A product, service or brand that’s being raved about is all well and good until you try it out for the first time. With mountains of people talking so wildly about something, you’ve naturally put it in the remarkable box. But what happens when it’s not remarkable; when it’s only OK; when it doesn’t blow your mind?
Apple has this hype problem. Mac lovers sermonise so wildly about using them instead of PCs anyone taking one out of the box for the first time almost expects a Mac to do the work for them – or at least perform it by telepathy. I met a Mac newbie this week and they were seriously underwhelmed by their box-fresh MacBook Pro, “It’s not as special as everyone bangs on about, is it?”
Buy an iPad this weekend and see if it lives up to your undoubtedly weighty expectation. (What do you mean it doesn’t change nappies?)
Word of mouth is the pinnacle of marketing – until, that is, when it sets the bar too high. Then it leads to disappointment and a distrust of the next ‘big thing’ and marketing in general.
Hadfield Road in Cardiff is a haven for the car buyer. It’s just a mile long but straddling nearly every inch of it you’ll find over 20 car dealerships. This proximity to your competitors certainly isn’t unique – pub chains all gather together in city centres. So does the sex industry in London’s Soho, and jewellry in New York’s diamond district around 47th Street. All apply the same phenomenon of proximity.
A similar thing is happening with e-book readers. The iPad launched earlier this year and threatened to decimate existing readers like Sony’s Pocket Reader, Barnes & Noble’s Nook, and, most notably, Amazon’s Kindle. But it appears to have done the opposite as sales of Kindle have trebled this year compared to the first half of 2009.
Amazon is now selling more E-books than they do hardbacks! Just think about that [undisclosed] number for a minute. In an interview with USA Today, Amazon’s CEO Jeff Bezos said, “I predict we will surpass paperback sales sometime in the next nine to twelve months. Sometime after that, we’ll surpass the combination of paperback and hardcover. It stuns me.”
They’re releasing a new Kindle at the end of August that’s smaller, lighter, better and half the cost. I don’t know if it can launch an artillery strike but it’s going to further enliven their product life cycle.
All this should remind us that the next time competitors threaten to join our market or emulate our products, we should wonder if we cant use proximity to grow the whole together, rather than needing to turn into cannibals. It’s another argument for the thoroughly modern co-opertition, not necessarily competition.
Sky have been ordered by the media regulator Ofcom to open up their Sky Sports 1 and 2 channels to competitors. But just before the physical sharing is to take place there’s been a typical Murdoch move.
The wholesale price Sky can charge its (not so friendly) brethren at BT Vision is linked to their own retail price. Sky have lifted their retail, and therefore the wholesale price. This is cutting your nose off to spite your competitor. Of course they knew that BT had advertised the service at £16.99 forcing them into a loss-leader position.
The silver lining on BT’s cloud is that they’ll be the cheapest on the market until they decide the pain is too much to bear. They should vacuum up some price sensitive viewers from rivals, giving Sky an own goal in the short term.
It’s the epitome of bargaining versus negotiation. I met a wonderful professor recently who hit home that there’s a massive difference in the two:
- Bargaining occurs when each party seeks the best outcome for themselves i.e. win-lose (think about buying/selling a car with a complete stranger – you’re bargaining)
- Negotiation occurs when both parties try to ‘create value’ in unity. Our coalition government is a timely example of this win-win situation (they have little without each other).
Sky were forced into negotiating with competitors and turned it firmly into a bargaining situation. When you sit down with that supplier/client next week will you be bargaining or negotiating with them?
Old news: technology and consumerism are intertwined. Simple example, the cheque book and then the debit card were tech replacements for cash.
Today’s smart phones and the rush of tablets we’re about to see really are changing the landscape now, not just tomorrow. Watch Scoble interview the head of eBay mobile, Steve Yankovich to see how serious one of the globe’s largest retailers is about mobile.
They’re serious about augmented reality; serious about decoupling from the desktop PC; and serious about going truely global. It’s 25 minutes long but hang in there, the second half is more ‘business’ than the first.
Go out with a group of friends and notice how many times Facebook crops up. Did you see it on Facebook… don’t put that on Facebook… I read about your holiday on Facebook… are you on Facebook (instead of the hassle of swapping mobile numbers). It really is becoming ubiquitous with socialising.
Where there are customers, companies will follow suit (like lions to the zebra). Every vertical from retail to radio; from celebrity to cinema are clambering to get aboard the good ship Zuckerberg.
Simple example: the Radio 1 Xtra blog is now their Facebook page. The BBC has scores of blogs and other social media eye candy but Facebook makes it easier for people to comment (and spam), to ‘like’, to interact with. This equals an increase in engagement – isn’t that the Holy Grail that marketers crave so badly?
What’s the problem then? Well, after flipping their privacy policy three times, Facebook has the same level of trust as your average politician. A-list tech folks have deleted their accounts in protest. Well, they tried. It’s a lot harder than you’d think.
So, crucially, whose data is it? Facebook would say it’s yours, but this difficulty in exporting/copying your data and then deleting what Facebook and its partner sites are holding for you says otherwise.
