Tag Archives: marketing

The Apple Watch Is Just Another Example of Apple’s “Smart” Marketing Funnel

By now, you have probably heard at least some of the details regarding Apple’s new smartwatch.  I’ll mention a few of the highlights below.

1. Its battery life is 18 hours.

In comparison to some Android smartwatches, that’s actually an improvement.  However, when it comes to some notable smartwatches, including Pebble, that’s actually unremarkable.  There are some smartwatches on the market that can go as long as 7 DAYS between charges; Apple’s only comes in at 3/4 DAY, which means that you will have to charge every night at least.  Keep in mind too that that 18-hour mark is likely its maximum; the actual time will vary depending on your activity and will likely be less than the stated 18 hours.

As you would expect, Apple touted the features of the Watch in an attempt to mitigate any disappointment that may have been felt by the fact that the stated time of the battery life was just 18 hours.  Tim Cook stated that the “Apple Watch is the most advanced time piece ever created.”

2. The starting pricing tiers for the three types (Sport, Watch, and “Edition”) are $349, $549, and $10,000(!)

I think many equally wondered what the top-tier pricing would be for the “Edition” version, and I think some were amazed that Apple would go that high, thinking Apple would sell at a lower price than $10,000.  Of course, Apple is trying to market it as a luxury jewelry item, a major reason why they’ve promoted it in two Vogue magazines (U.S. and China), including a recent 12-page ad in the U.S. version.  Combined with the materials used to construct the watches (especially the Edition version, which has 18-karat gold) and a high profit margin, that’s why Apple is charging the amount that it is.

It still remains to be seen if the luxury market will open up its arms and wallets to the Apple Watch, being that this is new territory for Apple, never mind the fact the smartwatch industry has not taken off as many experts thought it would.

This September 9, 2014 New Yorker article, “Does Anyone Want a Smartwatch?“, shows the issues surrounding smartwatch makers to this point, and I think Apple will come across similar issues, especially when it comes to whether people actually feel they NEED one.  Yes, there will be devoted Apple fans who will want to get one just as they did the iPhone and iPad, but as that article mentions, those items replaced something before them and did it better.  The question is, “What is the smartwatch replacing?”

Some people don’t wear watches of any type, while others wear a $9.99-$29.99 timepiece that they like, think it goes well with their attire, and tells time (what a concept! :-).  These timepieces can easily last 5-10 years or longer (I’ve had watches work even beyond 10 years, and that can be without changing the cell battery; if I change the cell battery, I’ve had some watches work 15-20 years without an issue).

This brings me to my point about Apple’s “smart” marketing funnel once again being at play with its Apple Watch, and why getting 5-10 years or beyond of use with this current Apple Watch may be a period of time that never occurs due to the way Apple and virtually all tech companies operate.

If you’ve followed along with Apple products in recent history, you know that an iPhone or iPad model is released every year (give or take a few months).  It will often have the latest specs (or close to it) at the time it is released, then it quickly becomes outdated, just as virtually all technology does.  Apple will then release the next updated model with updated specs.  You’ve seen this with its smartphone: iPhone 5, iPhone 5c & 5s, iPhone 6 & 6 Plus; you’ve seen this with its tablet: iPad 4, iPad Air, iPad Air 2; you’ve seen this with its mini tablet: iPad mini, iPad mini 2, iPad mini 3.

In the not-too-distant past, many Apple fans were determined to get every updated version, just because every model seemed so new and innovative.  However, as time has gone on, I know of many Apple users who don’t get every version of the iPhone, not seeing the need to update because the newest model wasn’t that much different from the one they were currently using.  In addition, people were more willing to upgrade when their 2-year contracts run out, thus leading to them often skipping one model upgrade, at least.

The iPad has been similar, being that the technology upgrades weren’t that much different from the previous version, especially over the past few years.  Plus, in the iPad’s case, the full-size tablet has started to witness declining sales due to the smaller-sized tablet (iPad Mini line) and, most recently, the phablet-sized smartphone (iPhone 6 Plus).

