Michael R. Solomon

Archive for January, 2010|Monthly archive page

What’s in a Name? Apple Goes with the Flow

In Chapter 3 on January 30, 2010 at 10:13 am

http://www.nytimes.com/2010/01/29/technology/29name.html

We all know that the folks at Apple are the greatest marketers on earth — and the most secretive. Have they become so all-knowing that they don’t even bother to assess likely consumer response before they roll out a major product launch?

The widespread association of the new iPad name with feminine hygiene products won’t staunch its inevitable flow of popularity (the obligatory play on words has now been provided).  Perhaps Apple was paranoid about leaking information to the eager market (oops, there’s another one).

But, since many women today are crucial adopters of high-tech products (especially those that enable social networking), could they at least have bounced the idea off of some of them?  Have Apple’s own female employees ascended to such a level of godliness that they are impervious to the monthly call of Mother Nature?  I love my iPod as much as the next guy, but it seems that the ubiquitous lower-case i in Apple’s product line is morphing to an upper-case I:  As in I am the center of the marketing universe.

Yank that sucker: Entertainment by committee

In Chapter 10 on January 1, 2010 at 10:38 am

For passionate followers of obscure (at least for now) groups like The Lost Natives or Kasual, Pandora’s the way to go to customize a playlist.  But now more pedestrian radio listeners at least can get a vote on what they hear —  If they can locate a station that plays Jelli Radio, the newest adventure in crowdsourcing.  Most importantly, if enough listeners give the thumbs-down to a nasty riff while it’s playing the station yanks it in midstream. http://online.wsj.com/article/SB10001424052748703462304574606992942654558.html Relief is just a click away.

This ceding of control from the program director to the audience highlights a key change in the way some new media companies approach their businesses: Think of it as marketing strategy by committee. The wisdom of crowds perspective (from a book by that name) argues that under the right circumstances, groups are smarter than the smartest people in them. If this is true, it implies that large numbers of (nonexpert) consumers can predict successful products.

Social networking sites have the power to let their members dictate purchase decisions. At Threadless.com, customers rank T-shirt designs ahead of time and the company prints the winning ideas. Every week, contestants upload T-shirts designs to the site, where about 700 compete to be among the six that it will print during that time. Threadless visitors score designs on a scale of 0 to 5, and the staff selects winners from the most popular entrants. The six lucky artists each get $2,000 in cash and merchandise. Threadless sells out of every shirt it offers. This business model has made a small fortune for a few designers “the crowd” particularly likes. One pair of Chicago-based artists sold $16 million worth of T-shirts. To keep the judges and buyers coming back, the owners offer rewards—upload a photo of yourself wearing a Threadless T-shirt and you get a store credit of $1.50. Refer a friend who buys a T-shirt and you get $3. The site sells more than 1,500 T-shirts in a typical day.

Here are some more crowd-based sites to watch:

  • At the French CrowdSpirit site, participants submit ideas for consumer electronics products and the community votes for the best ones. Those go to the site’s R&D partners and investors who then decide which to finance for further development. Community members test and fine-tune a prototype and then they can buy the products that go to market. The community handles product support and recommends the new products to retailers.
  • Sermo is a social network for physicians. It has no advertising, job listings, or membership fees. It makes its money (about $500,000 a year so far) by charging institutional investors for the opportunity to listen in as approximately 15,000 doctors chat among themselves. Say, for example, a young patient breaks out in hives after taking a new prescription. A doctor might post whether she thinks this is because of a rare symptom or perhaps the drug’s side-effect. If other doctors feel it’s the latter, this negative news could affect the drug manufacturer’s stock so their opinions have value to analysts. Doctors who ask or answer a question that paying observers deem especially valuable receive bonuses of $5 to $25 per post.
  • How about social networking sites that “create” a concert by persuading an artist to perform in a certain city or country? At Eventful.com, fans can demand events and performances in their town and spread the word to make them happen. Or how about actually buying a piece of the bands you like? Go to SellaBand where fans (“believers”) buy “parts” in a band for $10 per share. Once the band sells 5,000 parts, SellaBand arranges a professional recording, including top studios, A&R (Artists & Repertoire) managers (industry talent scouts), and producers. Believers receive a limited edition CD of the recording. Believers get a piece of the profits, so they’re likely to promote the band wherever they can.
  • Individual consumers gain crowd clout when they shopmob with strangers. So far this is most popular in China where the tuangou (“team purchase”) phenomenon involves strangers organizing themselves around a specific product or service. Members who meet online at sites such as TeamBuy.com, Taobao.com, and Liba.com arrange to meet at a certain date and time in a real-world store and literally mob the unsuspecting retailer—the bargain-hungry crowd negotiates a group discount on the spot.
  • The St. Louis Cardinals invited fans to send the team scouting reports on promising college players.  The idea is to collect intelligence on talent at small colleges that scouts don’t routinely visit.  One of the team’s executives explained, “We don’t have a monopoly on baseball knowledge. Just looking at the fan sites and posting boards, you see an amazing amount of energy. Why not harness it?”

Adapted from Michael R. Solomon, Consumer Behavior:  Buying, Having and Being 9th ed, Prentice Hall, to be published January 2010.

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