Marketing – Strategy – Pricing – Competition
Saturday November 1st 2014

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All of your Eggs in One Basket

CBC_Logo_1940-19581

CBC has committed a strategic blunder.  Actually the blunder happened many years ago when they got complacent relying heavily on sports, hockey specifically, for the bulk of their money and viewers.  Today they paid the price.  The national post does a good job of summarizing.    Rogers bought the rights to NHL hockey for the next twelve years and basically took CBCs money maker away.  This type of nightmare can happen to any complacent organization that thinks it is invincible as the CBC has been acting for years.

The CBC, as a taxpayer funded broadcaster, has a mandate to provide the type of programming that the private sector will not.  Here is the type that I am thinking of… documentaries, unique regional coverage, investigative journalism, the arts, science programming.  Instead the public broadcaster paid the price.  With the loss of hockey they will have a gaping hole in the programming and in their revenues.  They will also lose the platform to cross promote their other offerings such as news, drama and their radio stations.

They went wrong by putting so much effort into sports broadcasting in which they have no competitive advantage and are in fact disadvantaged by their inability to always have the highest bid for the programming rights.  It was also viewed as a must have by commercial broadcasters.

CBC got crunched and may not recover if the federal government decides to pull further funding.

Client Retention

handshake

Most people are lazy, once they have tried a brand that works they tend to stick with it.  After all, you tried it, tested it and are happy with it.  You had a happy experience.  Why risk an unhappy one.  I think the tendency to not change is especially high among commodity items.  This may seem odd because they are really interchangeable, but the amount you stand to gain from switching products is also especially low.

When you think about switching car insurance, phone companies, or banking services you know that you will not be wowed by the switch.  It really will not be difficult to move accounts, maybe 10 minutes work, but frankly there is no upside to switching.

Now the point:  businesses should just try to keep you happy.  If they keep a low profile, and don’t disappoint you they will keep your business for years.  If they wow you, they may get more business.

In the industrial sales world this is even more extreme.  Once a product is specified, and drawings are made, nobody will kick you out unless your product turns out to be a disaster.  Everybody is just too busy to switch out a product that is working just fine.

The lesson is simple, once you are in, keep your clients happy.

Hurting the Category

Sinking ShipI think one of the worst things a company can do is to hurt a product category.  This happens when a company makes repeated public failures, releases a technology too soon, or attacks a rivals product in such a way that it brings disrepute on everybody’s offering.

The most recent example of repeated screw ups has to be the ocean cruise liner business.  Here is looking at you Carnival.  Nothing screams epic disaster better having a boat like the Costa Concordia getting its own Wikipedia entry and its Captain bereted by the Italian Coastguard as a coward on Youtube.  Then because one collossal headline grabber wasn’t enough they followed up a year later with the Triumph where passengers were left stranded in the Gulf of Mexico wallowing in their own filth.  Here is a nice story on that.

If you are a competitor to Carnival you would be tearing your hair out because you are going to pay a price in terms of reduced bookings.  After all as a marketer you cannot come out with a slogan like, “We are safer than those bozos”.  It just doesn’t work.  That’s why the tobacco companies never competed in terms of product safety.  It implies that the product is dangerous in the first place.

Releasing a product too soon can also damage a category.  Electric cars have had some bad press thanks to Fisker’s exploding vehicles.  This makes the world question the safety of electric cars.  Tesla is shrugging it off for the moment, but I have to think that seeing videos like this one cast doubt on the technology.

http://youtu.be/wzQiY4eUygA

Attacking rivals or partners to extricate yourself from a mess makes everybody look bad.  My favourite example of this is the Bridgestone versus Ford SUV fights.  These two companies could have worked together, shared the expense and resolved the problem.  Instead they decided to engage in a public finger pointing match, tarneshed both of their brands and wrecked a long term business partnership.  Well played.  Here is a brief summary of that stupidity.

The bottom line is that companies must work hard to avoid trashing an entire line of products, because recovering from these misdeeds can take a long time and slow growth in the whole industry.  All of the examples I used either caused deaths or led to the risk of great bodily harm.  The public will rightly wait a long time to revisit the idea of purchasing a product with this stigma.

 

 

 

Manipulating Markets: Governments trying to change prices

Bank

In Canada, consumer debt is hitting some pretty high levels.  Mortgage debt forms a big part of that debt load.   The banks keep putting fuel on the fire by lowering interest rates.  Consumers are rationally borrowing more when the money is at historic rates.

The finance minister went onto chastise the banks for their “race to the bottom” through lower prices.  As finance minister, Jim Flaherty, has some moral suasion he can use on the banks.  I am not sure how I would feel about a finance minister telling me how to price the goods in my business if I was a banker.  I see the banks ignoring him unless they really, really need his help.

Here is the story.

 

Wind Versus Mobilicity on Locking Cellphones

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I think the way to retain customers is by offering great customer service, have an excellent product and provide superb value.  You don’t have to brilliant at all three but must excel at one of them.  The least effective way in my view is by holding customers hostage like Mobilicity does by not providing unlock codes to their phones.  To me this is ridiculous.  Mobilicity customers own their phones outright, there is no contract, and there are valid reasons to having the unlock codes besides leaving your current carrier.  Some people like me travel and use the local carriers SIM card to reduce costs.

WIND by comparison offers up unlock customers after a few months with the service.

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