Newspaper publishers need to explore new methods of pricing content as they expand their digital portfolios because merely transferring the methods used in print can never bring the success publishers desire.
Print newspaper publishers have traditionally tended to set prices based on production and distribution costs and not on value created. Unfortunately, this has made it impossible to possible to obtain a price premium for factors such as prestige, service, experience, and convenience.
New digital operations, however, provide significant other pricing options because they differ in terms of whether they maintain the existing content bundle, whether non-payers can be excluded from use, the types of experience they deliver and how they are used.
Digital media require significant new thinking because they tend to be joint and complementary products with print. These lend themselves to selling strategies of bundling and versioning that permit uses of bundle pricing, option pricing, multiple purchase pricing, differential access pricing, and inventory based pricing that have not typically been used in the newspaper industry.
Pricing is particularly complex in the digital environment because the number of price choices grow exponentially. In the print product managers price advertising and the circulation, but when they add an online product they have to make 8 choices because they are shifting to a multisided platform operation. If mobile, social media and other print products are added to the portfolio, one must give significant thought to the roles each plays in the portfolio and the interactions of pricing choices among them.
Although digital media use is growing significantly, companies need to be pragmatic in their investments and operations and their hopes for new revenue. Online consumption is still only about 10 percent of all media use and online advertising is still only about 13% of offline advertising. Those numbers are significant and rising so companies needs to seek and exploit opportunities in digital spaces, but managers cannot expect those to immediately replace the contributions of their legacy operations.
Showing posts with label strategy. Show all posts
Showing posts with label strategy. Show all posts
Thursday, October 14, 2010
Monday, May 31, 2010
Apple is poised to become the most valuable company
S&P 500 Largest Companies |
| Symbol | Company Name | Close on 5/26 | % Chg. YTD | Mkt. Cap Value B$ |
| XOM | Exxon Mobil | 59.31 | -13 | 278.6 |
| AAPL | Apple | 244.109 | 15.8 | 222.1 |
| MSFT | Microsoft | 25.01 | -17.9 | 219.2 |
| WMT | Wal-Mart Stores | 50.02 | -6.4 | 187.6 |
| PG | Procter & Gamble | 60.44 | -0.3 | 174.1 |
| GE | General Electric | 16.01 | 5.8 | 170.9 |
| JNJ | Johnson and Johnson | 59.66 | -7.4 | 164.5 |
| IBM | IBM | 123.23 | -5.9 | 158 |
| BAC | Bank of America | 15.47 | 2.7 | 155.2 |
| JPM | JPMorgan Chase | 38.78 | -6.9 | 154.3 |
| GOOG | 475.47 | -23.3 | 151.4 | |
| WFC | Wells Fargo | 28.04 | 3.9 | 146 |
| CVX | Chevron | 71.55 | -7.1 | 143.7 |
| T | AT&T | 24.13 | -13.9 | 142.6 |
| CSCO | Cisco Systems | 22.89 | -4.4 | 131.1 |
source: CNBC
Bottomline:
Apple surpassed Microsoft as the most valuable technology company. Apple is on a high growth drive. Apple's forward P/E is only 16.58, whereas the current P/E is 21.78. Analysts are estimating Apple's stock to rise to $303.11, with a high end estimate of $350. If Apple stock indeed breaks $350, Apple's marketcap will expand to $318.5B, higher than Exxon Mobile's marketcap of $284B, making it the most valuable company in USA (source: Yahoo Finance). With successful new innovations such as the iPad that will generate at least $5 billion in new business this year, and the impending launch of the new iPhone which will bring in more sales, Apple will accelerate the torrid growth throughout 2010. The stars are aligning for a perfect marketcap storm that Apple is going to cause, as analysts will ponder on whether to raise Apple's stock target price further to $400 come December. It's a matter of when, not a matter of if, that Apple will surpass Exxon Mobile. Bravo Apple!!
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Originally published on Apple Innovation Blog
Monday, May 10, 2010
Challenges of Product Choices and Prices in Multi-Sided Media Markets
Commercial media have faced product and price challenges in 2-sided markets for more than a century, but are encountering greater difficulties in getting it right as they try to effectively monetize multi-sided markets.
