Friday, February 12, 2010

Four (or Maybe Five) Examples of Brilliant Marketing

There is nothing that I find more fascinating than a fabulous new technique to attract customers to buy a product and induce – and sometimes even compel – customer loyalty. That is what I call brilliant marketing. And every now and then I see an example that makes me say, “Now that was a brilliant idea!”

Let’s start with mainframe software. I am of course referring to the real mainframes (not the ones that claim to be mainframe-like) – specifically, these are the ones built to run with the IBM z/OS (MVS heritage) mainframe platform. Clearly there is some brilliance in the terrific capabilities that the software provides, but that’s not my focus here. The real brilliance is the fact that customers get hooked on the platform, and the software that is charged on a monthly license fee translates into an annuity stream for IBM long after the product is sold. Each time a new mainframe is sold, even into an existing account, it extends that annuity stream longer. Brilliant.

The Mobil Speedpass is another great example. That little plastic widget on my keychain probably cost very little for Mobil to implement, but because it is there I look for Mobil stations to stop at even if the gas costs a few cents more per gallon. Why? They made it very easy for me. I don’t need cash, and I don’t need to get a credit card out. I just swipe, pump and go. Brilliant.

Amazon has what might be the best example of online loyalty marketing that I have ever seen. Their ‘recommendations’ have often caused me to purchase a book that I had no idea I needed. A lesser-hyped marketing play in their arsenal is their Amazon Prime membership where (for $79 per year) you can get unlimited free second day UPS shipping. This appeals to both the need for instant gratification (my packages often arrive the very next day) and the practical. If you make more than a handful of purchases a year this is well worth it. I go to Amazon first because I’ve already paid for the shipping. Brilliant.

Next we come to Apple’s genius around the iPod and iTunes. The iPod was coveted for it’s sleek design and usability, but it’s really iTunes that was the magic here. Providing a superior platform to download, organize and play music is what (in my opinion) drove iPod to the number one spot in the MP3 market. And then… wait for it… the business model feeds on itself – as people download more music, they need iPods with more capacity. Podcasts and videos made available via iTunes all drove the need for more capacity, driving more iPod sales. This one is not just brilliant – it’s pure genius.

So what then is the next brilliant marketing idea? Will we see one with the eBook readers? Amazon made an attempt with the Kindle. They had the e-reader market to themselves for a couple of years, and even attempted to get people hooked on the technology by taking a loss on Kindle book sales. Barnes and Noble entered the market this year with the Nook. Both are attempting to compete on feature/function with what I will call ‘near-proprietary’ platforms. Amazon and Barnes and Noble are approaching this as a book war. Tie the book sales to the technology and get them hooked; he who sells the most technology will ultimately sell the most books. But are they sacrificing the pawns too soon?

Enter the iPad. What’s different here? Let’s start with the fact that Apple is not in the bookselling business. They aren’t selling just another e-book reader. The jury is out, but I suspect that we are going to see a kick-ass business model that is all about the data. And like the iPod, more data drives the need for more capacity, which in turn drives the technology sales. Is this about selling books? I doubt if Steve Jobs thinks it is. It doesn’t matter where the content comes from – the more books and more data the better. And while Amazon and Barnes and Noble are fighting about who is going to win the electronic book reader war, I predict that the iPad is going to be all about data, and data integration (music, text, video…), and integrating data and applications. Gee, I’m almost talking myself into wanting one!

What do you think? Can Apple ratchet up their brilliant marketing yet another notch? What’s your top example of brilliant marketing, and will we see one with the iPad?


KarenG said...

I don't get why people in publishing are so down on Amazon. They are who they are because of marketing & customer service. The indie bookstores who are struggling are doing so because of lack of it. They aren't competitive in the marketplace.

(This is a comment from a writer, not a business/electronic person. I have no idea what new examples of brilliant marketing are out there, but I wish I could think of one to sell more copies of my books!)

Colette said...

Karen, I do understand why the publishers are down on Amazon -- because Amazon is a threat (maybe their biggest threat). As Amazon tries to move from being a bookseller to a publisher (e-books/kindle) traditional publishers are threatened (and rightly so). From a business perspective I'd say Amazon is doing a brilliant job.

As an author, Amazon's tactics good be good or bad -- good because they give you another outlet -- bad if what they do hurts your ability to make money -- and that's why the agents (who are looking for their clients' interests) come in. Kristin Nelson (an agent who blogs at Pub Rants) covers the author's angle of these topics quite well on her blog.

Anonymous said...

Microsoft (Windows operating system) impresses me most with marketing. Who else can sell defective product after defective product, and get its customers to pay for the repairs? Amazing!

Colette said...

Ha! Anonymous -- very good point! Yes, Microsoft certainly deserves some credit there!

Dave E said...

I'm not so sure the iPad will be the hit that Apple hopes it will be. Sure, some people will buy one just because it's made by Apple or because it looks cool but so far, all I've seen is big ipod.
It's not a laptop, no keyboad although you can plug one in, but there goes the portability since you now need to cart two items of hardware around.
It's not that portable as it's the size of a laptop and it's locked down to only you let you do what Apple want to allow.

In comparison, my wife has a small laptop, not one of the micro mini ones but just a little bit bigger = more powerful processor with more memory and a 250g hard drive. Runs windows 7 and all her windows apps fine. Built in camera so she can skype everyone on the planet, 6 hour battery life and it fits in her handbag.
Oh, and it was only $400 so it beats the ipad on price as well.

I'll give Apple credit though for innovative marketing. The lame iPad name and the enusing hilarity certainy kept the device in the news far longer than it would otherwise have been. I guess any publicity is better than none.

Anonymous said...

Beg to differ with you on the MF software as brilliant marketing tho I do not disagree on the consequence - a fantastic annuity stream. It was not brilliant marketing that forced IBM to decouple software, education, and systems support from the hardware in 1969, but the threat of of monopoly prosecution. All but education turned into great businesses which IBM has managed to exploit, sometimes brilliantly, sometimes not.

Colette said...

Stevedbpok, thanks for reminding us that the reason for the mainframe software change was the law. But IBM sure did find a way to implement that that was profitable! And it's great that someone can remember back farther than me!

Anonymous said...

I frequently found particularly in my later years, that my company kept trying to resurrect ideas/programs that were dismal failures in the past, for good reason. There was no one around that remembered when. Doomed to repeat history!

Anonymous said...

Walmart went through one of the best brand marketing realignments in recent memory with it's "Save more. Live Better." identity campaign. Previously focused solely on the savings side of the equation, the addition of this campaign’s aspirational lifestyle component enabled them to move from the camo-clad Kmart category and start eating the tonier lunch of competitors like Target. Most recent sales figures show a 2010 4th quarter rise to $112.8 billion, an increase of 4.6 percent from the fourth quarter of 2009. The key has been the ability to define fundamental customer aspirations and truly align the company's brand with them. At heart, it's one of the simplest concepts in the world, but for most companies, one of the most impossibly difficult things to do. So, love it or hate it, I have to give Walmart props for knowing they’re doing, at least this time around.

Colette said...

Anonymous, perfect example! Walmart is indeed a marketing genius. Some of the best examples are the simplest.