The Internet Marketing Autopsy
IntroductionThe “Death Of Internet Marketing” report was created and distributed by Mike Filsaime a couple of years back. This article was actually written a couple of days after it was released, but has been residing on my site until I pulled it off. Anyway, DOIM was one of those reports that actually got many people talking. Yet, because of the way it was marketed, I think it got a few people thinking about it, but probably not enough. Even this year, people aren’t doing what they need for their business, and I honestly don’t care if it is online or offline.Well, Mike says “Internet Marketing Died”. So here’s Stuart Tan’s autopsy:So… let’s just say that I’m going to do a post-mortem after this report is out into the market. Yep – we’re all into forensics now, with so many interesting metaphors such as the “death of internet marketing”.Most people would have by now read Mike Filsaime’s “Death of Internet Marketing”, Rich Schefren’s “Internet Business Manifesto” etc, etc. In my opinion, the biggest issues have not been dealt with. Mike undoubtedly gives a fantastic exposition of what was and what is to be.Why am I writing this? Because after looking at all the emails coming in about Mike’s report, I came to the conclusion that:
most internet marketers didn’t ‘get’ it. They said “it’s a good report”. That’s not what it’s about.
The reviews about Mike’s report were far too simplistic about implications about what he really had to say
Firstly, these reports really weren’t for the newbie in internet marketing. They are for experienced marketers who know what is happening in the industry. Second, it’s a foregone conclusion that you need to be more of an entrepreneur… not just a marketer.
For those of you who are unable to keep up with Mike’s brilliance, or think that this is the be-all and end-all of marketing strategy, most people have missed the basis of Mike’s report.Component #1 – Don’t be lazy!If you want to be lazy, you’ll go to the sharks. Most of the hardest working internet marketers are also the wealthiest. Again, I’m not suggesting that you are going to become wealthy by only working really hard. The truth of the matter is that working hard to achieve auto-pilot in your business does require a bit more strategizing and action.Component #2 – Assess trends!Staying outside of the box? Then you’ll definitely be very lost when it comes to assessing whether or not you should take on a business model like affiliate marketing, or ecommerce… because you have insufficient information to be able to decide. Assess trends. Watch the web. Look at all the stuff that is progressing right before your very eyes. Get on technology forums and learn, learn, learn.Component #3 – Credibility As Weaponry!Through all this hype and a very severe lack of information, it’s difficult to decide whether or not to buy one product or the other. The main deciding factor will come from someone whom you trust completely and will be willing to buy simply because you deem this person to be credible. So, build your credibility! It will take more than just one report to do this! Build your credibility! Set yourself up with the right people, credentials, etc. Or better still, get on one of my teleseminars.Component #4 – Forward Strategy!It’s not easy to move forward in internet marketing, but that’s often because one doesn’t have a clear direction in the first place. Vision, as Mike says, is important. I believe it’s more than just ‘vision’. It’s more like the ability to focus on what needs to be done, and just taking action and doing it, having already decided that it is something you will accomplish at all cost.Too many people balk at doing the things that matter. They end up procrastinating! Okay, I’m not an angel myself 100% of the time. But think of where you are. For instance, you know for a fact that you need to create content for your site. Say you’re not a really good content creator. What next? Wait and hope that money will fall from the sky? I don’t think so! You still need to find a way to get it done. Or, make a way! You may have to think of ways to get your way even though you can’t do it yourself.Component #5 – Polarity thinking… and the Stuart Slap!When everyone is doing something, you have to do the complete opposite.Look at the infamous Google Slap. If you’re not familiar, Google “slapped” people a number of times already. When people don’t provide good value, they get slapped. This is to force people to avoid their own impending doom. It’s like a parent slapping their children to not touch the burning flame. Still, people go ahead, get burnt, them blame the person they last encountered. Tsk. Tsk.The internet marketing world is filled with sheep. One person goes there and everyone follows. This is good news for the person who knows how to exploit this situation. When everyone moves in one direction, they miss out opportunities that already exist.One example is this – now everyone in Asia is heading and attacking the internet marketing niche. I know it’s not the right thing to do to monetize, and there are many other monetization sources out there. So what do I do? I spoil the market so that people will not be hoodwinked into buying non-value-for-money items. Is it a good strategy? Some people will hate me for it. But it will force the survivors up the chain, the credible ones will quadruple their income, and those who can’t handle the heat either give up or find another niche.What next?It’s not hard to understand. But the fact is, newcomers to the internet marketing world will look at these reports and say ‘what the heck do they mean’? Such things will garner a lot of value for the average internet marketer, but will hardly make sufficient sense to the average newbie in internet marketing. To them, it’s like “oh yeah – I’ll focus on my business strategy” or “sure, I’ll use a one-time-offer”. It seems like a ‘no-big-deal’ thing.Well, of