Nintendo: Catching up with the Digital Revolution in Gaming

Nintendo blaming price promotions (http://www.marketingweek.co.uk/news/nintendo-blames-price-promotions-for-profit-slump/4001363.article) for a profit slump is nonsensical; discounting is only ever a symptom of an underlying business problem rather than a cause. Strong brands and product manufacturers do not need to reduce their prices to shift volumes. Judging by Thursday’s announcement Nintendo’s recent focus has been to desperately cling onto market share, even at the cost of profitability.

The underlying reason for such ailing fortunes is the expansion of their competitive set. The digital revolution that is underway in gaming (as well as most other industries) is fundamentally altering consumer behaviour in a way that is squeezing Nintendo’s devices out of the market – who wants to buy a hand-held console if they can download the games onto their iPhone for a lower price? Portability and convenience used to be Nintendo DS’ great selling point, but carrying one device is infinitely more convenient than carrying two.

This is part of a wider trend in technology that is leading the consolidation of devices into a fewer number of formats, each of which acts as a multi-purpose platform. The result is that Nintendo’s strategic focus going forward should be on software rather than hardware, both from the point of view of the market trends and the core strengths of their brand in the eyes of the consumer.

Boutique Budget Hotel: Redefining Luxury Customer Experience

Once upon a time, luxury brands were premium and budget brands were mass-market. Yet as consumers become more demanding, brands are becoming ever more creative in meeting multiple, seemingly irreconcilable customer needs.

The launch of Bloc Hotels is in Birmingham is the latest in a series of such feats. A ‘Boutique Budget’ hotel brand, Bloc has developed a new model based on an in-depth understanding of customers’ behaviour and needs when travelling on a budget (rooms start at £30).

As most short-stay travellers do not unpack and prefer not to eat in their hotels, Bloc has chosen not to offer storage or dining facilities. The resulting savings mean that its hotels can focus on those elements that cue a premium accommodation experience for guests: for example luxury linen, powerful drench showers, state-of-the-art WiFi and HD TVs, and a superb location.

By focusing on the brand touch points that make a real difference to its customers, Bloc is able to provide a luxurious experience in spite of its failure to tick all of the customary ‘luxury hotel’ boxes (with associated price tags). This innovative challenger model has potential to shake up not only the travel industry, but also potentially any luxury product category.

Even if you can’t build your customer experience from the ground up, do you have a full understanding of what’s important to your customers and what isn’t? Focus on the elements that have a real impact on consumers’ perceptions, rather than wasting resources on those that don’t, and you can create a superior experience without an associated increase in cost.

Spotify: Redefining Music Monetization

I’m a Spotify Premium customer, meaning I pay £9.99/month for unlimited access to virtually all music that is out there – including streaming onto my iPhone. I do not own any music, don’t use the iPod function or even have iTunes. Spotify meets my music needs better than any other provider.

In the pre-Spotify era I would not have dreamed of spending £120/year on CDs or downloads, but now feel it’s providing me with such good value I don’t think twice about it. It is their ability to innovatively monetize the market that seemed like it was fast heading into the abyss of promotions (HMV) and giveaways (YouTube) that I admire most.

It’s true that Spotify’s profitability and financial future is a very controversial issue. Yet no matter how healthy their finances are, it is critical to appreciate the revolutionary nature of their new revenue model. At a time when piracy threatens the music industry an approach that gets customers to pay more for accessing music whilst feeling they are getting better value is not to be sniffed at. The consumer interface of this model is a brilliant innovation, and even if Spotify are unsuccessful at making its financial ends meet other music providers should take note.

Spotify have not yet got it right. But they’re onto something, and the music industry better take notice of this completely new way of engaging with their audiences. After all – iTunes caught the big players unaware, and many (HMV included) have still not developed a strong enough platform to compete with Apple. History might be about to repeat itself.

Confessions of a Londoner: aka the genius of the Duracell Portable Charger

Oh, the perils of the iPhone battery running out when one is away from home... Sophisticated and adaptable beings we may be, but being forced to survive in the midst of the the urban jungle without a GPS or Night-bus app (let alone voice calling) fills us with a primitive panic.

Sadly, as handsets become more indispensable – and therefore more used – so the time available before charging decreases. The problem isn’t limited to Apple fans: the majority of smartphone users will appreciate the inevitable compromise made between technological sophistication and battery life.

With the introduction of its branded portable charger, Duracell has identified and met a critical need among a small but rapidly growing proportion of smartphone users. In doing so, it has begun to extend its footprint beyond the declining category of alkaline batteries into a new category that’s growing as rapidly as technology is changing.

Full marks, Duracell.

Naked on the Shelf

From Stark Naked foods to Naked Smoothies to Naked Noodles – nudity seems to have recently flooded supermarket shelves.

Interestingly, even the visual language of these products has similarities – recurrent use of fluid, organic lines, child-like fonts, and vivid yet natural colours.

