A reminder about twittering

A reminder about our Twitter feed: @introtomkt
If you ask a question, you might even get an answer!

Many marketing professionals are fixated on social media - they see it as an answer to many questions. Our prediction is that in the fullness of time, social media will become another tool in the toolbox, rather than a replacement for other methods of communication between parties to facilitate creation and exchange of value.

How to make being a marketing student easier

A couple of posts ago I noted some of the issues that made being a marketing student difficult.

The problems I identified were:

1. Information overload
2. Subject diversity
3. Heirarchy of knowledge

So if these are problems, how to solve them? Alas a real solution isn't possible - rather a marketing student must try to ameliorate them - reduce them to something that is manageable rather than overwhelming.

1. Information overload. In the medium term, you will become used to the volume of information. You can help this process by going to class, reading the materials suggested - as a minimum, doing better will require extra reading and selection of things to read. Try to avoid being left behind by ignoring the reading - it might be impossible to ever catch up.
2. Subject diversity. There will be elements of the subject that you intuitively grasp - either because of the way your brains works or previous experience and/or education. Be glad of these. More importantly, there will be elements that you find difficult or uninteresting. Consumer behaviour might be a good example of the former for many students, market research [maths!] of the latter. Don't ignore these problematic topics - don't label them as boring when what you mean is that you find them difficult. Athletes work hard on their weaknesses - a footballer's weaker foot for example - rather than pretending they don't exist. You should do the same - work out which bits you understand and which bits you don't and manage your study time accordingly.
3. Heirarchy of knowledge. How do you start studying marketing? That is a tough question. From the perspective of those teaching/training rather than learning it isn't obvious either. If you look at a lot of the textbooks, there are groups wrt approach. Some start off with the marketing concept, others with the role of marketing within an organisation. My personal preference though is to begin with looking at consumer behaviour. As someone new to the subject, you might not have much work experience if you are quite young - or have not been involved in marketing issues in your previous professional life. What you will have some experience of is of being a customer and consumer [refer to your favourite glossary!]. My experience is that looking at selected elements of consumer behaviour is something that most peope are able to 'get', and from there we can link to segmentation, branding and many other key topics.

If you have a problem - think how to deal with it and put your plan into action. Don't let small problems grow into big ones.

Rolex: Much more than just a watch

Recently Media magazine reported on the market for luxury watches in China. The prospects are good: “Having a Swiss-made watch clasped around one’s wrist is a talisman of attainment for Chinese men. ‘A watch is a must,’ says Sandy Chen, research director, TNS China. ‘When buying up, they start with a luxury watch, next comes the luxury car, and last is the luxury apartment. Men compare and discuss watches, and they need a watch of a certain quality to be part of the social circle.’” The most aspirational brand in this very aspirational market? Rolex. Apparently, if you want to demonstrate your success in the world’s second largest (and soon to be largest) economy, then nothing beats a Rolex watch. This is good news for luxury goods manufacturers in general, and for Rolex SA in particular, at a time when the European market for luxury goods looks like stagnating in the face of poor prospects for long-term growth. The fast-growing Asian economies are showing a craving for the very best brands that Europe can offer.  

One branding expert claims that “If there were a fight to be the perfect brand, Rolex could be the heavyweight titleholder”. After all, the simple function of telling the time can be served extremely well by more or less any watch costing more than a few Euros these days. More complex functions can be delivered by, say, a watch from one of those solid and dependable brands Timex or Casio. For around €50 you can more or less carry a multi-function computer on your wrist that will tell you the time in several time zones, light up at night, and capture multiple lap times on your jog round the park. Agreed, there are some people who will not find these utilitarian products all that attractive, but for the style conscious there are the ubiquitous and stylish Swatch products, which, again for a very reasonable price, you can own in psychedelic colours, fluorescent shades, or adorned with your favourite cartoon character. For no more than two hundred Euros you can, if you desire, own several watches to meet more or less every purpose – sport, leisure, evening wear, work, travel, swimming … you name it. Clearly, a Rolex is delivering something very special to its owner, something that has nothing to do with accurate time-keeping or even aesthetic appeal (which is not to deny that a Rolex is generally very easy on the eye).

An economist would tell you that the unique charm of a Rolex is that it is a ‘position good’. That is to say that its most important purpose is not utilitarian but to assert the social position of the wearer. Human beings are social animals with a strong sense of hierarchy, and one of the psychological forces driving them to work harder and to achieve more is the desire to attain social status. What better way to assert social status, and to demonstrate material success, than by carrying round on one’s wrist a product costing €10,000 whose essential functions are undifferentiable from those of a product costing €50? That’s €50 to be able to tell what time it is, and €9,950 to show that the owner belongs to a highly exclusive social category. A marketer might explain this using Maslow’s hierarchy of needs (see chapter 5). We can reasonably suppose that the basic, physiological needs of a Rolex owner have been met. Owning a Rolex, however, clearly contributes to the satisfaction of esteem needs, and simultaneously to the social need to be seen to belong to a valued peer group.

Let’s make no mistake about it; a Rolex is a fabulous example of the Swiss watchmaker’s art. The original company was founded by Hans Wilsdorf in 1905, with the trademark Rolex registered in 1908. Rolex has to its credit several important advances in watch technology: the first waterproof watch (publicized in a swim across the English Channel in 1927), the first date-adjusting watch, and the original diver’s watch – the Rolex Sea-Dweller, released in 1967, was certified down to depths of 1,220 metres.  Rolex watches were used by members of the expedition on the first successful ascent of Mount Everest in 1953.

