What makes a company successful?...

... delivering products and services that are relevant and create impact among consumers.

I combine my expertise as a Marketing executive in a Fortune 500 company and my passion as an investor to find the Companies that I think have "cracked the code" with consumers. Advertising does work. When I see a new product that fits relevant consumer trends, and that is supported with a campaign that I find particularly shrewd and innovative, I know that Company is potentially a great investment.

One of the great investors of all times, Peter Lynch, recommends to "buy what you know". You watch TV, go to the supermarket and walk around everyday. Observe... look around: what you see can make you money in the stock market. Now, let's be clear: a Company is not good just because it advertises. What we have to look for is great products supported with -and enhanced by- great advertising. The principle is simple: if something is good enough to draw your interest, it will be of interest to millions of persons just like you.

It is my goal to share with the reader my findings in the world of marketing which I think will turn into great returns for investors. Profit from it!

Sunday, May 30, 2010

Apple vs. Microsoft: embracing the Zeitgeist - Part 2

The ‘digital ink’ was not yet dry in my previous post “Apple vs. Microsoft: embracing the Zeitgeist - Part 1” , when Apple (AAPL) surpassed Microsoft (MSFT) in market capitalization. And consistent with the case I’m making in these articles, I'd expect that difference to widen in the future.

In my previous post, I used two very unorthodox words to describe Apple’s unique recipe for success: enlightenment and selflessness.

Why is Apple enlightened? An old colleague, the then global Market Research guru of the company I was with at that point, had a maxim that has stuck with me through the years. It’s a very simple four-step doctrine, and yet, quite difficult to truly follow: 1) listen to your consumers; 2) listen to them again; 3) believe them; and 4) act on it. As I was explaining in the first part of this article, it is steps 3 and 4 were most companies struggle. It is where insights collide with pre-established paradigms that things go awry. Yet, even if this doctrine is followed to the letter, there are yet another two pitfalls that must be dealt with: exactly which consumers do we need to listen to, and how literally do we take what they say. These are two pitfalls many companies also fall into. Based on outdated marketing precepts, they think in terms of “our regular brand users” or “competitive users”; or, being a little more sophisticated, the “creative class” or the “social adventurers”. Then, they take what the consumers say to the letter, and build the literal meaning of the collected insights into their decision making process. All these very easy to make mistakes will, most of the times, result in initiatives that are unsuccessful and leave everyone scratching their heads: “we did all the research… what went wrong?”. As I explained in my article “The spirit of the times” , today marketers must free themselves from the constant chatter around them, climb the proverbial mountain and scour the horizon to understand where society is going as a whole. And in seeing the direction, they need to embrace it and decide to lead it. Not fight it, not trying to steer it, but just position themselves at the forefront of the future and start building it before the rest get there. That ability to hover above and beyond the noise of the market today and understand where society is heading as a whole; to believe in what you’ve seen; the will to truly embrace that future and have the capacity to articulate it and to build it ahead of the arrival of society to that point, that is what I call enlightenment. That’s what Apple is doing: Apple goes beyond the interests of particular groups or segments. Apple is reading and decoding society as a whole, seeing where it is going and just delivering against it. But, wow, what a delivery! There is where the second component of their formula kicks in: selflessness. The secret of Apple is that they simply understand that what they must deliver is an experience, not just a product. It’s not about features, it’s not about trying to force fit my technology or to impose my view of the world onto others. Apple is masterful at understanding the experience the consumers want, and making technology work to provide it. They don’t sell operating systems, chips, memories and hard drives. They don’t brag about search capabilities, speed, computing power and other technical irrelevancies. No. Apple delivers beauty, the feel of your fingers gliding on the screen, simplicity, reassurance and reliability. At Apple, the consumer is truly the center of their attention; not a prey that needs to be persuaded to buy their fares, but the capable individual they need to serve. And in that selflessness resides their power and their dominance. Interesting, isn’t it? Apple dominates by seeking to serve. And those who seek to dominate, end up pushed aside.

The iPad is just a superb example of that vision and understanding of where consumers are, where they are going and what they really want. The immediate reaction heard in the techie circles was: why would the consumers want one? It’s not a laptop, not nearly as powerful; it’s just a bigger iPhone that doesn’t even make phone calls. And yet, consumers flocked to it. But why? Simply, because it is the experience the consumers were longing for. Think of where laptops have been heading: smaller, lighter, netbooks. And despite these changes, you constantly hear people complaining about having to carry their clunky laptops. Think of where connectivity is going: it is a mobile world. In this small global village, consumers want… no, need to be plugged to the grid 24/7. And yet, even the mighty iPhone is rather small for most of the things consumers want to do with their connectivity. Think of the future: what is the ideal scenario for anyone? The portability and simplicity of the phone with the comfort and power of the laptop. Some sort of cybernetic transformer that can be unfold from a small phone into a larger and spacious… what’s the word? pad!... that facilitates work and fully blown entertainment anywhere. Some technologies like flexible screens will likely get us there. But in the meantime, as we arrive there, Apple starts preparing the terrain with the iPad. Apple will take us there. Apple has become a symbol of the zeitgeist. As such, owning Apple is pretty much owning a big piece of the future.
Disclosure: I own shares of AAPL

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