It also looks awful and if every site ends up migrating there my brain will melt from the bland sameness that threatens my screen. The explosion of the web is more than partly to do with the fact that individuals have become the creators – the publishers. Instead of doing this individually through their own HTML skills, or via blogs or micro sites, we’re facing the Borg. Star Trek fan or not, do you really want to join the Borg?
Regardless of shelving your existing content and only publishing on Facebook, there’s a real possibility that Facebook becomes the portal to the web. You can vote by liking items all over the web but there will be a covert element to this because data and consumer habits, along with profiling, is pure fertiliser to the advertiser.
You’ll also stay logged in and even though you go off and surf elsewhere, because you’re logged in, all your habits and actions are registered. Google are extremely clever with their AdSense but Facebook threatens to become so clued in as to make AdSense look like an abacus versus a scientific calculator.
Virtual currency, micro money, Facebook Connect, store fronts, adverts, gaming and the ever growing social graph (The Open Graph as Facebook call it) etc, etc mean Facebook is THE force to be reckoned with online.
A crucial argument from the protesters is that the pure web is open. Facebook are closed and – arguably – they stand to gain more by remaining closed. Come behind our walled garden, fertilise our product by increasing your interaction, and growing the whole ecosystem, and we’ll cash in from your data. Incidentally it’s the same data that we keep changing our privacy policy on.
Some would say it’s giving the web over to Mark Zuckerberg, Facebook’s founder and CEO. My problem isn’t necessarily with Zuckerberg’s leadership; the moneymen will be sure to right that ship. My problem is the possibility of it becoming the de facto site on the Internet.
Facebook has an amazing product. It’s staggering in size and hugely successful. If you’d built something 1,000th the size then you could pat yourself on the back for a monumental achievement. But if the populous web migrates there, I for one will be calling on Captain Kirk to save the day and defeat the Borg.
Have Suitor A believe they can be replaced by Suitor B at no cost to yourself;
Indicate to both Suitors how good the other is with you and your organisation;
Have Suitor A and B both believe they are playing second fiddle to each other;
Leave no stone unturned and explore every option from the start gun – you can never anticipate all the outcomes;
While various suitors are making offers, consider what all your stakeholders would appreciate and have other suitors make counter offers from those positions thus keeping momentum towards your goals;
Have your spokespeople dirty their hands with the groundwork leaving you free to play the trump cards in the 11th hour;
Keep your private thoughts just that, private. (Mr Clegg said far too much about who he’d do deals with during his campaign).
Note to dealmakers: this leverage negotiation can only work when you are strongly courted by suitors who appear, to each other, to offer you similarly successful products/outcomes. Sound familiar?
Questions:
Is Mr Clegg regretting what he wished for?
Will he overplay his hand?
Will he be wrongfooted?
Is it all a poisoned chalice?
Rebranding is an ugly word. All too often it’s a euphemism for ‘we were rubbish but a cleaner logo and new strapline means you should forgive our history and buy into this new stuff.’ Perversely, not rebranding is one of the reasons Mr Brown is going to be punished so badly on Thursday.
But I am a fan of change. I love improvement and progress and no one needs that more than a trio of uber-brands: Toyota, BP and Nike. All three have had a disastrous time in 2010 but the BP spill is sickening beyond belief. All three are surely hiring branding experts to refocus messages and ensure customer buy in?
But that’s the problem with most branding. It’s not the logo, or font, or jingle, it’s what the company does that makes it what it is. That’s why the purest marketing is a reflection what you are (your true story), not what Madison Avenue portrays you to be. Actions are what customers truly judge you on. The slickest branding in the world won’t get you to invest in Bernard Madoff!
So, Nike needs Tiger to stay on the wagon, Toyota needs consumer confidence more than we need oxygen and BP (along with everything they’re about to devastate) need a biblical miracle.
I was at a Barclays Springboard event with Rene Carayol this week. You’ll have seen him on the box with his shows, Pay Off Your Mortgage In Two Years, and Mind of a Millionaire.
What charisma! Watching the guy holding the stage he reminded me of the actor, James Earl Jones (voice of Darth Vader, Patriot Games etc).
But Carayol’s career is every bit as impressive as his persona. M&S, then Pepsi and the board of Pizza Hut. His golden moment was at the board of IPC Media as the young, noisy upstart. He soon recommended a management buy out, and convinced the board’s other nine members with his enthusiasm.
To raise the £860 million in capital needed, Rene delivered 72 presentations on five continents in three weeks. The board got their money and a 1% share each. Three years later they made the biggest exit in UK history by selling to AOL Time Warner for £1.1 billion. Unsurprisingly, he had the room’s FULL attention at this point of the story telling.
Couple of nuggets from Rene Carayol and others on the evening:
A players are twice as productive as B players;
Selling is about building relationships, not making transactions;
Hire a great attitude, not just a great skill set [if you can't have both];
Those on Facebook and Twitter are three times more likely to experience high growth [I think that’s because of mindset not necessarily the tools employed];
Rather than the common cost/investment thoughts, spending needs to pass a ‘value for money test’ (that was from a bank guy);
If you are bold you may fail; if you are not bold you WILL fail;
I’ve always had a fairly neutral opinion about Barclays, but an excellent event with a chance to hear the thoughts of some of their senior staff has risen them a notch or two in my mind. They did infinitely better on the feel good factor than the Word of Mouth Marketing Association did this week with their robotic cold-calling fiasco.
