Friday, April 25, 2008

Death of Mediocre




There was a time when people would think themselves lucky to have a telly. Foreign food was quite exotic. Foreign holidays were for the toffs. But then people started getting fancy ideas above their station, as they got their hands on goods that were once way beyond their means.

A lot of this democratisation can be attributed to technology. The cost of consumer technology, from the washing machine to the mobile phone, has plummeted, while devices have become more powerful, in accordance with Moore's Law. Now most people in developed countries think it's their god given right to watch their favourite shows, when they want to, on a flatscreen high definition TV.

Exercising this right in all their consumption, consumers expect everyday luxury and good quality at an affordable price tag. At times, they'll also treat themselves to real luxury and pay the exorbitant price. Increasingly, what they won't stand for is mediocre goods at fairly high prices. We're seeing the death of the middle ground.

Polarisation is occurring across industries. In the hotel business, on the one hand, there's 'boutique budget' accommodation with mandatory flatscreen TV and wifi, for example, Accor's Motel 6 chain in the US; at the other end of the scale, luxury hotels like the Westin in Sydney.



Motel 6


Supermarkets have low-cost, good quality staples, such as the You'll Love Coles range, and they have the premium deli-quality offerings.

Gordon Ramsay adjures owners of small restaurants to do a few simple things really well, even if it's soup or a Croque Monsieur, and offer them at a competitive price. His own restaurants are the epitome of ultra-luxury, for when people want to spoil themselves.

But still, in all sectors, falling between two stools, there's a quagmire of a) fairly cheap and fairly shit and b) mediocre and overpriced goods, fighting a losing battle to stay relevant. Unfortunately, a lot of traditional, household brands fall into this category. They're pushing out the same old so-so goods that were crowd pleasers in the 1980s. They may alter the look/taste/feel incrementally, but that's just not enough. Mediocre is dying and cannot be reanimated, despite the best efforts of marketing.

At the same time, consumer segmentation based predominantly on socio-economic, or demographic, profiling, is leading businesses up the garden path. That's because the same people, who are buying the quality budget goods, are also buying the high-cost luxury. They're not different segments. They're the same people at different times (who can be more different in their behaviour from one occasion to the next than two entirely different people!) They'll shop at K-Mart one day, and David Jones the next. They'll choose the thrifty option at times, so they can treat themselves when the need arises.

Weighing up their time, energy and money, people are constantly making trade off decisions, consciously, or unconsciously. Mediocre brands hardly feature in these decisions. They may still be household heavyweights, but this is largely thanks to shoppers' habitual behaviour. These consumers are giving way to new generations, who expect more.

Wednesday, April 23, 2008

B&B

Blogging is a bit like running a B&B, without the breakfast, or the bed. You set up the place to your liking, but with punters in mind. You check out the guest book and take comments to heart. You keep it neat and tidy, but retain enough character to keep people coming back. I say this glibly, for I have no experience in the hospitality trade. Then again, I'm the landlord of this virtual space.

Wednesday, April 16, 2008

Gridlock 2020




The issue of Australia's digital economy has dropped to second place - from bottom - on the discussion guide for the forthcoming Australia 2020 Summit, B&T reports (April 11).

This doesn't bode well for a bright digital future. But, in the light of the current debacle in the UK over the BBC iPlayer's bringing broadband networks to their knees, it seems particularly shortsighted.

The iPlayer lets users download or stream TV programmes to a computer, a Wii, even an iPhone. Such is its popularity with users that broadband networks are straining under the pressure and network upgrades are needed.

Now there's a lot of argy-bargy between the BBC and ISP providers, with the government caught in the middle, over who should pay for the bandwidth improvements. It's a debate to the tune of £830m - the estimated cost, according to regulator Ofcom, of providing the extra capacity to accommodate online video services.

Unless the situation is resolved, some analysts, including US-based Nemertes Research, predict net gridlock by 2010.

Now, let's come back to the issue of Australia's digital economy. As consumers enjoy more bandwidth bustin' on-demand services (with less bandwidth available to them than UK consumers currently have), it looks like 'Australia 2020 Summit' is a wildly optimistic title - we could be heading for meltdown well before then.

Wednesday, April 9, 2008

Worldview

I love this quote, which I just spotted on the FOAF site:

"There are two kinds of people in the world, those who believe there are two kinds of people in the world and those who don't."

Robert Benchley, Benchley's Law of Distinction

Tuesday, April 8, 2008

Social Shopping: Making Online Advertising Work



A new site, Rasba, co-founded by 17-year-old Miriam Brafman, succeeds in doing what Facebook's Beacon initially tried - and failed - to achieve: the right balance between online shopping, advertising and social networking.

As I've highlighted previously, Beacon failed to have an opt-in system, so people were revealing their purchases to others without realising it. But, I believe, despite the fallout, Facebook had the right idea, executed wrongly.

Rasba not only avoids antagonising users through ensuring opt-in from the start, it makes buyers advocates of the advertising model, through leveraging social - and real - currency. They earn kudos and commission when the brands they've bought, displayed on their profile pages, are subsequently purchased by other members.

Just as 'gifting', 'begging' and feedback features on social networking sites facilitate social exchanges, other smart features of Rasba include wishlists and newsfeed-style updates on what their friends are buying. And brands get their own customisable storefronts within the website - it's win-win all round.

For teens, shopping is fundamentally a social event - whether it's spotting what the cool kids are wearing (nonchalantly, of course, and passing it off as your own style), consulting friends in the changing room, or via mms, or getting the verdict from the crowd on the way to a big night out. It makes absolute sense for e-commerce sites to leverage this. Teens' desire for acceptance, belonging and killer style is no less online.