course. That’s because there IS no big deal. We’ve come full circle. If you don’t do it right the first time, conventional wisdom like “failing to plan is planning to fail” will suddenly make lots of sense. Are you willing to wait until that happens??The Evolution Of Marketing StrategiesThe truth is this – marketing strategies have been evolving. Every day, there is a new strategy or tactic pulled by someone to create the next wave in internet marketing. But the truth is that most of them start with a concept from thinkers everywhere.”This Article Is Not Meant To Overwhelm You!”Yes, be overwhelmed, if you choose. I am still stumped by the fact that beginners are still lagging so far behind. I can’t blame them, but I can blame internet marketers for not helping to chip in to clear this.Excuse #1 – They are lazyInterpretation – I’m lazy.If you as an internet marketer are reading this and not going all out there to clear the air and help out building the market, the industry will become stagnant and there will be very little left that can be done in the industry. Mike’s prediction will then come true. We probably wouldn’t be able to sell anything because subscribers are going to be lambasted with emails over and over without the right ability to decide what to choose and why.Most internet marketers are themselves lazy. That’s the plain truth, and many admit to that. But they are propagating the problem, not solving it. Instead, they will need to cultivate a voracious appetite for information in people who are completely new. Disagree with me all you want. You’re the one reading this article.Excuse #2 – They are not technicalInterpretation – I can’t be bothered to look at ways in which newbies can learn easily.As a trainer, my angle as always been to simplify, simplify, simplify. If I can make a complex process simple enough to follow, there will be understanding and comprehension. This is good enough to start. When someone says that there is a complete lack of understanding, then that same person is going to be the reason why I start to alter my instructions or the way I teach.Excuse #3 – I don’t have enough resourcesInterpretation – I’m not creative enough to find a better way.All the experts out there had better find a way to utilize resources to make beginners learn in a more efficient way. Admittedly, I want to do this myself, but have failed in attracting the right learners much of the time, as well as to attract the right coaches. Too many times, people are in it just for the money. Selfish, selfish, selfish. It’s not wrong, it’s just selfish. Can you find better ways to do it? Challenge yourself!The Newbie PhenomenonFor every one or two internet marketing gurus, there are several hundred newbies who develop. At the rate of growth of internet marketing, there will be far more newbies than there are experts. The lop-sidedness of this is true – only 5% of the population will earn a decent income from internet marketing related products. The next 10% will probably be working very hard and earning decent 6-figure incomes. The next 25% are probably working hard and earning a high 5-figure income, but the mean range of the next 35-40% of internet marketers are struggling with 4-figure incomes. What this also means is that 25-30% of every internet marketer’s list has a bunch of newbies who are afraid to start internet marketing and don’t have a clue what to do.Here are typical mistakes newbies make:1. Diving into the “internet marketing” niche.I see so many newbies with ‘cut-and-paste’ approaches, attempting to encroach on the very large and highly profitable internet pie. I apologize in advance if you are one of these people. You will earn some income, but you won’t really make much. A couple of hundreds, maybe?If you are one of these, you are the kind of people being described in Mike’s report. Students of the gurus and guru wannabes. In my opinion, the biggest issue alluded by Mike’s report goes FAR BEYOND what he actually mentions. It’s a common thing, but missing. It’s called research.It’s so plain and simple, and all the information is literally right in front of your eyes. But you’ve been given so many opportunities that you don’t know which one to sell or to understand which niche to penetrate.Key lesson: to be an excellent internet marketer and entrepreneur, you MUST know how to assess the market. You MUST know what weapons are at your disposal, and you MUST know how to make a decision about what to sell, who to sell it to, and how to go about doing it.2. Affiliate marketing without ‘affiliating’Don’t you think that the issue in people selling other people’s products is clear? People want anonymity. They want to sell something without having to put their picture on the web. This is silly. If you want to be an affiliate marketer, you have to learn how to do it without fear of being revealed. Unless, of course, you are an employee who doesn’t want to be caught.Wait a minute – if you simply reversed the role, would YOU buy from someone who had something to hide? The whole idea about affiliate marketing is that people have forgotten that they need to be doing more “affiliating” than they do “marketing”.Key lesson: Loyalty will be the determining factor in your business strategy.3. UnCreativity – The Same-ol’ same-’olSomeone says “do a report” and you do it. Someone else says “use a drop cap” and you use it. I don’t mean to put down such information. I do believe that it has been useful to some extent. But my question is… how do YOU know?The big irony is that the report entitled “The Death Of Internet Marketing” was being spread using the exact same mistakes that it talks about in the report itself! You see, the truth is you might be able to pull off the same stunt a couple of times, but on the third attempt… nah.You cannot (and should not) re-use methods developed by other people. The ideas are already passé the moment they go out on the net – after people use it over and over, it’s like a degrading gene pool. If you want to do something outstanding, then innovate a little. It’s the small innovative tweak that gets people to smirk, nod their heads and say ‘wow, that was brilliant’.If you don’t know, then you won’t know the foundational principles of how people react to your writings, reports, etc. It’s essential for you to be able assess their reactions and how they take action based on what you say, and to be able to do this well.If you are just doing cut and paste strategies, sure you can work with your list for a while, but you are still not cultivating a relationship with them. You are merely overloading them with information.Key lesson: If you are attempting to breach the internet marketing stronghold, you need to have far more than just used tactics and strategies. You have to think. You have to innovate. More on this later.Other issues In Internet Marketing1. Quality of products: no standards of assessmentWhat else did Mike say? He mentioned that many people are buying and buying into opportunities then heading off in all different directions. I see this happening right in front of my very own eyes. At the same time, he mentioned the concept of Web 2.0 and user generated content and the ability for users to rate and comment on a site. I’ve mentioned this several times in my internet marketing seminars. But the issue is, so what?You need to be able to assess the quality of something. How well you can assess the quality depends on the level of the user. I mean a complete newbie will hardly be able to provide an effective evaluation from an internet marketing perspective. In addition, there is also a growing trend for internet marketers to provide rewards for testimonials. This is hardly a fair judge of a product.As a trainer, I often request for feedback with a standard evaluation form at the end of my trainings. This form is created in order to assess specific elements in the training. The concept of training evaluation itself is a broad area, and if you’d like to receive my insights into this, you may do so at my Business Strategy section on my blog.2. Marketer recognitionAs you know, marketer recognition is an issue. Most people do not have the means to be able to establish a high enough level of credibility until they align with other top marketers. However, there is another way.Be aligned with happy and satisfied customers!Some of you might think that this is about building a really large testimonial list. Well, this testimonial list leverages on the psychology of social proof. However, if you are not schooled in logical analysis, you will not be able to pick out flaws in arguments. One such typical flaw is called the ‘slippery slope’ technique. “He was really good. He gave me a good product. Yeah.” What in the world kind of testimonial is that? How about this instead:”Stuart, wow, you’ve made this a fascinating 2 hours for me. The chemistry is very good between us I love the things you’ve said and the questions you’ve asked. I’m deeply grateful to you for being so insightful as to the things that are important to [guerrilla marketers] everywhere.” ~ Jay Conrad LevinsonSatisfied? Happy? Well… you have to build this as part of your neurological hardwiring if you want to survive online. If you want to get more stuff out from where you are right now, join me to build a credibility plan.3. Entrepreneurial effectivenessI’m guilty of one thing – complaining that there isn’t enough effective business training for new internet marketers. And as a result of that, I got my just desserts – people asking me to be their business mentor and strategist.In my opinion, business training is not just about taking a degree in business management and graduating top of the class. It’s about making a business come to fruition. These skills include a whole bunch of stuff such as knowing how to conceive a business idea and put it into a plan in the first place. Another is to know what your strengths are and put them to use, while knowing how to delegate to people who can use their strengths together with yours. This basically implies the need for leadership.Most newbies are attracted to the opportunity, but not willing to make the time or effort. However, those who are leaders already take the next step and make this happen. Leadership in an organization is important – tons of authors have already made this clear, especially one John C. Maxwell, a very highly respected leadership thought leader. On the other hand, it may be that some people think of leadership as something so ‘normal’ they forget to revere the importance of its value in running a business.The biggest mistake one will make is to say that it takes hard work. No it doesn’t. It simply requires an effective and systematic mobilization of resources to get your system to work.4. Process thinkingBeing able to create a system presumes you need to know systems thinking as well as process thinking. Both are part of the same thing, and one needs to recognize this. If you are unaware of the power of systems thinking and process thinking, it means you have not been honing your thinking capabilities.One too many internet marketer has mentioned the need to learn to be physically ‘lazy’, but never mentally. I totally agree with this statement, but there needs to be more education to help you develop this competence of learning about process thinking. If, as an entrepreneur, you do not develop this capability, you will be incapacitated, unable to see the interrelations of a large variety of different things in the complex world of business. You will be unable to craft your own strategies. Jeff Walker is a clear example of how knowledge and clear thinking leads to powerful, powerful product launches.Marketing Style And CompetenceSo, what does this mean to the average person?I’d like to summarize and highlight a few competencies that you must know.