You know all too well that traditional journalism has changed. We’ve read the Huffington Post and heard about the Google-Murdoch punch up. The journo genie has left the bottle.
So when change has taken place in your industry and the future indicates far more, what are you expected to do? Unsurprisingly Gary Vaynerchuk advocates jumping the sinking ship. What’s new is his push to start a collective of freelancers building a new centre of journalism.
From his inspiring Crush it! “…those who possess that rare combination of fiery entrepreneurial spirit and reporting chops could team up and form a killer online news service without any biz dev partnership at all. They’re going to really win big.”
I completely agree. No, you don’t need to send four people to New York to cover a plane landing on the Hudson. Or send a John Simpson wannabe to a war torn corner of Asia. Instead, save the airfares, expenses, insurance and security costs by running original, insightful and discerning thought pieces, commentary and analysis. Suddenly, a handful of talented ladies and gents are delivering true fidelity.
Thanks to some sharp printers you can even go old school and get a paper run along side your site. The Newspaper Club will print 12 page tabloids in quantities as low as five!
The web has disrupted nearly every vertical on the planet and sent the established incumbents into a spin (obvious example: the Royal Mail). With so many undiscovered opportunities, which will you choose?
You’re having a conversation with a company Big Wig, perhaps an interview, and she asks, “What do you think of this social media phenomenon?”
Well, imagine it’s the 1960s. Horses pull milk floats, colour TV is just around the corner for most households, shillings are in your pocket and the Bay of Pigs has petrified the world. In between watching Steptoe and Son and listening to Elvis or the Beatles, someone asks you, “What do you think about this telephone phenomenon?”
With 20/20 hindsight you could’ve said, “It’s going to be amazing in ways we can’t yet imagine. The infrastructure we and other countries are laying now will be used for revolutions in communications and commerce that sound like science fiction if we talk about them now (think fax and Internet). User take-up will be so overwhelming that the lines will be stretched to breaking point and the ‘phones themselves will become like your watch or wedding ring – always with you. In short, phones will become an integral part of our personal and business lives.
The ‘60s Big Wig would nod sagely, probably with a slight smirk, and take the conversation elsewhere. But the answer to the question if you’re asked tonight at dinner is that, “History will repeat itself here…”
Unless you’ve been on Mars this week, you’ll know all too well that Kraft have now purchased Cadbury.
Well, it now turns out that Goldman Sachs, Morgan Stanley and UBS, hired by Cadbury, are – thanks to the purchase – to be paid more than if they’d successfully defended the hostile takeover.
It’s easy to flow with the anti-bank sentiment at the moment, but throughout the process we were led to believe that Cadbury’s management were hell-bent on seeing off the greedy American and retaining a British jewel. Let’s remember, Kraft is only in buying mood because they think organic growth is unlikely and Cadbury has a bigger future ahead of itself. They sounded like a deer being hounded by a savage tiger. Now it’s apparent that they gave the gatekeepers strong odds to leave the door open!
Nice to see the basic theory of management is still alive and well: what you reward, gets done.
Warren Buffet, Kraft’s largest shareholder, felt their shares were undervalued so instructed 500p in cash make up the 840p offer. That’s around £7 billion in bank debt added to balance sheet.
I guess it’s only fair banks both sides of the pond maxed out, right?
Charging for postage is the perennial debate of e-commerce. I think Amazon’s decision this week to extend its free postage charge trialled before Christmas might favour a good deal more consumers than Amazon serves. I can see other retailers having to follow suit as they look to win a friend and gain a client from their competitors.
You can almost see it as a cost per acquisition – how much would you pay a 3rd party to get you a customer? Is it cheaper than banner ads and affiliate percentages?
Then again, when Amazon can charge $3 billion for a Discovery Channel CD-ROM, maybe taking the hit on their postage bills wont hurt the P&L so much.
In the movie, The Untouchables, Kevin Costner’s character, Elliot Ness, sits on horseback overlooking the US-Canadian border. He’s there with his fellow Untouchables and the Canadian Mounties to arrest Al Capone’s men running contraband whisky across the border.
The Mounty Captain says to his troops, “Let’s take the fight to them, men.” Turning to Ness he says, “As you know it’s half the battle.” Ness replies coldly, “Many things are half the battle. Losing is half the battle. Let’s do what is all the battle, winning.”
Before Google Reader, in the days when I’d buy The Sunday Times, I’d head straight for the business section and the big interview within it. The interviewees were typically folks that you couldn’t name in a line up; maybe a telecoms or hotel chain CEO. But what became familiar every week was the ‘half the battle’ line.
