Awe inspiring movie making…; Creativity at its best…; Technological innovation transforming into silver screen magic…; Intriguing way of unveiling the plot and storytelling…; Top notch technicians….; Celluloid beauties and Screen idols…; Personal touch moulding century old story lines into modern-day novelties… This is how I would think of most of the Hollywood Box office successes and their reasons for raking in the millions and made them Historical master pieces worth watching over and over.
The story in Bollywood is a tad different. They thrive on sensationalism, fantasy, demi god heroes, script and lyrics and music to create success and draw the crowd. For decades it has been the family values and tradition that they utilise to define the plot. Very few movies stand apart and have experimented and travelled the Road less travelled. There have been far more people taking these bold decisions off late.
Coming down further south and seeing how Box office success was and is created in Kollywood….
For several years it has always been Hero centric movies in the Kollywood. Right from MKT Bhagavathar, M.G.R, and Rajinikanth to the current crop of heroes, its been all about the hero worshipping the mother’s feet, speaking bold dialogues on the face of the camera, dancing around trees with gorgeous actresses (most of them totally alien to the Tamil language) and pouncing on the bad gang. Again the ones who take the other road are very less here too. But there has been a prominent rise of one particular force in one of the biggest film industries in the world.
That force is nothing but – “Marketing and TV media publicity”. This has been the reason behind several latest successes (in terms of box office collection). Even though most ofthese films might get only average rating from a traditional film critic, they all have managed to earn decent returns. Sun Pictures with with backing of Sun Network’s array of channels, FM stations, political muscle and marketing acumen has made a string of medium budget movie releases. All have been above average on earnings. The group buys distribution and marketing rights of many Minimum return-guarantee films and plans the release of all of them on a sequential manner. Targeted, well planned list of trailers get released day after day, building momentum gradually right up to the release day. This is followed by half an hour interactive programmes with the Movie team (Director, Actor, Actress, Producer and comedian) on each of their channels. Dont forget the Audio release, Movie preview, Movie Launch functions aired on a 3 hour time slot. This is what we call Fully Loaded
This is one aspect of the force. the other aspect is that it has become a blessing in disguise for the movie production houses who find it difficult to market and bring in the needed RoI for their films. This has helped them to recover whatever they have invested with a decent margin and thus encouraging them to produce more movies. It has also helped a lot of new comers get chances to prove their mettle. Overall even though the movies run just because of the marketing genius, this new found success formula has extended the shelf life of medium budget movie makers.
Can the same tactic work out for other products genres too ??!!
Reflecting back on the noughties (2000-2009) there are plenty of high profile cases of businesses built with high expectations but which failed to deliver. Many of these are examples of products being developed with little or no understanding as to whether or not there was a market demand for it.
In this post I analyse the much publicised example of the dot-com disaster Pets.com.
Build it and they will come… won’t they?
An all too common error at all levels of business from small garage inventors to mega corporations is a tendency to create products and services in a state of isolation and then task marketing and sales teams to “go out and find a market”. It’s quite an insane approach when you think about it. It would be like gluing a toaster onto a skateboard, calling it the Roadtoaster 5000 and then asking a friend to find a few thousand people who’d like to buy it.
There may be some anomalies, but the vast majority of successful products are developed following an analysis of a market – to identify if there are any needs or problems that people are facing, how important these needs are, how many of these people there are, if they would actually pay for something that meets their needs, if any competitors are already serving those needs and what it would take to offer a more compelling proposition than them.
Throw in a bit of basic segmentation, targeting and positioning and you would then have the beginnings of a business case to then look into developing a product to meet those needs. That in itself is a multi-step process because it may not be financially viable or even technically possible to meet the needs.
In short: Don’t build a product and then look for a market to sell it into. Look for a valid market requirement or need first. Then you can go about developing a product.