Systems Thinking. Creativity and innovation.
Rapid Learning Skills. NLP and Modeling.
Writing and content building skills
Online Leadership skills
Personal Mastery
Credibility Building Skills.
a. Rapport building
b. Selling and marketing
c. Managing your outsourced talent
d. Partnering and loyalty building skills
To gain access to knowledge, just join me on my site and there will be regular business tips and strategies that I’ll cover in upcoming trainings, teleseminars and online reports.
The Three Biggest Lead Generation Mistakes Small Businesses Make And How To Overcome Them
If you’ve been looking for simple, proven and tested, step-by-step methods for generating more leads for your small business, then this article may just have the answer. Firstly, I want you to stop for a moment and think about all the advertising you’ve seen over the past week.How many of those actual ads can you name? Researchers estimate that over the past seven days, you have been exposed to as many as 117,000 ads based on national averages. So out of 117,000 ads, how many can you name?If you’re fairly attentive, you may be able to come up with 3 or 4 specific ads… but I’ll bet that’s because you probably see those ads over and over… week in and week out. Let’s face the facts… repetition works. When you see any advertisement multiple times every day you’re bound to eventually begin to recall the ad. But now answer this question.What few ads you do remember, how many of their products or services have you bought? Because I have a passion for marketing I tend to go online and research for well accepted ads. Take for example a series of ads from online trading company E*Trade which uses babies to promote their products. These have a massive audience on both TV and YouTube. They even had one during the Superbowl. I think they’re a scream. But… I don’t have an E*Trade account. Never have, never will. Why should I?What benefits do they offer me as a potential buyer of online trading services that any of the hundreds of other stock trading services offer? See my point? Does a smart-aleck, wise-cracking baby have any relevance to online stock trading whatsoever? Of course not. So why does E*Trade continue to make these commercials? Believe it or not, there is a reason… and by the end of this short presentation, you’ll fully understand what that reason is.Businesses today are led to believe that all they have to do to build a successful business is create some type of attention-grabbing form of marketing and they will generate leads at will. Nothing could be further from the truth. And that’s just in the area of marketing. What about generating fast cash flow? EVERY small business needs to generate fast cash flow. So how do you do that as a small business owner? What about generating profits? Generating more cash flow is great… but not if you don’t get to put any of it in your pocket at the end of the day. How would you like the answers to all of these problems?In this article I am going to reveal to you the three biggest lead generation mistakes small business owners make… and outline how you can overcome them.Here are the three mistakes. Mistake #1… they fail to get professional help. Mistake #2… they don’t know the fundamentals required to successfully market their business and attract as many new clients as their business can handle. And mistake #3… they have no idea how to use their marketing to generate immediate cash flow. Let’s explore these three in depth, and show you how you can easily and systematically overcome each one of them.Mistake #1… small business owners fail to get professional help. Can you name me just one professional athlete who does NOT have a coach? There aren’t any. Tiger Woods actually has a total of 9 coaches guiding him in everything from his golf game to his financial investments. But do small business owners really need professional help? Remember the TV ads we previously discussed? Those ads are created by “professionals.” Unfortunately, those professionals have no clue what they’re doing. Everything they’re doing in marketing and advertising today is wrong! But let me prove that to you right now.If you currently use any form of marketing such as a print ad, brochure, postcard, flyer… or for that matter… your company website, take it out and look at it carefully. And if you don’t have any form of marketing right now, take out a sheet of paper and sketch out what you think would make for an effective ad for your business. It doesn’t have to be anything formal or fancy… just create a basic outline of the ad and where you would locate the various elements on the page.Now that you have your ad… or a mock up of your ad sitting in front of you, let me provide you with the little known secrets that produce more leads than your business can handle. 