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While I’m on the topic of long tail and other modern business concepts, let’s think about the power of the technolocally adept business. Why would you want to go to the trouble of setting up and furnishing your own warehouse, with all the cash outlays and risk involved, without equipping it with a warehouse management system such as that offered by Cadre? You want to make sure that you have a firm  hand on your supply chain and fulfillment process, since that’s where the ‘rubber meets the road’ as you deliver products to customers. They say ‘Speed Kills’ for a reason- you want to be able to handle your customers’ orders as smoothly and seamlessly as possible. Cadre’s system is idea for web-businesses - you can take your orders in real time and automate your shipping process. That’s smart - take as much physical (and expensive) human effort as possible out of the process, and automate all you can. That leaves more time to work on pursuing more business. Let the experts at Cadre help you reach your goals.

Fans and would-be buyers of the Nintedo Wii gameset are confronting shortages for the second year in a row. This is surprising to many, since while you might expect shortages immediately after launch (ie. last year), you wouldn’t expect shortages a year later.

There was an article in the WSJ on this the other day, as well as plenty of blog chatter. (What are Nintendo Wiis so hard to find?). There are a few theories as to cause-

• unexpectedly high demand (maybe)
• supply chain problems (maybe)
• Nintendo purposefully keeping down supply because they are evil (not likely)
• Nintendo holding down inventory so as not to lose their shirt if the popularity suddenly dies off (very possibly maybe)
• Nintendo is deliberately limiting supply so as to maintain the Wii as something to be sought-after and aspired-to, not to mention keeping it in the news. (Bingo– very, very likely).

Sorry, Wii fans, but limiting availability is a fantastic, albeit unpopular, way to maintain the popularity of a product. That’s why everyone wants to go to the club with a doorman and a long line.

The trick for Nintendo is to pull this off without either a) pissing off its fan base too much, or b) sacrificing too much potential revenue.

I read once (and I have no attribution for this, but I’ll repeat it anyways since it’s a nice story) that Ferrari estimates annual demand for its vehicles, and then sets production plans to make perhaps 90% of demand… thereby guaranteeing shortage.

You want most the thing you cannot have. That’s one consumer behavior which will never change.

Any blogger might occasionally find him- or herself lying awake at night wondering How to Get 86,000 RSS Subscribers. Those with less ambition might be wondering how to get 86 subscribers! Still others might wonder what RSS is (really hate that term, it’s absolutely non-geek exclusionary).

People who subscribe to your blog with RSS automatically get the feed in whatever ‘feed reader’ they use. Many would use something like My Yahoo, which takes the geek out of it as much as possible. This kind of ‘push’ technology is great, since people don’t have to remember to come to your website to see what you’ve written lately. You show up on their doorstep every morning, just like the newspaper.

Obviously, the first step is to have some worthwhile, and well-written content. And it should be interesting to the reader. Beyond that, well check out the post.

Interesting post over at MarketingProfs, Partnership Brand Marketing—It’s About Distribution Channels. It talks about brand partnerships, ie. when 2 different brands (often owned by 2 different companies) decide to partner up for mutual benefit. As an example, think of something like the Monopoly game at McDonald’s.

Why do a brand partnership? To give your brand exposure to a new audience, and to lead to new sales. Possibly also to let some of the other brand’s pixie dust rub off on your own, and vice versa. This especially makes sense if each brand owns a position of value to the other. There should be mutual benefits for it to work well.

If you feel the earth shaking under your feet, it may be tremors stemming from Radiohead’s surprise announcement that it is releasing its new album In Rainbows electronically, on a pay-what-you-want basis. While Radiohead isn’t the first band to do this, it certainly is the most popular. And that makes the move potentially business-changing. A few thoughts:

• Ironic, how money in the music business used to be made from album sales, while touring was treated as a cost-center– essentially, advertising for the album.
• Now, with the value of songs established by the market at $0.99 (at best), and typically free for anyone who knows where to look, that business model is dead. Many of the players haven’t yet noticed that the corpse stopped breathing and is starting to smell, but that doesn’t change the facts.
• Further, touring has become extremely profitable… bands and promoters have learned new tricks, such as special seating, special vip meet-and-greets with the artists, special package deals. Anything to extract more money from the crowd; and the crowd is willing to pay.
• Is this a death knell for record labels? What value do they add, if there is next-to-no value in distribution of a band’s music? Good riddance, really, since labels have in most all instances been vultures for lo these many years.
• What about the effect on upcoming bands? The young ‘uns used to make no money touring and give all the album sale profits to the labels. Now, they’ll make no money touring and there are no album sale profits to give away. On the other hand, they have distribution and reach into a worldwide audience which they never would have had under the old, brick and mortar and vinyl discs system. If this is a meritocracy at all, it should be a benefit for the talented, since there are fewer gatekeepers between the artist and the listener’s ears.