Naturally, Rolex is very careful about the kind of people and events with which it associates its brand. Not just any sporting or cultural event, nor just any sportsman or woman, meets the demanding Rolex standards. In tennis, think the Wimbledon Championships and all-time great Roger Federer, while in the arts think the Teatro alla Scalla in Milan and superstar ballerina Sylvie Guillem. Rolex associates its brand with the most successful people and the most successful events in the cultural and sporting worlds, and carefully selects the type of sporting and cultural event to reflect the preferences, and above all the aspirations, of the highly motivated, driven and successful people who are in the target market. Above all, the message is exclusivity. The Rolex brand is associated with exceptional people and events; the brand epitomizes European, and particularly Swiss, tradition, precision and excellence. For the expenditure of a mere few thousand Euros you can buy yourself a small piece of this exclusivity, and you can establish yourself as a member of this most sought-after club. Now, when you think of it that way, it’s not really an expensive watch at all, is it?

Sources: Glen Smith, “Luxury watches find booming market in China”, Media, September 10^th 2009; David Taylor, “Rolex watches: A timeless example of building a brand champion”, Central Penn Business Journal, December 3^rd 2010, available from www.centralpennbusiness.com, accessed April 15^th 2011; John E. Brozek, “Everest: A pinnacle of achievement for Rolex”, International Watch, April 2004;Company Profile: Compagnie Financiere Richemont AG, Datamonitor, 2010; further information obtained from www.rolex.com, from www.sylvieguillem.com, and from www.rogerfederer.com, accessed April 15^th 2011. 

My experience with NIKEiD

I wrote some time ago about the trend for mass customisation. That is - having systems and processes in place so that a product can be adapted to more closely meet the needs of the specific, individual customer. The main example I used was M&S and dress shirts: M&S custom shirts
M&S are just one company trying to more accurately match the wants and needs of their customers. Another company being innovative in this area in Nike. They call their system NIKEiD.

Find it here: store.nike.com

Although not applicable to the whole range of products, NIKEiD allows a customer to select a base model of [say] a training shoe and then customise it. There is flexibility in respect of materials used - suede or leather - and especially in regards of colour. The customer takes each element of the shoe and makes a selection from the options available. Typically there are 10-12 components. Laces, midsole, sole, accents and of course the famous Nike-swoosh logo.

Once all the components have been selected and adjusted the customer can pay for the shoe and wait four weeks for delivery. Alternatively they can look at designs by other NIKEiD users - and there are thousands of customer designed models to look at.

Rather than doing this at home, I decided to try the experience at the local Nike store in the centre of Glasgow.

Naturally a good proportion of the customer-service staff were current or ex-students of mine - or at another local college or University. This meant I felt free to interrogate them about some of the details of the system that a normal customer would not have known or cared about.

Where are the shoes made?

China or Italy - dependent on model. Most of the time between ordering and delivery is not taken up with manufacture but with shipping.

Do Nike use the customer-generated data in their evolution of their range of designs and colours? Also, do popular combinations make it into mass, standardised production?

Possibly. Certainly Nike HQ is tracking customer use of the system.

What proportion of shoes the store sells are designed using NIKEiD instore?

A small minority. Across categories, football boots are much more likely to be customised than streetwear style shoes.

Do you notice any patterns in the choices customer make?

Almost half of the football boots are in green and white. Most of the remainder are in blue. A match for the local football teams, Celtic and Rangers. Some customers don't want to make so many choices.

How careful do you have to be when using the system to co-produce a pair of shoes with a customer?

The system automatically detects swear words and copyright issues. So to use the text 'Rooney' wouldn't be allowed as that is protected. Ditto for text critical of Nike. Local knowledge is key for text and number combinations that might be regarded as obscene or hateful. A global company wouldn't know the significance of the local culture to that extent.

When a customer designs a shoe are you trained to say it looks good - even if you think it is appalling?

No, we're allowed to give an honest opinion. Of course we tend to be polite or silent, or lie.

Have you ever been tempted to ask if the customer was colour blind?

No.

So - here is my design. Quite a simple one.

Four weeks to wait!

The NIKEiD system will be one of the very many new cases and examples used in the second edition of Marketing: An Introduction - due for publication around May 2012.

Marketing - a hard subject to study?

I posted on this topic last year, but the issue comes around every September - so here we go again.

Here is a question you might not have asked yourself before you signed up to take a class in marketing:

Is marketing a hard subject to study?

My answer – as you might have already come to expect from an academic - is that it depends.

What can make it hard? Having observed thousands of marketing students over the years I have noted that there are three things that can commonly cause a problem – even for bright students – over and above issues that apply to all new students:

1. Information overload. A thing that often surprises new university students is that whilst the general complexity of ideas they must engage with is something that is not beyond them, the sheer quantity of information – pages to read, A/V materials to watch, lecturers to listen to – is an order of magnitude higher than anything they have encountered before. As a subject, marketing throws ideas at you from all directions over and above the general problem for new students.

