Tag Archives: iTunes

Kindle Fire vs. Apple iPad: A Story in Innovation Strategy

First, after a year away I am back to blogging. More to come on what I have been up to for the last year, but until then, please read on…

After reading tons of stories on the recent Fire launch and why we should “thank Amazon”, I found myself asking a different question: What is the innovation rationale for each product and will the Fire win or lose?

Wikipedia

Well it is hard to say for certain, but I will take some leaps to explain one view. It would seem that Apple had been eyeing the tablet space for some time and watched as other companies from HP to Toshiba had tried. In 2005, I was party to meetings where Intel and Asus were shopping 7-9″ screen devices to all manufacturers trying to drum up support for the form factor and their respective piece parts. What makes Apple’s story seemingly unique is that the consumer and the experience seemed to be at the heart of innovation as oppose to the previous attempts that were PCs made to look like a tablet (See picture of early HP design).

Why is this important? Well knowing the rationale for the innovation may give us all a window into how successful each will be. If Apple was starting with consumers and trying to build a better experience that was neither satisfied by the line of computers or new iPhone, what was Amazon’s rationale?

Amazon’s rationale seems to be more focused on a retail-dominate strategy, trying to increase the points of purchase (or store fronts). This is to say that Amazon as a e-commerce retailer has dominated its channel as the Best Buys and Circuit City’s of yesteryear did in physical stores. With increasing consumption and purchase occuring in mobile platforms versus on a computer, Amazon’s business model is under attack, especially in digital consumption. The primary competition in mobile purchase is Apples iTunes and App Store and with well over 100 million iPhones on the global market and 25 million iPads, Amazon has a lot of ground to make up.

To be fair, Amazon may feel that price conscious consumers will flock to the device. This is probably true for a mass market approach that make great holiday gifts, but will they still be happy with the device 6 months from now? As their recent earnings announcement and great analysis points to lower margins for some time to come and the company alludes to a “razor-razor blade” approach to making money, the strategy will only work if consumers continue to use the device and purchase at or above those that purchase the iPad and other devices. Is Kindle Fire really going to attract the most valuable consumers of digital content?

As a final rap up, the innovation rationale has delivered two different approaches to business that will make a great case study over the next year. Keep watching as consumers cast their votes (purchases). My bet is Apple wins and the Fire may turn out to be the next Zune.


CPG vs. Service Marketers: skill-sets and executive hiring decisions

Headgear is mandatory in amateur boxing
Image via Wikipedia

Recently, I posted a question on LinkedIn in a effort to get some outside opinion on marketing skill-sets and how that is driving hiring decisions. While I was underwhelmed by the number of answers I received — three in total — I was intrigued by two responses.

My Question: What are the pros and cons of hiring a traditional CPG marketer vs. a Service Marketer? More specifically, what is the rationale you are using to make this decision.

I further referenced the following examples: CPG – P&G, Unilever, Kraft;  Services – iTunes, Scottrade, Netflix. Primary basis in these examples was a consumer-to-consumer apples to apples comparison.

The Responses:

Tough question – The necessity to qualify past performances and the other integral parts of the hiring process can’t be overlooked, but on a macro level this is [my humble opinion].
The traditional service marketer is able to move left to right brain more fluidly, based on the career choice to associate themselves with something that is fundamentally “untouchable”. The career progression of being successful in any one of your service company examples shows a high level of measurement as well as creativity. In my experience, the ability to think on both sides of the brain has become integral to any top performing marketing exec.
Matt Gill, Senior Vice President, Pile and Company- Executive Recruiter for Marketing Talent

Your service examples are really consumer products in that they are tangible goods. However, to answer your question: a traditional CPG marketer is usually working with a tangible product of defined value and generally a defined brand image. He/she is used to dealing with measureable goals and defining strategies against share of market objectives. Tactical tools are known and also quantifiable, such as promotions, packaging, collateral support. A good CPG marketer knows how to use these tools to best effect. On the other hand, a service marketer is selling something that is usually very intangible and tough to measure in terms of cost and value to its intended users. As Matt says, there is more need for both the left and right side of brain to come up with strategies and programs that will be of relevance to the user. In my experience, successful marketers of intangible services can more easily and effectively cross over to traditional product marketing. It is much harder for a traditional CPG marketer to cross over to selling intangible services. – John Fricks, CEO at Frix Group – Marketing/Strategists

The Bottom Line:

Flexibility, versatility are the highlights in favor of service marketers provided by Matt and John. Matt’s point that top marketing executives need the “ability to think on both sides of the brain” is more associated with service marketers. CPG marketers need to demonstrate they can sell what you can not see — a great analogy to selling the value you can create for an organization.

At CMG Partners, we have been conducting qualitative research with a number of top marketing executives across a number of industries and find that those with a “seat” at the executive table are best at working across the enterprise to drive transformation or change that enables growth.

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Service brands: vision of the future?

As a marketer and consultant, I always find it difficult to explain what a brand is to people that are not familiar with the concept (e.g. my mom). This task of explaining things becomes increasingly difficult when the brand is not something you can touch or feel like a service.

Service Brands are populating the landscape today and I feel a strong desire to learn from them as many other marketers should. Why? Because the idea of customer engagement, loyalty, or the idea of employees living the brand are old news to the service brands that get it right. Sure, the work is never done, but they are light years ahead of the consumer packaged goods companies.

I have put together the below diagram as an example of how the landscape of product-to-service brands is complex:

Examples Service Brand Landscape

The Bottom Line:

Three brands to take a page from are: Scottrade, Netflix, and Red Hat.

  • Scottrade has mastered customer service in my opinion. I must admit that I have a couple of accounts with them and within hours of making a major transaction on-line the local office (1 mile away) calls to make sure everything went as I expected.
  • Netflix mastered a simple concept of adapting to consumers lives and taking away the hassle of the rental store and late fees. Simplicity is their virtue. The next chapter of on-line and downloads for movies will likely test them.
  • Red Hat sells “free software”. In the early days, they boxed free software and made it easy to buy. Now they are leading and prospering in the enterprise business software arena and wining more than their fair share. The company’s culture of transparency and openness that is shared with the open-source community which fuels the software is Red Hat’s greatest asset. How else could you actually sell free stuff?

Links of interest:

Chris Grams Blog – Senior Director of Brand Communications & Design, Red Hat

The Official Netflix Blog

Scottrade YouTube Channel

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TiVo on the slide; is this a death spiral?

In TiVo Swings to a Profit posted by The New York Times, it is clear the TiVo continues to shrink. It is a sad day for the small technology brand that could. Subscribers are now at 3.5 million from a peak of 4.4 million. Net subscriber additions are down and have been shrinking all year long.

Net Adds for TiVo Service as reported by tvbythenumbers.com

Net Adds for TiVo Service as reported by tvbythenumbers.com

The cable companies are the major immediate threat and have been, but in the larger context Apple (iTunes), Hulu, YouTube and other similar services are changing the consumption behavior for video content.

See my last post Netflix & TiVo join forces, it does not seem TiVo is positioned well even in the strategies they are employing to get out of this tough spot. It is time to rethink the business model.

The Bottom Line:

TiVo needs to pull themselves out of this death spiral, but it will take grand action not incrementalism. They could become a software and information services provider for the competition (cable and satellite TV providers). Cable companies love to outsource this type of thing and they have been on a whirlwind of deals to work together in wireless communications, advertising networks, and interactive TV initiatives.


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