After understanding value, creating value, and capturing value, we now come to the next part of the value journey, i.e. communicating value.

A product manager has to be an effective communicator. Effective communication is timely, concise, and inspiring, yet with a lot of empathy. In the daily grind of the job, there are numerous things that pull a product manager in many different directions, yet, the opportunity to communicate with different stakeholders is always welcome.

Steve Jobs was a master communicator. We will look at a specific example from Steve’s and Apple’s past to understand the value of communication and how best to communicate value.

Communicating Value

But what does communicating value mean? Why do companies need to do it well?

“This is a very complicated world, it’s a very noisy world. And we are not going to get a chance to get people to remember much about us. No company is. And so we have to be really clear on what we want them to know about us….The way to do that is not to talk about speeds and feeds, it’s not to talk about MIPS and mega-hertz. It’s not to talk about why we are better than windows….What we are about is not making boxes for people to get their job done, although we do that well. We do that better than almost anybody in some cases. But Apple is more than that. Apple at its core…its core value…is that we believe that people with passion can change the world for the better….A lot of things have changed. The market is at a totally different place than it was a decade ago, and Apple is totally different and Apple’s place in it is totally different.”

This applies to companies as well as products. The essence of communicating value comes down to creating a position for the company or the product. When applied to companies, it takes the form of brand and branding, and when applied to products, it comes down to two things – Perception of Utility and Cost of Ownership, contrasted with competitors or alternatives.

Perception of Utility: Value is about what it means to the users, because they are the ones who are going to perceive how useful the product is to them, in relation to what it allows them to do. How does it fit into their life? How does it enhance their life? This applies to enterprise customers as much as it does to consumers. For enterprise customers, it is about whether it helps increase productivity, or whether it helps cut costs? Does it help them to meet their goals? At the end of the day, does it make people more successful, more satisfied, more enriched than before? And this can be an objective assessment, such as quantified by ROI calculators, or a totally subjective perception, based on how people feel when they own and use the product. The Samsung 3D TV is one of the fastest selling TVs in India even though there is no roadmap for 3D broadcasting and fewer 3D movies to watch. The subjective perception of value associated with simply owning the latest and greatest product can be said to be very high within a specific customer segment. With Apple, the fact that people are willing to stand in long lines for a new Apple product is also a measure of high perception of value in owning the product as soon as it is available.

Cost of Ownership: The perceived usefulness of a product is going to be contrasted and compared against the total cost of the product. The total cost of the product is not just the initial price, but any tangible and intangible cost implied in owning and using the product. For enterprise products, this is the cost of installation, deployment, implementation, training and administration all combined once the product is procured. Enterprise resource planning software like SAP requires a lot of customization to make sure it is installed, implemented and configured appropriately to a customer’s specific environment. For consumer products, such as say automobiles, cost of ownership includes the cost of fuel to keep the vehicle for a certain period of time. If you compared gasoline versus hybrid vehicles, you would see a comparison of how much you would save on fuel with a hybrid over a period of five years. For consumer products like home electronics, it is about ease of use, which is slightly less tangible, but important nevertheless. Does it fit into their life, or does it require a change in behavior, or a change in environment?

As we communicate the value of our products, we have to think about how we can increase the perception of utility and value. Cost is more tangible, but to the degree that products have an intangible elements associated with cost of ownership, we have to think about how we can reduce the perception of cost. And we have to compare and contrast these elements against what our competitors provide to create separation in our customer’s minds. The positioning statement is a great way to do it, and we will take a look at it later in the post.

iPod

Apple keynotes and product launches are legendary for Steve’s showmanship. The launch of the iPod, iPhone and iPad have all been fascinating lessons in how to communicate value. While the iPhone and iPad launches were elaborately staged events with the product introductions lasting well over an hour, we are going to take a look here at the launch of the iPod back in 2001. Apple was still trying to figure out its future at that time.

The iPod, in Steve’s words, was a breakthrough digital device, that was not a Mac. It was not the first to market, and music players was a crowded field. But Apple centered the discussion around the Mac being a digital hub for people’s increasingly digital lives. Apple had already released iMovie, iTunes (which was mainly a jukebox), iDVD and iPhoto by that point, making good on their promise of delivering on digital hub strategy.

The first iPod had the following feature spec:

• Hard drive based MP3 music player: 5GB
• 1.8 inches diameter hard drive, 0.2 inches thick
• Number of songs: 1000
• 160K bit rate
• Plays all popular music formats – MP3, MB3 VBR, WAV, AIFF
• Firewire connectivity
• 10 hours battery life
• Rechargeable lithium polymer battery
• 20 min skip protection
• Piezoelectric clicker
• Scroll wheel with acceleration
• Ships with earphones and charger
• Syncs with iTunes
• International language support for German, French and Japanese
• 2.4″ wide x 4.0″ tall x 0.78″ thick
• Weight 6.5 oz

Although this is not the complete list, as you can see this is a pretty technical feature spec. Now of course, any product manager worth his or her salt is not going to just rattle these features off to prospective buyers. Let’s look at how Steve communicated the value these features would bring to people.