99% of all marketing professionals DON’T know the lead generation secrets I’m about to reveal to you. This information is so powerful and compelling, it will position you in the top 1% of all lead generation professionals today. This example will show you why every small business owner should acquire our step-by-step roadmap as they start to generate leads for their business.Here’s what a true marketing professional will know… and help you implement into your marketing. It’s known as the “marketing equation.” This marketing equation will let you quit competing on price… and let you start selling your product or service for what it’s really worth. You will drive in more leads and increase your advertising response by 10 to more than 100 times. You will convert a higher percentage of those leads and dramatically increase your number of sales. You will get a bigger bang for your marketing buck. The bottom line is this you will literally create a profit faucet that you will have TOTAL control over.First, you MUST understand what marketing is supposed to do. Its purpose is actually three fold. Its first job is to capture the attention of your target market. Second, it must give them the hope that reading or listening to your marketing will give them enough information to help them make the best decision possible when buying whatever you sell. In other words, train and teach them how to recognize the true value of your product or service… and conclude that you… and you alone… offer the best value versus your competition. Marketing’s third job is to lower the risk of taking the next step in the buying process… and if necessary… continue to educate the prospect regarding the value you offer.Marketing that accomplishes these three objectives will result in your prospects and customers coming to one single conclusion, that they would have to be an absolute fool to do business with anyone else but you, regardless of price. It’s estimated that as many as 96% of all small businesses fail within their first 5 years. The main reason for this tremendously high failure rate has to do with the lack of expertise when it comes to generating leads and making the phone ring.Most small businesses don’t know anything about those three things that marketing is supposed to do. But there’s also an additional problem to consider. Most small business owners use a tactical marketing approach instead of a strategic approach. Let me explain.Running an ad in the local newspaper… sending out an email or direct mail letter… airing a radio or TV ad on a local media station are all examples of tactical marketing. Now don’t get me wrong… the newspaper, radio or direct mail can be successful marketing channels… If your marketing message is powerful and compelling. But that’s the problem… the message is the strategic side of marketing… and yet, it’s the most neglected.This distinction between strategic and tactical marketing is huge and one you need to be acutely aware of anytime you start talking about generating more leads. Many companies mistakenly assume that when you talk about lead generation, you’re automatically talking about tactical lead generation… placing ads, sending out mailers, joining a networking group, attending tradeshows, implementing a prospect follow up system and so on.They fail to realize that the strategic side of the coin, what you say in your marketing and how you say it is almost always more important than the marketing medium where you say it. If you fail to make this distinction, then you risk becoming jaded towards certain forms of marketing and advertising that should be a part of your tactical plan, but you eliminate them from consideration because they haven’t worked for you in the past.When lead generation results are less than optimal, small business owners tend to almost always blame the marketing medium… like the newspaper the ad ran in or the postcards they sent out. They blame the tactical part of the plan… without any regard for how good or how bad the strategic messaging in that marketing piece was. People often say things like, “we tried radio and it doesn’t work for our kind of business,” or “we sent out 50,000 pieces of direct mail and only generated 3 orders. It just doesn’t work.”Just because it didn’t work, don’t assume that it won’t work. Most people don’t have the evaluation skills or the know-how to judge whether poor marketing results from poor strategy or poor tactical execution. This is where our step-by-step roadmap can generate more leads than your business can handle.For example, most small business owners rely heavily on platitudes in their marketing. They say things like – we have the lowest prices… the best service… we’re family owned and operated… we offer convenient hours… the best value… not to mention that we’ve been in business since 1431 B.C. Look at your own marketing that I asked you to acquire or create earlier. How many platitudes did you use in your own marketing?By the way, this is NOT your fault. Small business owners have been conditioned to think this is the proper way to market their businesses… since most advertising follows this same pathetic marketing formula… including the Fortune 500 types.As human beings, we’re all after just one thing when we buy something… the best deal! Unfortunately, when you use platitudes in your marketing, there’s absolutely no way to tell who is actually offering the best deal. Everyone says they have the lowest prices, the highest quality and the best rates. So who do you believe? There’s only one way to know… and that’s to research every single business that offers what you want to buy. How many of us have the time or patience to do that?So most of us just automatically assume that everyone