2. Subject diversity. One of the descriptions I give of university marketing education [as opposed to professional training] is as a subject that pinches the shiny bits from social sciences and applies them in a commercial context. One day learning about marketing might require you to be a psychologist [consumer behaviour], the next might require you to be a sociologist [cultures of consumption] or an anthropologist [market segmentation]. Alongside these social science hats, marketing students must sometimes be technologists, economists, statisticians and so on. Some people have a genuine and deep talent in a narrow area – the maths wizard who can’t tie his own shoelaces. Marketing students that do well tend to have a wider knowledge and skill set. Jack-of-all-trades. Of course, the second half of that saying is master-of-none, and we’ll talk about that in the next blog post

3. Hierarchy of knowledge. That is a very posh phrase – what can it mean? Do you remember how you started studying mathematics? 2+2=4. After you mastered simple addition you would have moved onto subtraction, then multiplication and finally division. Years later and you might have been capable of second-order partial differentiation whilst picking your nose – but each and every intervening stage would have been built on the knowledge and skills you gained in the last. Marketing isn’t  like that most of the time. The way forward isn’t always clear and even selecting a starting point can be difficult.

Each of those can represent a real problem. Taken together, they can be a real killer. In the next post I’ll talk about you can manage these difficulties and outline the positives of being a marketing student.

Welcome to the new academic year

A welcome to students starting marketing classes in this new semester. As the new academic year gets underway there will be more frequent postings here.

The draft of the second edition of 'Marketing: An Introduction' was completed tlate his summer and will be published in May 2012. Our thanks to all those who have bought a copy of the first edition.

Simulations in Business Education

Ross Brennan, co-author of 'Marketing: An Introduction' was recently interviewed on the topic of using simulation games in marketing and business education.

Twenty minute interview - to be found here: Ross on simulations

Twittering

This blog is nearly one year old. Not many posts over the summer break but that will change come September.

In the meantime, there is a new Twitter feed to support the book. @IntrotoMKT

Summer hiatus

This blog is intended to be worthwhile reading for students new to marketing. This being the summer, postings will bcome rather sporadic until the new semester is approaching.

I've just marked a set of first year exam scripts

A partner this to the last post.

I've marked a set of exam papers for my own first year class at Strathclyde University. A few comments in addition to the points I made last time.

Apply what you know - concepts, terms/definitions, systems, alternatives/strategies.

Can you think of a process/model/diagram that is relevant to the question? Think carefully - would it be worth taking the time to draw a positioning map or a model/process like consumer buyer behaviour?

If you are going to use an exhibit like a model or chart or diagram then try to not to focus too much on the aesthetics of it. Don't waste time devising a colour scheme - the important thing is to make it large [minimum 1/2 a page] and clear. The labels for boxes/axes/stages are more significant wrt getting marks than graphic design.

In this set of scripts, examples weren't used well or often. Don't make the same mistake.

Are you sitting a marketing exam in the near future?

It is the time of year when exams arrive. If you are a a first-year university student it is quite likely that university type exams are new to you. It is also quite likely that you won't have ever sat a marketing exam specifically. That being the case, I thought a few comments might be helpful.

1. I have marked thousands of exam papers, and written a few dozen. Here is the number one tip I can give you. TIME MANAGEMENT. Work out how long you have per question and try to stick to it ruthlessly. Time and time again I see an exam script where half or more of the time has gone on the first question attempted, and the other [say] two have been rushed. There is a diminishing rate of return for marks - 10 minutes more on the first question won't score you anywhere near as many points as the first ten minutes on the second. One of the reasons that so many students stay on the first question is that they have done the one they liked the most first - staying on that topic is comfortable psychologically and this comfort zone can be a deadly trap.
2. KNOW YOUR VOCAB. All subjects have specific terms and words and/or acronyms particular to them. A lot of what new students of a subject do is learn the language of that subject. Marketing has a large vocabulary of terms associated with it. You need to know the technical definition and meanings of words such as segmentation, positioning, branding etc. You need to be able to show that your knowledge is greater and more precise than someone not studying marketing. At the back of Marketing: An Introduction is a glossary. Learn a few every day as part of your revision. Be sure to test yourself and make sure you know the difference between similar words/phrases - social marketing Vs societal marketing for example.
3. HAVE EXAMPLES. Investigate a couple of firms. Learn the key aspects of their marketing tactics and strategy. How do they group products? How do they distribute? How do they promote etc? Be able to apply your generic/abstract knowledge to the specific cases you've researched.

Voting systems

On Thursday the UK holds a referendum on future voting systems for elections. The alternatives are to stay with the current system - called First Past the Post or switch to something called Alternative Vote.

Naturally the BBC has an outline of the issues: Q&A: Alternative vote referendum

Other than the issues of the groups supporting each system promoting themselves - advertising, PR etc there is the significance of this for the future political shape of the UK for the next generation or two.

If you are eligible to vote in this election think carefully, and participate.

Mass Customisation - shirts at Marks and Spencer

A lot of basic and fundamental economic theory developed in the period when the industrial revolution was shattering traditional methods of production and manufacturing. People like Riccardo and [local hero] Adam Smith looked at the manufacturing of simple items like pins and tried to think how those systems and processes could be abstracted.

The industrial revolution saw [for the first time] the standardisation of components. Also, prior to this components weren't interchangeable - a real issue if your musket needed a new barrel, or your coach a new wheel. These days we expect standardisation. If your Grado headphone jack didn't fit into the socket on your iPhone you would be stupefied.

