US Credit Rating Downgrade- The S&P AA+ Club

Executive Summary: Standard and Poor's downgrade of the US credit rating can be evaluated in terms of signaling power, economic comparisons of countries, and a review of the members of the S&P AA+ rating club. We take a brief look at two countries with sovereign debt ratings the same as that of the United States. From the Desk of If-It-Talks-Like -A-Duck-But-Does-Not-Walk-Like-A-Duck... What do you do? Worry about a double dip instead!

For a little while, folks were focused on the possibility of the US economy slipping back into a recession. Then, Standard and Poor's downgraded the US Credit Rating to AA+. There are various ways to review the implications of this move. Below are three. We take a quick look at two countries in the S&P AA+ club. This is just a quick look, since my take is that the core focus needs to be the possibility of a double dip recession.

1. Signaling Power:

Review and compare economic fundamentals across the OECD and come to your own conclusion on whether this credit rating event is a response to an economic reality that have already been factored in by the market, or this rating provides new information (broadcasts a new signal?) to the market that needs an economic reaction.

Here is a scenario analysis of the downgrade's impact on U.S. based financial institutions sectors:
http://swampland.time.com/2011/08/06/sp-downgrades-itself/

Here is another view of the impact of this downgrade:
http://www.reuters.com/article/2011/08/07/usa-ratings-financialsystem-idUSN1E7760AD20110807

2. Relative Macroecnomic Performance:

Review relative economic fundamentals across the globe, and reevaluate if there is a relative change in the US economy vis-a-vis the rest of the global economies, and if there is an across-the-board change in a set of economies across the global.

Here is Standard and Poor's view of the European economies and that the US credit rating downgrade means for them:
http://www.cnbc.com/id/44053959

At the bottom of this article below is an opinion of the coupling of the APAC region economy with the US economy:
http://www.reuters.com/article/2011/08/07/us-global-economy-weekahead-idUSTRE77628V20110807

3. Review Members of the Standard & Poor's AA+ Credit Rating Club:

To get started, here is S&P's sovereign ratings page:
http://www.standardandpoors.com/ratings/sovereigns/ratings-list/en/us/;jsessionid=6TZhT1HpLpw3Slb1QjJZM1NR4wLTThcH4MfNp4JHbLZcGVHG0yhL!603717864?subSectorCode=39&start=100&range=50

Let's review two members of this club:
1. Belgium:
Here are some quick statistics on Belgium:
https://www.cia.gov/library/publications/the-world-factbook/geos/be.html

Belgium set a record for the number of days without a government. If you think there's a message in there about fractious politics, here an extract about Belgium as a poster child from the Economist:

“Most surprising, perhaps, maddeningly ungovernable Belgium is being held up by many as a model for debt-crippled euro-zone governments.”http://www.economist.com/node/18988904?story_id=18988904&fsrc=rss

If you thought Texas was its own country, here are more details on the political stress and strains at work in the country:
http://www.economist.com/node/18988904?story_id=18988904&fsrc=rss

You could also review Belgium's interest rates in the context of the European Central Bank long-term interest rate statistics for member states.
http://www.ecb.int/stats/money/long/html/index.en.html

In contrast to the Economist article about Belgium a few weeks ago, the Wall Street Journal reports growing concerns about Belgium's borrowing costs:
http://online.wsj.com/article/SB10001424053111904007304576494042192351786.html

Les Belges thought setting a record for existing without a government was worth a party:
http://www.france24.com/en/20110217-belgium-world-record-longest-period-without-government-iraq-election

If you were Belgium, what would you do?

What do you think?

2. New Zealand:

Here is the NZ treasury's review of the NZ economy:
http://www.treasury.govt.nz/economy/overview

The factbook (https://www.cia.gov/library/publications/the-world-factbook/geos/nz.html) tells me that New Zealand has the following key industries:
Food processing,
Wood and paper products,
Textiles,
Machinery,
Transportation equipment,
Banking and insurance,
Tourism,
Mining

New Zealand's economy is coupled to the Australian economy, and you may review the industry sectors to understand weaknesses in the economy relative to the other members of the AA+ club. This would be my starter list:
- Banking and insurance,
- Textiles,
- Machinery.

