May 3, 2011
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I saw a grandmother reading her Kindle this morning.
A seismic shift is occurring in the publishing industry, and before all is done a great deal of corporate blood will be shed. Nimble organizations will survive and perhaps thrive. Old institutions will die. The very nature of content is forever changed, and as always, marketing people are both over and under reacting.
 Electronic book reading devices (e-readers herein) are getting very successful. Some reports have e-book sales at 20% of the market, shaving a few years off industry predictions. One interesting tangent to this is that e-book readers buy more books than people who thumb-through dead trees (and will phrases like ‘thumb-through’ exit our vocabulary?). This is in part due to the retail price of digital books being about half that of paper, and thus there may ignite impulse purchases, such as is the case with single MP3 files as opposed to buying an entire CD in a jewel case. Or it may be that people who bought Kindles, Nooks and iWhatevers were voracious bibliophiles to begin with.
The fundamental change in market mechanics is that a bunch of middlemen were obsoleted. In the old days, an author hired an agent (15% commission) who sold rights to a publisher, who sold books to distributors, who sold books to book stores, who then sold them to you. Now you can write a book and sell it directly to readers and cough-up as little as 30% to a single mediator (Amazon, Barnes & Noble, Apple and Google). In effect two middlemen are now standing in the unemployment line with your brother-in-law. And frankly you can’t even compare shopping at Amazon with shopping at Border’s Books, mainly because Border’s is locking their doors.
Digital publishing has changed the industry more radically than the recently dead Osama bin Laden (praise Allah for a clean kill) changed 21st century geopolitics. In the bad old days, a writer would earn 15% or less of the cover price for his books, the rest being divided between everybody in the value chain. Today the writer, if he self-publishes, makes no less than 60%. However, by cutting out everyone in the value chain, the entrepreneurial author has to be her own PR, marketing, advertising and social media agency.
Most writers can barely write, much less do real work.
Everybody in the business is trying to adjust, from Simon and Schuster to the neo-beatnik you see tapping his laptop at Starbucks every morning. The good news is that the value chain disappeared in part to the brutal and beautiful efficiency of digital distribution. With e-books, there are no warehouses, store shelves, or dust gathering on unsold books that will be returned to the wholesaler. The cost of product for e-books nears zero and thus the cover price is half of the old variety. Similar market mechanics apply to magazines, which are scrambling to go digital.
iPads and Android slabs may even save newspapers.
Marketers face problems in this model. Many traditional means for promoting new books are bombing. Only 60-70 U.S. newspapers do their own book reviews. With book stores closing faster than a Jewish deli in Kabul, book signing events are becoming scarcer and moving to more fragmented venues. Even Oprah has depreciated her book pimping. Most publisher marketing mavens are looking to social media as the primarily promotional point, but those paths are still not well understood. The industry’s old habits are dying as hard as the industry (though not nearly as hard as Bubba bin Laden).
Book stores are toast. Large publishing houses will be margin constrained. Small press will thrive. Book marketing people will be confused.
The backhanded marketing lesson herein is that if you want to own an industry, kick the legs out from everyone else. Circuit City, in their prime, engineered-out everything everyone hated about shopping for consumer electronics, and at that time they were the darlings of Wall Street. Amazon eradicated the publishing industry value chain, reduced delays in the publishing cycle (upwards of a year from contract to book sales) and caused the old venues for promotion to evaporate. If in doubt look for what makes your industry weak or inefficient, then use that to change the rules.
March 22, 2011
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I have a dear friend who drives me nuts.
 He is an iPhone fan in part because he makes a dime chronicling that industry. Of late I have been predicting that Android will dominate the mobile device market (and in full disclosure I own nothing Apple or Google based). He responds with glorious tales of how Apple does everything better, the iPad is perfection, and how he wants to have Steve Job’s love child.
Sadly for him it looks like I’m right and that Steve won’t be sending him flowers in the morning.
In any market, Darwin wins. The market could be baboons, and that their irrepressible multi-partner mating habits that spread the better DNA faster than politicians spread manure. It could also be the mobile device market, where several hundred vendors dabble in genetic modifications. Whereas the iPhone is like a purebred dog, beautiful but also loaded with inbred genetic weaknesses, the Android market is looking like a pack of healthy mutts.
I’m aimlessly strolling the CTIA show floor this week, and nearly everybody sports an Android logo. Yes, some vendors have a token Windows phone on display, but the bulk of handsets, pads, hybrids and a few things I cannot adequately describe all run Android. Announcements in and around the show include many new devices that have new takes on the core competency (Moto’s smartphone/laptop hybrid and a new pad with a keyboard/cover/battery combo). As every mobile device vendor seeks to fill one or more niches, more and more lovable mutts appear.
Which explains, in part, why one survey shows consumers will buy Android over Phone by a 2:1 margin. Everybody get a mutt from the pound, and you get to pick the color, fur length, wetness of tongue, speed of tail wag and degree of doggie breath.