Why Music?

Steve first started off by saying that as a result of making software to deal with music players, camcorders, DVD players, and digital cameras, Apple had to learn everything about those devices. But the problem was that the devices did not know anything about the amazing iApps Apple had created. What if someone built a device that could take advantage of the software? It could unlock the type of integration that had never been seen before.

He first set the stage and asked why music. He answered his own question with, “We love music.”. He doesn’t talk about the size of the market, number of music players sold in the last year, and estimated to grow at a certain compounded annual growth rate (CAGR). None of that. Simply, “We love music.”. Of course, he goes on to add that music is a part of everyone’s life, which meant it was a big target market. And it was not a speculative market because music had been around for a long time and wasn’t going anywhere. Besides, although the market was crowded, a clear leader did not exist, and no one had found the recipe to deliver the right product. Apple had the capability to contribute a far better solution to the market.

Steve then explored the alternatives people had for listening to their music – CD players, Flash players, MP3 CD players, Hard drive juke box players. He compared and contrasted their prices and capacity of songs and established that the hard drive music player was a better category of players because they simply held more songs.

Your Entire Music Library In Your Pocket

While the keynote itself is over 50 minutes, the actual introduction of the iPod is only about 10 minutes. Steve repeated the “1000 songs in your pocket” line over and over in those 10 minutes. But what does 1000 songs really mean? Up until that point, most people who had their music on CDs and weren’t downloading music illegally, had no idea how many songs they had in all those CDs. Steve provided some context by saying that for most people this was their entire music library.

“How many times have you gone on the road with a CD player and gone Oh God, I didn’t bring the CD I wanted? You have your whole music library with you at all times. This is a quantum leap in listening to music. The coolest thing is that your whole entire music library fits in your pocket. Never before possible.”

This is the part which gives rise to the myth of the reality distortion field. Up until this point, the thought of wanting to carry your entire music on the go never occurred to most people. But when Steve says with conviction, it immediately becomes something that should be possible, and something that’s wanted.

Take It Anywhere

Steve gives people a vision of how they can take the iPod everywhere – bicycling, jogging, mountain biking, and with the 20 min skip protection built in, iPod would play music in all those scenarios without missing a beat. You don’t even need to know what skip protection is and how it works.

The focus here is not on the small hard drive size or the skip protection technology, but it is on what those things allow people to do. All you need to know is that the iPod is really small and you can take it anywhere with you.

Fast

How do people get 1000 songs on to the iPod? With Firewire, and it is fast.

“You can download an entire CD into the iPod in under 10 seconds.”

He compares and contrasts this with music players, hitting home the point that the iPod is 30x faster than every other MP3 music player.

10 Hours of Continuous Music

One of the things Steve does in this presentation is that he brings up the challenges people have had with music players.

“It doesn’t matter how many songs you have with you, if your battery is dead, right?”

So its one thing to know that the battery on the iPod lasts for 10 hours, but it’s a whole another thing to realize that you can play music continuously for 10 hours before the iPod runs out of battery. The focus here again is on the user’s experience. I don’t know about you, but the imagery that came to my mind is of me with my headphones on and listening to music for 10 hours. What a blissful state, even though I would never have the time to listen to music 10 hours straight, unless I was on a really long drive, and not even then.

Steve strikes a balance between talking about how the product would fit into the user’s worldview, and also talking about the amazing technology powering the device. He talks about the rechargeable lithium polymer battery being the most advanced battery Apple has shipped. And he doesn’t skip the details. He talks about being able to recharge the battery up to 80% of its capacity in just 1 hour, even over Firewire. 

Ultra-Portable

So the iPod has a tiny hard drive that can hold 1000 songs, and a great battery life, but what is so special? Why would you not continue to listen to music on your iBook laptop that had all the music on it anyway and also had a decent battery life? Why iPod?

“iPod is the size of a deck of cards….it is tiny…it is lighter than most the cell phones you have in your pockets….Its a major major breakthrough”

Easy to Use

Steve talks about Apple having one of the best design teams in the world known for legendary ease of use in their products. He talks about the scroll wheel providing one handed operation for quick navigation along with acceleration to scroll through music, either by playlist, artist, album or song, or to change the volume. He contrasts with most consumer electronic interfaces being clunky and claims the scroll wheel as a breakthrough consumer electronic interface.

“You can use the iPod with one hand”.

More than Music

What else can you do with a hard drive?