While you are at it, here is New Zealand's reaction to the United States joining the AA+ club:
http://online.wsj.com/article/BT-CO-20110806-700118.html

If you were New Zealand, how would you react?

What do you think?

Economic Recoveries.

Executive Summary: What would explain the length of the jobless recovery phase in an economic recovery? Would we find answers by comparing trends across recessions, or by comparing trends across countries, or by both? From the desk of I-Think-Therefore-Economics-Exists.

 

The employment/ population ratio has hit a low point not seen in a long while:  http://research.stlouisfed.org/publications/net/page10.pdf

While you can utilize publicly available statistics to make your own charts and form your own views, here is a way to structure thoughts around it:

1. How do you compare recoveries and the nature of unemployment across recessions in the same country?
2. How do you compare recoveries and the nature of unemployment across countries during the same recession period? 

Comparing Economic Recoveries Across Countries During the Same Recession Period.

Since there have been comparisons between the European economies and the American economy:

1. How do the trends in the employment/ population ratio compare across countries?
2. Are European economies more likely to have structural changes in unemployment rates than the US?

Comparing Economic Recoveries Across Recessions in the Same Country.

What does the increasing "length" of the jobless recovery phase in a recovery mean, as a trend across recessions?

Is there something in the nature of the economy, the nature of the macroeconomic entities in the economy, the depth of the recession, or the boom period prior the recession that has primacy in terms of its impact on the nature of the recovery?

Here is one pattern of Socratic thought that explores the two questions above.

Is the increasing length of jobless recovery phase in a recovery, as a trend across recessions, a function of:

1. The increasingly service oriented nature of the economy?
2. An increasing dependence on large monolithic corporate entities over time as drivers of economic performance, with the dependence changing from direct hiring to a greater multiplier effect across the economic ecosystem in terms of dampening hiring?
3. The nature of work available to labor, which has changed from hyper-local activity, to increasingly being touched by global supply chains?
4. An increasing delinking of corporate performance, financial institution performance and "real" economy performance?
5. The degree of specialization, and education, require for work, requiring a greater time for individuals to unlearn, turn around and relearn?
• E.g. I talked about Baked by Melissa here, and surprise, surprise, it has expanded to four stores in NYC.
6. A greater population density in large metropolitan areas over time?
• This may be counter intuitive, if you think in terms of supply, where people band together to create economic activity (not everybody can be an entrepreneur).
• However, if you think in terms of depressed demand, which translates into opportunity for economic activity of a certain type, this may be a worthwhile line of inquiry.
7. Our lifestyles, which are less community driven, and hence make turnaround during recessions more difficult?
• E.g. This may be an effect seen in decreasing labor activism (ed- analysis to be done) with each passing recession.
8. A psychological effect (animal spirits) of the nature of the boom period that preceded it?
• E.g. How long did the Dutch economy take to recover from the tulip boom?
9. Simply the depth of the recession?

What do you think?

Note: Throw someone a thought provoking point about economics, and ye shall reap many more thoughts in return. These thoughts were first published in a macroeconomics forum, in the week of July 16th, 2011. Thank you, Prof. Rosensweig.

Google Plus and Apps.

Executive summary: App downloads continue to explode across various mobile and non mobile platforms. Are apps secondary to the Google Plus strategy? No. Here is why.

The Overview

In response to my last post on Google Plus, a wise man (thank you JJ) asked me whether I think products, not apps, are core to Google Plus' success. 

App downloads across various mobile and non mobile platforms (have you downloaded Spotify yet?) are exploding, and both paid and free app download projections till 2015 indicate they will become an integral part of our lives, if they aren't already.

So, the obvious answer? No.