The marketing lesson here is that it is unwise to argue with Darwin, who has been batting 1,000 since slime formed into something more mobile. If a market exists, be Darwin and make sure your product drives mutations by letting other people innovate. Nobody can fulfill every customer’s needs, so let other vendors do so.
December 7, 2010
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 Cheap marketing research is like a cheap date: Sure, you have a transient and temporal moment of involvement, but nothing longer term ever comes from it and it can lead to nasty infections.
This comparison recently came to mind when a client asked if there was any way we could scale back a proposal for performing market research. As with most everything else, market research presents a tradeoff between cost and quality. The results from seeking inexpensive alternatives are the same. A discount paramour might deliver a life threatening disease and discount market research could deliver a fiscal death sentence.
Either way you get … well, let’s not go there.
Many miss three essentials about market research, namely qualitative breadth, quantitative depth, and statistical strength. If any of these three elements are missing, your market research will lead you astray. Hence, anyone attempting to understand their market needs to commit to researching the human factors of purchasing motivations, the degree to which each element concerns the entire market, and be sure that enough hands were counted to correctly model the market’s needs.
It is doable, but rarely is it cheap.
Qualitative research attempts to capture the wide variety of issues buyers and influencers have. Despite nearly seven million quarter inch drill bits being sold last year, nobody wanted a quarter inch drill bit: they wanted a quarter inch hole. They also wanted quarter inch holes in wood and ceramic and steel, a minimum of fracturing/splintering, a minimum number of sustainable RPMs, and a choice of colors (the pink drill bits were not big movers). Drill operators also wanted twist, tapers, extenders and left handed rotations. All these reflected the qualities (qualitative) nature of the users, their work and the varied essences of quarter inch holes.
Qualitative research typically involves talking to people until they are sick of talking to you. Deep interviews with a large handful of target buyer genotypes is a common approach. Even the smallest start-up performs accidental or ad hoc qualitative research – otherwise they would never have a single buyer (which seems to be the case with many start-ups).
Quantitative research mainly deals in how many people want one or another qualitative aspect, or how seriously they want it compared to other features. Since you cannot possibly deliver every possible feature to every possible buyer, you need to know which whole product features are in most demand and why. Members of the United Brotherhood of Carpenters showed a distinct lack of interest in pink drill bits, even in metric sizes.
Quantitative research almost always swings toward surveys, which creates two problems. First, there is a science to surveying – from survey instrument design, to question cross testing, to covariant analysis – it is a non-trivial activity. The other problem is that online survey tools became so popular so fast that email inboxes everywhere were instantly flooded with requests to participate in surveys. Thus, you have to bribe people to take serious surveys (American Idol text polling doesn’t count) and the longer the survey, the larger the bribe.
Which leads us directly to statistical validity. Attempting to perform research on the cheap typically causes an insufficient number of responses to be gathered to obtain a statistically strong measurement of a market. Granted, if there are huge divergences in smallish samples, the research may be valid (like when 99.998% of the members of the United Brotherhood of Carpenters said they would never buy a pink drill bit, and the one fellow who did was nail-gunned to a beam). Restricted response produce dicey decisions. Yet many businesses make million dollar mistakes based on substandard surveys.
With one exception, you need to bite the financial bullet and outsource market research. Your ultimate business decisions rest on the results. Using cheaply produced research to launch or grow your business is like using masonry bit to anchor crown molding – the results ain’t pretty.
The exception is for companies designing products in the ‘innovator’ phase of the technology adoption lifecycle. This earliest of moments in a product’s life cycle is like when Michelangelo first stuck a raw hunk of marble with a chisel. The process is about knocking of huge imperfections in order to see the basic shape of the art/product. Most of the direction comes from you and some very participative patrons. You conceptualized the core product idea because you had talked to enough potential users to see an opportunity. In the innovator phase you are building the core product, and expensive formalized research can wait … for a while.
October 26, 2010
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The easiest way to kill something nice is to make it popular.
This certainly is the case with restaurants and bars. Pleasant, cozy cafes and lounges become unlivable hellholes once they gain notoriety. You can’t find a seat, a table, a waitress. Service vanishes, quality suffers and you can’t enjoy the environment once 347,890 of your closest friends go there … every night. The same may apply to software, though the mechanics of the destruction of value differs.
Such may be the fate of Java.
 For all its early warts, Java became an important technology. It was the first cross platform application language that didn’t suffer from 4GL rigidity or opaque stupidity of design. Once woven into the fabric of web pages, it provided the first major addition to HTML and made web applications behave more like desktop applications. The web became more intuitive while server-side applications became more fluid, released from the rather awkward confines of the old CGI apparatus. While Sun kept Java (more or less) open and devoid of exploitive patent litigation, developers were willing to gulp Java as well as Diet Coke.
Naturally, it took Larry Ellison to screw this up.