Still, even with Apple users skipping some updates, they still were willing to upgrade their products, and in many cases, they had to.  Some of the newest iOS operating updates and/or current apps don’t work or work as well with older hardware versions (that have older operating systems or memory limitations- those who own an iPad 2 like me know this, especially when it comes to updating to iOS 8, which can take up over 25% of a 16GB iPad 2).  Thus, it was necessary to upgrade your hardware in order to continue receiving the benefits and conveniences of that technology.  This is true of Apple (as it is pretty much of every technology company).

Apple has also integrated this into its smartwatch as well, and that could be a potential deterrent for those who expect their timepieces to last a long time (i.e. 10 years or more).

On Apple’s part, it’s smart marketing because, this will encourage (and even force) users to upgrade their timepieces in order to continue gaining the benefits and convenience from the Apple Watch.  Apps that are used on the Apple Watch will likely need an updated operating system (either the most current or close to it) in order to continue functioning properly and giving the Apple Watch its greatest value.  Those who want to keep their Apple Watch version for a long period of time (say, 5+ years or more) likely won’t be able to upgrade the iOS operating system after a while either due to technology incompatibilities, lack of storage space, or some other reason (much like the issues with the iPad 2 and even with the iPad 3 and iPad 4).

Thus, I suspect that after two to three years (maybe five years, max), the current Apple Watch won’t be able to handle the iOS updates and/or the updated apps needed to give the Apple Watch its greatest functionality.  Thus, users will be faced with one of two choices- either purchase the newest (or at least newer) version of the Apple Watch or stop using the Apple Watch altogether.  For diehard Apple fans who like the watch and have grown accustomed to its features and conveniences, that may be nearly impossible to do.

Thus, Apple has employed its marketing funnel again in order to get Apple Watch users to become paying customers AND remain paying customers (and that doesn’t even include utilizing iTunes and Apple Pay, two more ways to keep these customers as RECURRING paying customers).  That is really what you want to see in a successful business- the ability to get AND KEEP paying customers in your funnel- that’s how you can make residual income long term, which is why Apple is doing so well in terms of revenues and stock price, as well as why it has so much cash on hand.

Therefore, if you really want to learn about marketing strategy and employ that into your own business and your own marketing methods, pay close attention to Apple’s product development and launch strategies – you can learn a great deal of how to set up your own product development cycles and marketing strategies in order to get customers to pay you and to keep paying you over a long period of time, while boosting and promoting your brand in the process.

 

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The EU VAT Directive For Digital Products Begins Tomorrow!

Hello everyone! My sincere apologies for not updating the Digital Marketing Times blog more in 2014.  This was due to a number of circumstances, including business-related and personal/family reasons.  I intend to write much more on this blog in 2015, so please stay tuned and check in regularly, as there will be more digital marketing information you can use right here.

Before I begin, I want to wish you all a happy, healthy, and prosperous 2015!

The information I want to discuss today relates to the EU VAT directive that will take effect beginning tomorrow, January 1, 2015.  Essentially, all marketers who sell digital products are required to collect VAT based on the purchaser’s location.  This is where a myriad of problems come in, especially for those that are small- to medium-sized businesses, as a lot of expensive administrative costs and extra paperwork is required to be in compliance.

A good summary of all of those issues can be found here:

Disclaimer: I am not a lawyer; thus, the information I present here is NOT to be taken as legal advice.  Thus, I am NOT responsible for any information presented here that you choose to use in your business.  Please consult a qualified attorney and/or accountant for legal advice regarding the EU VAT and your particular situation.

I’ve learned from a reliable source (who lives in the EU) that each EU member state must create a national law, pass it in their respective Parliaments, then apply those laws in their respective countries in order to make the EU VAT executable.  As you can imagine, that will take time.

Now, the question remains whether those national laws, once they are passed, can retroactively apply the EU VAT directive back to January 1, 2015, the first day the EU VAT directive is to take effect.  That is anyone’s guess, but for the EU countries to actively enforce that directive, they must pass their own national laws first.  That has not happened yet, and it will be a period of time before they do.

Suffice it to say, though, if you do sell digital products, you need to be aware of this law and take steps to be in compliance for if/when the respective EU countries pass their national laws to enact the EU VAT directive, especially if those laws do retroactively enforce that directive from January 1, 2015. (In other words, you need to be preparing for this NOW if you haven’t already).

Thus, what can you do if you sell digital products from your website(s)?

