It is a frequent request from sales teams: create products that are more competitively priced or competitively featured. It sounds good and this kind of request has send product marketing and engineering teams off to create me-too products for centuries. The trouble is that is hardly ever works out as well as one would hope.

See, when you set out to make a competitive product, you have actually given up the one thing that might just be the key to your success: the ability to set the criteria for which products are judged and buying decisions are made. You have let your competition decide what is important and make you play catch up.

If you have the creativity and capability, it is much more fun (and probably more successful) to do something your competition isn't doing. Create a new product category. Solve a new problem in a new way. Sell to new customers in a new way. Go after a Blue Ocean or a Purple Cow, as the authors's suggest. Do something to set the pace and decide the rules of the game and then get your competition chasing you (or better yet, dismissing you as an outlier and you can be successful without them even noticing).

Seth Godin wrote a post about price pressure. In it he proposes, that if people are asking for a lower price, you are not providing value and providing that value is your choice. Choosing the path of lower prices and commoditization is your alternative choice. I found this thought provoking.

This could be perceived in contrast to a previous post I did some time back about embracing the challenge of commoditization. That said, I think there is a big difference between internally looking for improvements and new ways to provide value in an increasingly competitive market and marketing yourself externally as the Arco of your segment. You can look for efficiencies, while delivering value for the money you are charging. Stay ahead of that curve (on both fronts) and you have a great business.

I ran across an interesting post today about charging overweight people who smoke more for their health insurance. A provocative concept, to be sure.

This is what car companies have done for years. Why not other types of insurance or other industries.

There is risk inherent in any business that might be mitigated through pricing strategies. The total cost of goods sold for most companies includes not only the cost of the physical item they are selling, but also the warranty expenses (which can make or break the profitability of the business in certain categories). What if customers who showed a lower risk for needing technical support in the future (by either their historic return rates, technical proficiency as measured in some test, or some other measure), would get a deal on their purchases of products? I bet the test alone would encourage people to try to fit it themselves a little more aggressively.

Taking it a step further and bundling services with products based on this model. What if car insurance was bundled in the price of the car? The safer the car, the less the insurance.

The next natural step is to turn risk-profile based pricing into use pricing. You pay for the car and the insurance by the mile that you drive, for instance.

I hired a doula when my son was born and her published rate was a range. She encouraged her clients to pay whatever they felt fair within that range, based on the quality of the services provided. At the time it struck me as an interesting pricing model. Very collaborative. Very service-oriented. Horribly unpredictable.

The band Radiohead has made news recently by letting their fans pay whatever they want for the new album. The magazine Paste is following suit, allowing people to pick their own subscription price (at least for a couple of weeks).

Following Radiohead's 'pay what you want' pricing scheme for their latest album, In Rainbows, indie pop culture magazine Paste is giving its readers the option of paying whatever they like for a subscription. "We were curious to know what our customers thought we were worth. And what better way to find out, than to let them tell us?" explains Paste President/Publisher Tim Regan-Porter. "While it's certainly a bit unconventional, we also see it as a chance to get our product in the hands of people who could become lifelong fans."

So, part "puppy" strategy (as in, no one wants a dog, until they get a cute, little puppy) and part pricing research, this new tactic may be crazy or brilliant. I love the idea of getting real feedback on the pricing elasticity of a market by allowing people to set a price.

That said, so much of how we view pricing (both from a customer and company perspective) isn't absolute, but relative. If someone could pick their price of a Rolls Royce, would the brand have the same cache? If the marketplace decided that you could only charge $5, for something that costs $7 to deliver, is your marketing "bad" (feature/benefit positioning, awareness, channel coverage) or is your cost structure out of line?

After years of admiring the innovation of on-demand printing businesses, I have decided to launch one myself, as a shopkeeper with CafePress.com.

You can find the store at http://www.hsvgear.com/.

