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Archive for October, 2007

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This impressive article written by Aaron Nemoyten, he is author @ Startupism.com

Now that we actually have something to show off which demonstrates that we kind of know what we’re doing, Alex and I have decided to get back into the habit of attending meetups.

 

Meetups are strange beasts. A bunch of people, bound by a broad common interest, lack of other social outlets and/or real industry connections, gather to awkwardly talk about their ideas, their plans for the future, and to try to figure out who is a potential employee, coworker, manager, cofounder, contractor, and/or insane person to be avoided at all costs.

 

Meetups are also a good place for newbies to go to learn the ropes of the industry they’re trying to get into. I don’t consider myself an expert by any means, but after months of constant reading and research, I’m not doing too poorly.

 

One of the types of people you may run into at a meetup is what I will call Newbie Idea Guy. Newbie Idea Guy is somewhat aware of the industry, but doesn’t know a lot about it. He comes up with a bunch of ideas that either already exist, or that are slight variations on something that already exists. Confronted by evidence that his (or her, I guess, though I’ve honestly never run into any women like this) idea is not unique, he will defend its uniqueness with some kind of circular argument that “yes, but I’d make it better/different” without any kind of clarification as to how.

 

As a bonus, you may find that Newbie Idea Guy thinks his idea of copying a web site “but better” is so valuable that he won’t even tell you what’s going to be better about it without talking about NDA’s.

 

Thus I come to what I will call, for the sake of this post, Conceptual Algebra.

 

In the case of a meetup I recently attended, there was a Newbie Idea Guy who wanted to build a travel site. Nevermind that he has no technical or design experience – as a business-degree-holding-recent-Bay Area-transplant, he wants to get into A MARKET. On THE INTERNET. It will work because “we’ll do it better,” and of course the “doing it better” task would actually go to whichever lucky audience member is allowed to work with Newbie Idea Guy on his AMAZING IDEA.

 

Equation 1:

 

Market != Idea.

 

Also: Market != Business Strategy.

 

For my next equation, we will examine a more intricate situation. A person with technical knowledge and boundless enthusiasm has an idea for something that is very useful in theory, but requires a lot of user participation. In fact, it only works with a lot of user participation involving people looking at, and interacting with, content their friends have created.

 

That’s tough.

 

The problem with strategies like this is that they do not work. (That’s a pretty important problem!)

 

Most of them have been focused on music: I can create playlists on Amazon.com or other music services, which my friends can marvel at. In theory.

 

In practice, my friends know what music I listen to already. They do not need to look at a list on a third party web site on the internet. They know I listen to a bunch of weird music and a bunch of pop music, and they either think that’s cool or they don’t. I’m going to tell them what I think they would like in regular communication, NOT redirect them to my online play list.

 

Okay, so how can something like this potentially work?

 

Well, it would have to be a much more specific use. A narrow target market who is already interested in sharing, in interacting. A market of people who value communication amongst peers in a formal, controlled context, especially input in regards to whatever their interests are.

 

But then again, most of that would have to be *a feature* on a much larger community web site (see my previous post on this blog about that!). For instance, a cooking community site could easily make use of top ten lists for recipes – people who cook always want new ones and love sharing their knowledge.

 

At any rate, I asked this person with this idea what his target demographic was.

 

“Oh, you know, 18-35 year olds, independent, well-employed…”

 

No, no, and no. This is the market that EVERYONE wants a piece of, but it’s damn hard to get anything out of us. We’re immune to advertising. Things that work take time, and we’re very picky about adapting technologies and habits. I could go on.

 

Equation 2:

 

Idea – Market = 0

 

A decent idea targeted at the wrong market will go nowhere. Guaranteed.

 

For my third, and saddest, example, I’m going to have to get even more hypothetical.

Say you’ve got great technical skills. You’ve built something VERY impressive from a technical perspective, but those who are immediately impressed by it are also the least likely to use it. In other words, it’s a complex thing that makes it easy to do something that geeks need more control over than it gives them.

Interesting Read Continues Here

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The practice of ‘price skimming’ involves charging a relatively high price for a short time where a new, innovative, or much-improved product is launched onto a market.

 

The objective with skimming is to “skim” off customers who are willing to pay more to have the product sooner; prices are lowered later when demand from the “early adopters” falls.

