Tuesday, February 15, 2011

PUMA Social, Planting A New Market In Nightclub Sports

While Nike and Adidas continue developing the already-existed market, Puma is trying to create a new trend in sport market by its marketing project – Puma Social. Puma makes a new term called “After Hours Athlete” describing people who like to social at night and participate in night sports such as dart, foosball, pooling, bowling, karaoke, and even ping pong.

There are mainly two parts in their marketing plan, Puma Social Club and Life Scoreboard. Puma Social Club is a series of clubbing events sponsored by Puma around the major cities. The club is not in the form of traditional nightclub. In fact, the decoration of club is more toward sporty style and Puma provides sport equipments with significant logos on it. Meanwhile, there are Puma shops in the club displaying those colorful Puma shoes and shirts that suit such occasion. Puma is bringing a new concept to people that club events can integrate with night sports and sporty outfits. Also, Puma provides a free application called Life Scoreboard on both computer and smart phone where players can use it to record the score for their games. This application comes with Puma’s advertisements on the side.

What Puma is doing is similar to the blue ocean strategy from previous post, but at a larger scale. Basically Puma is creating a new market demand in nightclub sport by bringing sporty style into nightclub culture. Instead of seeing what consumer needs and then making the product, Puma does the marketing in the opposite way this time that they create an environment first and keep promoting the atmosphere, after it reaches certain popularity the environment itself will attract the consumer and further lead to final sales. Puma has integrated the market with several elements and created a new trend for consumers to follow. It requires huge resources input at first to set the environment, but once the trend is launched Puma will be the leader in this new market with significant profits.

Tuesday, February 8, 2011

Retargeting - New Opportunity and Possibility

Today I want to share a marketing service provided by advertising company. It is called behavioral retargeting. It is a form of online targeted advertising by which online advertising is delivered to consumers based on previous Internet actions that did not result in a conversion. Basically it uses computing technology to track consumer’s viewing history, once a page or an item is clicked but not converted into a transaction, the advertiser will keep the record and put the exact same thing on the online advertising section when the consumer enters related websites.

I think retargeting is interesting and I have been noticing such retargeting online advertisement appearing on some of my favorite websites. The most obvious example is Google’s online advertising program called Google AdWords, which they call it remarketing.  Despite the potential privacy issue, advertisers find retargeting very efficient and profitable. Let ‘s look at advertising’s development history and compare retargeting with old advertising skills. The very first model of advertising does not target at any specific consumer, it just promotes at a large population in which the cost is very high and the conversion rate is disappointedly low. Later advertisers discover the importance of targeting consumer, so they start to present the advertisements selectively. How advertising company decides to put what type of advertising at what specific time period is all based on the relevance. For example, cars’ and beers’ ads are shown after sport games, toys’ ads after cartoons, and fast foods’ ads after dramas. This is based on the research result that most audiences are the main potential buyers of the products. Through advertising they are more likely to purchase the shown product in the future. However, the disadvantage is that the advertisers cannot assure if the consumer will make the purchasing decision in short term. Although the targeted audiences are the biggest group of potential buyers, perhaps most consumers will only have impressions about the advertisement without really purchasing it (situation varies depending on the durability of the product). On the other hand, retargeting is efficient because the advertising is designed to be delivered to consumers who are just at the shopping moment considering what to get. Under this condition the conversion rate is going to be higher than other advertising skills.

Retargeting is just at the beginning experimental period, but it is definitely the next trend of advertising. Currently it seems to be focusing on Internet-based advertising, while other market areas are still being covered. This means there are still a lot of opportunities for retargeting. 

Tuesday, February 1, 2011

Gym-Pact, A New Gym Contract

There is a new gym contract coming out called "Gym-Pact". It is both a service and a product. Gym-Pact offers free gym memberships to people who want to workout but there is a motivational fee which customers agree to pay more if they miss their scheduled workouts, literally buying into a financial penalty if they don’t stick to their fitness plans. In other words, if one is committed and goes to gym regularly, there will be no cost. However, if one ever gives up and quits, then he/she needs to pay the penalty which is significantly higher than the regular membership price.

Gym-Pact negotiated a group rate with Planet Fitness, then paid the membership fees for participants, who in return for a free membership agreed to work out at least four times per week. If they fail to follow the schedule in any one week, the participants pay $25. If they leave the program for any reason other than injury or illness, they will pay $75. For now the fees will be used to pay for the gym memberships and to build a financial aid fund.

The founder of Gym-Pact, Yifan Zhang, was enlightened by her economic professor at Harvard where the professor taught that people are more motivated by immediate consequences than by future possibilities. Zhang then translated this principle to workout motivation. If missing a workout costs people money, they would be more motivated to stick with it and being consistent.

