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.

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.

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 #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 #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/



Thinking about software markets and marketing

In a slight divergence from the posts published to date, I thought it might be an interesting experiment if I presented elements of a small project I have been working and thinking on recently. The project is about the marketing of software - specifically the small scale applications - Apps - that run on a smart phone. There are products, there are brands, there are customers and so there are markets.

First element of an essay on this topic to follow shortly.

Amazon buys Lovefilm

One of the earlier posts on this blog concerned my predictions for the future of the company Lovefilm. You may remember I was less than totally convinced that it would thrive in an environment where digital download/streaming/piracy was becoming so much easier. I noted that environmental change had allowed Lovefilm to replace companies like Blockbuster.

Amazon clearly disagrees with me: Amazon takes full control of Lovefilm . The price is believed to be about £200m. Much froth at the Lovefilm webbie: BREAKING NEWS: AMAZON TO BUY LOVEFiLM.

Amazon sold its own DVD rental operation to Lovefilm a couple of years ago. I'm intrigued to see what they will do with the company in the medium to long term - the Guardian article notes the recent upsurge in members streaming via a games console - and my prediction is that they will try and evolve it towards being digitally/internet focused, rather than physical media focused.

As for me - after being a member for nearly ten years, I think I'll be cancelling my subscription at the end of the month. Nothing political, I just don't feel I get better value than I would on a pay-as-you-rent basis via my Apple TV - on which note: Users now watching more Netflix on Apple TV than on iPad. Netflix to come to the UK, entering via Apple is my second prediction

Extreme Retail Bravery

Here is a picture of a small retailer that has recently opened near where I live. As you can probably guess from the picture, this is an independent newsagent/grocers. Based on your experience with similar retailers you can probably infer what categories of products it sells. There will be newspapers and magazines, a plethora of chocolate bars. Cigarettes and some alcoholic drinks will be on the back wall. A limited number of shelves will stock common food and household items – detergents, snacks, soft drinks in a branded refrigerator. It seems a reasonable guess that this is a family business.

I visited this shop a couple of weeks ago. Products were reasonably priced, the physical environment was basic but clean and the service was prompt and polite. I have no doubt that the people running the shop are dedicated, committed and will work hard. The area in which it is located is very near to the city centre and sees a lot of foot-traffic through the day, and of types of people that are quite likely to want something this shop offers.

So then – this is going to be a successful small business, one of the many hundreds of thousands of its type across Europe that trade, providing convenience to millions of customers and contributing greatly to employment, social mobility and economic development?

No. This shop is a Dead Man Walking. It was dead before it ever opened. I’m not sure how long it will last, but I will be surprised if it is still there in a year, and amazed if it is still there in two.

Why am I so sure? The answer lies mostly in what is happening on the other side of the street.

And there we have it, the cause of death.  Colonel Mustard, on the High St, with the metaphorical lead pipe. If you are in the UK, you have a Tesco near you. You probably have several. Notice those were statements, not questions.

Why is this Tesco going to kill our retail David? Let us consider a few of the reasons, and this list ends when I get bored of typing, not because I’ve run out. If you disagree with me – put yourself into the position of someone walking along the street in need of something trivial – your lunch, a newspaper, some cigarettes, a lightbulb.

Which of the two is going to have the best prices? Which the best range of products/number of choices? In respect of fresh food and vegetables, where will quality be higher? Which shop is likely to offer you everything you want in one stop? Which is most likely to be open early in the morning or late at night? Which will have full rather than empty shelves. If you are in a group of people, where will everyone automatically go without negotiation.  Which is most likely to accept your credit card.

In short – what can the small independent retailer do better than Tesco, when considered from the perspective of the customer?

What has just been described there is a very local issue. Nationally, this issue of larger companies beating up the little guy is of social, cultural and political importance. The BBC webbie has a news story on this topic today, in support of a programme this evening [1]. If you read the story, be sure to look at the attached graphics and perspectives from local residents, farmers, small business owners and unions[2].