is pretty much the same, and therefore we default to calling on the business that offers us the lowest price. When you can’t communicate the true value your business offers, you’re doomed to forever compete on price. Our marketing equation will change all of that for you forever. It’s going to be the backbone of your strategic marketing plan. It’s the foundation on which everything else we build for you is based. Let me give you a quick overview and then spend some time going through it with you in detail.A proper marketing equation has four main components. First, it must interrupt your prospects. It must get your qualified prospect to pay attention to your lead generation marketing. Simple enough to say, but a lot more difficult to pull off in real life unless you understand what you’re about to learn here. The interrupt is done through your headline if your marketing is in print… or it’s the first thing you say if your marketing through radio or TV. The second component is engage. Once your prospect is interrupted, it’s critical you give your reader the promise that information is forthcoming that will help the prospect make the best buying decision possible. In other words, it must help facilitate their decision to pick you over anyone else. This is the job of our subheadline.The interrupt is our headline that highlights a specific problem that your prospects are looking for a solution to… and the engage is our subheadline that promises them that you offer a solution to the problem we mentioned in our headline.The third component you need to include is ‘educate’. Once you have interrupted and engaged your prospect, you have to give information that allows them to logically understand how and why you solve the problem they’re facing. This is accomplished by giving detailed, quantifiable, specific and revealing information. This is typically done in the body copy of your ad. When you educate, you need to reveal to your prospects the important and relevant information they need to know when making a good decision, and that your business… and yours alone… provides it to them. The interrupt and engage hit the prospects emotional hot buttons. Educate is the logic they need to justify picking up the phone and calling you.The fourth and final component of the marketing equation is your offer. Now that you have interrupted your prospect based on problems that are important to them… engaged by a promise of the solution… and they’ve examined the educational information that makes your solution real and believable… the last step you need to take is to give them a low risk way to take the next step in your sales process. You do this by offering a free marketing tool, such as a report, brochure, seminar, audio, video or something that will continue to educate them. Your offer will allow your prospect to feel in control of their final decision to call and buy from you.So your marketing equation is interrupt, engage, educate and offer and together they equal market domination. Now here’s the problem. Most marketing today only contains two of these components. They interrupt by throwing something at you that’s either familiar like Tiger Woods… or unusual like a monkey or talking pets. Sometimes they like to use both, as in the case of the E*Trade baby. Then once they grab your attention, they make you some type of offer such as “call now for whatever.” They have left out the engage and the educate, and marketing seldom succeeds when that happens.In fact, the only time this type of marketing does succeed is when you can afford to run the ad over and over nonstop for an extended period of time. Plop, plop, fizz, fizz… melts in your mouth, not in your hand… and the burgers are better at… have literally been rammed down our throats by Fortune 500 types. After hearing these slogans thousands of times, of course we’re going to remember them. But how can a small business owner like you that doesn’t have a billion dollar marketing budget successfully market your business. The answer… you can’t… UNLESS you follow the entire marketing equation.And finally the third biggest mistake small business owners make is that they have no idea how to use their marketing to generate immediate cash flow. When you follow this marketing equation in every form of marketing you do… from your business cards to your company website, the financial results are instantaneous and immediate.So in conclusion, the three biggest lead generation mistakes small businesses make are #1… they fail to get professional help. #2… they don’t know the fundamentals required to successfully market their business and attract as many new clients as their business can handle. And #3… they have no idea how to use their marketing to generate immediate cash flow.The above marketing equation contains the fundamental components for instantly making your phone ring and positioning your business as the dominant force in your market. It provides the marketing foundation that will enable you to generate immediate cash flow. And small businesses can use this information as a minimum standard when seeking out professional help for their business.When you can overcome these three biggest lead generation mistakes, you will generate all the leads your business can handle.