It’ll make squillions
Launched in August 1998, Pets.com was created to sell pet food and accessories via the internet. The premise was that you could “buy online and cut out the middleman” and “take advantage of Pets.com’s strong buying power”. Users of the site could browse through different categories, choose products they like and have them conveniently delivered to their home. Think Amazon’s original premise – books – but for pet products.
Interesting concept right? Sure, but Pets.com did no market research before launching. They made a lot of big assumptions: that pet owners would want to buy online and knew how to (remember, this was 1998); that selling pet products alone was compelling enough (as opposed to say an online supermarket which could sell pet supplies and other groceries); that people wanted to have such pet supplies delivered and were happy to wait a few days, rather than just driving down to the shops and getting it now.
But market research and validation of ideas seemed to be unimportant back in the heady early days of the information superhighway. Within a year of launch it had been acquired by venture capital firm Hummer Winblad (who amazingly still list Pets.com on their timeline of acquisitions!) and industry executive Julie Wainright. They even got Amazon.com on board as an investor.
Here’s the product – start marketing now!
With cash in the bank and fire in their bellies, Pets.com’s owners spent big in marketing communications and developed a brand around a sock puppet character that was regarded as either hugely entertaining or incredibly irritating depending on whom you spoke to.
They then poured cash into a massive advertising campaign, launched in January 2000 with a Superbowl TV commercial with a media price tag of $1.2 million. This was followed by intense online, print, television and radio advertising as well as a massive publicity push that saw the Sock Puppet make an appearance in the annual Macy’s Thanksgiving Parade.
Awareness skyrocketed. Everyone was talking about Pets.com. The site was hit with traffic as people began to place orders. A month later Pets.com went out and raised over $80 million dollars in its IPO.
There must have been a lot of back patting and happy Friday afternoon drinks. Pets.com was on a roll. The money would surely start pouring in, wouldn’t it?
A flawed business model
Pets.com’s owners soon noticed some issues. They discovered that demand wasn’t anywhere near as high as they had estimated. They may have been perplexed – why wasn’t Joe Sixpack in Suburbia placing orders? Didn’t he realise how awesome Pets.com was?
Pets.com had obviously not heard of the simple AIDA model (Awareness -> Interest -> Desire -> Action). Their massive marketing campaign had certainly generated a lot of Awareness and some Interest. But it wasn’t translating into sufficient Desire and certainly not to enough Action. Not enough people were ordering products and those that did were ordering only small amounts.
Had Pets.com actually done some research and investigation it could have known this in advance. Pets.com did not offer a compelling enough value proposition – there was simply no market requirement for home delivered pet food.
Whilst this meant revenues were much lower than expected, it also meant that costs were higher than necessary. Pets.com had invested in massive warehousing facilities to store all the dog food they figured they’d sell. This was a fixed cost that could not be avoided and it made a serious dent in their sales profitability. To make things worse, Pets.com went so far as to offer discounted and even free delivery which given the physical size and weight of the product was hugely expensive.
Sales did grow due to aggressive pricing and the massive marketing spend, but this only meant that Pets.com was losing money on most sales. The model was unsustainable. It was argued that this was just the nature of building a new business but even a fifth grader running a lemonade stand knows you need to charge more than you pay otherwise you won’t be in business long.
RIP Pets.com
In November 2000, Pets.com folded after having burned through $300 million in less than two years. Over 300 people lost their jobs and the site was shut down. CEO Julie Wainright said in a statement ”It is well known that this is a very, very difficult environment for business-to-consumer Internet companies. With no better offers and avenues effectively exhausted, we felt that the best option was an orderly wind-down with the objective to try to return something back to the shareholders.”
Whilst it was a high profile example of dot-com foolishness it was not an isolated occurrence. It’s still astounding that so much money was lost at the time. It’s hard to accept the argument that people simple overestimated the potential of the internet. Sure, that may have happened but Pets.com’s entire business model was flawed with apparently no real understanding of some very basic business models (i.e. you have to make more money than you spend!).
What would a product manager do?