This particular Tesco has form – the previous enterprise in the space now occupied by our poor little newsagent was previously occupied by an off-licence, selling alcohol. They went bust, and I think we can probably guess why.

I take no joy in my prediction. I have no reason to think the newsagent is owned and run by anything other than decent, hard-working people. I hope there are not bankruptcies, I hope there are not divorces.

Merry Christmas!

[1] Growth of the 'big four' supermarkets - http://www.bbc.co.uk/news/uk-england-12039041

[2] For and against - http://www.bbc.co.uk/news/uk-england-11936730

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Branding and the sexualisation of children

A strong brand - one that is appealing to consumers - can be an important asset for an organisation, whether it is a charity, or a commercial organisation.

Here is a brand spokesman describing the brand of the company she works for:

“A brand that is urban, trendy, stylish and sophisticated,” [1]

How fantastic. What is the brand exactly? Playboy.

And there we see the instantly recognisable logo of a company with a rich heritage dating back fifty years or more. Ahem.

Branding can be a contentious issue though. Here is an example. Should a brand with a sexual component be permitted to appear on products intended or often used by children? For example, should an obviously sex related brand like Playboy appear on something like a pencil case?

If you could change the law, would you prohibit this? The current UK government is thinking about it seriously. A minister has recently said:

“Parents often find themselves under a tidal wave of pressure, buffeted by immense pester power from their children for the latest product, craze or trend. I want this review to look at how we can equip parents to deal with the changing nature of marketing, advertising and other pressures that are aimed at their children.” [2]

The boss of a ‘family’ charity – The Mothers Union – Reg Bailey [3] has been tasked with reviewing the situation and reporting some recommendations. He has asked for the British public to send him examples of “products of concern”. As a devout Christian, I suspect he may find the contents of packages he receives to be eye-opening....

[1] From: http://news.bbc.co.uk/1/hi/business/7415538.stm

[2] From http://www.bbc.co.uk/news/uk-11923107

[3] Reg may not actually be a mother himself, I’m just playing the percentages here.

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Marketing data - visualisation and interpretation

When I find myself discussing what contemporary students are better or worse at than their forebears, one topic that crops up regularly is the ability to comprehend and manipulate numerical data – maths and stats related skills. It is a matter of deep regret to me that the curriculum across the UK Business School sector is becoming more and more a-numerate year on year as students [and staff!] become more innumerate. Foreign students  regularly express their surprise at the low level of ability of even the very best UK students.

One of the ways this impacts on the teaching and learning of marketing related topics is the way in which you present and discuss data. Enter stage-left a new hero of mine. David McCandless describes himself as a data journalist and information designer. What that means is that he takes often complex and large sets of numerical data, and thinks of clever ways to present them in graphical form – so that they can be understood, comprehended and interpreted at an at least surface level.

You may have seen David’s work on a printed newspaper page or more likely on the equivalent website. One he did a while back was about the amount of oil being spilled in the gulf by BP in comparison to other oil leaks – that one went viral. Many of these representations are relevant to marketing activities, but let us just pick a couple of examples.

1.       World Map of Touristyness: Map of Touristyness . This map takes file tags from a photo sharing site and compiles them with geographical co-ordinates to show where tourists go – or at least where they take their photos!

2.       The colours used in products, packaging and advertising is very heavily culture dependent. This wheel compares and contrasts social/cultural perceptions of colours around the world: Colours in Cultures

3.       There are a great many types/brand of carbonated beverage available. So how many companies actually manufacture and market them? It might be a fewer than you think: Soft Drinks - note the link at the bottom for zooming/exploring

4.       Finally for now – places and people are different. Every country is the best/most prominent for something. Here is a not completely serious visualisation of that: Every Country is the Best at Something

Seeing as David has so kindly presented us with these free toys, we should return the favour! He has a very interesting looking book, and I'm sure I'll pick up a copy sooner or later: Information is Beautiful

Why do overseas students study marketing in the UK?