Each would say something like, “Gaining market share has been our key objective.” Or, “In this business, retaining customers is the most vital aspect of our jobs.” Others would point to market dominance, or a diverse portfolio of projects, or customer satisfaction, or retaining capital, or driving earnings per share (at least news for the market to create a drive). And so on…
Who am I to disagree with those leaders? Yet every time I hear a Big Cheese/Chief Exec stating so adamantly that X is half the battle, I’m reminded of that movie scene.
The one thing that the whole group of interviewees had in common as a key to running a great business? No, it’s not chasing a profit, as some could be CEOs of charities. It’s communication. Without effective communication, none of those leaders would achieve their goals. It’s the binding glue around which all successful organisations are built.
Example:
To win football’s Premiership title a team needs to score more points than all its competitors. Ultimately, to score more points you need to win more matches (not just draw). To win matches you need to score more goals than your immediate opponent. Therefore it all comes down to scoring goals. Why then don’t you see football managers scream ‘score a goal’ all throughout their matches and for hours at time on the training ground?
Because successful football requires thousands of components to fit into place. Only after hundreds or even thousands of actions from the whole team of players, support staff and management (passing, running, talking, teamwork, patience, skill, understanding, tactics, etc) can a goal happen. It is the result of ALL those actions. To perform those actions to the highest standard the team needs effective communication both before and during the match.
Shouting ‘make a profit’ to your team is as effective as Alex Ferguson telling the team doctor to score a goal – NOW!
How do you communicate that with your team? What’s the #1 thing they should have front of mind and how are you getting that agenda across to them? Isn’t that more than half the battle?
I was asked this week, ‘What does a manager really do?’ It was a fairly innocuous, rhetorical, jovial question from a well-paid, senior person.
The graduate switch flicked and I immediately thought, ‘seeing that the company’s goals are met’. After all, it’s the leader’s job to define and create those goals and aims, and it’s management’s job to realise them. Right?
But managing people is rarely a squeaky clean affair. I’m not a huge supporter of lofty job titles as they can often cause internal problems, but anyone claiming to be a ‘Manager’ will find themselves wearing several hats (in no particular order):
go between
consultant (to those above and below)
amateur psychologist
negotiator
dispute resolver
idea instigator
organiser
governor
role model
decision maker (the buck stops and all that)
communications expert (surely THE key to management)
soldier (ever metaphorically fallen on your sword?)
captain
big brother/sister (you need to eat more, drink less, curb spending)
counsellor
teacher
steward
servant
policy pursuer
change agent
supporter (of others, of the different viewpoint – perhaps the weaker voice)
challenger (of the status quo)
It strikes me that a manager who only wants to manage isn’t anywhere near up to the job. The seven-letter title is low-balling the variety of commitment needed in all but the safest of environments.
On the right - Prevent search engines from indexing news content and have readers pay through a variety of subscriptions to recoup lost earnings from physical news sales. People have no right to free journalism and aggregator sites (especially Google News) are to news, what Pirate Bay is to music.
On the left –
If you build it they will come. The internet is an unparalleled open space where the common good is freedom of information without class divides. If providers open their content equally the market will ensure the winners are the cream of crop. Revenue will be made through increased attention and trust.
Further right against ‘Don’t be evil’ - Stop the Google vampire by embracing its largest competitor instead – Microsoft’s Bing.
If Bing courted enough content providers to bed exclusively with them (by paying, say, the world’s top 50 newspapers and top 1,000 magazines) that would be a huge boon. Would it be enough to grab 10 or 15 percent of market share?
Of course it’s all about money for Murdoch, not attention and that’s where he and the digerati are looking at same issue from different ends.
Piano maker Kemble & Co is closing after nearly 100 years producing over 350,000 pianos. They were the UK’s last large scale piano manufacturer.
It’s a reflection of yesteryear when a piano was a central asset in the home. Mum and dad would teach their kids the odd tune in the hope of lighting their musical spark. Much more likely now to see a Playstation and laptop alongside the Sky box. Even if it were still fashionable, I doubt many modern living rooms are large enough to house a piano. I’m sure Kemble is a wonderful manufacturer but they belong to a sunshine industry that is clearly setting.
Another sign of the times is the UK release of Amazon’s e-reader, the Kindle. If I were a newspaper boss I’d be doing everything in my power to have my subscription service available to e-readers and smart phones. If I want eyeballs, I need to be where they are.
So why on earth are only four titles available via Amazon? The Evening Standard and Metro are free in London, but not so here. Hello! Amazon’s profits were up 68% in Q3 with the Kindle now their largest selling item by value and by volume (that’s staggering!). The music industry was far too slow to realise digital was a game changer, you’ve got to ask will the publishing and newspaper guys have learnt their lesson?
I can’t help but think of the Royal Mail strikes in the same (dimming) light. With the CWU seemingly taking glee at delaying some 50 to 60 million items, surely they’re speeding up their own inevitable death march.
Right or wrong as the union’s position may be, letters are in the same ‘sunshine industry’ as pianos and newspapers. No picket line will change that.
Google are the hottest company on the planet and they have well and truly won the war on search. That aint news to you. Fighting them directly is a bit like voting Labour in the next general election – a waste of energy.