It’s unlikely that we’ll see this sort of extreme silliness again. To be fair, over the past ten years a lot of niche specialist pet supply stores have started up but they operate at a much more scaled down level and have focused their product offerings and services on specific market segments.
As outlined at the beginning of the article I still see many examples of products being developed with no preliminary research, analysis or investigation to see if there is actually going to be any need for the product. This inevitably leads to wasted money, time and effort.
But it doesn’t have to be this way. Once again, the lesson of the story is simple:
Don’t build a product and then look for a market to sell it into. Look for a valid market requirement or need first. Then you can go about developing a product.
NOTE: This blog post of mine was originally published on the brainmates website. brainmates provides product management and marketing consulting and training services for leading organisations in a range of industries. And I work there so check them out!
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So we’ve looked at what is the heart of your business and last week we looked at how that new perspective applies to your customers. What did you come up with? Did you try it out? If you haven’t yet, this week that is your assignment, along with what we are going to talk about now.
No doubt that as you worked, or will work your new found heart, you will begin to realize that there are holes. Holes in your sales process, in your marketing strategies and most definitely, holes in your media that you use to share that heart with your customers.
As the Christmas season is drawing to a close. Take this time to think about just what types of media you use. What is missing. How can you tweek what you have to align with your new found heart. These areas are key in refocusing your media to align with the heart of your business. If you don’t have heart you are dead. If your clients don’t know your heart, how can they interact with you and trust who you are to them. How do they know what sets you apart.
As you move into the New Year, thinking about these questions. Answer them. Then search out a professional to help design and create the media that can make all the difference.
It’s been an interesting year for me with tons of firsts. My first year of being married. My first time in grad school. My first time going to Europe. My first time receiving something from another company because I was blogging about them.
Couple months ago, I wrote a rather innocuous post about eating take out dinner from Cafe Habana in NYC and washing down our delicious Cuban sandwiches with a Mexican soda called Jarritos. Well many weeks ago, I had a representative from Jarritos, David, leave a comment on the site about wanting to send out some samples due to my particular interest in the drink. I got back in touch with them and a week after that exchange, I had a large box from UPS waiting for me. I received 12 different flavors, a Jarritos mixtape CD and a Jarritos t-shirt! It was like an early Christmas gift.
The drinks have been delicious. I’m about halfway through them. My faves so far: Mandarin Orange and Toronja. Thank you Jarritos and David!
One of my seasonal ‘jokes’ goes that you can tell when Christmas is approaching by the adverts on TV. Thus, like many others I suppose, I am thrust from my usual lethargy into a mild panic, making hurried calls to my siblings and parents, enquiring what they might want for Christmas, with the implicit fear that the shops might somehow run out of appropriate gifts.
In spite of our recessionary times, the high street in London has done surprisingly well for itself compared to 2008 when the onset of the recession dampened the Christmas (spending) spirit. November sales are up only 1.8% on last year nationally, but in the capital sales are up 13.3%.
Even if we are short of cash, we certainly shouldn’t be short of ideas: most of the major newspaper websites have a glut of buying guides, telling us what we could buy, and for whom. But for every article about ideal presents, one often finds a dissenting contributor in the comments sections, outlining the merits of a presentless Christmas. Capitalising on these frugal sentiments, The Green Thing has created a cunning spoof of the Amazon.co.uk website, delightfully titled Amazero.com, encouraging us to buy their single product – nothing (it’s priceless, of course). With a slightly more traditional approach, Adbusters sponsored ‘Buy Nothing Day‘ on the 26th of November this year.
Both of the above campaigns make the claim that Christmas – or more simply, buying lots of stuff – is bad for the environment, and detracts from the true spirit of the season. However, if you’re more inclined to think that Christmas is a waste of money altogether, then Joel Waldfogel’s book ‘Scroogenomics: Why you Shouldn’t Buy Presents for The Holidays’ may contain some more compelling arguments. Based on US surveys, he suggests that people would generally be willing to spend 20% less on the gifts that they received were they to buy them for themselves. This difference – in economic jargon, the deadweight loss – is worth $13bn a year in the US. He continues:
There’s every reason to believe the deadweight loss is as big elsewhere. That would get you to $25 billion a year around the world in value destroyed through gift giving.
