Friday, June 29, 2012

Getting to Know YOU, Reader of E-Books

When you download a book from Amazon or Barnes & Noble, the retailers really get to know you. Did you finish the book or stop at page 50? Did you read every page or skip ahead to find out what happens? Did you buy the sequel even before finishing the current book?

Barnes & Noble found, by tracking how readers read e-books downloaded onto its Nook, that long works of nonfiction don't get read cover to cover. In fact, some nonfiction e-books are put aside after a few pages or chapters. As a result, B&N is introducing "Nook Snaps," brief takes on nonfiction topics, intended to be read when you have a few minutes here and there. Sales of Nook books and snaps are up 119% over LY figures, as B&N continues to adapt to the evolving e-book market. In other words, B&N has leveraged its knowledge of e-book reading habits to fill a need.

Amazon has mountains of data about readers of e-books: what page you stop and start at, what phrases you underline for emphasis or to remember, any notes you enter on a page. When you bought your Kindle, you agreed that Amazon can collect this data about your e-reading habits. Here's the exact wording from the Kindle License Agreement:
The Software will also provide Amazon with information related to the Digital Content on your Kindle and Other Devices and your use of it (such as last page read and content archiving). Annotations, bookmarks, notes, highlights, or similar markings you make using your Kindle or Reading Application and other information you provide may be stored on servers that are located outside the country in which you live. Any information we receive is subject to the privacy notice located at
Even now, it's not clear how much personally identifiable information Amazon has about you as an individual owner of Kindle and a reader of e-books, thanks to the way its Silk operating system operates.

On the plus side, Amazon is known for its excellent recommendations engine, offering you a number of ideas based on books or other products you've purchased in the past. That's a real positive because if you like one type of e-book, you're very likely to enjoy reading something else by that author or in that genre. Smart marketing, clearly.

But what about the potential negatives of so much data being collected? Under the Video Privacy Protection Act (dating back to the days before e-books, in 1988), video stores aren't allowed to hold onto your video rental info for very long, and they can't disclose it to outsiders. The California Reader Privacy Act offers some similar protections for readers of e-books. Are more protections needed for readers of e-books?

Wednesday, June 27, 2012

Hello Again from Hello Kitty

Hello Kitty is still going strong as a licensed brand--in fact, it's found some new categories for its playful brand. Not for kiddies only, by the way. How many extensions are too many for Hello Kitty? Here are three, involving spas, spoons, and the sky.

1. Dubai is home to the Hello Kitty beauty spa, shown above. Its niche is "Parisian glamor."
2. Yogurtland has a license for limited-time Hello Kitty merchandise (above), to be sold from July through Labor Day.

3. Taiwan-based EVA Airlines has painted a number of its jetliners with Hello Kitty in travel mode (for example, near the Eiffel Tower, as above).

Tuesday, June 19, 2012

Writing a Marketing Plan? Plan for 3 Types of Objectives

During the 1950s, most companies were focused on planning for higher sales and profits. In the past 20 years, the majority of marketers have expanded their planning to include relationships, thinking about long-term connections with customers, communities, etc. Transactions deliver financial results, but building strong relationships leads to loyalty, commitment, and other positive results that last long after an individual transaction is complete.

In the past decade, more firms have taken an even longer view by planning for social responsibility; not just sustainability, but helping people, sourcing materials ethically, or benefiting society in some other way.

So when writing a marketing plan, you should be thinking about three types of objectives:
  • Marketing objectives. How will you use marketing to build relationships with customers, channel members, and other stakeholders? Examples: (1) increase customer retention to 90% during the coming year; (2) Expand distribution by selling products through 2 new supermarket chains in the next quarter.
  • Financial objectives. What financial results do you want to achieve? Examples: (1) Build yearly revenue to $10 million by October 31; (2) Improve profit margins on all products by 1% within three months.
  • Societal objectives. What do you want to accomplish through social responsibility? Link these objectives to your company's mission and how you aim to make a difference. Examples: (1) Use only recyclable packaging for all your products by yearend; (2) Raise $50,000 by holding a local fundraising event to benefit a nearby hospice.
Now that customers (both consumers and businesses) have so many choices and access to so much information, it's societal achievements that often differentiate competitors and demonstrate how companies have real purpose other than to make profits. Accountability counts: stakeholders expect to be told how much progress is being made toward societal objectives.

That's why Heinz, Nike, Dr Pepper Snapple, and hundreds of other companies now issue annual reports detailing their accomplishments in areas where they've set societal objectives.

Friday, June 15, 2012

Can Zipcar Keep Zipping Along?

Zipcar is watching rent-by-the-hour competitors put the pedal to the metal these days. Zipcar pioneered this "car sharing" niche in 2000, trumpeting the tech-friendly, eco-friendly aspects of renting by the hour instead of owning or renting by the day. No rental counter, just click to rent online or on your smartphone. Zipcar has more than 700,000 members nationwide who pay an annual fee to participate, and it projects additional growth for years to come.

Now much bigger players are making a big splash in this ever-expanding market.

Hertz On Demand is pushing its large fleet of cars for every taste and budget, and its many locations--plus the lack of membership fee, a pricing advantage for those who don't expect to rent very often.

