Dec 31

The Obvious Next Product

P is for Product, but product development is often an overlooked element of the marketing mix, especially in small to mid-size businesses. Perhaps it’s a lack of creativity, the result of natural myopic business focus, or a function of the quality of marketing staff. Regardless, the primary, under girding principle of marketing is to meet customers’ needs, rather than trying to push what the company has to sell. So, so many businesses miss this point.

Another example of this came earlier this month as Walmart pulled the plug on its online movie download service (and no one noticed, as Gizmo reported days later). Walmart, who does an excellent job of taking my money on a regular basis, missed the customer boat on this one. Encumbered by restrictive DRM, built on Microsoft’s WMV format, priced expensively compared to the competition, and without a good way view the movies on — gasp — a television, the product flopped. No big surprise.

But the Walmart failure doesn’t mean that online movies aren’t a good idea, or that there isn’t a profitable market for movie downloads. It just means the product isn’t right. Yet.

In fact, the correct product is somewhat obvious:

  • Easy selection of movies – like Netflix or your local video store
  • Convenient one-click purchase and download to your computer – like Amazon or iTunes
  • A wide selection of recent releases and classics from the past – from all major and minor studios, including The Yellow Submarine by the Beatles
  • Relatively fast downloading, so movies can be watched on impulse – like cable on-demand services
  • Easy, unattended streaming from the computer to any television or other computer in the household – like your wireless home network
  • Light on digital rights management – so you own the movie and can play it at home or a portable device forever – like iTunes
  • The ability to make (limited) DVD copies – so you can take something decent to watch when you visit your in-laws
  • Low priced – to encourage adoption, volume and more purchases (as well as keeping Walmart out of returning to the market) – like iTunes
  • The option to watch in high definition without worrying about Blu-Ray or HDDVD formats – this could be at a premium price
  • Convienience and/or convergence features that make the product a useful addition or replacement to current home entertainment devices, such as:
    – Tivo-like features so one can record from broadcast or cable – including high def
    VCR Plus+ – like simplicity of programming from television
    – The ability to play DVDs that one already owns or has rented
    – The ability to rip DVDs that I already own to add to my library
    – No need to set a clock
  • A well designed product that “just works” – like the iPod

Of course there is one company already repeatedly mentioned in this list: Apple Computer. And there is an Apple product that already meets some of the criteria: the AppleTV. Thus, the obvious next product for Apple is a second generation AppleTV. And if they get it right, it will be another blockbuster.

Despite the demise of Walmart’s video download service, there are a number of other such services (CinemaNow, Apple’s iTunes Movie store, MovieFlix, Movielink, Amazon’s Unbox, and Starz’s Vongo), but only Amazon’s Unbox is a large, serious contender. Although Amazon has links with TiVo, which was mentioned in the wish list above, Amazon still lacks access to the hardware component needed to make such an online service work seamlessly with television — which isn’t to say that one should count them out, as evidenced by their willingness to launch the Kindle product.

Yet it is Apple that is poised to succeed in the online download market for a number of reasons, all which tend to circle back to the concept of “product.” Marketers can apply these principles to their product or business development efforts as well:

1. Steve Jobs Himself
Apple’s past successes have been strongly influenced by Job’s personal attributes: “his unwavering focus, his insistence on excellence and his belief in his own vision,” according Steven Levy in The Perfect Thing: How the iPod Shuffles Commerce, Culture, and Coolness. The leader is key in product development.

2. A Focus on Excellence
At age 29, just weeks before the original Macintosh launched, Jobs said “my best contribution to the group is not settling for anything but really good stuff.” Levy explains that Jobs evokes a “Reality Distortion Field” around him as he seeks to achieve the ideal solution.

Levy also notes that some people have mistakenly thought the key to Apple’s success was the “coolness” factor. But this is a classic post hoc ergo propter hoc fallacy. Cool is only a byproduct of the product development process according to Yossi Vardi: “The only thing a company can do is strive for perfection and hope that the gods smile on it.” The classic example is the distinctive click of a Mercedes door, which results from the care taken to manufacturer it so the entire rim of the door touches the chassis all at once as it closes. Jobs confirmed this principle when Levy asked whether he had tried to make the iPod cool. “No,” he said, “we tried to make it great.” A focus on an excellent product is essential to successful product development.

3. Understanding the Underlying Issue
As one works on developing a new product or service, it will eventually become clear that nothing simple is ever easy – meaning that the elegant solution must be found through a complex struggle. As part of that struggle to achieve an excellent product, “the really great person will keep on going and find… the key, underlying principle of the problem. And come up with a beautiful elegant solution that works,” according to Levy. Successful product development is a struggle that requires really understanding the underlying issue.

4. A Strategic Fit
The iPod and AppleTV aren’t just neat ideas to computer manufacturer Apple, they are core to a long-held strategy called the “Digital Hub.” Essentially, Apple’s goal is to create best-of-class software (and with the iPod and AppleTV, hardware as well) that people would enjoy so much that they would want to buy an Apple computer. In other words, there is a method to Apple’s “madness.” Good product development does likewise; it follows the organization’s strategic DNA.

The application for the marketing professional is several-fold. First, save up some of that holiday gift money for the inevitable second generation AppleTV. Secondly, approach product development (pause) and approach it as a serious enterprise: Find the right person to champion a new product or service; refuse to settle for “good enough;” drive down to the core issue; and only select new products or services for development that have an excellent strategic fit with your company.

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