Here’s the challenge that the PhizzPop Minneapolis teams got on Friday, January 9 at 4pm CST.
If you haven’t registered to see PhizzPop in Minneapolis there may still be seats available. Go to www.phizzpop.com and register right away we’ll do our best to accommodate but are literally with in a dozen seats or so of being full.
Thriving with online retailing and multichannel promotion
2009 represents one of the most challenging environments that retailers in the US have experienced since the Great Depression, these challenges extend to the entities that also distribute their products through retail channels—including content creators, consumer electronics, clothing, consumer and packaged goods, etc.
Online revenue for traditional online retailers has dropped 2% this year after 5 years of 20% growth. Revenues during the November to December season for traditional physical retailers (which represents 30% of the retailer’s business is down 7%) making for one of the worst performing years for traditional retailers since records were kept.
However, austere environments often create optimal opportunities for new business models and consumer experiences. You’ve recently been retained by a private Dutch-based company that currently owns and operates a variety of pharmacies and supermarkets in the Southeast United States and a number of big box retail chains in Western Europe, they’ve hired you to help them with a new physical and online shopping venture they’ve launched in 5 physical locations in each of two test markets, the Minneapolis metro area and Denver/Boulder metro area and across the US via an online channel that is tightly coupled to their physical operations.
Your client’s enthusiasm has been bolstered by the recent and continued retail success and resurgence of stores like Wal-Mart and Target that cater to different spectrums of the big-box retail market and on the high-end with retail stores like the Apple Store in the brick and mortal world.
They’ve also watched with enthusiasm as Amazon has quickly become ascendant in the online retail space and become even more interested in how nimble and adaptive competitors such as Netflix have rapidly evolved their business models.
There are a few pieces of information that they’ve asked you to ponder closely as you work with them.
One is a recent report by a trusted market research firm that found that brands are critically important to socially connected consumers, to the degree that socially connected consumers valued content created by their favorite brands more than peer generated content. Your client is very interested in how technology and social media can leverage their own brand and the brands they sell. They want to take that have social currency to increase relevance, affinity and loyalty consumers.
The second item is that your client is struggling with the success Amazon is having with programs like Amazon Prime and they are eager to explore experience strategies that can engage an audience that doesn’t always require instant gratification or can leverage any unique characteristics from a technology or services perspective that can enable new, disruptive experiences that increase relevance, affinity and loyalty with your client’s venture.
The new CEO of this consortium spent the previous three years in Europe in managing the firm’s retail expansion in big box stores. After much thought and how to best leverage the consortiums resources he chose to play on the firm’s strengths. In an effort to enter the US market they’ve focused on the concept for a new type of retail store that merges the mass market success of big box retail like Costco, Wal-Mart and Target with some of the brand affinity of stores that aspire towards the mastige like success of alternative groceries and coops such as Whole Foods, Trader Joes, and REI.
As a consultant and trusted advisor to this CEO you’ve been asked to develop a proof of concept that can be given at the firm’s board of directors meeting that can demonstrate how technology can be used both in a store environment, in physical branding and promotions both in the store and out of the store and via experiences on the store’s Web site and third-party online Web properties.
Although the primary objective of this exercise is to demonstrate that this retailer has a ‘plan’ to its increasingly fidgety board of directors, there are also critical secondary audiences whose objectives must ultimately be met, and include:
1. Price conscious consumers that must be inspired or incented to begin a relationship with the retailer with repeat purchases of consumer packaged goods, house wares, clothing, toys, consumer electronics and media.
2. Consumer packaged goods and consumer electronics manufacturers that are eager to determine new ways to position their products and (increasingly) services to consumers in physical and virtual channels that provide differentiation and value
3. Media companies that distribute books, magazines, audio and video content in both physical and (increasingly) digital formats
4. Other emerging next generation service models that can generate revenue and brand affinity around these repeat purchase behaviors with consumer packaged goods, consumer electronics and content.
Your assignment is to demonstrate next generation scenarios that can enhance physical shopping scenarios, brand awareness and improve online promotion and traditional online browsing, selection and cross-sell scenarios.
How can social media, services, digital distribution and enhanced experience design differentiate customer purchasing scenarios? The CEO has asked you to focus on the following areas:
1. Encouraging repeat purchases of consumer packaged goods, or the key drivers of the retailers revenue “beer and diapers” and more mundane goods like laundry detergent and clothing.
2. Offer compelling alternatives to secondary competitors that are eroding physical media sales, such as the Apple iTunes store, Netflix and Blockbuster.
3. Determine how an over arching strategy of web-based services and advertising models could or should be a part of this firms strategy for the above category or a more traditional category such as consumer electronics, pharmacy services, registry, etc.
Your client is adamant that you focus your thinking on both the attract and engage modes of the consumer experience and is less concerned with the specific purchase and sustainment phases of a consumer lifecycle. This means your solution should focus on.
A. In-store or out of store promotion scenario using technology (mobile, digital signage, kiosks, other) that utilize unique Windows mobile, touch or services-based solutions.
B. An online interaction via the client site or a third-party site that leverages Microsoft technologies such as WPF, Silverlight or Live Services technology that demonstrates a promo, configuration, acquisition, usage or services scenario.
- A multi-platform Web-based experience is part of the expected solution proposals
- A much of your demonstration as possible should contain real interaction components and data exchange (which can run locally, leverage APIs, reliable internet access will be available to all teams)
- For promotion focused scenarios we’re not expecting teams to be experts in online coupon fraud, promo-code redemption, etc.
- The use of services and social media strategies should be used to extend at least one scenario
- Channel optimization across different types of channels and mediums (Mobile, in-store, touch interfaces, desktop clients, disconnected experiences should be used to extend at least one scenario
- Variations or parts of the experience can be delivered to desktop, laptop, tablet, mobile device, Surface, etc…
- Solutions should make use of technologies and services that provide rich, interactive, unique and collaborative experiences that leverage the best of Web 2.0 and social media, but it should also extend the capabilities and effectiveness of these services. (Including use of audio, video, etc.) where a unique and valuable experience can be added.
- Interface(s) must be delivered as Microsoft WPF and/or Silverlight 1 or 2 experiences as a core enabling feature.
- A Microsoft Surface and HP Touchsmart computer will be available to demonstrate scenarios on if requested. You’ll be able to test your solutions on this equipment starting Tuesday morning at Microsoft offices.
The name of this venture is Indigo. When asked to define the style and tone of Indigo one industry pundit said that Indigo is… “What would happen if big box retailers married the customer experience of Nike’s marketing with Nike.com and the user enthusiasm of friend feed to sell you zit cream, movies, iPods and IKEA furniture.” In bus stops and transportation hubs in Minneapolis and Denver they experimented with the following campaign.
The following are considerations, not guidelines that should be evaluated when designing a solution:
- Extending the experience outside of the retail physical and online brand experience (including but not limited to Windows Live Services and leverage third-party communities—thinking beyond just Facebook, etc. but also looking and community sites for brands, ie pampers.com as an example, or affinity marketing such as the working lunch site (http://workinglunch.msn.com)
- Looking at how advances in visualization, viral marketing, relationship marketing, affinity marketing, casual gaming, advocate networks, offline applications can be utilized for this effort. For inspiration see http://www.artefactgroup.com/portfolio/nau/.
- Integration of Microsoft Live Services such as http://maps.live.com/ and http://dev.live.com/ and http://www.windowslive.com/explore.
- Usage of QR codes or online promotion and coupons and other next generation tagging and geo location services. See www.microsoft.com/tag.