You can’t be more of a lion than the lion himself, so throw in the towel. Move on. Fight another battle. Use new rules or change the game (even slightly). Semantic search is the future battleground where the engine understands more of your searching needs and the data it’s mined.
To the untrained eye this looks like the same ball game but it’s a much cleaner slate. Rather like Formula 1 this year where the cars appear the same as previous models but they’re inherently different. The new rules in both fields promise some new victors.
What’s so new about this semantic search?
Data has moved on exponentially since Google’s inception in 1997 (or so). Blogs, microblogs (e.g. Twitter) other social networking sites and book marking services stream and highlight more information than anyone could’ve honestly anticipated in the 90s.
Harnessing this data torrent allows for real time search results. If you’d searched for “Iran election” in June you probably wanted the latest news and insight on the troubles, not a standard bit of Foreign Office research.
Context is also increasingly important. Typing “Jaguar in London” could produce zoo or a car dealership results. Intelligence is needed to distinguish which you needed (known as disambiguation).
Making sense of search based on context and fresh data is the Holy Grail (closely followed by monetising it). Semantic search is craving to do just that.
Who’s playing in the hit-Google-from-another-angle game?
Bing (from Microsoft)
Mahalo (50% original content, 25% search and 25% knowledge exchange)
Aadvark (Vark.com asks your network for answers)
OneRiot (a real time socially-relevant engine)
Kosmix (a web guide with a dashboard)
Hakia (tabs results: web results, credible sites, images and new)
WolframAlpha (type a question, get an answer)
Twine (a bookmarking site on steriods)
Some are more semantic than others but that’s just eight players who are all in their relative infancy. With Yahoo’s open API code, Boss, anyone has access to a huge engine and can adapt from the basic Yahoo chassis. Google may have called game over on search 1.0 but there’s a whole new future out there…
UPDATE: since drafting this in early August, Google have announced a “fundamentally big change” via their Caffeine update.
Clearly, this threatens to put Bing et al back into their corner while Google blazes ahead with market share aplenty and more advertising than MadMen could dream of. We all know that’s not guaranteed though.
A lot has been made of Eric Schmidt resigning from Apple’s board. The short version: he’s also CEO of Google and these two tech giants are really starting to cross swords.
While Google are undoubtedly an increasing ‘problem’ for Apple, I think most reports are in danger of missing the elephant in the room: Nokia. They have a 40% market share of the world’s mobile handset market. They produce a phone every 13 seconds, with around 1.1 billion customers today, and they are well and truly on a charge.
Nokia are unquestionably number one – larger than their top three rivals combined – yet they were accused of being asleep at the wheel when it came to the iPhone. Enter the Nokia N900 Smartbook, launched this week with, “Computer-grade performance in a handset” and Flash support (not yet available on the iPhone).
Microsoft’s mobile version of the Office suite, currently only available on Windows mobile devices, is soon to be available on Nokia handsets. And Microsoft and Nokia plan on developing several mobile apps together.
Apple fans have consumed rumours about Mr Jobs producing a tablet computer for several years but it’s yet to materialise. Enter Nokia’s booklet. Add to this momentum the fact they appear to be teaming up with music rather than dictate to the industry. Dave Stewart (50% of the Eurythmics group) is a change agent and big fettler in the Nokia world of the future.
Nokia are a capable chameleon. They’ve reinvented themselves from a paper and rubber manufacturer to an electronic giant turning over $70 billion. So when they say, “we will quickly be the world’s biggest entertainment media network.” we should really pay attention.
Their aptitude, coupled with some audacious strategic alliances may yet see CEO Olli-Pekka Kallasvuo pull off a Finnish coup d’état.
All businesses want to control their own destiny. Surely, it’s natural. The old-fashioned classic is to cut out the middleman and access the wallet yourself. After all, why go to the trouble of producing a wonderful product, only to pray fickle retailers buy into it and run the gauntlet of the supply chain? It’s sorely tempting to improve margins and go B2C not B2B.
And, as retailers become ever more aware that globalisation is but a mouse click away, why would they pay top dollar for widgets they can source, spec and put on a boat from Taiwan themselves. Again, in the pursuit of margin, it’s tempting to bite the hand that’s fed you.
A couple of recent examples:
Fresh out of bankruptcy, General Motors are showing an eagerness for change and sales by trading on eBay. With no one denying the car dealer network needs napalming, will this be the air raid warning for their atrocious service?
And Which? are looking to raise finance to launch a range of own-brand products and services. This 52-year-old charity organisation is taking the goodwill of 1 million subscribers and completely reengineering their business model.
What’s next, the BBC’s political editor running for Number 10?
They’ve flirted for years. Constant advances were spurned and due diligence seemed wasted but Ballmer’s finally got his gal. Well, sort of. This week has seen a sharing of search revenue, not a sale between Microsoft and Yahoo.
Despite her strong words of rebuilding and turning-the-tanker, we all assumed Carol Bartz’s number one play when she parachuted into Yahoo in January was to negotiate the sell. Is this a toe-in-the-water on the way to a full-blown takeover?
Of course, search is where the rubber meets the road on the Internet and as Steve Ballmer said, “This agreement gives us the scale and resources to create the future of search.”