The marketing strategy in this case is focusing on the demanding side rather than the advertising side. What Zhang has done in marketing is the blue ocean strategy - the high growth and profits an organization can generate by creating new demand in an uncontested market space. Similar to how Groupon started their business, Zhang simply integrates the concept from her economic professor into fitness market and thus creates a new demand. By providing a new type of product in fitness market, the Gym-Pact contract, it encourages people to start workout with an attractive deal. People who have failed before on their own workout plans now have a new option that motivates them once again. I think this is a brilliant idea with many possibilities that Gym-Pact can develop into an insurance type company with floating rates in the future.

In conclusion, marketing is not just about advertising. A little idea from life experience might become a popular product or service. Just look at examples like Facebook, Youtube, and Groupon, they all succeed in a very short time because of the innovative concepts behind. That is the key to generate profits. Outside there are still plenty of blue oceans waiting to be discovered. 

Tuesday, January 25, 2011

Getting Testimonies From The Enemies - A Different Way Of Marketing

Recently I have read an article on Mashable (EA Ad Goes Viral Thanks to Disgusted Moms). It is the new advertising strategy made by EA, one of the biggest video game producers, for the new coming out game called "Dead Space 2". Basically it is a horror shooting video game containing bloody and violent scenes. In general, this is a normal violent game that is nothing special. However, the way EA advertises Dead Space 2 is very innovative and unique, at least I have never seen such type of advertisement. 

Dead Space 2’s advertisement contains not only the action scenes from the game, but surprisingly it also includes the video recording of mothers’ reactions of viewing violent game scenes, which all the mothers seemed either scared or frustrated. As said in the article, the mothers in the videos are real. The mothers were told they were part of a focus group for an entertainment marketing project and given no further information. It soon became popular and was spread over Youtube. Since the reactions were so good, EA decided to make more similar interviews. They even builds an official tweet named “#yourmomhatesthis” to further spread the influence. This strategy is called buzz marketing, meaning that you do it harder if you have discovered good reactions to make bigger impact.

Why did this promotion work? Didn’t EA concern about mothers’ reactions after seeing such negative advertisement? Mothers are the source of money in which they are the ones who are really going to pay for the game. I think the game company believes that teens are the decision makers and they will find a way to get money anyways. Moreover, the audience is clearly considered by EA. A writer writes with a purpose to aim at the target audience. So does the game company. EA chose Internet as its main media rather than television or newspaper. By doing this, EA greatly reduces the chance mothers viewing their advertisement. Instead, they posted on Youtube and Tweeter and spread the information on several major game forums where their target consumers gather.

After launching to the right consumers, marketers use the persuasive skills to convince people to purchase their product. A common example is the positive testimonies showing in the dieting advertisements. However, what has been done creatively by EA to promote its game is that they use negative testimony cleverly to get positive feedbacks. Normally a negative testimony will hurt the sale when it is used by the competitor side, but it will boost the sale if the negative testimony is given by the natural enemy of the product. In our case, from teen player’s perspective, mothers are obviously the enemies of games. When teens see the offended and extreme reactions made by moms, it tempts their curiosity and desire to play the game. Therefore, as marketers we should consider what are the potential natural enemies of our products and see if there are any possible profits that we can extract from it.

If you like to watch more similar advertisements made by EA, go to the official Youtube channel of Dead Space 2.

Tuesday, January 18, 2011

The Marketing Strategy Behind Best Buy's Buy Back Program

Best Buy recently comes with a new promotion called “buy back program”. It offers a guarantee that consumers can sell certain gadgets, such as laptops, tablets, smartphones, and televisions back to Best Buy within certain periods of time. However, this “future proof” service is not attached to the product. Consumers need to pay a set fee in order to have this service and the fee depends on the sale price of the product. Another interesting point is that Best Buy does not buy its products back with cash. All consumer payments are in the form of Best Buy gift cards.

This is a great marketing strategy played by Best Buy. I think there are at least three profitable points from this promotion. First, buying sold products back creates a second value for the company. Best Buy has its own retailing networks, which allows them to sell these used products. Second, they capture a new group of consumers who tend to sell used products online. As they sell products back to Best Buy, they gain gift cards which can only be used in store. These gift cards will transform into new spending and thus increase the sales. Third, the entry fee for the program itself is indeed a huge amount of profits already. According to the deadweight loss theory in economy, imposing entry fee on consumers decreases their surplus and it will be transferred into producer’s profits. As you can see, the above three facts are the reasons why Best Buy starts this new promotion. Ultimately, they all bring profits to the company.