Nikon New Year Resolutions


What Nikon should have set as goals for 2005

2005 is a very important year for Nikon. In the DSLR marketplace, Canon has stolen the professional thunder and re-established a dominant market share. Fortunately for Nikon, the D70 has held off the same thing from happening at the consumer end. In compact digital cameras, other than the 8800, Nikon seems to be falling behind and losing energy. 2005 is the last year of the huge DSLR unit volume growth, so keeping or adding to market share is important there. 2005 is the year in which compact camera unit growth stalls worldwide and becomes more like a normal market in terms of volume growth, so keeping or adding to market share there is even more important.

It's no secret that I give my advice to Nikon publicly. It's the only way I know how--Nikon Japan, where most of the decisions are made, is isolated from its customers by its distribution system and has no direct channels open for dialog. Even if a pushy American like me could get in the door and get an audience with the key leaders at Nikon Japan, it would be a typical Japanese business reaction: lots of meeting ceremony and little or no actual discussion of issues. I do know that some Nikon employees read this site, and I know they're smart folk, so perhaps the word will get back to where it needs to go. At least that's my hope. Herewith, then, are the five New Year's resolutions I think Nikon needs to make to gain back the momentum they've lost since the D1 and Coolpix 990 introductions:

"In 2005, we'll improve customer relations"

Nikon, like Apple, lives just outside the mainstream. Both companies engineer interesting, unique, competitive, high-performance, and slightly idiosyncratic products, and do so on their own schedule. Unlike Apple, Nikon has yet to master marketing or customer relations (not to say that Apple is perfect, but they're good enough that if Nikon attained that level, it would be a vast improvement over present conditions).

Right now, Nikon doesn't really perform any Nikon-to-customer relationship. It's all customer-to-Nikon oriented, and the only "interactive" portal into Nikon is a labyrinthian phone mail system that ultimately produces frustration on the part of anyone who's ever tried navigating it. The digital tech support system on the Web sites was a slight step in the right direction--at least software updates and a few common questions are researchable if you don't mind clicking through the equivalent of Nikon's phone mail system (way too much navigation guys--try looking at Google's main interface; moreover, the whole site is a bit slow and not always up).

Here's a challenge for Nikon: know your customer better than Thom Hogan does. Make your tech support answer questions better than Thom Hogan does. Talk to your customer more than Thom Hogan does. Now this isn't an egocentric play on my part--I find it absurd that I seem to know more about Nikon's products and am more accessible to Nikon customers than NikonUSA is (I answer all Nikon-related questions I get via email, usually the same day, even though this often means staying up late at night while traveling). I find it even more absurd that top-name pros that use Nikon equipment (yes, you'd recognize their names) are asking me about Nikon's products and plans because they're not getting enough contact and information from NikonUSA. This is the antithesis of customer relations.

Yes, I know that companies are getting their margins squeezed and sending tech support jobs offshore to keep costs down. But that's a dangerous path. The slide of the dollar isn't the least of it. The problem is that when a company essentially tries to be a hermit and avoid its customers, as Nikon seemingly does, it only takes one big problem to hurt the company big time.

Let's go off path here for a moment. Let's consider a hypothetical case: Company X makes sophisticated automatic steering systems for cars. Press a button and your car drives itself, allowing you to surf the internet and read this site more regularly during your commute (;~). The system sells well and becomes popular and imitated. But the company that makes it doesn't talk to customers directly--the product is only installed through auto dealers, and the marketing and support questions are all handled by phone operators overseas. Then one day a car crashes and the media start speculating that the auto pilot from Company X was the cause. Panicked calls start coming into the support center in Sri Lanka, which, unfortunately means that some of those answering the phone are distracted with putting their live's back together after the tsunami and not much into dealing with a problem they haven't even heard about from the company they work for yet. Now the media reports that Company X, whose product might have caused an accident, is not responding to customer questions because their tech support center is preoccupied with its own problems (or is it a conspiracy not to say anything--I'm sure that rumor would pop up, too). How many auto pilots will Company X sell in the coming year?

You may remember the president of Johnson & Johnson a few years back when a few bottles of tainted Tylenol was discovered in the US. His reaction was instantaneous, in your face, and clear. The president of the company was on the news shows the next day. The product was recalled (all of it). Hotlines were set up for concerned customers to call. Ads appeared everywhere telling people what to do, who they could contact, and what was going to be done. Customers that did call or return product received followups. J&J, in their actions, said "the customer matters." Johnson and Johnson was not a hermit company then, and it isn't a hermit company now. Customers can actually reach real people, ask questions, and get answers. (Try it. Go to http://www.jnj.com/contact_us/index.htm and click on the link for their product contacts. You'll see email, phone, and Web site contacts for every one of their brands. It's on their products, too. So quick question: where in anything that Nikon delivered to you is the phone number for tech support? Do you know what it is? Hint: it's in my books.)

Nikon needs to stop being a hermit when it comes to customers. That's what this resolution is all about. Tell customers you care about them, want them to be a repeat customer, let them know how to get hold of you, reply to them in a timely and complete fashion when they do, anticipate their questions (did you notice that J&J even had FAQs on the contact pages?), listen to complaints and politely let the customer know that, even if you can't do anything about that complaint today, that you've heard it and the information will get passed on to the right organization within the company for further review or action. Then followup if there is further review and action. That's all we Nikon customers ask.

"By the end of the year, we'll create and announce a new top-end DSLR "

Canon has clearly shown that having the high end very well anchored definitely helps the rest of the model line. Nikon's imaging president is on record as saying that they could create a full frame, high end DSLR, but haven't because they didn't think there would be much of a market for a US$10k product. Such an assumption is both incorrect and has a negative impact on the typical Nikon customer. What was heard by the customer was that Nikon didn't care to engineer the best possible DSLR. What wasn't heard by Nikon is that we Nikon users have never based our high-end purchases on price. We want the best products, period. That's what drew us to Nikon originally, and it's something that Nikon needs to never ignore. If the top-end pictures matter, the top-end camera matters.

The product in question doesn't have to sell in 2005. But sometime in 2005 we need to hear Nikon forcefully say "We will not allow Canon to have the full-frame, high-megapixel, high-quality DSLR market to itself. Indeed, we intend to make the 1Ds Mark II look less-than-state-of-the-art." What's it take to do that? Well, I already mentioned full frame. You'd have to think that 20mp is the target resolution in 2006, so 22-24mp would be top dog. Beyond that, upgradeable sensor/electronics, removable finder, a hard drive option, and improved UI would most certainly make a statement that would be hard to ignore.

I'll repeat: price be damned. Nikon needs to simply grab the top end of the DSLR market back so it can once again claim to be the engineering-oriented camera company.

"Everywhere in our lineup we'll provide more value"

The D70 should be an eye-opener for everyone in the industry. Not a single soul, including myself, thought that Nikon would regain the low-end DSLR momentum when Canon low-balled the market with the Digital Rebel. The reason the D70 succeeds is that for around the same price, it simply offers more value. It's not a crippled camera, great attention was paid to small details, and even the visual impact and build quality seem to imply more value than the Digital Rebel. (Yes, I know the Digital Rebel is being aggressively promoted on price right now, with as much as US$300 rebates if you buy it with two or more additional lenses. But that just proves my point: the D70 effectively made the Digital Rebel worth less. Note to Canon readers: I didn't say worthless, I said worth less; there is a difference.)

Nikon's next opportunity comes with the D100 replacement. It's not good enough to "match" the Canon 20D in value. If the D100 replacement is merely equivalent to the very-good 20D, then it needs to come with more (can you say Capture?) and sell for less. But given the D70/DR battle, I'd prefer to see the D100 replacement be just a little better all the way round (10mp, more controls, etc.), which would make Canon have to respond with something other than a price drop on the 20D. But it has to be one or the other (or both!). Failure to outvalue a 20D would be perceived as another big win for Canon, as they would have once again done it sooner and better than Nikon. Not delivering the expected value but being on time is not an option. Being a little late but better is perfectly fine for Nikon (however, see the first and next resolutions).

"Value" is a perception thing, not necessarily dollars and cents versus features. That also means that Nikon has to improve their marketing messages and incidentals. The Digital Rebel is advertised on television here in the United States as a camera capable of shooting professional football (from the stands!). A very deceptive message, but effective marketing isn't just being able to state facts, but an ability to shift mind share. Remember, Canon also advertises its pro cameras as being the choice of sports photographers. So the Digital Rebel commercial actually ties into a more subtle theme: use the camera that pros use.

Nikon's recent use of "if the picture matters, the camera matters" theme is okay. The basic idea is fine, but the problem with it is that we're never really told why "the camera matters" points to Nikon. In essence, Nikon is trying to market using the consumer assumption of the old perception that Nikon made the best cameras. Unfortunately, today Nikon needs to retell the world just how Nikon makes the best cameras (perhaps now you'll see why making a high-end flagship that lives above Canon's is important). Nikon was first with a lot of things. Nikon was best at a lot of things. But they haven't done much to tell the average Joe what those were. And now many people have doubts. Time to retell the story, Nikon. Add value by telling us why things are designed the way they are, and what that means to our pictures. Nikon started designing wide angle lenses with digital in mind back in the 1990's. Canon's just now getting around to that. There are differences. But unless they're marketed, the casual user will never know about them.

But there are other value points that need to be addressed, too: Capture really needs to get integrated into the DSLR packages. To get revenue back, sell plug-ins (yes, the current verison of Capture supports a plug-in structure). My take is that Canon is offering somewhat better and slightly more in the software bundles with cameras than Nikon is at the moment (and the step backward with PictureProject didn't help). That needs to be fixed. Likewise, another way to put a thorn in Canon's once-a-year consumer DSLR replacement is to add value with longevity: a two-year warranty would be perceived both as more real value and a subtle slap at how fast the Canon models go out of date. Put an extra eyecup, a CompactFlash card holder, the remote release, and other small things into the package. Perform a software update that gives the D70 mirror-lockup. In short, get creative and attack value at each and every aspect of the market.

Coolpix needs the same attention (actually, if anything, it needs more attention). When everyone is using the same commodity sensors and electronics, you can only compete on price or value. Nikon isn't a company who should compete mostly on price--that's not the company's heritage and strength. Thus, the Coolpix lineup needs real attention to what you get beyond what the competitors provide. That means providing storage cards, cases, straps, software (even if it's only tryout versions), and much, much more. Selling adapter rings (for accessory lenses) and lens hoods is a fool's errand for Nikon. Why not bundle it up and charge more? Instead of dropping the price of the Coolpix 8800 in coming months (which we know is inevitable), make it a bundle with the wide angle lens, adapter, and lens hoods and keep the price where it is. ADD VALUE!

"We realize you may be confused, so we're publishing a road map"

Road maps are not product announcements. They're essentially a marketing document that elaborates on a company's vision for its products. In it, you make statements about intent, but don't necessarily provide detail (though providing some detail where you know it can be helpful). You start with some basic concepts like "Nikon will compete at every level of the DSLR marketplace and establish products that are clear value leaders at every rung." The announcement to produce a top-end DSLR obviously plays into this, and the road map can be vague: "we've heard what our customers tell us and our engineers have been working on something special that ties into this: sometime in 2006 we'll introduce a new flagship digital camera. Yes, it'll be full-frame (though all other models in our lineup will remain APS-sized), and it will have a state-of-the-art sensor and resolution. We'll announce more when appropriate, but we want our professional and high-end customers to know that we're committed to providing them the best possible products."

Some of the questions Nikon users need answered in a road map are these:

  • Will Nikon produce a full-frame DSLR?
  • Do you think Nikon can seriously compete with Canon across the line?
  • Is VR going to be standard on pro lenses?
  • When will "lens gaps" be filled?
  • Which, if any, DSLRs will be able to be upgraded in the future?
  • How long (and which models) will you support film SLRs?
  • Is Nikon still committed to the F mount going forward?
  • How is a Coolpix using a particular Sony sensor better than Brand X's?

"We won't panic"

This is something that needs to be explicitly said by Nikon. Unfortunately, moves like NikonUSA lowering the D2h MAP (minimum advertised price) in December 2004 need to be fully explained in this context.

It's clear to me that Nikon Japan sees that they need to be more aggressive. They're fully aware of where the growth in the digital camera market is (DSLRs) and where it's sagging (compacts). Their fiscal year projections for 2005 show that they understand that price drops and competition are inevitable. But without a road map, without clear marketing, without good customer relations, some radical moves look like panic to customers, and being perceived as in a panic is not a good thing--indeed, it tends to have the opposite effect. If people perceive the new US$1995 price of the D2h as a panic response, they're actually less likely to buy it. I can't begin to describe all the emails I got from people who were intrigued by the price, but essentially had decided they'd better not buy a D2h because there had to be a downside. Or that the price response was a panic reaction and a declaration of failure for the D2h by Nikon.

Had Nikon simply said the following before the price drop the perception would be different: "In a few days we'll show Canon and others just how serious we are about making the very best products while being very aggressive about price. We want our customers to know that there's no hidden message in our upcoming action: we are simply repricing a product to make it stand out as an exceptional DSLR value that is unequaled by any other." Follow that up with a dealer coop advertising plan that starts on the day of the price reduction and which has the headline "Own the best without having to pay the price." And, finally, because customer relations matter, Nikon needed to also have something of value to give to D2h purchasers (I've suggested elsewhere that simply extending the warranty by a year might have been enough).

 


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