Not so long ago Yahoo’s search was ‘Powered by Google.’ If only they’d realised they were creating a seesaw of strength: as Google grew, Yahoo shrank. Fatal error.
It’s a ten year partnering, not an acquisition, but Google must be hoping this is a bit like the dog who chases cars and finally catches one. Can the undisputed also-ran in second place actually do anything different? Will the partnership lead to growth or confusion? What about the raft of other questions this throws up?
And, just in case you missed it, Amazon bought the highly respected Zappos earlier this month for about $937 million. I’m thinking the web just got a bit smaller but a couple of big players have sharpened their teeth further.
When a brand gets too big for its boots it can always change them for loafers. That’s what the Seattle behemoth, Starbucks appears to be doing by going all bohemian.
In an apparent throwback to their origins of the 70s, customers can listen to live music and poetry and even buy alcohol. But, more surprisingly, this pilot includes ditching the name at three stores in their hometown for a more neighbourhood “community personality.”
If this is a corporate makeover then it’s a radical one that may well throw the proverbial baby out with the bath water. McDonald’s modernised its restaurants recently but they didn’t dare mess with the brand name. A local focus is unquestionably sensible but with 38 years of growth in the name, are the connotations so negative that you’d want to turn your back on it?
The anti-globalisation consumer is as likely to boycott Starbucks’ 16,000 stores as they are Coke. If this is a play to engage them I suspect it might fail, rather like my three-year-old believing she’s become invisible by covering her eyes. The coffee aficionados of Seattle will be all too aware of the company’s facelift and could arguably shun it with double enthusiasm.
What do you guys think, is this retail smoke and mirrors or is it modern rebranding genius?
WARNING: this is a lengthy diatribe on ecommerce. If online retailing isn’t your thing then run away now. If it does float your boat then grab a coffee, my friend:
Scoble has been posting lately about the future of the Internet, calling it the Web 2010, others are more likely to call it Web 3.0. What will ecommerce websites look like in this future world? Amazon and the other ‘Web Whales’ don’t give us much of a clue what they are rolling out before the next Olympics, so here’s my take on some of it.
ECOMMERCE PROLOGUE
As the amount of data available to us grows exponentially, even the most naive of customers are suddenly morphing into prosumers (professional–consumer). Prosumers scan for information before actually shopping and they’re in your stores already. Armed with spec lists, reviews and price comparisons, they push back your sales team and POS with hard data and raw opinions.
Perversely, more data is seeing customers take longer to make decisions and impulse buys are now filled with doubt – “I should’ve checked the reviews on this.” It could be argued that retailers who engage the longest and build the most trust, will win the most favour (oh yeah, AND the most orders).
BLENDING
Firstly, from a marketer’s perspective, online wont replace offline. More than ever, we’ll see a blending of multichannel operations. Next.co.uk will still produce their very expensive catalogue and their website will outperform other channels, but their property managers will still have a job to perform. Ditto M&S and Tesco, but there is no question that the small and unremarkable of the high street will feel ever-more pressure from those dastardly dot coms.
DELIVERY
Free delivery is largely becoming the de facto choice online. With retailers pushing this, they’ll offer consumers in high street outlets the chance of delivery to home rather than carting it onto the bus. The visa versa of this is already becoming more popular but in-store collection is likely to be incentivised more as it’s a double opportunity for retailers: delivery is less costly as it remains within their own supply chain (they’re transporting from the hub to the high street anyway) and, as you collect, it’s far more likely that you’ll pick up that extra item (cross selling heaven).
MOBILE VALUE
Mobile web access will grow as smart phones continue to take hold but M-Commerce value will start from a low base – think ringtones and iTunes. However, these should see repeat visitors and as trust builds, value should grow. Until then, fears of data breaches and insufficient speed will prevent anything like widespread acceptance.
SEARCH
In-site search will gain intelligence as search engines are forever increasing shoppers’ expectancy of relevance, thanks to their ever-improving accuracy. Typing ‘white 16″ collar double cuff non iron‘ on next.co.uk results in “There were no documents that contained all of the words in your query. These results contain some of the words…” and they proceed to show me 225 products with a white luxury Percale bedset toward the very top. (Yes, they do list shirts with all those keywords.) Partnerships with the search guys are likely as algorithms need to improve.
SEARCH ENGINE PAYMENT
Facebook money and nano-payments are going to become a reality, but how about making your transaction on the search engine itself? If Google, Bing or Yahoo shows you a product you want from a five star retailer, there’s no real reason to jump through to the site at all. You could plug in your payment details right there, completing the transaction (Google checkout really starts making sense now, eh?). This will increase shopping speed where trust already exists.
AUGMENTED REALITY
Augmented reality will take place using your photo library. A plug-in will scan your local machine and online (esp Flikr and Facebook) to find an image that it can use to best display the latest wares from Asos.com and TopShop.co.uk. It will superimpose clothes onto you and put you on an exotic location, not a paid model, in true CSI style.
