Beware of fading mutual attraction

7

October

2013

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In my homework assignment article I explore two online music platforms: Apple’s iTunes Music Store and Spotify. They both face problems with one side of their user group. My purpose is to show that two-sided platforms rely on mutual attraction. If one user group doesn’t like the service provided and leaves, the platform could face a walk out of the other group as well.

Problem with listeners
Apple-users don’t like the look & feel of the iTunes Music Store anymore. It looks like a spreadsheet instead of giving the thrill of buying something. Apple also missed out on the trend of streaming music. The company clung too long to its concept of download-to-own. In my view Apple can simply not afford to let slip the user group of listeners, since there is a close tie between the service of Apple’s online music platform and the sales of its devices (iPod, iPad and iPhone). If music lovers definitely turn their back on the iTunes Music Store this step will automatically lead to the decline in sales of Apple devices.

Problem with musicians
Spotify was confronted with the first band, Atoms for Peace, to pull their music from the platform, because in their opinion the returns are too poor. It is not clear how many artist have followed this example, but it is clear Spotify cannot ignore this sign. Music lovers seeing their favorite bands leave a platform, might decide to follow, causing the total collapse of the platform. “The value of a platform depends on the value on the number of users on the other side,” according to the article in Harvard Business Review I used for reference and theoretical background.

New competitor
In 2014 both platforms might have to deal with a new competitor as Pono will be launched by legendary artist Neil Young. Pono is an online music platform that ‘will save the sound of music’ according to Young. That will make both musicians and fervent music lovers happy, who might decide to switch to this new platform. Being a late mover Young can avoid all the mistakes early movers made.

Conclusion:
Two-sided platforms are based on the mutual attraction of user group. They do however not run themselves. Managing a platform means having a keen eye for the various needs of both user groups. If one group is not happy with the provided service and decides to leave, the platform becomes unattractive for the group on the other side. This group could also decide to move elsewhere, leaving the two-sided platform a no-sided platform.

Find out more about Pono:
http://www.rollingstone.com/music/news/neil-young-expands-pono-digital-to-analog-music-service-20120927?print=true
Interview Neil Young at David Letterman: http://www.youtube.com/watch?v=qL1ffo8TwGM

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Loyalty is a marketing myth

3

October

2013

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Yesterday I went to IKEA to buy something for my kitchen. At the cashregister I was asked for my Family Card. Guess what: I didn’t have it with me. It must be in the kitchendrawer that I use for irregular items like elastic bands I might want to use in future, loose buttons, plastic bags, half a tube of glue and what not. I did have a loyalty card with me from Steps though, a shop I visit maybe twice a year.

I fear the marketers of IKEA and Steps will not consider me a loyal customer. Nor will all the other brands whose loyalty cards I have accepted and I don’t use.

Marketers introduce these cards because they want to create brand loyalty. Customers must feel valued and welcome within the brand community or family. The word Family Card is indeed very well chosen by IKEA . If I would have had the card with me yesterday I would have been able to get a free coffee with all the other Familymembers (do I really want to know them?) and could have benefited from several special offers (products I don’t need)

IKEA Nederland does incorporate social media in their marketing strategy. The company created a Facebookpage (127.842 likes) and answers questions from customers posted on FB in the same tone of voice as used in their publicity campaigns: straightforward and friendly. IKEA Nederland also has a Twitter-account (@IKEANederland). The account doesn’t seem to be very active. Except for announcements of their new campaign and promotions it shows tweets of people who use @IKEANederland, but no friendly responses. In fact, there don’t seem to be any two-way-communication between customer and company here. Complaints from customers of missing items are not answered and even the tweet of an influential member like Jan Dijkgraaf (more than 80.000 tweets, more than 7400 followers) who states the interviews in IKEA-magazine are fake doesn’t get an official comment.

Still, IKEA must belong to the 33% of companies that succeed in creating some kind of lasting relationship with its customers. Most brand loyalty campaigns however fail according to an American study because “companies often have dangerously wrong ideas about how best to engage with customers.” The study involving more than 7000 consumers states marketers hold on to three myths.

#1.Customers want to have relationships with brands.
77 percent don’t.
“It’s just a brand, not a member of my family.”
What consumers really want is to get discounts

#2 An increase in interactions is always the answer.
Many marketers are only adding to the information bombardment consumers feel as they shop a category, reducing stickiness rather than enhancing it

#3 Loyalty comes from regularly engaging with a brand.
Brand loyalty is built on shared values.
Pedigree Dog Food’s shared value is a belief that every dog deserves a loving home. Southwest Airlines’ shared value revolves around the democratization of air travel.

I do wonder, does anyone share a value with IKEA other than they sell cheap stuff ?

http://blogs.hbr.org/2012/05/three-myths-about-customer-eng/

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Wrinkles on Facebook

10

September

2013

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Seniors are a fast growing group on social networksites. Or, as the Washington Post put it: your Grandma is three times more likely to use a social networksite than three years ago. So chances are your grandparents are online, since they still want to be a part of your life.

Maybe they are laughing at the same stupid videos you just posted. Maybe they are making fun of you, while adjusting to the Dutch way of life. Posted a selfie yet eating ‘drop’ or ‘haring’?

A survey by Pew Research Center shows that that adoption rates for senior (65 and older) in the US using social networking sites have tripled in the last four years. Eight years ago just 8% of online adults said they used social networking sites.

The reasons for seniors to be on social networksites:
• stay in touch with the family, especially those far away
• check out the pictures of their grandchildren
• look up old friends
• connect with people who share similar hobbies

stats
Sources:
http://blogs.wsj.com/digits/2013/08/05/report-43-of-seniors-on-web-use-social-media/?mod=e2tw
http://www.pewinternet.org/Reports/2013/social-networking-sites/Findings.aspx

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