When big companies fail to see their true value: Case Study Motorola Xoom.
Every now and then, as a professor, I get to gloat about a prediction made to students. Makes me feel validated. This one I LOVE because it involves a big company, Motorola. The reason this is especially satisfying is that I find it so unbelievable that little ole me saw this clear as day. So why couldn't a large company with resources see it? Must be Myopia. Here's the thing:
Motorola launched their tablet Xoom at a higher price than Apple's IPad. This would suggest a few things:
1) The Motorola name has greater equity than Apple. Not really.
2) The Xoom has better features that consumers perceive and will pay extra for: Not the case. If it was the case, they didn't make that clear.
3) People who prefer the Android platform will pay more for it. Not necessarily proven.
4) Few competitors: Geez, didn't every business publication write about all the new tablets coming on the market?
So, I stated the above case in my marketing strategy classes when Xoom was launched. My prediction was the Xoom wouldn't gain much traction and the price will be lowered. Ta Da. The Wall Street Journal on Friday, August 12, 2011 states: Motorola says sales of its Android tablet were hurt by high prices, which it dropped, and expects shipments to fall ahead of new models.
If there is one thing I want my students to remember when it comes to pricing and value is the simple equation for value: Value = perceived benefits/price. PERCEIVED benefits.
If the Xoom had these benefits that demanded a higher price, they certainly didn't communicate them clearly. But more fundamentally, did they have information to suggest those benefits were relevant so the target consumer would pay more for them?
Companies never have to have the lowest price. However, the marketplace doesn't operate in a vacuum. Your 'value' is relative to other options in the marketplace. If you have it, shout it. If you don't...think again about your product's true differentiation. Don't be myopic.
Thoughts?
Jackie
Posted by Jackie Kuehl at 8/13/2011 8:10 AM 
Categories: brand messaging, marketing myopia, branding, brand value, B2B marketing, Relevant Marketing, brand marketing, target marketing, Marketing Tactics, differentiation, Marketing strategies, brand strategy
Categories: brand messaging, marketing myopia, branding, brand value, B2B marketing, Relevant Marketing, brand marketing, target marketing, Marketing Tactics, differentiation, Marketing strategies, brand strategy
It was a stupid strategy, but I get it. Work for a while at a HUGE company run by accountants, and you'll get it, too. They apply ROI hurdles that are unrealistic based on the market, and require compliance. The board of directors are compliant. Jackie: Motorola is local...go over there and have a meeting with the CEO and tell them you can help. Who knows?
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