Perhaps my 7+ years working at HP (with most of that time in HP’s printing and imaging group) makes me more sensitive to it than most. Or maybe I just appreciate a well played hand. Whatever it is, Kodak is doing something fascinating.
Kodak is clearly taking the opportunity, presented by the downturn, to expand their marketshare by trying to get customers to switch brands. If the numerous Kodak ads haven’t convinced you of this fact check out printandprosper.com. I am no ad guy, and who knows if it will work, but I have to love Kodak’s logic here. Allow me to explain.
If you think of brand switching like you do a recipe for baking a cake I think this economic environment has all of the ingredients to make one of the tastiest cakes you’ve ever had the pleasure of eating.
First lets define “brand switching.” For our purposes it will be the act of small and medium businesses deciding to purchase a different IT brand than they currently own. What ingredients would have to be present in order to create the perfect brand switching climate? I’d argue there are 1 of 3 key ingredients that need to be present:
1) Change in the role of purchase decision makers/influencers
2) Newly prioritized purchasing triggers combined with superior targeting of those triggers
3) Willingness of SMBs to explore new and different IT solutions
Lets think about the above 3 ingredients one-by-one.
First, there is good evidence that the purchase decision makers and influencers have changed roles (or at least the dynamics are different). The business decision maker (BDM) is playing a more significant role because they are exerting more control over budgets including IT. There is a renewed sense of adhering to more formal purchase process to help manage cost controls more effectively. This means the TDM – or technical decision maker – still plays a role (especially in medium businesses or MBs) but the TDM must be armed with a pretty compelling business need that the IT solution will address. Kodak’s campaign is laser-like focused on this fact by playing-up the cost savings in a very BDM-appropriate way by highlighting the amount you “overpaid” for your printing solution. According to their tool I overpaid $154 for my solution (or $463 over 3 years). Again, clear and tangiable value prop directed at the BDM.
Bottom line: there’s more than enough evidence when you look at YoY data to argue that the purchase makers/influencer roles are shifting.
The second key ingredient is having re-prioritized needs. The downturn hasn’t created new needs, but it clearly has put some existing needs front and center for SMBs. According to AMI’s Q Pulse study published in January, U.S. SBs are more focused on using IT to retain their current customers, while MBs are focused on expanding into new markets and acquiring new customers. These needs are very pronounced with approximately 80% of MBs over the next 6 months claiming they will be making IT investments to help expand their existing business capabilities (Q Pulse Jan 2009). More traditional IT needs (e.g. upgrades, speeds/feeds) take a backseat to these more fundamental business needs. When you combine this with the YoY data from annual studies you can see the re-prioritization of needs is indisputable.
Bottom line: needs have clearly changed; at least in order of importance
The third and final ingredient requires SMBs to think differently about how they view their IT purchases. This “new thinking” can lead to new brands entering into the consideration set of SMBs during the purchase process. After speaking with numerous SMBs during the downturn, if I know anything about SMBs (especially small), it’s that they are open to different IT solutions than they have been in the past. When you have an auto body shop owner talking to you about a new SaaS offering they just adopted to increase profits you know something different is afoot. SMBs are willing to explore new ways to cut costs, increase revenue/profit and drive business forward. According to Q Pulse 67% of U.S. MBs plan to leverage IT to drive out costs and increase efficiencies. SMBs are turning to IT to help them manage through the downturn. They are open and willing to listen to compelling, tangible and quantifiable value props that just six months ago they wouldn’t have had the time of day for.
Bottom line: SMBs are more open to more and different IT solutions than they have been in the past
So what does all of this mean? To me it means two things: 1) the potential for brand switching is NOW and marketers who understand this, and take advantage of it, could see significant increases in market share and 2) those IT manufacturers and vendors targeting the SMB space that don’t realize we have a perfect storm for brand switching are leaving themselves wide open to competitors.
Chad Thompson is the Vice President of Market Strategy at AMI Partners and can be reached at CThompson@ami-partners.com