OK I've been thinking again. Yes, I know I should probably give it up. Anyhow, this time it was about why a lot of students from other countries come to the UK to study marketing. Here is what I came up with. However, I would be very, very (I mean very) interested in the views of marketing students about this. In a sense, I am using this blog to do a little market research. So there you are, real marketing in action at the Marketing: An Introduction blog spot.

1. My feeling is that overseas students want and expect a traditional UK educational experience. They probably need frequent/daily contact with peers and tutors throughout the year in order to feel properly part of the institution and the British educational culture (which they value). They are NOT just here for the qualification, as some people seem to think. They want much more than JUST the qualification.

2. In general, more work-experience integrated into the programmes is a good thing (within reason). However, not all students will want it, so should internships be optional rather than compulsory?

3. The CIM is the premier professional body, and business schools need to stay close to them. Other professional bodies may be desirable, but are less valuable. The key professional bodies, other than CIM, are IDM, DMA and MRS. (Are they? Do students care about professional bodies at all?)

4. There is a limited range of programme titles that will attract substantial student numbers. We mustn't try to get cute by using innovative programme titles - the students will just not come. Students want programme titles that give a sense of authority, not programme titles that reflect the latest fad.

5. Presumably WOM [sorry, word-of-mouth] - by which these days I mean largely social media - is just going to become more important. If a student is having a bad time, then friends at school back home will hear about it. Not long ago, this was not the case. This has important ramifications.

6. Overseas students come here because it's Britain/a major city/English-speaking and a reputable educational institution. They like qualifications that combine marketing and management. They want to experience a proper UK education; they want to respect their tutors for their expertise, wisdom and kindness. They want to be treated well, and have problems resolved swiftly. Yes, they want some preparation for work, but they don't actually want a highly vocational training-like programme - that doesn't conform to their idea of a traditional UK university education. They want a nice combination of the intellectual and the practical. They want to feel educated, that their horizons were widened by their time at a British university. Obviously they want employment-relevant stuff as well - but NOT only that stuff.

Lovefilm and Blockbuster

In the last post I mentioned that my VCR had been taken out and put down for humane reasons. I also noted that for organisations that were founded and grew on serving markets related to video rental, the advance of technology was a significant issue.

Blockbuster evolved, moving from cassettes to discs, and from films to a range that included games, TV series and an unhealthy amount of sweets and chocolates. That kept them going for a while - but about 8 years ago a severe blow was struck by a new entrant - Lovefilm

Lovefilm operates in a very different way to the traditional video rental companies like Blockbuster. Disc only - for films and games. No retail outlets - customers/subscibers receive films and return them via mail. Films have no time limit, and you can choose a package to allow you a fixed number of titles at home. You pay by the month, not by the film.

Plus points - no need to watch a film the night/weekend you rent it. No having to return the films to the retailer you got them from. Subscription means you know exactly how much you will be paying. Management of your films/account online 24/7. Downside? You queue films, but can't be sure of which ones you'll get. There will probably be a two day delay between a disc being dispatched and it ariving in the mail - the same the other way as you return discs.

This model was replicated by other firms - most notably Amazon. Over time though, through brand building, stock management and superior customer services, Lovefilm bought or defeated most rivals - even taking over the Amazon service. Poor old Blockbuster has tried to catch up, but never quite managed it. I'm afraid I don't hold out much hope for their survival in the long term.

Lovefilm came to dominate their market by taking advantage of possibilities allowed by adopting a different supply chain. They in turn though are coming under pressure from technological developments - namely, digital distribution.

Consumers now have a number of options to receive and watch media they haven't had before. The BBC iPlayer, Freeview/Sky boxes with ability to revord HD programmes and of course internet based distribution - legal or otherwise!

A recent option is the new Apple TV product. Why wait for the film in the mail when you can select and view it within moments?

Lovefilm haven't been caught out by these developments, and now offer films to view on your home PC as well as discs in the mail. What remains to be seen is if this hybrid approach can compete against purely digital distribution - and the ability to conveniently watch on the living room TV, rather than a computer screen.

Not to worry the Lovefilm management, but I've been a subscriber since 2002, and I'm now thinking of cancelling.