Google Plus' Avenues to the Apps Superhighway
How does google plus play with apps? Here are some ways:

1. Android Mobile Platform Apps:

Google already has a mobile app platform with ready apps. Make it really easy for the apps to integrate with google plus.

2. Google Products as Apps:

Google products as apps are already a reality. Plug Google Plus into them.

3. Leverage/ Create an App Partner Ecosystem:

Android already has one for mobile apps. Google plus becomes one becomes the ecosystem for social across mobile. As I mentioned previously, the google ecosystem needs to spawn a few Zyngas, a few angry birds (while watching out for privacy trade-offs).

Easier said than done, right? The really interesting question? Can Google Plus also be the social collaboration framework for folks at work, and not just for folks at play?

What do you think?

Google Plus, and the Facebook and Apple Context

Executive Summary: Google Plus' future is for Google to throw away. It is in the hands of the marketing team (because I think the product is on a Moore's Law-ish trajectory), and in the hands of the unknown disruptive forces hiding in dark alleys. Yes, this is an unabashed, quick and dirty speculation on Google Plus' opportunity. From The Desk of Talking-About-Google+-As-a-Social Network-Is-Like-Calling-Le-Louvre-a-Little-Hovel.

After living with google+ for a while, here are some key, qualitative thoughts.

Throw away all that propaganda about Google Plus as a social network. Calling Google Plus a social network is like trying to fit an elephant into a refrigerator. Evaluate Google Plus against Facebook and Apple on the following dimensions:

• Core Company Products

• Digital Platform Integrating Core Products as an Ecosystem

• Flexible Social Platform

• A Gateway to a Digital Life
 
Now that we have got the obvious Big, Hairy, Audacious Ideas out of the way, here are the qualitative teasers I was talking about:

1. For The Believers:
Are you already a googlephile who cannot live without, atleast a few, google services? Then, Google Plus is, for now, google accounts on steroids, with controls and features staked onto it.
 
Very nicely done, though. Thank you. Not tacky at all. Now, segway to that Journey song from Glee.
 
2. Indicative Product Feature- Circles:
Very nicely done. Again. Lives up to its billing as the slayer of social network privacy concerns.

The circles model of relationships reminded me of a "brain's trust" model shared by a macroeconomics professor in graduate school. The graphical privacy controls makes you want to get comfortable by tweaking privacy to your comfort level.

Note, I have not talked about features like Hangout. All of those also falls under the "Nicely done. Thank you" category. Why pick Circles? It jumps at you like no other Google Plus feature.

3. Integrated Digital Platform:
Picasa for pics. Videos.YouTube. Yeh. Google has some pretty powerful and mature products. Google Plus comes "preloaded" with some of these google products. Google Plus is a great way to sew these products together, making it a complete and a serious digital platform.
 

Would you say that Google Plus is like an Apple ecosystem? Can it be like an Apple ecosystem? Can it be better than an Apple and a Facebook ecosystem rolled into one?

I think it can, but that is a different story, a different blog post. All Google has to do is light a few fires. Keep doing what it is doing on products. Keep integrating them. Oh, and spawn a few Zyngas now and then.
 
4. A Social Platform:
Will Google Plus be a serious social platform? That would be a function of adoption (think share of social life) and switching (think identifying this as a primary social platform).

Google Plus may hit 20 million + users by July 20. However, how many users will migrate from Facebook to Google Plus? How many will live in animated suspension between the two worlds? Finally, how many will use Google Plus as a glorified GMail service?

What would be your estimate of an equilibrium/ steady state Google Plus user base? 150+ MM? 250+ MM? 400+ MM? While staying out of China (for how long?)? What is your sense of the tipping point when Facebook users start migrating from Facebook to Google Plus, network by network?
 
5. Privacy Controls:
Yes, finding myself in a few folks' circles, when I hopped onto the platform, freaked me out a little.

Also, Google Plus, better than google accounts, brought home the fact that I use a lot of google products and all that information is a sneeze away from being mapped into a digital life.