Sandra is a 51 year old homemaker in Littleton, CO. She’s just getting settled into a new townhome that she purchased with her husband after sending their youngest child off to college at the University of Texas. Her husband recently took a voluntary ‘retirement’ package from his employer and is now consulting part time—for a fraction of his previous income. Because the Ladd’s were planning on a retirement in a few years they are taking advantage of this opportunity to move into a new phase of their lives.
The have less money to spend, but they also have less expenses. Their son’s college is paid for with previous funds and their retirement savings is relatively intact. Sandra’s most recent splurge? Trading in the mammoth family Suburban for a Toyota Prius. Sandra is determined to put her family on a path towards simplicity, she’s exhausted from raising three children in a mammoth house, driving massive cars and just doing everything…well big. The Ladd’s would be considered middle-upper class by most standards and as Sandra sees what’s going on around her with the economy and even a few friends that are experiencing financial difficulties she feels a bit guilty about some of her families more conspicuous past consumption. But…she’s still got a new town house to decorate and now is the time for her and her husband to enjoy some of the simple pleasures and fruits of both of their labors. She’s using some of new found time with her husband to volunteer at a few local non-profits that they are both respective board members of and get more active in their local school district—which served their own children so well.
Sandra goals are to continue doing the simple things she enjoys, but she’d like to simplify what she does and minimize her impact on the world. She’ll still continue to by the cosmetics and brands that she loves and she’s also got a home to decorate, but she’d like to be a bit more intelligent about how she goes about decorating this time. She’s mostly looking for simply accessories to accent what she already has and isn’t in a particular hurry to get things done. She’s begun shipping care packages to her son at the University of Texas but has become a bit a frustrated when her youngest son complained about the Guns and Roses Chinese Democracy CD she sent him.
“Mom, nobody listens to CDs!” he told her on a recent phone call.
“You’ve been waiting for that one to come out for years.” She replied.
“That’s true he said, but not in this format, I’ve moved on.”
Sandra promised no more CDs but privately thought “I raised that kid for 18 years and I’ll be damned if I’m not going to continue to mother him.” But…the next time she sent him a gift card to download music on Amazon.com.
Philip mad a frantic call to his wife as he drives to work on Monday morning and takes an exit ramp on the expressway and prepares to return home. His wife answers the phone.
“I’ve got it.” She said. “I’ll be waiting for you. Can you still make your meeting?”
“Yea, it will be close but I’ll make it. You’re the best; I’ll see you in five minutes.”
With his video projector now safely in his trunk and ready for his meeting as he drives into downtown Minneapolis Philip starts running through a list of what he needs for his office. Post it notes, coffee, tea and small TV for the reception area. He’s certain he’ll forget most of this. What was he thinking when he left his cushy job to start his new business? He missed being able to dump a pile of receipts on his assistant’s desk and have her reconcile his expenses as he focused on what was ‘important’. Right now, everything seemed important as a business owner. Already locked into a lease because he didn’t negotiate favorable terms he’s determined to be smart about every decision he needs to make. But…”I’ve got to focus on what’s important too, growing this business and landing deals that pay us.”
Philip is the type of guy that starts a project at home and spends about as much time running to a Home Depot or a Lowes as he does doing the actually project. About 25% of the time he winds up hiring a professional to redo much of what he simply didn’t do well.
As a small business that consists of only himself and a part time receptionist he needs a simple way to keep on top of the little things he needs for his modest office. He looks at his calendar on his smart phone and notices that he’s got 6 meetings scheduled over the next 8 days at his office. “I use Skype for my offshore team, Trip It for travel, Mint for my finances. Why can’t I find an easy way to keep note pads in the office, staples in my stapler and Red Bull in the fridge?”
Philip’s not going to enter into any long term agreement or relationship with the multitude of companies and partners that can help him with his business. He’s too cheap and too unorganized to want a long term commitment. He goes to Office Max when he needs to and the grocery store when he needs to, he loves serendipity but realizes he needs more discipline and structure too. He needs someone that can help him keep the office coffers stocked with supplies and food and handle the last minute fire drill. What he really needs is someone that can tell him what he needs before he needs it.