This standardisation is a subtext in the manufacturing and retailing of clothes. Ladies sizes are based on statistical analysis of measurements in the 1950's - and women have changed shape and size since then. Men's clothes are often divided into small, medium and large and so on - based on waist and chest and length of torso and inside leg. If you happen to conform to one of these sizes, your clothes will fit you well. If you don't - and most people don't -  then the fit is a compromise, and will be either too large or too small - or too short! One way around this is by bespeaking tailored clothing - but that is very expensive...

One way for an organisation to better fit its customers is something called Mass Customisation. A phrase often heard just before or after other fancy terms like Agile or Lean Production. These are manufacturing systems that can adapt what is produced within certain parameters. Toyota have used such a system for many years. The robots on their production lines can select and combine specific components from a range, so successive cars that roll off the end of the line might have different sized engines, trim or even colours.

Can a similar concept be applied to clothing? To a certain extent, yes. Marks and Spencers is one of several companies now offering 'made-to-measure' shirts: Made to Measure

The customer inputs several key measurements - neck, arm, chest etc and selects from a range of fabrics, styles and buttons. The details are inferred from this data by software, and a specific shirt is made for a specific customer. Thousands of shirts, thousands of customers - Mass Customisation.

When brands fall out

Two brands have ended their relationship. Previously it had been beneficial to both parties, but the brand-identity of one party has become inimicable to the other.


Brand 1: Coca-Cola

Brand 2: Wayne Rooney

The full story here: Wayne Rooney's Coke deal finally loses its fizz



Your route into copywriting - Guardian discussion

The Guardian is hosting a discussion about working in the copywriting sector today: Ask the experts: How to break into copywriting

The price of an undergraduate degree - recap

Some time ago I posted on the issue of setting a price for an undergraduate degree programme - BA/BSc etc: The price of an undergraduate degree - Oxford and Cambridge will charge £9,000. The BBC has now produced a table of UK institutions and prices: Bath latest to charge £9,000 fees

As you can see, almost all of those institutions are charging the maximum possible - though a couple have set a range.

The one exception is Bishop Grosseteste, Lincoln: Welcome to Bishop Grosseteste University College
This isn't a well-known place to study. When you see their fees as being lower than elsewhere - what is your emotional/instinctive reaction to them and what they might offer you? If you try and think about it objectively - have you been fair?

Here is the statement from BG on why/how they set their prices: BG Announces Tuition Fees For 2012

The statement in full. Highlighting mine:

Bishop Grosseteste University College Lincoln (BG) has reached a provisional decision on the tuition fees it will charge students when the new Higher Education funding system comes in from 2012. For the majority of BG's courses the annual tuition fee will be £7500, subject to Government approval. Announcing this decision the University College stressed that it would continue its efforts to ensure students could attend regardless of family income.

Announcing the proposed charge Principal Muriel Robinson said "we have decided to play this straight with students and charge them the real cost to us of providing their courses. We are not trying to send messages about our quality or how we see ourselves relative to other providers. We are setting a fair fee. Our excellent track record in relation to quality, student satisfaction and employability means we don't need to play games with the fee we set. We recognise that this is a substantial increase in fees, but people considering coming here to study should remember that they won't have to pay the tuition fees while they study - they will receive a Government loan."

The University College stressed that the decision was not yet final - like all Higher Education Institutions BG will require the approval of the Office for Fair Access for the fee it intends to charge.

Professor Robinson added "we have an excellent record in encouraging students from all backgrounds to go on to Higher Education if they have the ability. We will continue to invest in reaching out to prospective students from lower income families and supporting them if they come here to study. Our strong financial position allows us to charge a fair fee despite changes in the Government funding system."

Now what do you think about them?

Guest Post: Being a Marketer - Alan Stevenson

Michael asked me some time ago to provide a blog article in an area that you (his readers) might be interested in. A challenge I gratefully accepted and one which has taken me a bit longer than I first anticipated to deliver (sorry Mike). In part this is down to work commitments but also because I wanted to deliver an article that was reflective in nature (looking at the changes that have taken place over the last few years within my particular space).       

For over 12 years now I have been involved in both Internet technology and marketing (advising companies and public sector organisations in the best practice application of both). In all of my time in this role, what is most stimulating to me is the continuing ability of new technologies to disrupt, to change our view of what is possible and to challenge the status quo or the traditional way of doing things.

Being so close to this area I often forget just how impactful new technology has become, consider the following current examples:

- We think nothing of carrying our "music collection" around in our pockets (using an iPod or MP3 player). I grew up in the age of vinyl and then CD. A music collection for me was a very physical thing and I remember vividly those sceptics (as I explained how my new Version 2 ipod worked) telling me why they will never give up the CD. Their predecessors said the same of the vinyl. 

 

- Many of us regularly sit at a PC or smartphone to watch a must see "TV programme". Channel programming through a TV was all about the event (tune in at 9pm tonight..) but through an internet device it becomes a repository of content which can be accessed at a time that suits you. 

- Increasingly, we catch up with our friends and family anywhere in the world in 'real-time' using services like MSN, Google Chat or Skype. I remember the days of the crackly long-distance phonecall. Now I can catch up with a friend in Australia and see them "live".   

- 640 million of us now spend much of our online time catching up with our friends or family through Facebook and Facebook is for a growing number of people the access point for all of our news and the rest of the internet. We discover new information through our friends, or click a link posted on Facebook or place importance on a new product because our friends have also liked it. Facebook is already dominant, in fact it is the 3rd largest country on the world. 

- When we need to know what is happening anywhere in the world, rather than switching on the TV or going to CNN online, the BBC or Reuters, many of us get our news first on Twitter. The uprisings in North Afirca and the middle East and the most recent Tsunami in Japan are all testiment to the power of this technology to break and spread news quickly.

- When we ask the question, "is there a better way of doing this" many of us also search our mobile app marketplace to see if "there is an app for that". We may also check if there is "opensource" software (software that is created by the community for the community) that is free for us to use. All the community asks in return is that if we change it, we share it. 

I could go on. The point is that in the last few years, the traditional way of doing things has been reordered and redesigned through technology. Technology is becoming an increasing part of our everyday lives. Technology is also becoming more accessible to more of us - our PCs and smartphones are becoming cheaper and more powerful and our internet connections faster. In one sense the future is very bright indeed. 

Whilst technology provides enormous benefit, for every 'winning' technology or associated practice there is always an incumbent or competing solution that falls by the wayside or goes the way of the do-do.

The way of the do-do

For those unaware, the do-do was a large, flightless bird living on the island of Mauritius. Within a few hundred years of European traders arriving on its island it was extinct.

The analogy to technology Market Leaders is probably a good one:

- Market leaders often feel invincible (the do-do lived on an island and had no known predators);

- Market leaders become complacent (the do-do was flightless, complacent in an evolutionary sense);

- Market leaders rarely see the threat until it is too late (the do-do was wiped out by man, it couldn't have predicted the navigation and shipbuilding innovation needed to make this happen)

- Market leaders can disappear quickly particurly in a technology context where companies operate in "internet time"  (the do-do evolved for many thousands of years but disappeared in less than two centuries from the first Dutch trader arriving in Mauritius)

To illustrate this point, Facebook may seem to have an unassailable position in terms of its Social Platform but remember   MySpace had a similar lead over Facebook just a few years ago. The Encyclopedia Brittanica probably never saw the CD Rom as a threat and yet Encarta had a devastating effect on its sales. I'll bet Encarta never envisaged a free web encyclopedia like Wikipedia doing the same to it. The Music industry saw little threat in MP3s as they continued to make huge profits on their CDs. Could they imagine the powerful position that Apple would now hold in music distribution through iTunes? The list goes on.  

So who are the next winners and losers? Where are the next do-dos to be found?

"The Fool Predicts The Future, Criticizes The Present And Recounts The Past"

- Shakespeare within King Lear  

As the quote above suggests, it can be foolish to attempt to devine what will come and the future is not necessarily determined by the present nor the past. Putting this aside it can also be a bit of fun. Just don't bet your house on any of these events coming true!

I have provided my top 5 potential do-dos below - why not give me your list or do the same in the comments provided?

 

1. Stamps and the Postal Service

- Scandanavians are already testing paid SMS alternatives where unique codes are provided and written on the letter. Will courier companies be better placed to fill the role of national postage services like the Royal Mail as the numbers of letters sent continues to fall.

2. Books & Libraries

- if MP3s and iPods can do for physical music surely eBooks and Kindles can have the same effect on eBooks. If we continue to use digital book formats could libraries be replaced by subsidised group discount schemes for e-Books

3. Newspapers and Magazines

- News is "freely" available online, thank you Twitter and RSS feeds and newspaper circulation is down. Is the writing on the wall, pardon the pun

4. TV broadcasting

- Broadcasters are realising that anytime, anywhere content is a necessary component of their service. Viewing figures are also down, few programmes achieve more than 10m viewers (in the UK)

5. Print and TV advertising

- If traditional print and broadcast TV are in trouble then advertising revenue must be similarly threatened

I would be interested in your views on the mainstream technologies and practices that you think will win in the next few years (foursquare, Facebook Places anyone?) and those technologies, services and practices that will go the way of the do-do.

Perhaps the following quote will provide some much needed insight:

"The future is already here – it's just not very evenly distributed."

Attributed to William Gibson (Science Fiction Author)

  

I look forward to your comments

Alan

Alan Stevenson

Director - Energise2-0

About Alan Stevenson

Alan is co-Director with Dr. Jim Hamill, of Energise2-0 (www.energise2-0.com), a Social Media Marketing Agency. As a visiting lecturer in the Department of Marketing, Alan works closely with Michael Harker to provide engaging and thought provoking e-marketing and customer management courses that combine their respective practical and theoretical backgrounds.  

Talking about Software #5 Angry Birds – Product and Promotion

We’ve taken a very brief look at elements of pricing and place in the context of App marketing. The basic framework of the marketing mix has of course two further elements, product and promotion. Before we finish, let’s consider those – and do so in the context of possibly the most famous Game-App of all time – Angry Birds! An app by Rovio of Finland, it is an inaugural member of Apple’s App Hall of Fame. Angry Birds has sold an astonishing 50 million copies. No app has sold more. Players include David Cameron, Dick Cheney and a pantheon of sports and music stars.

Angry Birds Screenshot

Let’s look at part of an interview with the lead designer – Niklas Hed – where the discussion turns to the ethos and process of the games genesis and evolution:

Rovio was perfectly positioned to take advantage. It had learnt a lot from the triumphs and failures of its past games. It also had copious notes from focus groups it had organised over the years, during which Niklas and his colleagues had watched people playing games from behind a glass screen and recorded what the players found difficult, what excited them, what they found boring. The information from these sessions had then been used to produce a blueprint of the “perfect” mobile game. The checklist ran to several thousand words, but, one of the main things they learnt was that each level had to feel achievable.

“It’s important that players don’t feel that the game is punishing them,” Niklas says. “If you fail a level you blame yourself. If the pigs laugh at you, you think: ‘I need to try one more time.’”

They also knew it was important that any game they designed could be played in short bursts – occupying those periods of “downtime”, such as queuing for a coffee or waiting for a bus, that had formerly been devoted to staring into space or, perhaps, reflecting on life.

“You have to be able to play the game right away,” Niklas says. “We didn’t want any loading times.”

It was this principle that led to the introduction of the catapult, the game’s central feature. Players know immediately what to do with it and it makes the game more intuitive.

The game also had to appeal to both video game “virgins” and hard-core enthusiasts. “We knew it had to be simple but it couldn’t be too simple,” Niklas says.

Kendall (2011)

The promotion of the game was based on a very simple strategy. Rovio noted that Apple tended to highlight Apps in the store with strong colourful characters present in the game itself and imagery used in logo design. This meant the characters in the game became front and centre in design – and the name became Angry Birds rather than, say, Catapult. Examining potential partners to publish the game [games studios design and build, publishers market] Rovio plumped for a company called Chillingo (Chillingo, 2011) who had a good relationship with Apple and a track record of successful publicity campaigns. The strategy worked, Apple selected the game as a highlight of the Apps in the store, that generated publicity which led to downloads, which led to almost totally positive reviews – word-of-mouth – between consumers which led to more sales and so on in a virtuous circle that has required next to nothing in terms of traditional advertising expenditure.

Even more interesting than the way the game was promoted is the ways in which the game itself is now so strong as a brand that it is being used to help promote other products and has even led to game related merchandise – covers for phones, plush toys of the birds and the pigs and even a tie-in with an upcoming animated film called Rio. The clincher in respect of Angry Birds now being a ‘transmedia franchise’ (Pulman, 2011)? Angry Birds being included as part of a promotion in a Superbowl advertisement.

Look forward to the animated series!

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Chillingo (2011) About Us From: http://www.chillingo.com/about.htm

Kendell, P. (2011) Angry Birds: the story behind iPhone's gaming phenomenon, Daily Telegraph, From: http://www.telegraph.co.uk/technology/video-games/8303173/Angry-Birds-the-story-behind-iPhones-gaming-phenomenon.html

Pulman, S. (2011) Angry Birds: Casual Gaming to Transmedia Franchise? From: http://transmythology.com/2011/01/17/angry-birds-casual-gaming-to-transmedia-franchise/

Talking about software #4 - Marketing a games App

Now we’ve developed some focus and context, we can now turn to some specific marketing related issues for Games-Apps and examine some specific examples of practice.

Where to start? How about channel strategy? If your app is for an Apple device, there is only one choice – the App store as part of iTunes. Apple take 30% of the price the end user pays – and decides whether or not they want to retail the App at all – sometimes a problem if your App contains adult orientated material like sex, violence and profanity. In return for the substantial slice of the pie and they host the App on their servers for download and integrate it into the online catalogue, as well as managing feedback and payment.

Firemint.com

If your business is involved with traditional physical goods, the feedback you get from your channels can be delayed, incomplete or inaccurate. This makes good decision making difficult. This isn’t true for Apps. The above graphic shows the sales chart of a game called Flight Control (Firemint, 2011). As you can see, even with millions of copies sold, Firemint knows exactly how many were sold overall, how many in specific national markets and the impact of significant events like a change in price, some publicity or even just a release of an updated version. Within each market they also know their ranking in the sales charts. The pie chart below shows the relative importance of each national market. Unsurprisingly the US is no. 1, and the UK is certainly doing well – but look at the surprise entry at no. 3 – Australia. When you have this level of detail and precision, making good decisions is easier.

 Firemint.com

After distribution and sales management, perhaps it is time to look at pricing. Further interesting things are happening here as the nature of Apps means that great flexibility is possible. The price of an App can be changed almost instantly, meaning that price can easily be used as a promotional tool or to establish a user base for future exploitation. Apps can even be offered free via the Apple App Store. Why would any company give away its product? There are some good reasons. As just mentioned, the short-to medium term objective might be to establish a reputation or gain publicity and attention. Once achieved the App can have a price change upwards. Electronic Arts used this tactic before Christmas 2010 to considerable benefit. Slashing prices across their range of games, they quickly occupied most of the top ten positions on the charts. After Christmas, when millions of owners had unwrapped their new Apple devices, EA reaped the benefit from their games being front and centre. Some Apps are deliberately released with only a portion of the functionality operable. If the user wants to get the full benefits, then a payment must be made.  If this were a car, we might refer to that as a test-drive. If the App-sample isn’t to the liking of the user, then there is no cognitive dissonance – no money was wasted. This switching on of the functionality of the App isn’t even as simple as an on-off switch – the App creators might have adopted a pricing model called freemium - a word you will hear increasingly often in the future. Freemium means the App itself is free or very low cost to download, but once installed the user must make what is called an in-app purchase to unlock portions of functionality. In game terms, this might mean extra levels to play through for a few pennies, or new items for in-game characters to be equipped with. This model is one which is increasingly attractive with App developers as it means they can create a stream of revenue from each user, rather than a one off payment and achieve this without the substantial costs of developing an App from scratch.