Well, if you don’t utilize a third-party processor like ClickBank (and I’ve heard that JVZoo and Zaxaa are working on complying as well) to take care of the VAT (and there are problems with this approach as well, which you can read more about at the link above), you’d have to register your business in each EU member state to which you sell, as each EU member state has different VAT rates (there are reportedly around 75 different rates!).

Plus, “digitally-delivered service” is defined differently in different EU countries; some countries will see sales of ebooks and digitally-delivered programs as being subject to VAT, while other countries will only see the sales of ebooks as being subject to VAT.  Thus, it is virtually impossible to satisfy the requirement due to the fact that digital marketers don’t usually get the required data needed to determine the purchaser’s place of origin until AFTER he/she has clicked the “Buy Now” button.

Thus, unless a third-party processor or a website plug-in can calculate the appropriate VAT after the purchaser has input his/her info, it’s virtually impossible for a digital marketer to apply the correct VAT for each purchase.  And, as I said, there are around 75 different VAT rates that can apply, depending upon the specific country and purchase.

Thus, you can see some of the issues that this EU VAT directive is causing for digital marketers, which is why many are calling it the “VATMESS,” even creating the hashtag #VATMESS on Twitter.

In my opinion, (again, not to be taken as legal advice), the best course of action would be the following:

1. Stay tuned to this developing issue- check back here regularly, as I’ll keep tabs on this issue.  The link above is also a good blog to check out.

2. Contact your attorney and/or accountant to learn how you can be in compliance with the EU VAT directive.  Do this NOW rather than later; even though there are no national laws in place (to my knowledge) to enforce the EU VAT directive, it’s possible they could retroactively apply the respective national law back to January 1, 2015 if/when the national laws are created and enacted.

3. Do NOT go the route that some digital marketers are considering: Not selling to EU members.  While this may seem like a reasonable alternative to avoid the legal issues and administrative headaches and paperwork that will accompany selling digital products to EU members, you would be in violation of discrimination laws for willfully not selling to EU members, creating a different type of (and equally large) legal issue for your business.

Essentially, you cannot just ignore this and hope it goes away.  While, as the link above indicates, EU government officials are beginning to realize the strain and cost the new EU VAT directive will put on digital businesses, especially those that are smaller- and medium-sized, the directive is likely NOT going away.  Instead, there will probably be some modifications that will be made to help make it easier for these businesses to be in compliance, but the businesses will still have to obtain the VAT, whether it’s through their own efforts and/or through a third-party processor.

In fact, the directive could potentially apply to physical products beginning in 2016 (as stated at the link above), which makes it even more vital that your business (especially if it also sells physical products in addition to digital products) stays informed and gets into compliance with VAT now.

As they say, “knowledge is power.” Stay in the know and stay tuned to this blog and to the link above for further details on the EU VAT directive – only by staying updated and taking action can ensure your business is in compliance with the new directive and can be profitable in 2015 and beyond.

 

Amazon Prime Is A Marketing Problem, Not A Value Problem

Much talk has been made over Amazon’s decision to raise its Amazon Prime program cost to $99 per year, up from $79 per year.  It’s the first time in the program’s nine-year history that the price was raised.  This comes shortly after Amazon raised the rates in countries throughout Europe.  Combine that with the fact that Amazon has only made a relatively marginal profit and is a publicly traded company, and it’s not that surprising that Amazon would raise the rate of Amazon Prime.

In fact, there were rumors that Amazon might raise the price to $119 per year, even up to $139 per year, so the fact that the price only went up $20 per year is actually small.

However, there are many people complaining about the price increase, enough so where they are reportedly considering dropping their Amazon Prime subscription before the next renewal.  At last check on this DealNews poll, there were 200 more votes to end their Prime subscriptions before renewal, about 58% willing to end it versus a 42% willing to keep it (essentially around 4 in 7 people willing to end it versus 3 in 7 people willing to keep it despite the rate increase).

Some are wondering if people are still getting enough value from their Amazon Prime subscription to justify the increased cost.  Well, let’s consider what you get:

– You get free 2-day shipping on nearly every items fulfill by Amazon, even if you don’t spend the minimum $35 as non-members must do.

– You get to borrow one free book each month (though you need an actual Kindle device; Kindle mobile apps or desktop applications do not quality for this benefit).

– You get access to Amazon Instant Video, including many free television episodes and series, movies, and more.