It is easy to see the thinking behind these brands. ‘Naked’ is the ultimate stamp of clean label – something that Innocent, the uncrowned king of the health beverage world, has raised the bar for. Yet apart from the health and transparency messaging, the term ‘Naked’ also works to give the brand an attitude and infuse it with a cheeky, urbane personality. A textbook case of functional/emotional benefit one might say.

However, as it becomes more prevalent, naming your product ‘Naked’ is no longer that differentiating, nor particularly interesting. Brands ought to look to new, original ways of communicating the health messages of their products in a sassy and catchy manner.

Undressed salad, anyone?

Understanding Consumer Identity: The Dangers of Ethnicity-Based Segmentation

Last week some fascinating new research was published by WARC.com regarding the media consumption habits of African Americans, Asians/Pacific Islanders and Hispanics in the United States. The findings have serious implications for media planners, since they point to strong differences in behaviour amongst these ethnic groups.

Any research that points to consistent correlation between multiple variables is useful. Yet as an anthropologist I feel uneasy about an ethnicity-based segmentation in the 21st century – for reasons that have nothing to do with political correctness.

‘Ethnicity’ is a funny term and should not be used unquestionably. Like ‘race’ before it, it’s the kind of word that derives its power from the assumption that it is something physically engrained in us, passed down from our predecessors. But ethnicity is not inherent. Rather, it is part of our (also frustratingly fuzzy) ‘identity’ which is fluid, situational and constructed in our daily lives – in the way we dress, the food we eat, the language we speak and so on. It is through such practices that we come to identify ourselves as belonging to one group or another. 

If we start talking about how media and technology consumption affects identity we get into a whole new ball-game. There is so much you need to take into account – Facebook, online forums, Apple versus LG – the list could go on forever. What’s more – the phenomenal speed with which technology and media trends emerge and become mainstream means that the next big thing is just around the corner. For a young American of Chinese origin his iPhone and Twitter profile might well form a much greater part of his identity than his grandparents’ immigration story.

A good segmentation is typically predictive of consumer behaviour. If the present study helps media planners devise more effective campaigns, it will have fulfilled its role. My note of caution goes out more against the implicit assumption inherent in this research – that ethnicity is a concrete stable variable against which other variables can be plotted. Instead, both ‘identity’ and ‘ethnicity’ have never been as fluid and fast-changing as they are today, and media and technology consumption are central to our ever-changing concept of ‘self.’

Just as segmentations used to be based on demographic data such as age groups before we realised that needs and attitudes are often more indicative of consumer behaviour, so too ethnicity-based segmentations might fall behind with the times unless we really understand the effect that ‘ethnicity’ has on consumer ‘identity,’ and what effect that, in turn, has on behaviour.

Price is a Number, Value is a Benefit

In our cash strapped times all we seem to hear about is the need for competitive pricing and offering consumers good value for money. These deceptively simple phrases conveniently hide the fact that ‘value’ is a very relative term which is used – and interpreted – in very different ways.

The relationship between ‘value’ and ‘price’ is not a straightforward one. John Lewis and Waitrose are both premium brands which have managed to position themselves as offering customers ‘good value’ despite their price tags. Their offer is centred on great customer service and confidence in the origins and quality of their products, which goes a long way to justify the added expense.

For many consumers ‘value for money’ means investment. The initial outlay may be high, but the longevity of the product and little need to maintain it means that a saving is made in the long run. We can see this across a wide range of categories from white goods (Bosch: ‘Invented for Life’) to groceries (Florette: ‘Fresher for Longer’). And which one of us girls has not at some point tried to justify those expensive boots (bag/coat/etc.) by claiming that they will last for a decade longer than the cheaper alternative?

It is hard to pin down the value of something unique – which is why some brands use tailor-ability to add value to their offer. Moonpig.com has pioneered personalised cards, whilst Nike ID enables customers to custom-make their own trainers. Such flexibility produces products that make consumers feel special, and this emotional feel-good sentiment is impossible to define in monetary terms.

Consumer need for ‘value’ but reluctance to pay more for it has recently given rise to some interesting communications.

In the context of current supermarket warfare ‘value where it matters’ is a strong tag line. If Sainsbury’s wants to keep its position as a somewhat premium brand, it cannot scoop down to merely price-matching Asda. Focus on ‘Value’ rather than ‘Price’ keeps customers thinking about the benefits of good food rather than their price tag.

British Airways are similarly at pains to defend their apparently higher flight costs in the face of budget airlines such as EasyJet and Ryan Air. Their latest ad campaign is an aggressive defence move which seeks to show how low cost flying fails to deliver on ‘value.’ Moreover, BA’s ‘value calculator’ demonstrates how EasyJet and Ryan Air’s potential extra costs can rack up the overall journey price in a way that actually makes flying with British Airways cheaper.

To conclude, some aspects of ‘value’ are emotional, whilst others – such as longevity – are rational. But whichever principles you choose to adopt to demonstrate the value of your brand do not forget:

PRICE IS A NUMBER ON A TAG. VALUE IS THE BENEFIT TO CUSTOMER.