Honor Thy Channel

Unless you’re a serious cyclist, you’ve probably never heard of Orbea bikes (http://www.orbea.com/). Orbea is a Spanish designer and manufacturer of high end racing bicycles. Their bikes retail for $1,500 to $10,000 and are made of lightweight carbon fiber and aluminum. The bikes are sold exclusively through retailers.

I recently had the chance to tour the Orbea USA assembly facility with their Chief Operating Officer. I asked him about Orbea’s distribution strategy of using only retailers. After all, competitive cyclists tend to be pretty “wired” and know what they want, so why not sell directly through the Orbea website? He said they sell through retailers since there is some customization done at the dealer and to protect their premium product positioning.

I also visited an Orbea retailer. I asked the sales guy (who obviously was a cyclist) about Orbea bikes, and he launched into a passionate rant about why they’re the best and how he wouldn’t be caught dead riding anything less.

The Orbea strategy is a great example of why manufacturers must stay true to their distribution channels, especially in recessionary times:

• Brand loyalty is not just for the end user. It extends to your channel. Protecting them builds goodwill that carries you through tough times
• Short term margin gains (e.g., selling through the Internet) comes with a long term cost of diminishing your brand in the eyes of the end user and losing your channel’s loyalty

Orbea is taking the long view of meeting the needs of a very specific segment of the riding population. Their customers, and their channels, are in turn rewarding this strategy with fierce loyalty.

March Madness Myth?

Tuesday begins one of the high holy periods for sports fans....March Madness. For basketball fans all across the US, this is the time of year they've waited for: the NCAA men's basketball tournament. Many of the games leading up to the championship game are played in the afternoon on Thursdays and Fridays. The conventional wisdom is that those fans will be following those games online while working, thus "stealing" from their employers. The outplacement firm of Challenger Gray estimated in 2007 that lost productivity amounted to a staggering $1.2B. Or did it?

Here's how Challenger Gray figures lost productivity during the NCAA basketball tournament.

• 79 million -- Number of Americans who have Internet access at work.
• 22.9 million workers --29% of workers say that they are basketball fans.
• 13.5 minutes -- Average time spent on college basketball websites during tournament.
• 309.3 million minutes -- Time spent on websites during tournament.
• $1.17 billion -- Total lost in productivity (average wage every 13.5 minutes is $3.78).

Sources: Challenger Gray & Christmas using data from MRI CyberStats, ComScore, Hitwise, CBS

All this assumes, of course, that employees had no downtime to begin with, which we know isn't the case. So, watching a game online during work hours is probably replacing shopping online, chatting via IM, or balancing your checkbook. Bottom line: the real number is probably south of $1.2B but greater than zero.

Nevertheless, March Madness is the closest thing America has to the hysteria around the World Cup. I wonder if anyone has done those calculations?

Cool Technology + a Need = Success

One of the blogs I enjoy reading is Marc Andreessen's blog (http://blog.pmarca.com/). He's always out there with technology that makes you think.

Here's a new product he mentioned on his blog that could be one of those "disruptive technologies" consultants like to talk about. (see the video here). It allows you to voice your thoughts without speaking. The applications are astounding for ALCS patients and others for whom vocalization is impossible.

Personally, the very act of having to put my thoughts into words keeps me from saying stupid things...my mantra is "just because it comes into your brain doesn't mean it has to come out of your mouth."

Planning for Retirement (Your Product's, Not Yours)

The last thing anyone wants to think about during the excitement of a new product launch is how to retire it. Try bringing that up in a launch meeting and you'll get shouted down or just ignored.

But product managers are paid to manage the entire life of the product....even its death or retirement. So, here are a couple of things to think about once you recover from the launch party hangover:

• Market the retirement as positively as you would (or did) the launch
• Have a communication plan explaining why the retirement is good for the customer
• Have a solid transition or "crosswalk" plan -- Make sure to have a suitable alternative product ready for them prior to the cut over date and make the cut over as painless for the customer as possible.
• Make it easy for the customer to ask questions -- have a toll free number or a plan to contact key customers before, during, and after the retirement; keep the lines of communication open.
• Make sure all suppliers, value added resellers, and partners are aware of the retirement and you have a plan for each.
• Fully estimate all of the retirement costs before hand -- make sure leadership understands the one time and ongoing costs, if any, of retiring the product, not just the revenue that is foregone.

Do these early and the other retirement (yours) will be easier to plan!

Welcome!!

Welcome to Product Management for Profit. Not a spine-tingling subject, but for marketing practitioners, it's all about delivering profit from marketing activities. My goal is to get marketers talking about how to show marketing's contribution to value creation. So, I'll be posting thoughts, resources, best (and worst) practices, and the like. I'd like to hear from you...what works, what doesn't work....