“Drag documents, photos and keep them alongside your music.”

iPod Knows All About iTunes

Steve pitches “Auto Sync” as the coolest new feature because iPod knows all about iTunes. It automatically syncs with your music library, making managing music extremely easy. It automatically updates.

“What happens if you add new music, rearrange playlists? Every time iPod plugs into the Mac it automatically updates…Isn’t this cool? It’s never been this fast or this easy before….For the first time, we have a complete and seamless MP3 music solution.”

Steve stresses the intimacy of iTunes and iPod working together.

Call to Action

So what should people do after they come to know about the iPod?

“Ultra-portable, 1000 songs in your pocket for $399. I think this is going to be the hottest gift for every Mac owner this holiday season.”

A few other interesting points.

Here is the keynote in its entirety. Steve talks about the digital hub strategy in the beginning and gives some demos of the iApps – iMovie, iTunes, iDVD, iPhoto – and then goes into the iPod launch.

Notice how often Steve says the words “1000 Songs In Your Pocket” and “Ultra-portable”. It seems like he says those almost every few sentences. Also notice how many questions he asks as he introduces the iPod. He builds curiosity. He brings up the questions that most people would have in their minds.

“Why music? … What is iPod? … How do we do this? … How do we get 1000 songs onto the iPod? … It doesn’t matter how many songs are with you if your battery is dead, right? … What is so special about the iPod?”

My friend Vinay Dabholkar, has a good article on the iPod launch where he talks about curiosity before content, and how a good presenter builds curiosity before presenting his or her idea.

Positioning

Communicating value is essentially marketing the product. The positioning of the product plays a key role in helping marketing teams create the right messages using the right words and imagery to create a position in the customers’ minds. How do we position our products? Steve Jobs positioned the iPod in his launch in very specific ways. We can attribute the effectiveness of his communication to his charisma and showmanship, but the nuts and bolts of his communication come from knowing and understanding how the iPod needed to be positioned. That requires a level of clarity that we can all aspire to achieve, and the positioning statement is a great tool to use.

A positioning statement describes the key elements of the product and where it fits into the market, in very simple words. It forces simplicity and minimalism in communication. It is only a short paragraph but it is the most powerful statement that requires a lot of thought and care. Below is my shot at how Apple would have created this internal document before the launch.

For [the target market] people who love music

[the product] The iPod is [what type of product] an MP3 music player with a hard drive

That [has key benefits] holds 1000 songs which is an entire music library for most people,
is ultra-portable,
is easy to use and
automatically syncs with the music library in iTunes

Unlike [competitors or alternatives] other music players from Creative, SonicBlue or Sony,
iPod has a breakthrough user interface with legendary Apple design,
is 30 times faster to download music, and
smaller than most cellphones people carry in their pockets

This positioning statement becomes a strong asset which marketing and creative people can use to craft messages, advertisement inserts, that position the product in the minds of the audience, by simply using the words “1000 Songs in your Pocket”.

Metaphors

Bicycle for the Mind

The use of metaphors is an excellent advantage for positioning. Back in the early days of the computer industry, when computers were new and not used by the masses, it was important to establish the value of computers, and what they could be used for and how they could be used. Steve’s description of a computer as a bicycle for the mind is a fascinating metaphor.

1984

Similarly the 1984 commercial that launched the Macintosh made use of powerful metaphors to contrast Apple vis-a-vis the monotonous hegemony of the PC. Again it is all about standing out, creating the separation in the customer’s mind. This comes from having the clarity about who you are, what you stand for, what does your product stand for and what does it ultimately mean for customers. The 1984 commercial was all about breaking through conformity, about having your own freedom to decide what was best for you and not based on what was best for others. It is regarded as one of the best commercials of all time.

Marketing is About Values – Think Different

And who can forget the yet another classic, the Think Different campaign? This was yet another masterpiece in establishing who Apple was and what it stood for.

Back to Communicating Value

Let’s revisit our earlier two points about communicating value of our products.

Value is tied to utility, but from the user’s perspective. Steve emphasizes being able to carry your entire music library in your pocket, which has never been possible. He stresses the ultra-portability of the device, being able to use it outdoors while doing any activity, not having to worry about running out of battery. He talks about the challenges of not just other music players, but other alternatives of listening to music. He talks about Apple being the only company who could even create a product like the iPod.

Utility of a product is balanced with its cost of ownership. Cost is more than the actual price of the product. Steve stresses the ease with which it is possible to get the entire music library onto the iPod, the fast speed of transfer and automatic synchronization of the entire music library between the iPod and iTunes, and the ease of navigating the entire music library on a portable device on a small screen with the scroll wheel. And he stresses ease of use, which is the hallmark of Apple’s legendary design.

There are so many examples of Steve Jobs communicating the value of Apple products, but I thought the iPod made for a great example in how Steve balanced the technical features of the product with its benefits, with a clear focus on the end user experience.