This site has a huge variety of products that celebrate the active lifestyle of Hot Springs Village, Arkansas. The Village is 26,00 acre gated community, complete with 12 lakes, 9 award-winning golf courses, and lots of recreational activities.

Check it out and spread the word to anyone who might live or visit Hot Springs Village! Fans of Creative Outlet Labs will like to know that this is one of the first of many planned sites and projects in the works. Stay tuned for updates.

Do you remember the proofs that you did in high school geometry? I have been thinking about forecasting lately (as a topic of keep professional interest and personal curiousity) and am wondering if I could use this proof concept to make some connections. See if you can follow the following:

1. Each one of us has a bias.
It may be conscious or subconscious. It might be easily seen by others or by ourself. In any case, there isn't a person out there that is free from natural inclinations, pessimism/optomism, strengths / weaknesses, etc.

2. Bias create errors
A optomistic person may see the glass as half-full, and credit people with too much capability than they have demonstrated. A pessimistic person might be overly conversative and play out the "worst case scenario." Reality, in either case, will be different than the bias of the individual. Even a small error is still an error.

3. Bias manifest themself in every decision point.
Unless we actively fight it (often by overcompensating in the opposite direction), we demonstrate this bias at every point in our life where we are asked to make a choice.

4. Forecasting is all about making decisions.
Forecasting is an estimation process in unknown situations, which inherent relies on our ability to extrapolate our beliefs, data, and assumptions and make decisions. Whether forecasting financial results, anticipating the success of a new product, informing supply chain decisions, guessing when the train will arrive, or charting out your personal retirement savings, it is all about guesses, and educating those guesses as best you can.

5. The more decisions, the more error
So, if the above are true, each decision point in a forecasting process would give you an opportunity to illustrate your bias, introducing error. This error would multiply by every decision point to amplify your natural bias.

6. Corrolary: Fewer decisions, less error
Some forecasting processes having fewer decision points, thus would inherently be more immune to bias error as described above.

7. Conclusion: Forecasts based on limited data points are inherently more accurate than those based on multiple decision points.

Sounds logical, right? But think about this. This theory would say that forecasts based on historical trend data (one data stream) are more accurate than bottom's up forecasts which roll up the estimate sales targets from multiple sales territories. This is the counter intuitive part. When asked for a more accurate forecast, what do most general managers or business owners do? They go head first into bottom's up sales data to prove their assumptions, to show where the money will come from, and the like. This seems like it would be highly accurate and give them more confidence than simply extrapolating past performance. But I am coming to the conclusion that it isn't true. More analysis, leads to more error, which leads to more analysis, and forecasts get wildly out-of-whack.

So, what the is the true north for forecasting? I asked this question of several folks whose forecasting ability and experience I respect and they replied, "past performance is the single best indicator of future performance."

This phrase is very familiar to those who are experienced with behavioral interviewing techniques, which seek to illustrate a candidates competency and compatibility for a new job by matching the patterns of performance and styles of work from their past to the ideal for the position. This theory, in human terms, says that as you grow older and gain experience, you simply become a more refined version of the person you always were (a key point in Marcus Buckingham's new book entitled Go Put Your Strengths to Work).

If you are interesting becoming a better forecaster and trend observer, you'll like this post showing Paul Saffo's (Institute for the Future) Rules for Forecasting.

Enough philosophy. How do you forecast? How do you take out the bias, but ground your forecasts in reality? Are complex methods better than simple methods? How important is an understanding of the business (thus the passion that would lead to bias and to errors) or is it better to have a "pattern recognition" person that doesn't know the business? Your insights and experience greatly appreciated.

Private-labeled products in specialized, captive distribution channels is not something new. Every grocery store has invested significantly to reposition their "generic" products in recent years to premium offerings. Outfits like Trader Joe's have taken that to an extreme and carry mostly private-labeled products. Certainly the buying power of a national grocery store chain can open some doors at suppliers and make private-label products possible. What about private labeled products for the rest of us?