And by the way, Radiohead’s website for the album sports a very stylish circa-1993 cheesy web design. More irony, that something so basic can be potentially so revolutionary. No flash or web 2.0 rounded corners anywhere to be found. Apparently, design was not a factor, since hordes of fans immediately crashed the servers as word spread.

And finally, let’s not overlook the absolutely huge promotional benefit Radiohead derives by pulling this off. By being first, and thus unique and newsworthy, they have the attention of media organizations worldwide, and will likely reach an audience of millions who never would have made the effort before.

Now, it everyone would just swear off mp3’s and adopt a compression standard which doesn’t sound like crap.

I enjoy the trendwatching website, which keeps an eye out for trends, and attempts to distill the essence of what those trends are about. One of the trends they’ve pointed out recently is Pop-Up Retail, which is getting enough visibility it’s popped up in some business magazines. The concept is this: it’s hard to get people to come to the store. So why not take the store to people? Thus is born instant, impermanent stores. They might be modified shipping containers, or tents, or blow-up carnival tents. They might be linked to a particular event, or time of year (xmas anyone?), or might just be randomly placed so that the very randomness itself establishes buzz. What a great idea… by putting something where (and when) it’s not expected, you confound people’s expectations, and get their attention. Getting their attention seems like more than half the battle in our over-advertised age.

I always find it interesting to learn about or observe the different techniques that retailers use to maximize their sales. Here’s a post on 5 ways supermarkets trick you into shopping their way, which looks at this from the food store perspective. One of the things not mentioned here is the sneaky trick about putting the items kids will be most interested in on the lower shelves, where they will be at eye level for the child (and within reach of grabby little hands which can then insist that Mommy buy it.) Now if someone can figure out why I always get in line at the slowest check-out on earth, we’ll really be making some progress.

Interesting article from Business Week on the phenomenon of Pop-Up Stores. Companies are experimenting with, sometimes quite literally, pop-up stores. This is an interesting twist on the ‘Place’ part of marketing– the Place becomes anywhere you want to inflate your store, or drop your shipping container.

Seems a little faddish to me, but on the other hand, what a great way to test a market without committing to long term leases and start-up expenses. And how about for seasonal themes? In a way, this concept is nothing new, since every Halloween brings a whole bunch of costume stores popping up in empty store fronts and unused mall space.

I’ve been playing around with implementing a SPIF program lately. Many people have heard the term, but it turns out few know too much about it, including what it stands for. I hunted all around the net, mostly in vain, and after seeing a few similar-but-different interpretations, eventually settled on ‘SPIF=Sales Performance Incentive Fund’.

Basically, a SPIF is a commission paid by the manufacturer directly to the sales person who is face to face with the end customer. Here’s the thing - that sales rep is not employed by the manufacturer, but is instead an employee of a dealer or retailer.

So what’s the idea behind a program like this? Well, it’s a means by which a manufacturer can reach around the many barriers separating it from the place where the rubber meets the road (a sales person deciding what products to emphasize to steer a customer), and attempt to influence that process.

Consider the chain of companies (and people) separating the manufacturer from the person making the buying decision:

Manufacturer — Distributor — Dealer — Dealer Sales Rep — Customer 

The manufacturer ultimately stays in business based on whether Joe Consumer decides to purchase its goods. However, the manufacturer has limited ability to influence Joe Consumer directly, especially at the critical point of purchase where many buying decisions get made. Even worse, the manufacturer is several layers of Kevin Bacon removed from the scene. In between might stand a distributor (with its own sales force), a dealer/retailer, and the dealer’s sales rep. At any point along this fragile chain, a bad attitude or bad impression can kill the manufacturer’s chance of making the sale.

The SPIF program is clever, in that it is price/promotion/place rolled up into one. The SPIF may encourage a commissioned sales rep to offer a better deal than usual, knowing the back end payment will come. The SPIF is also a promotional tool- what better way to get the attention of a sales force than to send them cold hard cash? And finally, it’s ”distribution insurance”, in that it ensures distribution. The dealer’s buyer might not be too eager to purchase a particular company’s widgets, but he HAS to if the sales force keeps selling them. And hell hath no fury like a sales rep told his favorite product is being phased out.

The SPIF buys salesperson mind share. For some product categories, that is critical- generally, wherever the product tends to be an after-thought item. Sales reps are going to focus on the items which pay the most return for their effort. A car salesman wants to sell cars, not auto wax. An electronics salesman wants to sell plasma TV’s, not surge protectors. They can’t be bothered with the small ticket items. The SPIF might just get you a piece of a very harried and fragmented mind. (Not that I know any sales people with harried and fragmented minds!)

The dealer’s management often doesn’t like SPIF’s. They have their own organizational goals, and these may not mesh with a particular supplier’s goals. The dealer may be trying to push Widget A, in pursuit of a negotiated back-end rebate, and may thus not want its sales reps pushing Widget B for the extra cash-in-pocket offered by the manufacturer. But in certain industries (office furniture comes to mind), SPIFs are a somewhat common tool, and might be worth a look for a company with limited marketing dollars trying to gain market share.

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