Firemint (2011) Flight Control Sales Per Week From: http://firemint.com/wp-content/uploads/2011/01/FlightControl-PerWeek.png see also Firemint Backgrounder at: http://firemint.com/2010/firemint-backgrounder-current-as-at-15-july-2010/

Radiohead - practicing disintermediation with their new album - King of Limbs

A few years ago Radiohead adopted a very interesting pricing and distribution strategy for their album In Rainbows. Consumers could choose their own price and download it directly from the website owned and controlled by the band.

Stories vary as to how much money was made - numbers of sales, average price paid etc, but what was undeniable was that per copy, Radiohead were receiving a much greater slice of the pie than for the traditional model of reproduction and distribution on physical media - like a CD.

How so? Costs not being incurred - burning and shipping discs - but also because Radiohead cut out many of the intermediaries in the supply chain. Record label, manufacturers of discs and jewel cases, distributors and of course retailers. The curse of the 'content producer' like a music band or the drudges that produce textbooks is that only a small percentage of each sale makes it to their bank account - all the other parties get paid, and often by a multiple factor when compared to the artist. Retailers would historically do much better from a book or album than the people who created them.

Radiohead have realised that these other parties are no longer useful or necessary - and that they can keep a much larger slice of the pie by disintermediating their supply chain. The prices are now fixed, but the same model is being used for their new album - King of Limbs.

Not everyone has gone - Radiohead still have financial intermediaries to move money about, and there is probably a technical and legal team supporting the website - but the vast majority of the cash is now going to the band and not the middlemen. Good for them.

Could a new band do the same - with no fame and reputation - we might say brand? Difficult.

Talking about software #3 - making games has come full circle

In the last post in this series, we saw some headline figures about Apps, but do we know anything a bit more specific about how people are using and consuming Apps? Indeed we do. One online collective has examined this issue and has some tentative findings to report (Appsfire, 2011):

1.      A typical iPhone user has downloaded about 80 Apps to add to the 20 pre-installed by Apple.

2.      Users spend upwards of an eighty minutes a day using these Apps.

3.      Just over half of the Apps downloaded were ‘free’

App Usage by Category

                                    Appsfire.com                         

The Business and Culture of Gaming has Come Full Circle

As can be seen, games form a substantial part of the buying-and-selling of Apps. A particularly interesting thought about App games is the extent to which the business and culture of gaming has come full circle. In the 1980’s – ancient history now – the creation and marketing of computer games was a cottage industry. More accurately, it was a bedroom industry – teenagers and twenty-somethings were able to teach themselves the skills and knowledge through trial and error. Over and above a home computer very little was required and the scale and nature of the product meant that one person could create the whole thing. Codemasters started like that, as did many other firms and now senior individuals in the industry. As technology evolved, and the potential for complexity of design and structure set in, the industry evolved from a semi-professional sector into one requiring significant capital investment in high-end equipment and highly specialised design/coding/creative roles. A big game on a major platform like Playstation or Xbox that it is hoped will be a big seller is likely to have involved the efforts of several hundred people and an enormous amount of hardware. The recent game – Grand Theft Auto IV - is understood to have cost upwards of $100m to produce. $10m was spent on the audio component of the game alone. In the modern marketplace for PC and console games, the individual or small firm cannot hope to bring a competitive and attractive product to market, and the same is true for most other categories of software.

Apps, and games Apps in particular take us back to the beginning of this cycle. Certainly some of the big players have established business divisions to focus on Apps, but a small firm can bring a product to market using nothing more than a standard-PC and some cheap software. You can read about the nature, culture and success of such SMEs in a paper like O’Dwyer (2009).

Appsfire (2011) Infographic: iOS Apps Vs Web Apps From: blog.appsfire.com/infographic-ios-apps-vs-web-apps

O'Dwyer, M. Gilmore, A. and Carson, D. (2009) Innovative marketing in SMEs, European Journal of Marketing, Vol. 43 Iss: 1/2, pp.46 - 61

The price of an undergraduate degree - Oxford and Cambridge will charge £9,000

How much should Universities in England and Wales be able to charge in respect of course fees for one year? The Government has set a new limit of £9,000 - up from just over £3,000.

Simultaneously, Government ministers have expressed 'concern' that institutions are planning on charging the maximum possible - internal documents have revealed this is certainly the case at Oxford and Cambridge: High-fee universities warned of sanctions

My initial comment is 'well duh!'. I would be amazed if those two institutions end up charging anything less, though there may be a sop of some kind of bursary scheme for students from disadvantaged backgrounds.

It won't just be those two ancient places though - very many others will want to charge as much as they can. Why? Other than the fact that it increases the amount of revenue received per head, charging less can create real problems in respect of how they are perceived. Would you choose a university because it had the cheapest programme in your intended area? I suggest not. Even if you hoped to reduce the cost of your education, you might be concerned how that might look to others - peers and employers for example.

'If you were any good, you'd charge full price'

So, some predictions:

1. Oxbridge will charge full whack as soon as they can
2. Redbrick institutions will follow suit, but have more developed bursary schemes
3. Those doing the teaching won't be seeing much of any increased revenue [drat!]
4. We're going to see a shift in the proportion of UK students in each general area. Humanities to be massacred, arts to shrivel, business schools to inflate. Note this is a prediction, not a desire.
5. Scottish students will be paying upfront in five years. It will start at a lower level, but catch up within the next ten years.