Those benefits alone give you more than what other subscription-rate video-only providers give you, such as Netflix or Hulu Plus, thanks to the countless number of items you can shop for online.

In addition, Amazon plans to release a new streaming radio service for Amazon Prime members in early April, thus entering the free online streaming industry alongside competitors such as Pandora, Spotify, Google Now, and iTunes Radio.  Thus, even more value will be provided to Amazon Prime subscribers.

Thus, I think it’s safe to say that the value of Amazon Prime is as high as ever, and soon to be even higher.  Why, then, are many people complaining and even considering ending their subscriptions to Amazon Prime?

In my opinion, it has to do with Amazon’s marketing.  How many times have you heard the magic number of “$99”?  Probably too many times – every time you think of Amazon or Amazon Prime, I’m sure that number has popped into your head, along with the soon-to-be old rate of $79.

This $99 is what people keep focusing on, and, thus, have overlooked what that number actually is.  That $99 is a yearly rate, not a monthly rate, and this is a point that Amazon has failed to remind people of.  In fact, to my knowledge, they haven’t even compared their service to Netflix’s.

Remember that Netflix offered their streaming online movie and television service for $6.95 per month, then it went up to its current $7.95 per month.  Not too many make mention of the $7.95 per month cost now. (Many subscribers and investors DID complain about the fact that Netflix raised the cost 60% to offer both DVDs and streaming to customers after they originally offered the two together for $9.99/month, plus the fact Netflix didn’t offer a discount for bundling the two together).

The $7.95/month cost, when multiplied by 12 months per year, comes out to an annual cost of $95.40/year, less than $4 cheaper than the new Amazon Prime rate.  As mentioned above, value isn’t the problem with Amazon Prime – it still offers way more than Netflix for that $99/year.  However, Amazon has failed to emphasize this in their marketing.

One of the main keys to marketing is pricing, and presenting that pricing so that it represents the most value.  This is usually shown by breaking a price down to its lowest unit cost.  You see this exhibited by many companies; one common example is life insurance companies breaking down life insurance to cost per day.  I’m sure you’ve seen Alex Trebek talking about Colonial Penn’s life insurance coverage costing “less than $.35/day; that’s less than the cost of a daily newspaper.”

When higher-cost items are broken down into smaller units, they are much more palatable to the budget-conscious consumer.  When you keep prices at higher units, especially ones pushing $100 like the new Amazon Prime rate, it’s going to be naturally oppressive to people because most people consider $100 to be sizable money.  However, if that cost was broken down by month or even day, it would be much more palatable to most and likely would quell much of the anger and dissension that has gone through the Amazon Prime subscriber base.  The yearly cost of $99 broken down by month comes out to be $8.25/month, $0.275/day (less than the cost of Colonial Penn’s life insurance daily rate, in fact).

This would especially be true if Amazon was comparing that monthly cost to a comparable service like Netflix or Hulu Plus, both of which do not do anything in regards to carrying a large inventory of items and shipping them to the consumer.  This would reemphasize the value subscribers are getting with Amazon Prime, and for most, would justify the higher rate increase.

Due to the fact that Amazon has failed to do this, everyone is fixated on the $99/year cost.  Certainly, the one-time payment of $99 can be a sizable amount for many, but when you consider that it’s a yearly cost and the fact that most households easily pay that much and more per month for their cable and Internet subscription packages, their groceries, their clothing, their utilities, their car insurance, their home insurance, and other essentials and non-essentials (cable and Internet, while important, isn’t exactly an essential package like food and shelter), you can see that the Amazon Prime rate increase isn’t that substantial for the value a subscriber gets.

Yet, Amazon is letting the public run wild with the $99/year price increase as being the “end of the world” and a good reason to end their subscriptions to Amazon Prime, even if they’ve been loyal subscribers for years.  This is another example of where the power of social media and online communication via the Internet must be monitored and responded to right away, as Amazon really hasn’t combatted this pervading viewpoint that the price increase is unreasonable.

As mentioned above, it was inevitable that the price increase would happen; after all, Amazon makes a marginal (in relative terms) profit compared to most companies, especially those that are publicly traded on a stock exchange.  Of course, investors will get antsy over rising costs and slim profits, so Amazon had to take some step to increase their revenues.  Besides the fact they raised the minimum purchase price for free shipping to $35 from $25, they’re raising the price of Amazon Prime to $99 from $79.