Some very smart people predicted that Oracle didn’t want Sun as much as they wanted Sun’s percolator. Since Java was the foundation of Oracle’s Fusion, and since competitor IBM was the biggest Java development shop on our Big Blue globe, Oracle had an interest in obtaining control over the destiny of Java. In short order Oracle co-opted IBM into abandoning a Java clone and then sued Google for sundry alleged violations of Sun patents for Java technologies (and one must wonder, given Ellison’s salted earth approach to competing, if litigation was not mentioned to IBM before their conversion to the Church of Larry). According to Oracle’s shysters, “Android (including without limitation the Dalvik VM [Java] and the Android software development kit) and devices that operate Android infringe one or more claims of each of United States Patents Nos. 6,125,447 … [blah, blah, blah].”
This may have scared Steve Jobs.
In news that rattled even Mac-only developers, Apple announced it was decaffeinating Macs. The official response was muddled with much misguided and inaccurate justifications, but the bottom line was that Java will not come pre-loaded on future versions of Macs. No developer can thus be assured that Java will exist there and would be criminally insane to develop using Java for Macs.
They may feel the same way about Android if Oracle’s hammer lands heavily.
Java’s popularity brought about Oracle’s acquisition, abuse and now possibly its demise. Making development upon any platform uncertain begins its downfall. For about twenty years I have had taped to my to my computer monitor the business card of an HP marketing manager who was behind the decision to unbundle Image DBMS from the HP3000 operating system (MPE), breaking a relied-upon development paradigm. Many market trends spelled the doom of the HP3000 and most other proprietary operating systems, but at the date of that decision I heard developers who had made their entire living off of the HP3000 declare they were going to branch-out.
“I cannot overstate what catastrophe this is,” is how one Apple Java developer was quoted. “If the future of Java on Mac is in doubt, then I have no other choice than going the Linux way…all the work I’ve done trying to get all developers converting to Mac is undone.”
Oracle is committing a marketing mistake by removing developer’s Java addictions. Once uncertainty abounds about the availability of a programming language on any target platform, then that language is scuttled, if not the platform as well. Perhaps Ellison wants to hamper Android (which is silly since Oracle makes no money on mobile) or emasculate Macs (which is silly because not only is Oracle not in the desktop business, Mac users are already emasculated). Protecting patents is fine, but disrupting and dissipating the good favor of a core product lapses into stupidity, especially when the very body that most closely supports the platform is thrown into spasms.
It also accelerates a drive Steve Jobs and Google have initiated via HTML5, to begin weeding out proprietary components from the web. Since Ellison is treating Java as a proprietary product, it will suffer the same fate as the HP3000 (“The HP what?” I hear people saying, to which I reply “Exactly”).
October 19, 2010
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B2B marketers could learn a lot from influenza.
 Actually, they would learn from Walgreens and their annual flu shots. A few weeks back I received snail mail from Walgreens, the chain pharmacy which I haphazardly selected last year to get my annual influenza inoculation. In the envelope was a colorful reminder about flu season and the fact I could get an injection, the location and hours of the closest store, a sheet detailing the hazards of catching the flu and the inoculation forms already filled out with the info I provided the previous year.
This helps explain why Walgreens’ return on equity, investment and assets are higher than competing CVS and why their stock price is doing better as well.
Promotions need to provide a sense of urgency, a solution and then ease the path to acquiring the product. Walgreens did all that in one mailer. Their literature reminded me of a recurring need, the flyer insinuated that body parts would drop off without the flu shot, and Walgreens even made the relative ease of filling out forms zero effort. To do any better they would have to come to my office and inoculate me during lunch with both a flu injection and three martinis (which I’d gladly pay extra for).
B2B marketers rarely do all of the above. Silicon Strategies Marketing is currently consulting to a company facing a come-from-behind scenario. In reviewing their web and other materials, they create zero sense of urgency for their enterprise software, take forever in articulating how they solve the problem (though you will read a complete set of self-aggrandizing buzz words that describes their software), and they do nothing to ease the process of acquiring the product … not even a video demonstration to convince you of the products capabilities.
It’s enough to make you sick.
Oddly business buyers are no different from consumers in as much as they have the same need/search/evaluate/acquire process. Their motivations are different and more complex and their requirements are more precise. Yet B2B marketers seem to believe in some mystical higher perception and patience of corporate buyers and thus do little to make buying easier and needs more painful. Our new client’s customers are in extremely competitive markets where the solutions provided can mean survival. Yet their web site never drives home the fact that their customers could vanish without gaining a competitive edge or how the software offered can provide that edge.
The marketing lesson is simple: the basics apply everywhere. Consumers, businesses, monks sitting atop distant mountain ranges … they all have needs even if they are unaware of those needs. You have solutions. Make the buyer feel the specific need that you uniquely fulfill, then remove all the barriers to learning, testing and acquiring. Walgreens motivated me, told me how to get the solution and made it easy to have a stranger stab me with a sharp object filled with dead viruses.
They just phrased it better.
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