If you live off GMail, this should not surprise you. However, since I can claim to understand a little bit about security, privacy concerns will always pop up in my mind. Maybe it is just me.

6. A Gateway to a Digital Life:
To borrow from a wise man I know (who is also on Google Plus) - can Google be my gateway to a digital life?

The Pitch? Without much ado (to all the Google engineers, yes I am being simplistic :-)), Google can be my online identity, my Netflix, and my computing device on a cloud. Even as a glue for the google products we already (or will) use, Google Plus will be a formidable doorway.

I am inclined to draw a bubble chart mapping how the Apple, Facebook and Google future state ecosystems would look 5 years from now. For now, all I will say that in his early days, Henry Ford would have been proud to call his company Google. Think Google Products + Android + Cloud + Google Wireless (Definitely Maybe?).

That's enough crystal ball gazing for now. I have stretched my definition of "key qualitative thoughts" far enough. Moreover, I would like to sneak in the crystal ball gazing in digestible chunks.

What do you think? If you do, you know where to catch me for a lively conversation.

News, New York Times, and a Movie about Publishing

Executive Summary: A review of "Page One: Inside the New York Times"- a documentary that provides an inside view of a market leader in publishing through some changes in the industry. From the desk of If-It-Sounds-Like-the-NYT-But-Reads-Like-Twitter, It-Really-Isn't-A-Documentary, It-Is-A-Reality-TV-Show.

Introduction

The last time I posted about a movie was the opening weekend of Iron Man, over 3 years ago. This one is about "Page One: Inside the New York Times", a "fly on the wall" account of a desk at the New York Times.

The Key Theme: Challenges

The movie gets three challenges facing the New York Times right:

1. A Market Leader's Core Differentiation in a Seemingly Fragmented Ecosystem:
Where does the paper, and in comparison, the rest world, stand on news accountability, quality, objectivity, and transparency? The movie touches upon the difference between Journalism and activism, in the Wikileaks context.

2. The Survival of Publishing as a Well Oiled "Machine", and Its Metamorphosis :
The documentary covers Der Spiegel, Guardian and NYT partnering with WikiLeaks, and alludes to the shifting sands of the publishing ecosystem where a publisher could be a source.

3. Funding to Sustain a News Enterprise:
It touches upon the launch of the metered paywall at NYT (in line with the FT, and the Economist).

Finally...  The Opinion

As for the documentary experience, it stays true to the fly on the wall theme. Its like what reading Twitter is to reading the NYT. However, it does a great job of juxtaposing current changes in the industry impact the market leader, against its storied past.

If you are looking for more detail on the trends, you would be better served by visiting the Economist website (or reading this week's print edition) here:
http://www.economist.com/node/18904136. More on that to follow.

At worst, you may end up feeling like you watched some reality TV about a desk at the NYT, and even then, you will find a memorable line or two. "A textured life", for one.

What do you think? If you saw the movie, what did you think?

Netflix and Organizational Capabilities

Executive Summary: While I previously shared a thought exercise (link) on the kind of capabilities Netflix can demonstrate against its competition, this post is about the hard work that goes into creating an organization where teams work in concert, and in diverse ways, to develop these competitive capabilities. From the Desk-of-George-Lucas-Theory-When-In-Doubt-Make-Star-Wars-Prequels.

Why am I talking about Netflix?

Three reasons.

1. Innovation:
Netflix has been called an innovator that leverages its investments into innovation effectively towards business capabilities.

2. Market Capabilities:
Recently, there was news about Netflix looking at original programming, that kicked off this thought exercise on innovation and tactics below:
http://randomjunkyramblings.blogspot.com/2011/03/innovation-and-tactics-series-netflix.html

3. Distinct Context:
Unlike the iPhone, Netflix has entered existing markets and upended them without much "confetti about cool". It's almost like a B2B company in a B2C market.

What does Netflix mean for Other Organizations?