Price Premium Profitability Through Ingredient Branding
What are Ingredient Brands?This is the first of a series of articles on ingredient branding. In this first article we introduce the concept of ingredient branding and a model for the understanding the utility of their brand equities for building businesses. In subsequent articles we will discuss how to manage – and avoid pitfalls – in guiding ingredient brands profitably from their early life cycles all the way to their mature stage.Ingredient Brands are those product components that not only add functional value, their logo on a main branded product or service adds to its own brand power to retain customer loyalty, evoke customer preference, and support premium price points. An ingredient brand not only adds value to a host brand’s equity, in mature markets it can also create or enhance differentiation.Intel® is arguably the most famous of all ingredient brands that has enjoyed a long and continuing life. Others include Microban®, Kevlar® and Goretex®.How Ingredient Brands Are BornWhen an upstream manufacturer develops a new breakthrough product, they diligently commercialize and promote the brand identity in order to obtain increasing market acceptance of the product. Since it is a breakthrough, the branded product becomes accepted by direct customers and often famous for the benefits it brings to the downstream market. When promoted properly it also becomes desirable to consumers because of the publicity it generates as a source of “new” perceptions for older brand names that incorporate it into their product lines.The name the manufacturer gave the product is generally intended to both simplify the conversations with specifiers, production managers, and others whose beliefs about its value prompt them to include it in production processes and to assist purchasing agents in requesting the right product. Most often this value is discussed in terms of how it is functionally advantageous. This is a common practice in industry. However, its value as a public indicator of host brand commitment to quality innovation should not be overlooked.As a new ingredient brand becomes familiar among downstream specifiers the name not only becomes more recognizable, it also develops its own meaning. The ultimate constituency that fosters an iconic meaning for any brand is consumers who assign daily-life significance to it. At that point – when a labeled component of an end product like a computer or a fashionable garment becomes a familiar name that influences consumers’ choices – an ingredient brand is born.Strong brands often hesitate to publicly identify an ingredient brand because of concern about compromising their own strong host brand’s perceptions. History has shown however that a powerful ingredient brand, whose provider is committed to maintaining its perceptual equity long term, continue to be enhanced by identifying their investment in publicly recognized quality components. The smart branders take full advantage of the popularity of a famous ingredient brand, further enhancing the equity of their original brand.The 10 Challenges of Managing an Ingredient BrandMany ingredient brands have successfully passed the value-adding test of time including Intel®; Kevlar®; Micro-Ban® and Stainmaster®. The key to achieving this marketplace status is managing the brand well beyond its functional value. Accomplishing this is much more complex than managing a consumer brand. Ingredient branders have challenges which must be met in order to fully capitalize on ingredient brand potential for value. They must:1. Develop organizational understanding of the difference between the product and the brand to multiple constituencies, each with their own mind-set and calculation of interest.2. Effectively communicate the brand downstream from the direct customer without creating unmanageable friction with that customer, who may perceive the ingredient brand building effort as inevitably reducing their profit margins.3. Educate their own leadership to the value of creating and maintaining brand equity and the need to market the brand benefits that exist beyond its functional contribution to product features.4. Educate the main brand’s leadership on value of brand equity and the need to market the brand on benefits beyond the product features.5. Articulate an integrated marketing strategy with a balanced emphasis beyond product performance value to include benefits and emotional brand image that drive differentiation and preference. And implement it consistently over time.6. Coordinate all management functions to contribute to consistent brand message – to “walk the brand talk” in all decisions.7. Assure that the internal organization, channel organizations, and customers always use the brand icon and extensions correctly. They must police misuse of the brand by others or risk commoditizing the brand and diminishing its financial value to that of a generic.8. Capture and retain price premium, avoiding the temptation to trade off long-term premium for short term share.9. Gain and maintain organizational commitment to improving product performance that is consistent with what the brand means to members of its value chain and end-users.10. Brands have life cycles that operate somewhat differently than product life cycles. Both product and brand lives have youth, maturity, and “old age.” Unlike humans, both can be rejuvenated and returned to their youth – usually by renewed relevance accomplished by capitalizing on new end-user trends. The classic example is Maytag whose “dependability” positioning in the 1930′s reassured homemakers that the new-fangled electric motor eliminating women’s hours at a washboard was going to last. By the 1970′s this was irrelevant; Maytag lost consumer attention.The arrival of the “lonely repairman” renewed the relevance of Maytag’s dependability to homemakers who now worked at jobs out of their homes full time and whose faulty washer might cost them a day of work. Maytag shows the opportunity careful management of a branded product’s life cycle offers.Brand Management Life CyclesThe “The Marketing Triangle” implies managing the three critical dimensions of marketing a brand today: product, brand, and price. In the typical marketing triangle, the marketer develops and commercializes the breakthrough product, and after the product begins to achieve a high level of recognition, begins the process of branding the product. Alternatively, the marketer should recognize the brand potential of the breakthrough product and initiate brand management process immediately upon commercialization. An operating comparison of these two approaches are described belowThe Typical Ingredient Brand Management Life CycleIn the typical approach, the supplier develops and