Again, though, it’s a relatively minor increase compared to what was originally proposed, not to mention it’s a one-time yearly fee, not a twelve-time monthly fee.  Most people pay far more per month for food, clothing, car insurance, health insurance, cable and Internet TV subscription bundles, etc.  Yet, most of those people aren’t complaining to the extent that they are about the Amazon Prime price increase, and that’s because of how those services are marketed as compared to Amazon’s marketing of Prime.

For Amazon to quell this anger and dissension amongst the Amazon Prime subscriber base, they need to do two things:

1. Break the yearly price down by month, even by day (as I did above), and emphasize that in their marketing.

2. Reemphasize all of the value subscribers will continue to receive, including the new music service that is scheduled to come online next month.

The first item has been non-existent, while the second item has been haphazardly done at best.  I really think that by emphasizing these two points, Amazon can help to quell the concerns and anger coming from much of the Amazon Prime subscriber base and keep many of them from fleeing.  If too many of them leave, this could start a bad cycle, as Amazon’s profits will suffer, scaring investors further and making Amazon consider more price increases in the near future, which will only make subscribers even angrier and giving them more impetus to unsubscribe from Amazon Prime.  It will be interesting to see the numbers of how many Amazon Prime subscribers stay and how many go as the new rate increase kicks in.

What do you think of Amazon’s rate increase of Prime? Reasonable? Unreasonable? Are you a subscriber to Amazon Prime? If so, do you plan on keeping your subscription or dropping it? Why? Feel free to answer any or all of the questions in the comments box below.

A Strategic Example To Differentiate Between Omnichannel Marketing And Multichannel Marketing

If you followed me on Twitter, @jchengery, you’ll have seen a tweet about this article on iMedia Connection: 6 tech trends you can ignore in 2014.

The author, Eric Anderson, Vice President of Marketing at People to People Ambassador Programs, claims that there are six tech trends digital marketers can safely ignore in 2014.  One of them is “omnichannel,” as he believes that “multichannel” is a sufficient-enough word to encompass the idea that all marketing channels should be integrated and provide the same seamless experience for a customer, whether he/she shops in a store, via a desktop/laptop, or via a mobile device (such as a smartphone or tablet).

While I can certainly see his point about where “omnichannel” is a bit redundant, I think it does have its place in the marketing world.  A good article that showed this was this one from eMarSys, presented by New Markets Sales Director Alex Timlin.  In it, there are some great photos of the concepts of multichannel marketing and omnichannel marketing.

Essentially, omnichannel marketing is where the marketing process to a person is consistent and seamless across all channels, whereas multichannel marketing is where the person is marketed across multiple channels, but the message and experience may not be consistent across all of them.

You may know that the prefixes of those words indicate a great deal about the relevant strategies.  Both come from Latin (for the record, I was a Latin major, so I’m very familiar with these prefixes):  “Omni” stands for “all,” while “multi” stands for “many” (which is where the word “multiple” comes from).  Thus, omnichannel marketing refers to having a strategy across all channels, while multichannel marketing refers to having a strategy across many channels.

Anderson believes that the word omnichannel isn’t even needed if multichannel marketing strategies are properly set up, but as Timlin points out, many industries are just learning about the need for proper integration across channels to ensure there is a consistent marketing message and experience across all of them.

It got me thinking on what would be a good example to clearly illustrate the differences between omnichannel marketing and multichannelmarketing.  I think (and hope) the following example will help.

Imagine a military army that has four different divisions in it.  These divisions consist of tanks, jeeps, planes, and troops. (If you’ve ever played a strategy game on your computer, or on any of the popular gaming systems, such as Nintendo, PlayStation, or XBox, it may be helpful to picture that game or games in your mind.)  Each division has a commander.  The mission is to infiltrate the enemy’s land and take the enemy’s headquarters, which is heavily fortified.  The enemy knows that the army is coming and has four divisions of tanks, jeeps, planes, and troops to counter.