SIZE AWARE
Zappos, the US shoe mail order giant, budget for a 20% return rate. Size aware sites will pummel that kind of error. Using the augmented reality above, you could see yourself in specific sizes: perhaps the large (your normal size) is a little too loose and viewing the medium shows it to be more correct. Obviously, very accurate pixeling and measurements from the site are a prerequisite. Women will be addicted to this feature; men might well become extinct from the high street.
3D
Why wouldn’t future sites look like merchandised finished stores? We’ve all seen Second Life and other virtual reality sites. Well, imagine you could ‘walk’ the whole store or teleport to the men’s shoe department. The store’s branding could even change to suit your mood – upbeat and funky, or perhaps click to change the ambiance to sedate and sophisticated.
SOCIAL PLUG-INS
This is where the likes of Facebook are betting on the big money. You’ve seen the sonar picture in the Batman movie where Morgan Freeman can view the whole of Gotham thanks to everyone’s mobile phone acting as a radar device. Well, as you ‘walk’ through the 3D reality store and into others in the shopping centre (because they’ll collaborate, as retailers know proximity brings success), you will be aware of your social media contacts – Julie is 50m off to your right, David is in the café upstairs. Virtual geotagging would allow you to meet them/talk/show as busy.
FRIENDLY FOCUS
Social advertisers are of the mindset that if you like snowboarding, heavy rock and fast convertibles, they can serve you ads that will interest you i.e. heavily targeted. They’re also of a mindset that your friends wont be too far off that choice spectrum either. If you’re golf mad then it stands to reason some of your contact book will be fellow golfers, right? Therefore if they can define you, they reckon they can define your group.
If our virtual store knows that ten of your friends bought something from the homeware department, it might well show you an offering from that neck of the woods. If it knows two of your mates browsed a particular shirt and another one bought it, perhaps it might show you the shirt. But wait, you don’t all want to look the same (though you may well want to buy identical music and games) so the store’s intelligence shows you similar styles, but not an identical shirt.
4th DIMENSIONAL WEB
The focus on friends and your group above is referring to the social graph (a modern take on six degrees of separation, if you like). The problem with that graph is that as your social list grows, the trending becomes diluted. Let’s say you ‘friend’ two people you work with: one is into motorbikes and cooking and has married four times; another is a spinster and likes books and knitting – correlation is becoming far more difficult (simple example, but you get the idea).
You ‘friend’ people almost on a daily basis because you’ve touched each other in some way. But it is NOT an indicator of similarity. However, if you and I are connected *and* we’re both members of the Chartered Institute of Marketing and the Institute of Directors and we also list similar books and blogs as of interest, then the algorithm could rightly pair us on the same graph. The trouble is, which graph: perhaps occupation (to serve job ads), but music and clothing? How about sport and movies? Will we both like cricket?
Incorporating the social graph along with real time search is what the master mathematicians are coding right now. It will make the web more than 3D. The intelligence and relevance will mean no serious retailer will have a standard look. Very few visitors landing at the home page will see identical layouts and offerings. The big players will become more relevant and successful because of it.
VOTING RIGHTS Scoble had this down when he said, “So, if someone says “Pluto’s rocks” there should be an aggregator that lets you see how many people talked about Plutos. Obviously only people writing on their iPhones FROM Plutos on University Ave.”
He’s talking about your contacts (friends again) informing you of what’s well regarded, but there’s also the possibility of the wider view from perhaps the whole of Twitter or Friendfeed. I’d say this could split in two, similar to paid ads appearing above the SERPs in a Google search with your closest friends (easily ID’d beause of most interaction) biased toward the top. The intelligence knows that I’m biased to my friends views, but still shows me what the masses think.
MOBILE NETWORKING Jason Calacanis says that the Mobile SNS (social networking services) is up for grabs in the United States. I’ll take his word on that, and I’ll completely agree that social networking will shift from the desktop to your pocket. The phone coupled with geolocation tools will become networking nevada.
BRILLIANT BAR CODES
The cubic generation of bar codes is coming where data matrix squares will replace the traditional lined rectangle. But we’ll also see QR (quick response) codes more frequently in the UK (they’re common in Asia and North America). The QR code can look like art, but when scanned, usually by a mobile phone camera, it reveals data. These can take you to micro sites, or vouchers, or secret passages to hidden info (known as easter eggs) – like game cheats and movie trailers for example.
Gorilla marketers will appear to make these bleeding edge, scattering them around cities and towns, but within a year the Pepsis and Fords of the world will drag them to the mainstream.
CHANNEL CONFLICT
Manufacturers want greater penetration and control and they can achieve both by cutting out the middle man and going direct to the consumer. When your products are as hot as Apple’s you can do as you please. Retailers are still falling over themselves to tout Apple’s wares despite the possibilty of losing a sale to apple.com. However, the majority of brands have their hands tied by the threat of retaliation (i.e. refusal to buy) from their retail partners.
It’s thought that 50-60% of customers looking for a branded product begin their search at the manufacturer’s website. Manufacturers will look for ingenious ways of capturing that consumer rather than just being a megaphone of information. Ship to store is the most obvious route but the marketing steps ahead of that will be ingenious – hooking in TV advertisment widgets for instance.