Netflix continued to invest in streaming capability for many years, before launching the product. This demonstrates a long term thinking about its business and its markets.

How does an organization connect
a. investing in long term capabilities, and,
b. thinking about markets,
In hindsight, all of this is as easy as pie. Lets look at the challenges.

Challenges with Making the Organizational Connections:

Let's take two cases within two functions in an organization.

1. Finance:
Say you are a business finance manager, and a business manager comes over to you about a prototype he would like to acquire and integrate into the company's product and marketing portfolio. How do you not only help him acquire the prototype, but also give him the leeway to invest time and resources toward patiently integrating an early stage startup product into a reliable portfolio asset at the company?

2. Marketing:
As a marketing manager, say, you realize you need an organization wide communication and analytics sharing capability to meet the product and competitive environment in the medium term. What kind of marketing programs, and in what prioritized order, do you push, to deliver phased, sustained capabilities to your organization over the medium term?

Suddenly, this doesn't look all that easy, does it?

For managers battling to get things done within their silos on a daily basis, these are not easy questions to answer. Thinking about this gives you the scale of the effort that an organization needs to put into developing capabilities that impact its markets.

What do you think?

Innovation and Tactics Series: Netflix Bids for Original Programming.

Executive Summary: Netflix has been lauded for its ability to manage innovation, especially for its ability to translate innovation into real impact on its business. This post helps us think through some of the market possibilities it can target. From the Desk of "Is it a bird? Is it a plane? Its a... Jedi mind trick!"

The News, The Question

Netflix seems to be making interesting moves in content production:
1. http://www.theatlantic.com/business/archive/2011/03/netflix-plays-the-long-game/72611/
2. http://blogs.forbes.com/chunkamui/2011/03/17/how-netflix-innovates-and-wins/

The news reminded me of a curveball I recently threw to some very bright folks:
Will Netflix get into running movie theaters (or atleast renting them out temporarily)?

What Does The Question Mean?

The folks found the question interesting enough to pause to think it through. This is not because they did not have a (what may seem like an obvious) ready answer, but because it should, and apparently did, make you think about Netflix's context and how it is disrupting the context around it.
To rephrase:
1. Can Neflix groupon its at-home viewers into a high quality, custom generated "in theater" experience?
2. Can Netflix be vertically integrated in a niche market, while still serving what is currently its core market?

All in all, how do these ideas impact its profitability and its margins? At worst, can a capability to pursue the option posed in the question be a useful negotiation tool?

To dig a little bit deeper:
- What about Netflix's current position and capabilities (e.g. continued investment in innovation) provides it a competitive advantage?
- As Netflix get to know more of its customers better, how can it leverage it's information better?

Structure Around the Question

Here are a couple of paths to making sense of this question on Netflix:
- Content Development and Production -> Content Channels and Distribution -> Content Consumption
Or the reverse:
- Content Consumers and Markets -> Content Channels and Distribution -> Content Development and Production

Deep Dive Into The Market and The Consumer

Lets walk through the first way of looking through this process:
A. Who is Neflix's core consumer? What market is Netflix targeting?

1. Viewers of TV and movie dvd like content "experience" at home with access to a mailbox and to an internet ready device?
2. Viewers of video content "experience" at home with access to an internet ready device?
3. Viewers of an entertainment "experience" anywhere with access to an internet ready device?
4. Viewers of an entertainment "experience" with access to an internet ready device or with access to a specific location?

Now, you can define a spectrum of "experience" as well, from a streaming video "experience" on a small device while on the move, to a fixed location video "experience" of the IMAX or the "IFC Theater"/ "Indie Movies" sort. As for margins, isn't the IMAX share price hear its LTM high?

Now that you have some lightbulbs flashing in your mind, need I say more?


What do you think?
 

Ad Spend Trends in the US

Executive Summary: A quick check with *you* on your thoughts on media and ad spending in the US. The objective is two fold- identify what you believe are the factors driving the trends, and then seek your forecast for this trend.

Trend: Advertising Dollars

I attended a conference where a respected businessperson emphasized a trend in the media industry. Ad spend in online channels was not growing the overall pie in terms of dollars. Instead the online channels were cannibalizing other channels. So the question arises- is there a disssonance between the change in the size of the pie, its slices, and consumer/ end user relevance?

Older, publicly available statistics are available here:
1. Fred Wilson:
http://www.avc.com/a_vc/2010/06/ad-spend-trends.html
2. Hal Varian:
http://www.theatlantic.com/business/archive/2010/05/a-google-eye-view-of-the-newspaper-business/56360/1/

Some Macroeconomic Factors

1. Are economic conditions factors in terms of the overall ad spend pie? How?
2. Are demographic trends factors in the stagnation of the overall ad spend pie? If so, how do these trends play out in terms of the slices of the pie?

Marketing Teams as Factors in Ad Spend Shifts

I also noted some opinions a few years ago that the move of marketing dollars from traditional media to online media would be slow because of deep, embedded marketing and agency relationships, as well as marketer mind share.

Consumer/ End User Behavior

1. Has the user's behavior across the various marketing communication touch points, even with the addition of online media touch points, changed?
2. Has the user's reaction to these marketing communication touch points changed over time?

What do you think?

White iPhone 4, Hamann Mercedes and Nike AF1 shoes.

Executive Summary: The White iPhone 4 has been a no show. Is this an opportunity that Apple can exploit? A la the Hamann Mercedes or the Limited Edition Nike DJ Clark Kent AF1 shoes? Does that fit into Apple's portfolio of marketing tactics? For some structure to these tactics, see:
http://randomjunkyramblings.blogspot.com/2011/03/innovation-and-tactics-series-ipad2-and.html

From the Desk of Aerosmith-said-Lateral-Thinking-is-Hard-On-the-Knees.

Carrying and using the "no show" Apple White iPhone 4 has apparently become a status symbol in silicon valley:
1. Why Apple can make a white iPad but not a white iPhone:
http://edition.cnn.com/2011/TECH/gaming.gadgets/03/03/apple.white.ipad/
 
Now, there are enough "shops" around the world happy to rip apart an Apple product, and some can even put them back together. In fact, you could even classify them as a subculture. However, can Apple use these custom built white iPhone 4s a as marketing tactic?
 
1.  Geneva 2011: Hamann Hawk
http://www.autoevolution.com/news/geneva-2011-hamann-hawk-live-photos-32206.html
 
2. Nike's Limited Edition DJ Clark Kent AF1 Shoes:
http://www.nike.com/nikeos/p/sportswear/en_US/media_details?video=3&videotype=video&guid=31aa9ccc-445b-ce59-7435-55c77c81215d_id1253&
 
How many companies you know would draw laughs, instead of being excoriated, for not launching a promised product or extension? :-)
 
What do you think?
 

Innovation and Tactics Series: iPad2 and iPhone Nano?

Executive Summary: Sometimes, the simplest things can be lost in the daily tactical maze. There have been a slew of statistics demonstrating that Android phones have been eating Apple's lunch over growth in marketshare. If you were Apple, how would you react to these market developments? With its product pipeline and brand dexterity, does Apple really care? From the Desk of Beatles-Were-Wise-With-Live-And-Let-Die.

... More: Think a simple 2x2 matrix covering- market penetration via existing and new products, adjacent market development via new and existing products, and entirely new markets via new products.

The Statistic

Google’s Android becomes the world’s leading smart phone platform:
http://www.canalys.com/pr/2011/r2011013.html

So, there have been rumors swirling about the iPhone nano:
1. Rumors of an iPhone Nano Continue: Smaller, Cheaper, No Memory?
http://onespot.wsj.com/technology/2011/02/14/351ce/rumors-of-an-iphone-nano-continue-smalle

2. Opportunities & Challenges Galore for Apple with 'iPhone Nano':
http://blogs.strategyanalytics.com/WDS/post/2011/02/16/Opportunities-Challenges-Galore-for-Apple-with-iPhone-Nano.aspx

Could they be true? What should AAPL be doing?