Waldfogel isn’t against gift giving – just bad gift giving. Tim Harford has some useful recommendations based on Waldfogel’s arguments: spend modest amounts (hence reducing the likelihood of a large deadweight loss), or increase the sentimental value of your gift – invest time or creativity into making something personal. In other words, give it value to which you can’t attach a price.
In a neat twist, Waldfogel’s book is out for Christmas. But before you buy it, make sure the recipient wants to read it first.
The Image above is taken from the Amazero.com website, and is used with thanks.
I recently viewed a presentation from Seth Godwin, (have also read his books). Fundamentally he makes a great point. With the emergence and unbelievable growth of the internet, businesses and services have become interchangeable. So Seth states you have to hunt for something unique about your business to enable you to stand out. Sounds like a sensible strategy but got me thinking.
During writing for my latest seminar I uncovered some amazing facts, in 1950 in America the average person got bombarded by fifteen adverts a day! Can you image that, I have the picture of a family sitting around the dinner table (eating meat with two veg, it is the 50’s after all) talking and recalling all the ads that they saw that day. Imagine that! Now the average American gets hit by around 3000! Yes 3000, I find that amazing. Makes really bad news for traditional marketers, you sort of get to the point of saying what’s the point anymore to billbords, magazine advertising etc
Seth makes the point given a market is as complex as this then you have to be a purple cow, for those that haven’t read his books he says if you drive down a country road and see a normal cow do you even notice? Would some even raise a eye brow at a normal cow? But if you drove and saw a field of cows and one was purple would your stop or even look? He makes the point of course. Now I agree that you need to find your purple cow but sometimes I think too many business try to be cleaver and find a point of difference. I think accept it that it if you sell a widget and ten others sell the same except it’s the same widget! Now I believe if you get resigned to the notion that because every widget is the same why would you buy mine and give up your missing marketing 101. GET A COMPLETE SALES AND MARKETING PLAN
You have to think of your client (or potential client) and solve their biggest issues, then and only then work out how to get to them! In New Zealand theres a website www.trademe.co.nz a takeoff of ebay, I get pitched every month from someone wanting to create a takeoff trademe. None work! There’s lots of reasons why but one nice one was in trademe’s first five or so years every weekend they dropped flyers on cars in supermarkets! Our biggest website, now equating to 60% of all internet traffic in New Zeland had to get their customers to find out about them by dropping flyers (manually!!) on car windows!
They had no purple cow, no new amazing breakthrough in technology but good old fashion brains to realise they had to work out ways to go direct to their potential customers.
In my experience advertising clutter is getting horrible but theres a silver lining, I believe that this growing clutter is evening the playing field for all companies (there will always be a few this doesn’t work for, coke, nike etc). Now if you can think of a way to get to the end customers then most of the time your one up on the big guys. I can’t see ATNT or AMAZON doing flyer drops! Your big advantage as a small company
Yes the worlds changing and for the small businesses this change will benefit you, if you’re smart. The best way now to cut the clutter is to enter the world of social networking. Stuff purple cows, get friends to buy your products. Be liberal with the term friends, in my mind anyone that wants to buy from me can be my friend. Hell give me enough money and come round for dinner!
I was amazed that I set up a twitter account and within a month I had over 2000 people following me, imagine the world were regardless of advertising budget I can get a daily message to them if I want. Everyone should check shitmydadsays in twitter, 500,000 people follow him! Amazing. Use facebook, twitter, bebo any social networking. The bets stratergy I believe is to get as many followers then sell your heart off! There is rules and tricks which I might talk about at a later date.
Hope people get value out of my blog, feel free to visit my website www.webpartners.co.nz
Oliver Wright writes: