product developer or marketer who is out of great ideas.
The exception to this rule is the quantum leap in pricing. When a marketer can radically redefine the way a product is produced or delivered, and leapfrog the pricing of others, that can create a remarkable game-changing event.
The Purple Cow is not the exclusive domain of high-priced products and wealthy consumers. Motel 6 is remarkable for being simultaneously clean and cheap. Same with Wal-Mart.
JetBlue and Southwest have completely changed the pricing equation in air travel. Traditional carriers, with expensive hubs and awkward union relationships, cannot sustain long-term price competition. In the long run, the 50-percent cost advantage enjoyed by these new competitors is certain to defeat the old guard. American and United know this, yet there’s absolutely nothing that they can do about it. Southwest changed the rules of the game, and the big airlines don’t even have a pair of dice.
IKEA has done it in furniture. They so dominate their segment with cheap (but not cheapo) furnishings that they are able to drive their costs lower and lower. Their volume advantage changes the game for their competition, guaranteeing IKEA leadership in this segment (until some competitor figures out a remarkable way to change the game again).
If you could build a competitor that had costs that were 30 percent lower than yours, could you do it? If you could, why don’t you?
Case Study: What Should Hallmark.com Do?
Hallmark runs one of the three biggest online greeting card services. The site grew when an ideavirus started—people would send an e-card to a friend, who would find out about the service by reading the card and would respond by sending a few more cards. Within a year, billions of cards were flying around online.
The challenge, of course, is turning this free activity into something that can actually make money. One thing that’s working for Hallmark is selling gift certificates. Hallmark owns a gift certificate company, and they make a profit every time you spend $20 on a $20 gift certificate (complicated, but true).
Anyway, Hallmark lies at the nexus of three powerful forces at work in this book, so I was happy to help my friend at Hallmark brainstorm some ways to put them to work.
To start, Hallmark has permission to talk to the audience. These are consumers who voluntarily come to the site to send a card. No interruption media necessary. Alas, even though they are here on their own, many of them aren’t looking for Hallmark to have a voice in the conversation, so they’re not listening to any news Hallmark might want to share.
Fortunately, many of the visitors are members of Hallmark’s Gold Crown Club. These consumers are busy collecting points (à la frequent flyer miles) to trade in for prizes. These self-selected consumers have a problem (how do I get more points?) that they’re willing to look to the market to solve.
And best of all, these Gold Crown Club members are assiduous sneezers. They send a ton of cards (electronic and paper) every year, and the people they send them to enjoy receiving them—the recipients know the sender doesn’t have anything to gain. They just care enough to send the very best.
The win, it seems to me, is for Hallmark to discover whether people getting a gift certificate are likely to turn around and send one. If the idea of an electronic gift certificate is remarkable enough to spread, then their challenge is to get the core group of sneezers to spread the word.
So here are my ideas for my friend at Hallmark:
When a Gold Crown Club member is about to send an e-card, ask him if he wants to find out how many points he’ll get if he also sends a gift certificate. This will be a randomly chosen number between 100 points (a little) and 1 million points (a ton!). Obviously, most people will win a small number, but every once in a while someone will be eligible to win a large number.
Most members of this
The exception to this rule is the quantum leap in pricing. When a marketer can radically redefine the way a product is produced or delivered, and leapfrog the pricing of others, that can create a remarkable game-changing event.
The Purple Cow is not the exclusive domain of high-priced products and wealthy consumers. Motel 6 is remarkable for being simultaneously clean and cheap. Same with Wal-Mart.
JetBlue and Southwest have completely changed the pricing equation in air travel. Traditional carriers, with expensive hubs and awkward union relationships, cannot sustain long-term price competition. In the long run, the 50-percent cost advantage enjoyed by these new competitors is certain to defeat the old guard. American and United know this, yet there’s absolutely nothing that they can do about it. Southwest changed the rules of the game, and the big airlines don’t even have a pair of dice.
IKEA has done it in furniture. They so dominate their segment with cheap (but not cheapo) furnishings that they are able to drive their costs lower and lower. Their volume advantage changes the game for their competition, guaranteeing IKEA leadership in this segment (until some competitor figures out a remarkable way to change the game again).
If you could build a competitor that had costs that were 30 percent lower than yours, could you do it? If you could, why don’t you?
Case Study: What Should Hallmark.com Do?
Hallmark runs one of the three biggest online greeting card services. The site grew when an ideavirus started—people would send an e-card to a friend, who would find out about the service by reading the card and would respond by sending a few more cards. Within a year, billions of cards were flying around online.
The challenge, of course, is turning this free activity into something that can actually make money. One thing that’s working for Hallmark is selling gift certificates. Hallmark owns a gift certificate company, and they make a profit every time you spend $20 on a $20 gift certificate (complicated, but true).
Anyway, Hallmark lies at the nexus of three powerful forces at work in this book, so I was happy to help my friend at Hallmark brainstorm some ways to put them to work.
To start, Hallmark has permission to talk to the audience. These are consumers who voluntarily come to the site to send a card. No interruption media necessary. Alas, even though they are here on their own, many of them aren’t looking for Hallmark to have a voice in the conversation, so they’re not listening to any news Hallmark might want to share.
Fortunately, many of the visitors are members of Hallmark’s Gold Crown Club. These consumers are busy collecting points (à la frequent flyer miles) to trade in for prizes. These self-selected consumers have a problem (how do I get more points?) that they’re willing to look to the market to solve.
And best of all, these Gold Crown Club members are assiduous sneezers. They send a ton of cards (electronic and paper) every year, and the people they send them to enjoy receiving them—the recipients know the sender doesn’t have anything to gain. They just care enough to send the very best.
The win, it seems to me, is for Hallmark to discover whether people getting a gift certificate are likely to turn around and send one. If the idea of an electronic gift certificate is remarkable enough to spread, then their challenge is to get the core group of sneezers to spread the word.
So here are my ideas for my friend at Hallmark:
When a Gold Crown Club member is about to send an e-card, ask him if he wants to find out how many points he’ll get if he also sends a gift certificate. This will be a randomly chosen number between 100 points (a little) and 1 million points (a ton!). Obviously, most people will win a small number, but every once in a while someone will be eligible to win a large number.
Most members of this
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