The Structure Around The Idea

Here are some steps to aid the thinking process:
1. Current Product for an Existing Marketing- iPhones:
Apple smartly squeezed all it could through its relationship with ATT. Now, to seek increased market penetration, it partnered with Verizon. iPhones are still positioned as products that are a "cut above the rest", and continue to generate great margins for Apple.

The feature pipeline for the current iPhone product line is strong and Apple can expect to continue to dominate the market.

2. New Product for a New Market- iPads:
Apple at the netbook's lunch. No other product is near the customer's utility curve (read conjoint analysis). With the iPad2, Apple widens the gap with competitor products, and safeguards its margins. However, would we say that the Android's smartphone market is a "new" market for Apple? Perhaps it needs a "new" product for this "new" market?

3.  New Products for Existing Markets: 
Really? See point 1. Even better, Apple's strong brand and positioning with its existing product line is so much "gold" that it can practically launch what were traditionally new products under the guise of extensions of existing products.

4. Existing Products for New Markets:
Make no mistake, the iPhone nano is a *new* product in the product development sense. However, in terms of messaging, the iPhone nano is brilliant in leveraging the consumer connection and premium positioning with the "nano" and pit it against "fancy-scmancy" andriod phones.

The Bottom Line

Now, the questions that remain:
1. Internal Assessment: Do Apple's current financial position vis a vis its margins, and its future product margins trends, demand the iPhone nano launch?
2. Competitive Assessment: What does the iPhone Nano launch do its competitors? You can't expect them to shrivel up and disappear. :-)

Stay tooned.
What do you think?

Smartphones, Hypercompetition and Integrated Marketing Communication

Executive Summary: You are a second ranked player in a hypercompetitive market. You learn, from an independent research house, that your customers are more likely to buy your products than your competitors customers are likely to repurchase theirs. What do you do? Do you utilize this in your marketing communication? From the Desk of A-Kick-in-the-Shins-Does-Not-Always-Save-Nine. :-)

The Statistics

While looking at statistics toward structuring a perspective on industry trends, I came across an interesting study on customer loyalty for smartphones, where, even though the iPhone outperformed Android phones in NPS (Net Promoter Score- a Bain methodology) metrics, (marginally) more Android users are likely to buy a similar device, compared to the number of iPhone users' likely to repurchase an iPhone.

 

Waiddaminute? Did you read that right?

 

The Communication Opportunity

 

Given the hypercompetitive smartphone market, you would think the Android marketer has hit the jackpot. You can imagine Google Android folks rushing to their agency with a new brief to launch the next multichannel campaign (broadcast, web, etc.) in no time.

 

You can even imagine a few briefs ("Android users keep coming back for more") and a few advertisements:
1. Android user sees a store sign, "New Android Phone" and buys one, while iPhone users are shown getting their grip right for the iPhone, or,
2. Android user gets another Android phone as a birthday or a Valentine's Day gift, "I always wanted another Android", or,
3. Voice over wraps up with "Even when independent researchers praise the iPhone, they can't help but admit that more Android users are likely to buy another Android phone, than there are iPhone users willing to buy another iPhone."

... and many more!

Some Structure and Strategic Thought

 

The standard approach may be pretty simple in the abstract: Corporate Strategy -> Market Strategy -> Communications Strategy -> Portfolio of Communications Tactics. However, things aren't as straightforward in the "real world", are they?

If you were an Android marketer who finds this statistic, you would consider a few things, not necessarily in a top down, structured manner:

 

1. Source and quality of information:
Is the source and quality of information firmly in your corner? Well, you'll take a firmly independent corner too, wouldn't you? It’s more than just checking if your competitor can throw a more effective/ damaging response with the same source of information.