Miami-based Vuru is selling nutritional supplements in personalized daily packs, packing them in cool foil wrappers. Pick any combination of their 2,000 name brand supplements and vitamins and voila! The cool thing to me was that Vuru operates an affiliate program targeting doctors, nutrionists, and others that want to create personalied supplement programs for their patients/clients. What if this concept was taken further and these items could have the brand name of the nutrition clinic on them, instead of Vuru. What if Vuru's pre-selected mixes (with names like "Women's Yoga Pack" and "The UrbanDaddy Pack") could be private labeled to other brands or "celebrities." You could market "Josh's Secret Formula" or an marathon training club could offer it's members supplements to assist in training. The appeal is the ability to have the scale of thousands of micro-sales-channels all leveraging the same backend operations infrastructure.

There are a host of "standard" products that could be marketed in these three ways: 1) personalized mixes for personal use, 2) mixes assembled by one person for purchase by another customer, and 3) mixes sold by third parties, under their own brand. Some of these are listed here:


Bottled wine sold under a private label in a restaurant or bar with the chef's special mix of Cab and Zin. Mosaic tile mixes selected by mom-and-pop home improvement stores and sold at retail and regional home fairs. Custom mixes of M&M colors (add in the custom imprinting for a double-win) created by school PTAs for fundraising. Paint color palettes selected and "renamed" by designers who market to their clients and their friends (why should Gretchen at Devine Color have all the fun?).

This is yet another way that the "small" guy can be enabled to look very big and provide a huge degree of value to their customers based on their knowledge of the market, not their knowledge of supply chain, logistics, and manufacturing operations.

There is a new service from Barcadi (the rum people) in the UK called Barcardi Bespoke that allows you to order up a bar, complete with glasses, ice, equipment, expert mixologists, and a DJ, to your home or office. The cost of these events are subsidized by Barcardi as a marketing vehicle.

So, that (and a recent invitation for a custom fitting of Carlisle clothes in a woman's home) got me thinking what product demos I would invite into my home, or even pay to host. This is how the Experience Economy (see previous post) could be implemented through Tryvertising. Here is my list. What others would you add?

• Foot Spa Escape: invite a bunch of girl friends over for a foot spa with Body Shop or other products (I have, in fact, hosted this party). Could also work for "makeover" parties, manicure parties, "shaping your eyebrows" parties, or any type of beauty party.
• Garden Party: invite friends over to learn how to create a hanging basket with a representative from Michigan Bulb, Monrovia, or Jackson & Perkins.
• Music Burning Jam Session: listen to tunes and burn your own CD of songs from new artists.
• Digital Photography Workshop: Play with cool cameras (from Sony, Nikon, or Kodak) and take pictures of children or friends in a photo studio set-up with different backgrounds and props on-hand. Afterwards the pictures could be posted to Flickr or Evite, if they got in on the party.
• Scarf Party: Use RIT dye to create one-of-a-kind clothing art.
• Garden Globe Workshop: create a garden globe or other yard art using Black & Decker tools, 3M adhesive products, or other supplies.
• Easter Egg To-Dye-For: bring your own eggs to a dyeing event showing all the latest techniques.

I can think of a lot of "consumer" products that could create an experience around them. Even in the B2B space, I could think of a number of things that would be popular and help vendors sell more products. Here are a few ideas:

• Cool Office Supply Demo Day: the latest and greatest products from Mead, Bic, 3M, and other brands come together to let people try them out. Free samples lead to addiction and purchases.
• On-site Eye Exams: A lot of employers offer reimbursement for eye-glasses or contacts, but a lot of people don't take advantage of the benefit. Why not invite an eyeglass company and optomitrist into the office to give free exams and take orders for glasses?
• Chair Massage: A free chair massage could advertise a local massage salon, spa products, candles, or soothing music (or all of the above).

What company/product do you wish you could get a demo party for in your home or office?