The past few years have seen a number of new companies enter the streaming digital music space. The old model for a digital music marketplace—which Apple arguably perfected with its iTunes platform—saw users pay $0.99 for an MP3 of a song, which could then be loaded onto a compatible MP3 player or phone. Now, with services like Spotify, Rdio and Pandora, consumers are able to stream an unlimited amount of their favorite music, for free, straight to any device. It’s becoming less important to actually own a song than it is to have the ability to access any song, anytime, anywhere in the world. Many companies have flocked to this new market, and with Apple’s recent announcement of their new platform, iRadio and Google’s recent launch of Google Play Music All Access, the streaming digital music space is already beginning to look quite crowded. …Continue reading
There has been a significant amount of buzz recently about Ron Johnson, former CEO of JC Penney, and his failed attempts to turn around the struggling middle-market retailer. In a recent post, James Walker outlined how an unsuccessful SKU assortment and poor pricing and promotion decisions—not their new strategy of “everyday low pricing”—accounted for the company’s biggest losses. While this is certainly true, I believe it’s also worth evaluating the implications of these recent pricing moves and strategic decisions from an overall brand strategy perspective.
Ron Johnson and JC Penney: A History
In January of 2012, Johnson stepped in to reinvent the JC Penney brand. Drawing on his past experiences at Target and Apple, Johnson announced that Penney would do away with coupons and discounts in favor of “fair and square pricing,” while the store layouts would be overhauled to a format of curated mini-shops. A year ago, the stock price jumped at the Apple store pioneer’s bold vision, but today, Penney revenues have fallen by 25%, the stock price has fallen almost 60%, and the company has lost nearly a billion dollars.
So what happened? Within this failure story are two important lessons in brand strategy: …Continue reading
The last time I visited San Francisco, I was looking for a place to eat and came across a neighborhood with a remarkably high concentration of restaurants. I had plenty of choices, but with so much clutter, nothing really stood out. Some places tried to differentiate with an approach I’d never seen before: They paid people to stand on the sidewalk and stop pedestrians to tell them about a “favorite dish” or something they “had to try.” The strategy didn’t seem to work. It was clear these “advocates” were paid, and as a result everyone tuned them out like verbal spam.
Many attempts to build brand advocacy don’t look much different. Whether it’s an offer of 20% off your next purchase in exchange for a Facebook “like,” or a $50 store credit for referring five friends, many brands try to build advocates through incentives. In the short term this may be effective, but for many potential customers, encounters with this type of advocacy can feel inauthentic and transparent. We move it directly to our mental spam folder, and sometimes create negative associations with the brand as a result. Brands interested in creating lasting, long-term relationships with customers should avoid the temptation to incentivize and focus on building advocates that are authentic and genuine in their recommendations…but how? …Continue reading