Small Business

What's In A 'Small-Business' Label?

Lisa LaMotta, 09.12.07, 6:00 AM ET

It's one of the oldest marketing tricks in the book: Make the same product, but sell it to a new audience. That's what large retailers and manufactures have been doing lately to tap the lucrative small-to-medium-sized business (SMB) segment.
Last month, for example, Best Buy (nyse: BBY - news - people ) added a Professional Series label, which signifies products putatively geared for small businesses, though many have mass appeal as well. Dell Computer (nasdaq: DELL - news - people ) insists its new Vostro line of notebooks is perfect for small fries, while virtually all the options are available on other machines. And AT&T (nyse: T - news - people ) sells the same telephone and cable connections under the SMB banner as they do for plain old consumers.
Can you blame these guys? See-through as this strategy sounds, it's also very effective--and perfectly legal. As long as companies aren't making any false claims (after all, these products aren't not appropriate for small businesses), the Federal Trade Commission has no beef.
The other incentive: There are only so many large customers in the world. In an increasingly saturated market, competing for their attentions can leave some serious scars. That's why a host of giants in an array of industries, from finance (American Express (nyse: AXP - news - people ), JPMorgan Chase (nyse: JPM - news - people )) to technology (IBM (nyse: IBM - news - people ), Cisco (nasdaq: CSCO - news - people )), are casting for smaller fish.
Of course, marketing and substance don't necessarily go hand in hand. One famous example: Chrysler and Mitsubishi (other-otc: MSBHY.PK - news - people ) used to produce cars for both brands using the same assembly line--though Mitsubishi managed to charge thousands of dollars more per car (much to Lee Ioccoca's chagrin). In pharma land, Novartis (nyse: NVS - news - people ) now sells multiple versions of its Excedrin headache reliever, though at least two of them--Excedrin Extra Strength and Excedrin Migraine--are in fact the same product.
To be fair, many products bearing the "small business" moniker work just fine. But it's a bit of a stretch to claim that many of them are specifically tailored for that segment. “A phone line is a phone line," admits John Reagan, vice president of business marketing for AT&T.
Some so-called small-business products deserve the distinction more than others. Take Microsoft's (nasdaq: MSFT - news - people ) small-biz version of its ubiquitous Office software package, called Windows Office 2007 Small Business. While very similar to the standard Office package, the small-biz version comes with three additional features, including nifty accounting software that tracks overdue invoices and pending payables; a business contact manager; and a publishing program useful for making marketing materials. You'll pay a bit more--Office 2007 Small Business costs $450 vs. $400 for the standard Office package--but it's a decent value. Bought separately, the accounting software alone would set you back $150.
In other cases, the distinctions have less to do with how the product works and more with how it's sold or supported while in the field.
AT&T says it offers small-biz customers more ways to bundle its services than it does for home customers. If the dollar value of that flexibility is difficult to define, an over-the-phone consultant is happy to lend SMBs a hand in choosing the best pricing option.
Dell, for its part, has four lines of notebook computers for the small business market. Its latest--the Vostro line, ostensibly aimed at businesses with up to 25 employees and little or no in-house tech support--includes the same features found on its consumer models, such as 17-inch screens and latest-generation wireless capabilities.
The differences, says Dell spokesperson Jennifer Davis: Vostro customers avoid all that annoying free-trial software and have access to a dedicated phone support staff. (Extra support is nice, but you'll pay extra to avoid dealing with helpers as far away as the Philippines.)
Then there are the virtually cosmetic marketing pitches. Best Buy now slaps its Professional Series label on everything from notebook computers and printers to cellphones and digital cameras. A timely move, perhaps, given that U.S. sales of its "home-office" products--including all Professional Series items, except digital cameras--fell to 29% of overall revenues in fiscal 2007 (ended in March) from 34% in fiscal 2005; overseas, the number slumped to 33% from 40%.
Which products deserve the Professional Series label? Best Buy sets criteria for each product type based on in-store surveys; products that meet a significant portion of those criteria earn the Professional Series mark. “Different products have different needs," says David Barnes, a Best Buy spokesman. "We tried to identify a variety of these products and many of them are focused around portability."
The criteria for notebook computers include fingerprint security readers, Windows Vista Business or Ultimate (which combines standard and business features), the Windows Complete PC Backup and Restore feature, an encrypting filing system and motion-sensing hard-drive protection. The Sony (nyse: SNE - news - people ) Vaio TX series of notebook computers, for example, bears the Professional Series mark because of its fingerprint reader and Windows Vista Business software, says Barnes.
But here's the thing: Most of those features come standard on most new laptops--no matter who the buyer might be. Small business owners may very well be pleased with the Vaio, but not because it was designed with them in mind.
Indeed, Sony takes a distinctly consumer-oriented tack on its Web site: “Much like the car you drive, the notebook you own says a lot about your personality. Now available in Charcoal, Platinum, Slate Blue and Sienna." When it comes to the Vaio, the words "small business" are nowhere to be found.

Like we said, it's a stretch.