commercializes the breakthrough product and after the product becomes famous, begins to transform the product into a brand.Typical Model Step 1 – Supplier develops breakthrough ingredient product and initiates commercialization process.a. Demonstrates value added potential of the new ingredient, and sets price based on benefits offered – including potential for furthering host brand differentiation in its own market.b. Expands acceptance from early adopters among host brand producers to early majority of host brands in a given product categoryc. Ingredient brand management team makes public commitment to investing in promotion of their own brand – offering promotional value to host brands that feature the ingredientd. Effectively positions the ingredient brand with communications that converge on its central benefit – articulated to each member of the main product’s value chaine. Ingredient brand name becomes well known and universally used across industry applicationsf. Ingredient brand acquires meaning from positioning communications combined with satisfactory or superior experience among value chain members and end-users of the main product brandg. Ingredient Brand is perceived as critical to fulfilling expectations generated by marketing efforts of the host product brandTypical Model Step 2 – Ingredient product brand name succeeds by becoming famous downstream all the way from direct customers to end-users.h. Multiple members of the value chain specify the product by namei. Increasing consumer awareness and evidence that the ingredient brand encourages host brand preference and loyaltyj. Supplier makes the shift from generic ingredient product to named ingredient brandk. Price premium is maintained even though competitors enter with similar product performancel. Perceptions of ingredient brand promise and meaning add value to functional advantages – signifying such benefits as quality assurance and functional performance advantage in production processes as well as end-user experiencesTypical Model Step 3 – In typical scenarios after initial success, Supplier mismanages the brand, competitive ingredient product market entries proliferate resulting inm. Internal stress on the ingredient brand’s product renewal activity and on pricing results in temptation to rest on early successn. Direct customers exert downward pressure on brand price based on competitive product alternativeso. Ingredient brand fails to counter the logic with continued efforts to build perceptions of the brand’s superiority beyond functional features in the minds of value chain members and end-usersp. Accepting market definitions of function-only brand meaning fosters downstream indifference over timeq. Ingredient brand decay in product quality in order to keep plants operating at capacity (planned or unplanned) at diminished market price ensuesr. Management declares ingredient branding a failed marketing strategyThe Successful Ingredient Brand Management Life CycleSuccess Model Step 1 – Supplier develops a breakthrough ingredient product and initiates the commercialization process as in the previous case – but includes brand planning from the start.a. Value is demonstrated in terms of how the direct and downstream customers are benefited – FROM THE START OF BRAND NAMING THE PRODUCT. Thus the ingredient product is translated into a brand at the time of commercialization.b. The new ingredient brand is effectively positioned relative to the value it brings to each member of its value chain. It will establish a core value on how it will do business but will emphasize the most relevant benefits it promises for each member of its value chain and each end use application it can serve.c. Value chain and end-user constituencies needs are inventoried via customer research during the marketing strategy development process.d. Brand support is provided to both the direct and downstream customers.Success Model Step 2 – Product branding strategy is initiated simultaneous with the commercialization.e. The brand becomes the primary communication tag rather than the product. All interactions associate the brand’s name and relevant value to the specific situation and audience.f. An icon is developed and displayed profusely in every communication vehicle. Emphasis is on brand benefits based on what the brand does not what it is. The use of the icon by host brands is mandated and parameters described in legal agreements with host brands.g. The brand essence is defined and communicated along with the brand name and icon – either explicitly in promotions efforts or implicitly by choice of associations where the ingredient brand appears. Brand meaning is a factor in choosing host brand partners.h. Orders are for the ingredient brand and invoices reflect the brand as an integral aspect of purchase.i. Direct and downstream customers refer to the brand, utilize the brand icon, and charge a premium for their branded products that incorporate the ingredient brand.Success Model Step 3 – Brand is priced to value and never price-point compared to competitive products.j. Brand is specified by downstream customersk. Early adopter direct customers are given preference and provided with unique brand and product support.l. Cooperative marketing campaigns are designed uniquely to each direct customer.m. Cooperative marketing campaigns are designed with downstream customers who see value in the brand.n. Ingredient brand value increases with the number of valued host brand relationships, satisfaction of value chain members and host brand partners in how the ingredient brand aids their business development – either directly or via ingredient brand support programs. (e.g. co-op promotions, design resources made available only to host brand partners etc.)The Key to Converting the Typical Model to the Success ModelBegin with brand management in mind. Apply a branding mindset at the onset of product commercialization including naming, icon development, brand positioning, and communications. When doing the market validation concept research early in the product concept phase design it to learn not just what end-user respondents like or dislike about the concept, but also to capture how the respondents talk about the concept. This aspect of the data will inform your marketing team about how best to position it and help your brand communications team develop its most compelling messages.In future articles we will explore ingredient brand management in more detail. Let us know what you think about our discussion, pose any questions you have, and tell us what future aspects of ingredient branding you would like to see covered. We welcome any insight you wish to offer regarding the issues, benefits and processes of capturing value from effective ingredient brand management.