Enterprise has been buying up local and regional hourly-rental car firms, rolling them into its Enterprise Car Share business. Its point of competitive differentiation: Newer models.

Large competitors have the marketing muscle to educate more consumers about the benefits of hourly car rentals. Zipcar's first-mover position means it has high brand awareness among customers in the markets it serves (especially on-campus locations). But can Zipcar continue building its membership as quickly as in the past, now that Hertz and Enterprise are determined to drive off with a share of this market?

Monday, June 11, 2012

Netflix--Next Steps?

Booz & Co.'s Strategy + Business published a spring feature titled "Netflix Wasn't All Wrong," critiquing the controversial actions that Netflix took in 2011. Here's the conclusion:
  • Netflix should have split its rental operations to separate DVD-by-mail and downloadable entertainment, because these are different businesses requiring focus for success. In fact, Netflix retracted this decision after a firestorm of customer complaints.
  • The pricing change--separate monthly subscription fees for by-mail rentals and streaming rentals--was the right way to go. Netflix stuck to this pricing arrangement.
  • Netflix needed to better understand customers' true attitudes and behavior before making brand changes. The company didn't appreciate the depth of attachment to the Netflix brand, one reason why Qwikster (the brand for the proposed by-mail side of the business) was not embraced by customers. The way Netflix communicated the changes didn't help, either.
So where does Netflix go from here? Remember, this is a company that began life in 1997 and successfully fended off rent-by-mail competition from Blockbuster and Walmart.

The company did lose perhaps 800,000 subscribers after its botched attempt to separate by-mail and streaming subscription operations. But as of spring 2012, Netflix has more than 26 million streaming subscribers and 10 million by-mail subscribers worldwide. Netflix's Reed Hastings has set a long-term goal of attracting more than 60 million U.S. subscribers to its streaming service. Some analysts doubt whether this ambitious goal can be achieved, especially in the current competitive and economic environment.

Netflix's next steps depend, in part, on what competitors do. One serious competitor is Redbox, which rents movies and videogames through kiosks in local stores--very convenient for impulse decisions when customers prefer physical disks to streaming. Hulu is another competitor for customers who don't want to bother with disks at all. Apple TV may have some tricks of its own shortly. Finally, there's Amazon's Prime Instant Video service, which has been gaining steam lately--although it has far fewer movies for rent than Netflix offers.

Wednesday, June 6, 2012

Whose Profit Margin Tops 60%?

Marketing pop quiz! Match the company with its approximate profit margin:

1. Tiffany
2. Mattel
3. Dell
4. Whole Foods Markets
5. Rovio

A. 21%
B. 30%
C. 50%
D. 57%
E. 64%

 1-D, 2-C, 3-A, 4-B, 5-E
  • Dell's gross profit margin (computers, electronics) is a bit over 21%. 
  • Whole Foods Markets (food retailing) enjoys gross profit margins of more than 30%. 
  • Mattel's margin (toys) is a little over 50%. 
  • Tiffany's (jewelry) margins are higher than 57%.
  • Rovio's gross margin is so high because the Angry Birds parent company gets 30% of its $100 million in annual revenues from licensing and the rest mainly from game downloads. Looking ahead, can Rovio prove it's not a one-hit wonder?

Tuesday, June 5, 2012

Retail Show-down over Showrooming

Remember last December, when Amazon encouraged in-store shoppers to use its app for price-checking and offered a 5% discount for buying online instead of in the store? That was when showrooming burst into the headlines--consumers looking at products in stores and then buying from an online retailer instead.

Not surprisingly, bricks-and-mortar stores resent being showrooms for the online stores they compete with. With the economy still struggling, buyers notice the difference between store prices and online prices, and try to buy for less when possible. One study shows Amazon's prices 14% lower than Target's, for example. And that's a big reason why pioneer Amazon, known for low prices, is now the 11th-largest retailer in America.

Best Buy has been particularly hard-hit by showrooming. Because of its extensive inventory, Best Buy is the place to go for all things electronic, apparently even when the shopper plans to buy from Amazon or another web-based store. Now Best Buy is closing some of its big-box stores in the US as well as the UK. It will look into opening smaller specialty stores for specific product lines (think mobile phones). Smaller stores = lower costs and better service.

Watch for more changes as the retail industry seeks to combat showrooming through differentiation and, of course, price competition.

Friday, June 1, 2012

Celebrating with Queen Elizabeth II

Queen Elizabeth II is throwing a Diamond Jubilee party and the world's invited! She became queen 60 years ago, during the post-war era, and celebrations this weekend will range from official events throughout London (a star-studded concert, flotilla on the Thames, etc) to unofficial celebrations thousands of miles away.

Of course, the Jubilee year has only added to London's attractiveness as a travel destination in 2012, because the Olympic Games will be held there starting on July 27.

Marketers in North America are also celebrating the Diamond Jubilee in their own ways. Virgin Atlantic Airways is putting on a party in New York City's Union Square, asking the mayor to rename it Union Jack Square in honor of the UK flag. If you're in Naples, Florida, you can go to high tea or enjoy a pub crawl. Look around your area for a Jubilee celebration! Congratulations to the Queen.