a heterogeneous market.

RFM (Recency, frequency and Monetary value or money spent by consumer) and its alternative RFD (Recency, frequency and duration) is very popular with software products sold in retail. It is very popular in database marketing and direct marketing. However, the concern with RFM is that consumer behavior cannot be forecasted. One of its variations RFD is very popular with internet software to trace the duration of usage and number of users using the software online.

Organizations could prefer industrial market segmentation which is highly organization oriented and can have variations in the way it is employed. The basic idea is to gain an understanding of differences between current and potential buyers that could be influencing their buying behavior or trends. This can be used to differentiate products to gain a competitive advantage in long run. Generally, the company identifies whether it wants to target one product at many segments, many products at one segment or many products in many segments.

The most popular is many to many which can vest the company with flexibility to develop new products or improvise existing products and release into new or existing market. This enables

• Diversification by releasing new products into new market
• Product innovations when a new product is released into existing market
• Repositioning or re-launching of existing products in new markets
• Capability to maintain existing products in its existing market

But this model is subject to limitations as too many products in too many markets may dilute the segments and in turn the product differentiation. One common problem in such scenario is cannibalization of products.

Consider BMW X3 Luxury cars priced between INR 38, 00,000 and INR 44, 00,000. It is targeted at high-end market and in particular those who give preference to style and elegance in cars. Tata Nano is the world’s cheapest and eco-friendly car offering good mileage and has been targeted at a normal man with simple preferences and families. The ideal buyers have been described while describing the vehicle itself, but how do you identify them in a crowd.

Generally Market segmentation involves analyzing consumer-product relationships by studying geographic, demographic, socio-cultural, cognitive, behavioral or combined factors influencing people and their buying trends. Once these segments have been identified, individual segments are studied for the benefit that the consumers are seeking by using certain other products that are already available in market to arrive at satisfaction of consumption. Sometimes psychographic segmentation maybe required to understand what benefit best satisfies the group of consumers.

Let us try and look at it from Software product perspective. The most debated issue continues to be which OS to use, AntiVirus toolkit to use, ERP, CRM, etc. Assume the product being considered is an ERP product. What are the basic questions to ask before starting with segmentation? Perhaps, we could start by understanding the size of organizations that it can address, the nature of business models supported, provision for different processes to integrate such as marketing and sales support, customer transactions, payroll, and other related processes, nature of up-gradation required (is it elaborate or simple) and the extent of integration supported in certain business processes.

Based on these factors the offerings of the product can be decided. Once this is done market can be segmented based on the product features and best segment to target can be chosen. Based on these two choices a market mix can be designed in the next step.

Tracking, Labeling and Packaging is even more important when the products are being sold on a wholesale basis. For example many AVG and Norton products are sold to wholesale sellers who sell it to customers at retail or just below retail price.

The idea here is that many high-street retail stores are franchises and therefore wholesale selling is a way to reach stores in places where the products have limited or no entry yet. Having them as marketing partners or authorized distributors may also prove feasible depending on the nature of contract. Therefore wholesale selling is an economical solution to finding ways to penetrate low-end market. The same criteria may not be applicable for large-scale ERP application. This differentiation of product type and its offerings are critical to identify the possible places where the product could be sold.

With increasing online presence it is critical to have product information online. Another factor to be borne in mind is that there has to be adequate stock to address online orders. The products must be well packaged to sustain the postal delivery. To provide services on Internet a virtual data warehouse could be created to store product information and handle product specific queries. This is sometimes referred to as product catalog management. Depending on the number of products being released, certain query strings could be answered through automated messages to reduce the time between receiving a query and addressing it.

The most important information provided will be the way products are grouped and whether two or three similar products are being sold together to gain an edge over the competitors. Pricing must reflect the cumulative price for all three products and the discount criteria applied. The criteria used must be a ‘pricing rule’ for all the products in that category. That way uniformity is assured and errors related to shipping and supply chain management can be reduced.