Marketing Doctor John Tantillo’s Winner and Loser of The Week
Winner: Amazon Kindle Fire
Loser: The New York Times
Folks, almost twenty-five years ago, Apple made a mistake that led them into the wilderness for almost fifteen years. The mistake was to maintain strict control over their product lines and reject licensing of their technology.
The result was the rise of the PC and Microsoft as the vast majority of consumers –the ones who weren’t the earlier adopters— went for the lower price point. Software developers focused their attention on the PC and the rest was history: the incredible expansion of desktop computing around the world and the increasingly narrow market for Apple devices.
Now I’m not saying that the same thing is happening to Apple today. After all, the company is much more powerful than it was back then and it has also likely learned a lot from that first experience.
But, that said, you can’t underestimate the fact that while Apple evokes fierce devotion to its products, bottom line, it’s a competitive world and many people are going to be drawn to other devices, especially if the price is right.
That’s why Amazon’s Kindle Fire tablet is our winner of the week.
Amazon announced that it’s sales of Kindle Fire quadrupled year-over-year on Black Friday.
Amazon has never announced actual unit sales numbers, but it’s likely that Amazon will have sold somewhere between 3 and 5 million by the time 2011 closes out.
Apple is still clearly a leader. The company has sold over 39 million tablets since the iPad was launched in 2010, but they better be watching the rise of Amazon’s Kindle Fire.
Sure, there are other tablets out there, but the brand lesson with this kind of technology is that at a certain point the majority of consumers –the one’s who haven’t gotten on board yet— enter the market and these are the people who balance the perceived value of a brand with the sticker price.
That’s where companies like Dell took off during the PC boom. They were able to compete on price but also offer clear brand equity. That mixture is unbeatable.
Amazon is in a similar position. They’re not just producing a generic tablet, they’re producing a branded tablet at prices much closer to a generic tablet.
That’s the trick and my guess is that we’re going to see a lot more growth for Amazon in this area and shrinkage for Apple unless they decide to begin to compete head-to-head (something they didn’t do long ago and haven’t really done lately).
I’ve written about the problems newspapers have been facing for a long time. Here’s a sample with some links.
Bottom line, newspapers have been struggling for a long time. Margins have been shrinking, readership declining and staff facing layoffs. Many newspapers have stopped printing physical copies and gone completely online, while others have simply gone out of business.
The biggest problem has been that digital dimes don’t replace paper dollars –in other words, the advertising rates online simply aren’t able to replace the printed advertising revenue. In other words, the old business model is in a lot of trouble.
To counter this, the biggest newspapers have worked hard to create online experiences that can generate subscription revenue and advertising revenue through huge online traffic.
The New York Times has a paywall and has also been working hard on creating a social media “community” of readers. To say I’m uncertain about how “community” will work to save newspapers is to really understate things.
Fact is, while it’s popular to jump on the social media bandwagon and believe that somehow social media will save the day moneywise, it goes against the basic purpose, history and even business model of almost all newspaper brands.
Newspapers weren’t meeting places, they were information sources and gateways to high-end analysis and entertainment. In other words, their value came from distilling information and thought into something that was special and had authority. Because this service could predictably generate a large readership (all looking at the same space everyday), advertisers could be assured that they had a specific audience they could deliver their messages to.
Here’s the point: social media is much more like the community bulletin board than it is a professionally shaped (and most important) finite location. In other words, how do you stand out in social media if everyone else is trying to stand out and trying to communicate.
Newspapers, traditionally, were a one-way street with the writers writing and the readers reading (was letters to the editor ever anything more than half a page or a page?).
So already, I wasn’t so sure that the move by The New York Times and other media over the past few years to have comments on stories makes all that much sense (doesn’t that undermine this writer to reader relationship?).
But now The Times has decided to do something I know is a mistake. They’re tying themselves into Facebook.
Basically, right now all of the readers’ comments on The Times are moderated. But soon the paper is going to give certain readers preferred or “trusted” status so they will be able to post without being moderated.
But there’s a catch. Those preferred readers have to have Facebook accounts or else they will be excluded.
Wow. What a bad idea! Nothing like exclusion to alienate your customers.
Recently, I wrote about Facebook and how its attitude toward privacy has begun to turn off users. No surprise that the reaction from many Times’ readers to the paper’s move has been one of outrage. Readers also said that labeling some readers “trusted” implies that other readers are not “trusted.” A built-in insult.
If they’re smart the paper will backpedal and figure out another way. If they’re even smarter, they might even reconsider this idea of social media when it comes to their content. After all, isn’t content really king? Do hundreds of comments that are often of poor quality add or dilute the newspaper experience online? Also, should journalists and editors, already hard-pressed for time, be forced to interact more with readers in these forums?
These are uncertain times for newspapers and, folks, I don’t pretend to have any answers. But I do know that brands live and die on being consistently true to themselves and their business models –in other words, they live by providing a benefit to their customers.
The New York Times and others should pause here. Before they fit into social media, they really need to consider whether social media fits into them.
And remember, it’s always easier when you keep marketing and branding in mind.
TODAY’S TANTILLO TAKEAWAY – One of the worst things a brand can do is make the mistake of doing something new and different simply because it is a trend. The key is to ask how the trend fits your business. A trend is a tool.