Here are two scenarios:

Scenario 1 (Multichannel approach): Before the battle, the commanders decide to attack from each direction (north, south, east, and west), figuring that they will defeat the enemy divisions and surround the headquarters.  The attack proceeds, but before each army division can defeat the enemy, the enemy divisions retreat and becomes a unified force surrounding the headquarters.  The commanders and divisions are cut off from each other, so they continue trying to plow ahead, with only marginal success.  While they make some headway against the enemy, casualties and fatalities are high because the enemy is unified and able to utilize all of their resources (jeeps, tanks, planes, and troops) against the army, while the army’s divisions are separated, thus not matching up the best resources to attack the enemy. Thus, the division’s tanks are being bombarded by planes, while another division’s troops are being thwarted by the enemy’s tanks. They suffer heavy losses against the enemy.

Scenario 2 (Omnichannel approach): Before the battle, the commanders discuss attacking from the north, south, east, and west, but they also discuss the possibility of the enemy divisions combining into one unit before the separate divisions are defeated.  Thus, the commanders decide that they must be on the same page with their attack strategy if the enemy does combine into one unit.  As a result, they choose to integrate each division so that there are an equal number of tanks, jeeps, troops, and planes in each division from the start.  The battle commences, and the enemy does combine into one unit.  However, the army was prepared for that possibility and starts to combine  its resources strategically against the enemy (using planes to bomb the tanks, using jeeps to overrun the enemy troops, etc.).  There are few casualties as the army is able to overtake the enemy and take over the headquarters.

Just as in the example, there are several divisions (commonly referred to as “channels”) on the same team.  This is the case in any company in any industry:

– Product Creation

– Product Distribution

– Marketing

– Social Media

– Management

– Etc.

The channels of the company all want to make the company more successful and profitable, just as the army divisions want to achieve victory.  With a multichannel approach, the company channels don’t really know what the other channels are doing and aren’t allocating the resources together in the most effective manner to make the company successful.  Thus, much of the effort isn’t as optimized as it could be with an omnichannel approach.  With an omnichannel approach, each channel is aware of the other channels’ efforts to help the company be more successful and profitable, and integrates its own resources and abilities to help the other channels’ efforts to be more unified and successful.  As a result, the effort across all channels is more optimized, and, thus, more effective in promoting the company’s main message and marketing strategy to its target market, resulting in greater success and profitability.

While it would seem that companies would want their multiple channels to coordinate with each other in order to make their efforts more successful on a unified front, it’s not as easy as just going out and doing your best for the company (much like the army divisions just plowing ahead with their individual resources).  If your channels aren’t on the same page, much of the effort is duplicated and isn’t optimized for maximum effect.  This is why it’s critical to have your channels on the same page, knowing what each other channel is doing, and working together in order to achieve that symbiotic approach that will fully maximize the efforts of each channel and provide the best results for the company.

This is why I believe that the term, “omnichannel marketing,” came to be born. It is to remind companies that just having many channels working as hard as possible toward the goal of making the company more successful and profitable will often not lead to the best results.  There needs to be coordination amongst all channels to ensure that every product test, every marketing campaign, every distribution channel, and every social media platform is on the same page in regards to how the company wants to be perceived in the marketplace by its target market, how the company will go after that target market with its products/services, and how the company will respond to any feedback, complaints, and interaction with that target market.

What do you think?  Do you think “omnichannel marketing” is a necessary term in digital marketing today as Timlin and I think? Or, do you think that “omnichannel marketing” is not needed and that “multichannel marketing” is sufficient, as Anderson thinks?

Vote in the poll below, and let me know any further thoughts in the comments section- thanks!

Apologies for being out-of-touch – new blog posts this week!

Hello everyone, I hope 2014 is off to a great start for you!

Apologies for being out-of-touch; I’ve been copyediting two books that I just finished with on Friday. Barring any last-second changes from another party on the project, they will be published soon.  I am in both of them, along with 44 other contributors in the one book (about Overcoming Adversity) and 28 other contributors in the second book (a How-To book, largely dealing with business and digital marketing, but on a few related topics too).

I appreciate your understanding – I’ll have more posts this week, including one that should be up today regarding an article that I will be tweeting about later today.  It’s on “omnichannel” versus “multichannel” – I’ll provide some thoughts on the article, including a way in which you can differentiate between the two marketing terms, and why I think the “omnichannel” term came about (and why I think it is a good thing).

See you then – take care!