2-sided and multi-sided markets are ones in which more than one set of consumers must be addressed and there is an interaction between strategies and choices for each set of customers. Prices for one group of consumers affects their consumption quantity and this, in turn, affects the prices for and consumption by the other groups. Optimal revenues can only be achieved by dealing with all groups of consumers simultaneously.
Newspapers are a classic example of 2-sided platforms. The first product is the content sold to audiences and the second is access to audiences that is sold to advertisers. This has been the basis of the mass media business model since late 19th century and the strategy has been to keep circulation prices low to attract a mass audience and then to make the majority of revenue from advertiser purchases.
In this model, success in selling the newspaper product affects ability to sell advertising access because more readers makes a paper more attractive to advertisers; conversely, success in selling advertising affects ability to sell the newspaper to readers because it provides resources that improves content and make the paper more attractive.
Getting prices right in this model is crucial, but most media have traditionally been relatively unsophisticated in setting prices. Few have used demand-oriented pricing, based on what the market will bear, or target return pricing based on achieving a specific rate of return. Instead most have set prices based on what the closest competitors are doing or on industry average price. They were historically able to get away with it because elasticity and price resistance were relatively low because of the near monopolies of past in many markets.
Today, however, product and price choices are getting much more complex because of rising competition and because media are shifting from 2-sided to multi-sided platforms in which relationships among consumers are compounded. This complexity is evident in the difficulties newspapers and magazines are having figuring out effective ways to provide and sell content online.
The problem occurs because there are paying audiences and advertisers for the print edition; free audiences and paying advertisers for the online edition; and some joint audience and advertisers who use both the print and online offerings. If one alters the free price online to create a paying audience, it not only affects the willingness of online advertisers to pay, but affects the willingness of joint audiences and advertisers to pay and thus effects performance of the print sales as well.
Creating the correct combination of content available in print and online, getting the content prices right, generating audiences in both places that are right for advertisers, and properly prices advertising is no mean feat. The situation is made even more difficult as publishers add eReaders and mobile services to the mix.
Those who think they can easily monetize newspapers, magazines, or other information products online ignore the significant challenges posed by multi-sided platforms and need to carefully consider the impact that these factors have on product and price choices.
2-sided and multi-sided markets are ones in which more than one set of consumers must be addressed and there is an interaction between strategies and choices for each set of customers. Prices for one group of consumers affects their consumption quantity and this, in turn, affects the prices for and consumption by the other groups. Optimal revenues can only be achieved by dealing with all groups of consumers simultaneously.
Newspapers are a classic example of 2-sided platforms. The first product is the content sold to audiences and the second is access to audiences that is sold to advertisers. This has been the basis of the mass media business model since late 19th century and the strategy has been to keep circulation prices low to attract a mass audience and then to make the majority of revenue from advertiser purchases.
In this model, success in selling the newspaper product affects ability to sell advertising access because more readers makes a paper more attractive to advertisers; conversely, success in selling advertising affects ability to sell the newspaper to readers because it provides resources that improves content and make the paper more attractive.
Getting prices right in this model is crucial, but most media have traditionally been relatively unsophisticated in setting prices. Few have used demand-oriented pricing, based on what the market will bear, or target return pricing based on achieving a specific rate of return. Instead most have set prices based on what the closest competitors are doing or on industry average price. They were historically able to get away with it because elasticity and price resistance were relatively low because of the near monopolies of past in many markets.
Today, however, product and price choices are getting much more complex because of rising competition and because media are shifting from 2-sided to multi-sided platforms in which relationships among consumers are compounded. This complexity is evident in the difficulties newspapers and magazines are having figuring out effective ways to provide and sell content online.
The problem occurs because there are paying audiences and advertisers for the print edition; free audiences and paying advertisers for the online edition; and some joint audience and advertisers who use both the print and online offerings. If one alters the free price online to create a paying audience, it not only affects the willingness of online advertisers to pay, but affects the willingness of joint audiences and advertisers to pay and thus effects performance of the print sales as well.
Creating the correct combination of content available in print and online, getting the content prices right, generating audiences in both places that are right for advertisers, and properly prices advertising is no mean feat. The situation is made even more difficult as publishers add eReaders and mobile services to the mix.
Those who think they can easily monetize newspapers, magazines, or other information products online ignore the significant challenges posed by multi-sided platforms and need to carefully consider the impact that these factors have on product and price choices.