How would I set fees? Thanks for asking. I think that setting them by institution is a bad idea - it creates divisiveness/a class system and it encourages an upward spiral. Some have suggested that price should be a function of cost - that lab based programmes should cost a lot more than those that need only a lecture hall. I don't agree with that.

I suggest that rather than by institution, programme cost should be set by general area. A key problem with the spread of students in the UK HE sector is that we're dreadfully short of language students, engineers, scientists and mathematicians, and have very many students in other area -  case of under/over supply for society and the economy. I would use price to move students from one group to another, based primarily on how useful that person was then likely to be to society. Engineers, chemists etc go nearly free, other subjects pay more. I don't intend to denigrate subjects like history or sociology, but too many students of those subjects are at university as a lifestyle experience rather than because of ability or talent at those subjects - that is, a good proportion of students are flexible about what they study, and price could be a mechanism to change their behaviour. But what about students from a poor background that have considerable ability as a young historian, won't they be prevented from taking up their place by the higher price? With the increased revenue from high subject fees, it would be very easy to make sure that those of obvious talent get their places free.

So where would marketing and business education in general be on that continuum of free-to-expensive? It may surprise you to learn that whilst for obvious reasons I'm in favour of students studying marketing, I think it would be a good idea if the course fees were between the middle and the top of the scale. You study business to move into a well paid professional career, not to benefit society. You are being relatively selfish compared to the student nurse or the biologist and should therefore pay more.

Talking about software #2 - Applications

 

Given the vast number of companies and products and uses for software, it simply isn’t possible to cover all issues. Instead, it seems far more sensible to limit ourselves, in form and function. Therefore, this case will focus on the marketing of what are popularly known as ‘Apps’ for mobile devices like Apple’s iPhone. What is an App? The name is an abbreviation for application – a piece of software with a set of capabilities and functions. Microsoft Word is an application, and so is the web browser Chrome. What the abbreviated name refers to though, is a relatively small [in terms of file-size] self-contained piece of software that has a very specific and focussed purpose. Most so called smart-phones come with several of these pre-installed. The calendar is an App, the contacts directory is an App, the web-browser is an App and so on. What makes Apps worthy of particular interest is the after-markets – Apps offered for sale by third-parties to smart-phone users.  Let’s quickly review some quite dazzling facts and figures.

How many apps – products – are there? No one knows for sure, and the number is growing too rapidly to get a good fix, but Apple have indicated that for their smart-phones and portable devices [iphones, iPads] there are at least 400,000 choices. The online store [which itself is a piece of software] only opened in July of 2008. Arithmetic tells us then that in somewhat less than a 1000 days, the Apps added to the list of choices to buy from the store increased by 400 a day, per day, every day!

Just because there are so many products to choose from, it doesn’t mean that people are buying them though, does it? Let’s check that out as well. How many of these applications have been downloaded from the store – and note the word downloaded rather than sold – an issue we’ll come to later? Apple do know that – they know it perfectly. They recently held a sales promotion with a large prize for the person who downloaded the ten billionth App (Apple, 2011). Some context for the figure – 10 billion. That digital music, marketed through software portals like iTunes has revolutionised the marketing and consumption of music is surely beyond question. The rapidity with which the marketplace changed beyond recognition from what it was even a decade below has been breathtaking. One research group has recently compared the growth in sales of digital music with the growth in sales of Apps (Dedieu, 2011). Music had a four year headstart over Apps, if Apps haven’t overtaken music yet then inevitably they will do soon.

Asymo.com

Apple (2011) The App Store has Reached 10 Billion Downloads From: www.apple.com/itunes/10-billion-app-countdown

Dedieu, Horace (2011) More than 60 apps have been downloaded for every IOS device sold From: www.asymco.com/2011/01/16/more-than-60-apps-have-been-downloaded-for-every-ios-device-sold/



Introduction – The Rising Significance of Software Markets

Why spend time thinking talking and writing about marketing in the software industry? Here are three answers.

Firstly, the argument of size. It should come as no surprise to anyone who spends time using a computer or portable device that the software industry is big business. There are strong brands – Microsoft, Google, Facebook – and a multiplicity of types of software for business or leisure use, often with price tags in three or four figures. Exactly how big is the software industry though? The industry body, the SIIA [Software and Information Industry Association] estimated in conjunction with Datamonitor that the worldwide value of software sales in 2008 was US$304bn and estimate a 2013 value of US$457bn (Datamonitor 2008). Microsoft employees 100,000 people, a similar number to Exxon Mobil.

Secondly, the argument of cohort. If you are a relatively young person, software and the hardware it runs on has probably been fully integrated into many aspects of your life – you write email using a web-based application – a word we’ll see again shortly – like Googlemail or Yahoo, you use one or more of a console, PC or portable device to play games and make calls, you relax to music delivered by data files passing through something like iTunes and you sign up for tutorials and submit assignments via a VLE. You are as likely as not to be aware of many different brand names and the people and companies behind them. Software is important to you, it is going to go on being important for the rest of your life. If you aren’t involved with the marketing of software as a career, you are necessarily still going to be involved as a customer.

Thirdly, the argument of culture. Software is now advertised on the high street and TV. There are films about the development of software – The Social Network, Pirates of Silicon Valley and one of my all time favouritess, Sneakers – software capability and fallibility is now a common plot device in literature and drama. Images, tropes and concepts from software have been co-opted into polular culture. See above.

Datamonitor (2008) Software: Global Industry Guide New York, Datamonitor