 

2. Timeframe: Does this lead to a "multi-period game" over advertising where you do not win, or you have no first mover advantage, or both parties end up in an expensive stalemate with a negative outcome for you? Coke vs. Pepsi advertising is an example. Also, think about Pepsi stepping back from Superbowl advertising in 2010.

 

3. Communication Themes: What is Android's driving theme for the season or for the year? What is Android's multi-year communication and branding strategy? Does this drop in the ocean create ripples that turn in tsunamis, or should this drop be assimilated quietly using different tactics?

 

4. Portfolio of Tactics: Does the Android team have a portfolio of tactics aligned with its communication and branding strategy? Does the portfolio explicitly accept or reject this opportunity?

Digging into the Details
Let’s dig into a couple of the items listed above.

Timeframe:

Lets take one question- Do you think there are season spanning advantages to pushing the message? Here are some hypothetical situations that elaborate upon this. Say, it's the holiday season, and Android launches the campaign based on this research. Does Android have time to make an impact on sales? Does Apple have time to respond right away and nullify the advantage? Can Apple hit back harder around the same theme at the next key sales period?

The Source and Quality of Information:

The study, using the Net Promoter Score methodology, declares that the iPhone outperforms others in user loyalty:

http://www.zokem.com/2011/01/in-the-us-market-iphone-outperforms-other-mobile-platforms-in-user-loyalty-by-a-wide-margin-android-is-second-blackberry-fourth/

Given the number of iPhone users that have stuck through a lot of thin (network, antenna, cracked case, etc.) this should not be surprising. However, as you scroll past the Net Promoter Score based results of Mobile Platform Loyalty Ranking graph, and down to Repurchase Behavior graph, you would note an interesting result.

89% of Google Android customers would buy a similar device in the future. Compare this to 85% of iPhone customers being willing to by an iPhone in the future.

Huh?

Now, there are various perspectives to this:

1. The iPhone has set very high expectations and is doing a fantastic job keeping its user engaged.
2. Android targets a different customer segment than the iPhone and phone’s pricing could be a factor. (Perhaps not for long-http://www.pcworld.com/article/219712/cheaper_iphones_why_apple_might_risk_its_brand_identity.html)
3. Also, iPhone’s AT&T exclusivity (for this study period) could be a factor in Android's stats.

We can come up with a few more as we think through this. However, what do you think?

Innovation and Tactics Series: Groupon Wants My Married Friend to Speed Date.

Executive Summary: A light hearted look at the marketing tactics arising out of Groupon. No, I don't mean Groupon...zi. From the Mark Twain Desk of Funny Bones at the Jeffersonian.

Groupon wants my married friend to speed date! Really! Well, technically speaking, my married friend received a groupon for speed dating. I am sure you can see the humor in that. :-)

The smart folks would jump to thinking of this as a marketing, even statistical, error. However, this could well be the Jedi mind trick of the year so far- after the cool VW darth vader superbowl ad.

How? Here are some ideas...
1. Don't your married friends keep setting you up with dates? Duh, right? You would think their persistence factor would beat any email spam marketing tool known to man, or woman.

2. Do you know what the divorce rate in the country is? This could well be a long term, relationship building strategy for a future target audience. Disclaimer: A bright, married friend suggested this when I put this up on Facebook, so don't shoot the messenger.

3. Its an error- my friend would be one of the few, or many, random, in error recipients of the sophisticated, targeted statistical model used for the promotion.

I am pretty sure you have some ideas of your own. What do you think?

Innovation and Tactics Series: Putting Cool to Use- the iPhone at work.

This is an old link and an old post, and I have it here because its an apt start to a theme I would like to pursue.

The iPhone is cool. The iPad is cool. All that cool- what does it do for you? :-)

Here's an example of putting cool to use:
http://www.youtube.com/watch?v=NAllFWSl998

Resonates more than Angry Birds? I bet Angry Birds wins too when more of stuff like this happens. How has technology made your life better?

Next stop: iPhones and iPads for the working life?

What do you think?