Manuel glances down at his cell phone and sees that it’s his local video store calling. He looks over at the dresser in his bedroom and knows immediately that they are inquiring about the DVDs that he checked out—4 weeks ago. “I need to get another NetFlix subscription”. He thinks, but then he remembers he had one, one that got cancelled after his credit card expired. He never bothered to update it and still has a movie on his shelf, “The Wages of Fear” that he checked out for a cinema writing class he had last semester. He sighs as his roommate comes in his room and asks if he’d like to go grab lunch.
“Not with you! I take care of myself and I know you’re just going to the Italian Beef place, it will screw up my work out this afternoon if I go there with you and all that salt will mess up my skin.” He states.
“Suit yourself you metrosexual prima donna.” Says his roommate as he grabs his cellphone and heads out the door, but before he leaves, he stops, “Hey, I forgot, you’re Mom called. She wants to know what you want for your birthday. I suggested a new attitude and she agreed but you should let her know if there is anything else. Oh, and I ate all your beef jerky and those dried cranberries you had laying around for breakfast, you should get some more.” The shoe Manuel threw at his roommate landed with thud against the door as his roommate sprinted out of the apartment.
Manuel flopped down on the couch and grabbed his laptop. “I should write that summary on Revolutionary Road for my lit. class now.” He thinks. Instead he watches Futurama and South Park on You Tube for a half hour and engages is a lively debate on Friend Feed about the pluses and minuses of various herbal supplements and facial moisturizers.
Finally he writes his short summary paper and hits print. As he surfs afternoon television for a few moments before departing for class he hears his printer beeping in his room. He walks into the room and discovers his printer is out of ink. He grabs his jacket, book, laptop, phone and MP3 player and heads out the door towards the library to print out his paper before his class thinking that perhaps he’ll pick up that new Robert Downey Jr. movie after class. “I just need to see if I can chase someone down to watch it with me.” He thinks but then remembers that he’ll actually have to buy it if he wants to watch it too as he’s persona non grata at all of his usual rental outlets. He ponders this as he walks to class thinking if he was a bit more together he could be having his family getting him some of this stuff for his birthday. He also remembers that his sister’s birthday is coming up quickly too. He knows he needs to get her something nice (but inexpensive as he is a college student after all) after she had been very generous and purchased an Xbox for him over the holidays. “I better show I care.” He thinks.
Ruth looked at her computer screen and cringes as she reads how Wal-Mart has missed its earning guidance. What is most troubling is that in a dismal year Wal-Mart is the highlight, outperforming all of the other retailers and grocers that carried the brand of frozen and refrigerated baking products and meals that she was the global product manager for. As she stepped out of her office and into her ‘war-room’ it was hard to fanthom how it would be possible to successfully launch the four new products from their portfolio in the coming year.
“What are we going to do?” She thinks. Recently negotiations and agreements with retailers and distributors had become even more painful coming out of a holiday season where every retailer had tried to out Wal-Mart Wal-Mart and, in effect, hurting everyone. But the year was not without highlights. Brand satisfaction and awareness was at an all time high for almost her entire portfolio. This was largely credited to Mrs. Cho’s efforts in conjunction with the CMO and CTO to overhaul the infrastructure for all of their Web properties and consolidate the agency vendor list that produced the myriad of branded sites for her portfolio.
The results were impressive on two fronts. The master brand site had been live for only 18 months but already had 1o million members. A recent affinity campaign done with a third-party portal and social networking site had brought over 600k new members to the site. “But how can I capitalize on this?” She wonders. She looks at her calendar and notices that she’s got a board meeting with the retailer Indigo, a position she was asked to take because of the industry recognition of Mrs. Cho’s success with using communities to increase affinity and loyalty with her brands. “I sure wish some of our partners could demonstrate how we could extend and leverage this.” She thinks.