Monday, April 19, 2010
SEARCH FOR ALTERNATIVE MEDIA BUSINESS MODELS HAMPERED BY NARROW THINKING
Media executives around the globe are clamoring for new and alternative business models and industry associations everywhere are holding seminars and conferences on how to create and discover them. There is just one problem: They don’t know what business models are.
When you cut through the rhetoric, you find that most executives are merely interested in finding new revenue streams. Even when you consider firms touted as having best practices in that regard, none have been very successful in establishing them. The reason is simple: The dominant thought about business models is highly limited and far too narrow to solve the contemporary challenges of media industries.
Business models are not merely about the revenue streams. Instead, they establish the underlying business logic and elements. They involve the foundations upon which businesses built, such as companies’ competences, value created, products/services provided, customers served, relationships established with customers and partner firms, and the operational requirements. If you get those elements right, the revenue issues take care of themselves.
The biggest problem of media business models today is not that the revenue model is diminishing in effectiveness, but that most media companies are still trying to sell nineteenth and twentieth century products in the twenty-first century. And they are trying to do so without changing the value they provide and the relationships within which they are provided.
Because of the enormous changes in technology, economics, and lifestyle in recent decades, the needs of customers have changed, they kinds of content they want, and the ways they obtain news, information, and entertainment have been dramatically altered. If media firms do not address these changes in consumer needs and behavior, no amount of worry about revenue streams will stem the fundamental challenge that audiences are leaving traditional print and broadcast media behind for content providers and distribution platforms that better serve their needs.
The content of traditional media products were created in specific technical, economic, and information environments that no longer exist. In order to evolve and prosper media companies must revisit the foundations of their businesses, ensure they are providing the central value that customers want, and provide their products/services in a unique or different way from other media firms.
The range of technologies and distribution and interactive platforms available in the twenty-first century require that firms increasingly see their business activities as cooperative processes requiring coordination and interdependence with external firms and customers themselves. Standing isolated and alone—at arms distance from the customer—is no longer a viable option.
This is not to say that firms must make sudden and dramatic changes in their business models, but they must start revisiting all the aspects to make regular incremental improvements and changes. Questions need to be asked about what is provided, why it is provided, how it is provided, and the entire structures and operations of firms. These need to be addressed first, then the revenue models can be sorted out and improved.
When you cut through the rhetoric, you find that most executives are merely interested in finding new revenue streams. Even when you consider firms touted as having best practices in that regard, none have been very successful in establishing them. The reason is simple: The dominant thought about business models is highly limited and far too narrow to solve the contemporary challenges of media industries.
Business models are not merely about the revenue streams. Instead, they establish the underlying business logic and elements. They involve the foundations upon which businesses built, such as companies’ competences, value created, products/services provided, customers served, relationships established with customers and partner firms, and the operational requirements. If you get those elements right, the revenue issues take care of themselves.
The biggest problem of media business models today is not that the revenue model is diminishing in effectiveness, but that most media companies are still trying to sell nineteenth and twentieth century products in the twenty-first century. And they are trying to do so without changing the value they provide and the relationships within which they are provided.
Because of the enormous changes in technology, economics, and lifestyle in recent decades, the needs of customers have changed, they kinds of content they want, and the ways they obtain news, information, and entertainment have been dramatically altered. If media firms do not address these changes in consumer needs and behavior, no amount of worry about revenue streams will stem the fundamental challenge that audiences are leaving traditional print and broadcast media behind for content providers and distribution platforms that better serve their needs.
The content of traditional media products were created in specific technical, economic, and information environments that no longer exist. In order to evolve and prosper media companies must revisit the foundations of their businesses, ensure they are providing the central value that customers want, and provide their products/services in a unique or different way from other media firms.
The range of technologies and distribution and interactive platforms available in the twenty-first century require that firms increasingly see their business activities as cooperative processes requiring coordination and interdependence with external firms and customers themselves. Standing isolated and alone—at arms distance from the customer—is no longer a viable option.
This is not to say that firms must make sudden and dramatic changes in their business models, but they must start revisiting all the aspects to make regular incremental improvements and changes. Questions need to be asked about what is provided, why it is provided, how it is provided, and the entire structures and operations of firms. These need to be addressed first, then the revenue models can be sorted out and improved.