BRANDS
Own brand products will become even more obligatory. Did you know Amazon has had their own private label line-up for five years? China’s best will also feature far more in Europe as they cash in on the knowledge we’ve given them. It’s bite-the-hand-that’s-fed-you time.
The show, I’m running Sainsbury’s teaches retailers a valuable lesson. Several in fact: it was a great marketing ploy, a very good HR tactic, and it also showed the value of failing.
In seeking new ideas, Sainsbury’s Chief Exec., Justin King (see right), canvassed his entire team for the next big idea – that’s 150,000+ employees. We didn’t get to see how many reached final consideration, but the few Ch4 followed contained failures.
You got the impression from the Sainsbury’s big wigs that this was all part of their proficient DNA. Consider, canvass opinion, prototype, test, roll out slowly, emergency stop if necessary. Understandably, the smallest percentage of ‘big ideas’ mature through this process.
The Kings, Sugars and Bransons of the world would say failure is a necessary evil in businesses big and small. If you launch ten projects then it’s extremely unlikely that all ten will float along successfully. Therefore, for the realists, it becomes a question of how quickly you appreciate it’s a lost cause and just what you do about it.
Michael Jordan said: I have missed more than 9000 shots in my career. I have lost almost 300 games. On 26 occasions I have been entrusted to take the game winning shot… and missed. And I have failed over and over and over again in my life. And that is why… I succeed.
The recent reports of Tesco’s profit show they’ve been outstanding while others have cried ‘recession’. A 53rd week changes the picture somewhat, but lets round off profits at £3 billion. Bravo.
They’re launching a banking arm soon and it’s going to shake the big boys out of plenty of high street business, but what’s next? How about earning customer favour by taking green initiatives to their core business model?
I’m not talking about binning normal light bulbs for more energy efficient ones – arguably making the process counterproductive. Really go green, not create some spammy marketing half-truth, but a bona fide real deal. Court green ideas, embrace things that upset the status quo.
Here’s some examples:
1. Source the best designed solar panel that can be mass produced and put on top of Tesco’s buildings, helping them decouple from the national grid.
2. Offer a £1 million prize to the designing of a system that channels the energy of millions of shoppers pushing millions of trolleys around the stores. Possibly via some sort of dynamo/KERS system that downloads stored energy when in the trolley park (selling the surplus back to the national grid).
3. Train some of this year’s 600,000 school leavers (what percentage are to become unemployed?) to help manufacture the above, becoming the employer of conscience.
4. Find ways of better catching and using the rain water on site from roofs and car parks.
5. Recycle on a new scale altogether helping communities, suppliers, and possibly governments, better understand and practice this haphazard essential.
6. Lead the march on fair trade goods.
7. Employ a better infrastructure to source more local produce.
Note: I’m sure numbers 1, 2 and 4 have already been invented in Japan or by boffins at M.I.T.
The capital expenditure here would be scary but there is a future upside for both a marketing and fiscal tidal wave. Showing the world what an innovative, responsible, thoughtful corporation looks like could arguably see shareholder value fall, but that’s short sighted. Consumers will thank – and reward – Tesco dearly. What could that bring to their share price?
This doesn’t happen overnight, but Tesco could become the world’s poster boy for green retailing – in the same way Zappos is for customer service. Of course this isn’t easy and that’s why it would give them a massive competitive advantage. Or do you think others will beat them to it?
By day, Nick Fluck is a director of Tredz, a bicycle retailer with a strong web presence. By night, Nick can be found moonlighting on Digitally Minded, waxing un-lyrically about marketing, business, new media, technology and innovation. This semi-personal, part-professional blog is a collection of Nick’s weekly(ish) ramblings as the wannabe business partner/love child of Seth Godin Want to know more?
A product, service or brand that’s being raved about is all well and good until you try it out for the first time. With mountains of people talking so wildly about something, you’ve naturally put it in the remarkable box. But what happens when it’s not remarkable; when it’s only OK; when it doesn’t blow your mind?
On the left –
Piano maker Kemble & Co is closing after nearly 100 years producing over 350,000 pianos. They were the UK’s 
And, as retailers become ever more aware that globalisation is but a mouse click away, why would they pay top dollar for widgets they can source, spec and put on a boat from Taiwan themselves. Again, in the pursuit of margin, it’s tempting to bite the hand that’s fed you.
They’ve flirted for years. Constant advances were spurned and due diligence seemed wasted but Ballmer’s finally got his gal. Well, sort of. This week has seen a sharing of search revenue, not a sale between Microsoft and Yahoo.
When a brand gets too big for its boots it can always change them for loafers. That’s what the Seattle behemoth, Starbucks 
In seeking new ideas, Sainsbury’s Chief Exec., Justin King (see right), canvassed his entire team for the next big idea – that’s 150,000+ employees. We didn’t get to see how many reached final consideration, but the few Ch4 followed contained failures.
The recent reports of Tesco’s profit show they’ve been outstanding while others have cried ‘recession’. A 53rd week changes the picture somewhat, but lets round off profits at £3 billion. Bravo.