Monday, April 5, 2010
Lucky Brand Director Allocation (Vernon, CA)
Rooted in rock'n'roll with a signature sense of humor, Lucky Brand Jeans stands for independent thinking, individual style and a feeling as authentic as love. Friends since youth, creators Gene Montesano and Barry Perlman shipped the first order of Lucky Brand Jeans in 1990, and have been renowned for their great-fitting, vintage-inspired jeans and clothes ever since. Lucky Brand Jeans is sold at over 150 neighborhood Lucky Brand Jeans stores internationally, at LuckyBrandJeans.com, and in variety of department and specialty stores Overview:
Lucky Brand is a rapidly growing brand offering apparel, accessories, fragrances, and jewelry for women, men and children. Established in 1990, Lucky Brand has become one of America's favorite denim brands with a sense of humor evident in its trademark "Lucky You" fly. Lucky Brand products are sold through its own 226 retail and outlet stores within the US, its company website (www.luckybrand.com), select group of high-end department and better specialty stores, and through international retail partners in Asia, Middle East, and Canada.Responsibilities:
Develop Allocation Strategy and Store Inventory Plans •Collaborate with Merchants and Planners to develop and communicate a comprehensive allocation strategy for channel/division level to achieve:
fiscal sales, margin, and receipt plans in units •Coordinate end to end inventory management with cross function partners, ensuring timely and accurate deliveries that are in line with merchandising floor sets. •Conduct a quarterly hindsight and detailed review of historical performance, providing recommendations and guidance for future season deliveries. Weekly Business Management •Identify risks and opportunities based on analytical observations and provide recommendations to deliver overall company financial objectives •Provide inventory management recommendations to ensure in stock position and maximizing sell thru on floorsets •Develop merchandising and allocation strategies and present to cross-functional team and senior management Owner of Store Inventory •Lead and direct allocation and flow strategy for each floorset •Drive In stock position by store on basic replenishment merchandise •Present current and future allocation strategies on a rolling calendar approach •Highlight risks and opportunities with recommendations to deliver overall company financial objectives •Drive results to maximize selling by developing store groups, specialized store assortments and receipt flow in partnership with Planning Team, Merchants and Distribution Center Management •Present receipt flow, in stock positioning and store tests and performances at monthly SFR meetings. Assortment Planning & Assortment Planning Prep •Validate receipt plans and flow strategy of receipts, directing the team
Posted by Kris Iringan
Lucky Brand is a rapidly growing brand offering apparel, accessories, fragrances, and jewelry for women, men and children. Established in 1990, Lucky Brand has become one of America's favorite denim brands with a sense of humor evident in its trademark "Lucky You" fly. Lucky Brand products are sold through its own 226 retail and outlet stores within the US, its company website (www.luckybrand.com), select group of high-end department and better specialty stores, and through international retail partners in Asia, Middle East, and Canada.Responsibilities:
Develop Allocation Strategy and Store Inventory Plans •Collaborate with Merchants and Planners to develop and communicate a comprehensive allocation strategy for channel/division level to achieve:
fiscal sales, margin, and receipt plans in units •Coordinate end to end inventory management with cross function partners, ensuring timely and accurate deliveries that are in line with merchandising floor sets. •Conduct a quarterly hindsight and detailed review of historical performance, providing recommendations and guidance for future season deliveries. Weekly Business Management •Identify risks and opportunities based on analytical observations and provide recommendations to deliver overall company financial objectives •Provide inventory management recommendations to ensure in stock position and maximizing sell thru on floorsets •Develop merchandising and allocation strategies and present to cross-functional team and senior management Owner of Store Inventory •Lead and direct allocation and flow strategy for each floorset •Drive In stock position by store on basic replenishment merchandise •Present current and future allocation strategies on a rolling calendar approach •Highlight risks and opportunities with recommendations to deliver overall company financial objectives •Drive results to maximize selling by developing store groups, specialized store assortments and receipt flow in partnership with Planning Team, Merchants and Distribution Center Management •Present receipt flow, in stock positioning and store tests and performances at monthly SFR meetings. Assortment Planning & Assortment Planning Prep •Validate receipt plans and flow strategy of receipts, directing the team
Posted by Kris Iringan
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