 

The success of a price-skimming strategy is largely dependent on the inelasticity of demand for the product either by the market as a whole, or by certain market segments.

 

High prices can be enjoyed in the short term where demand is relatively inelastic. In the short term the supplier benefits from ‘monopoly profits’, but as profitability increases, competing suppliers are likely to be attracted to the market (depending on the barriers to entry in the market) and the price will fall as competition increases.

 

The main objective of employing a price-skimming strategy is, therefore, to benefit from high short-term profits (due to the newness of the product) and from effective market segmentation.

 

There are several advantages of price skimming

 

• Where a highly innovative product is launched, research and development costs are likely to be high, as are the costs of introducing the product to the market via promotion, advertising etc. In such cases, the practice of price-skimming allows for some return on the set-up costs

 

• By charging high prices initially, a company can build a high-quality image for its product. Charging initial high prices allows the firm the luxury of reducing them when the threat of competition arrives. By contrast, a lower initial price would be difficult to increase without risking the loss of sales volume

 

• Skimming can be an effective strategy in segmenting the market. A firm can divide the market into a number of segments and reduce the price at different stages in each, thus acquiring maximum profit from each segment

 

• Where a product is distributed via dealers, the practice of price-skimming is very popular, since high prices for the supplier are translated into high mark-ups for the dealer

 

• For ‘conspicuous’ or ‘prestige goods’, the practice of price skimming can be particularly successful, since the buyer tends to be more ‘prestige’ conscious than price conscious. Similarly, where the quality differences between competing brands is perceived to be large, or for offerings where such differences are not easily judged, the skimming strategy can work well. An example of the latter would be for the manufacturers of ‘designer-label’ clothing. Source

Image Credit: Darwinbiz

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More than half of the mobile-data users who did not respond to ads said they ignored them because they were not interested in the product being advertised.
More than half of the mobile-data users who did not respond to ads said they ignored them because they were not interested in the product being advertised.

A new Nielsen study finds that only 10% of the most likely candidates for mobile advertising — those using mobile devices for more than just talk, such as accessing the internet, sending text messages, playing video games or buying ringtones — responded to ads on their mobile phones. Eleven percent viewed the ads and did not respond, and a whopping 79% did not even view the ad.

More relevancy needed

The study, however, did offer marketers some guidelines for what might work in this emerging medium. More than half of the mobile-data users who did not respond to the ads — some 53% — said they ignored them because they were not interested in the product being advertised. That appeared to underscore the call from the Mobile Marketing Association and others for relevancy in mobile ads.

While only 17% of respondents said they were concerned about privacy or security, the study showed that still more education was needed before mobile ad views become commonplace even for the most tech-savvy. Eight percent said they didn’t understand how to respond to an ad, and 7% blamed slow phone-data connections. Among other reasons given for not responding to ads: Some said they never respond to advertising, and others said they were simply too busy at the time.

Jeff L. Herrmann, VP-wireless and interactive services at Nielsen, said consumers always say no when asked whether they want ads on their mobile phones, but, in an optimistic assessment, he said that’s because researchers are asking them the wrong questions. “As you peel back the onion, you see … many groups welcome advertising,” he said.

Overall 67% of mobile-phone customers who use data services found it unacceptable to have ads on their mobile device. But as many as 45% of those watching video on their mobile devices said they would be willing to have advertising in exchange for an unspecified benefit.  Source

 

Photo Credit: AP

 

Article Credit to :  Alice Z. Cuneo.

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NEW YORK (Reuters) – Companies will spend a record $31 billion this year to advertise everything from toothpaste to home loans on the Internet, supporting countless news sites, social networks, video exchanges and blogs.

 

 

But some media veterans worry that expectations for online advertising may be getting out-sized.

 

Increasingly, they say, too much media depends on advertising as the only source of revenue. With new players from software makers to cable operators also trying to cash in, the dollars simply may not stretch far enough.

 

“I’m getting to the point where I feel like every answer to every business development pitch is ‘We’re going to be advertiser supported’,” said Beth Comstock, president of Integrated Media at NBC Universal, which this year set up a fund to invest in media and digital companies.

 

“It’s just not going to be possible,” she said at a recent advertising conference. “There are not going to be enough advertising dollars in the marketplace. No matter how clever we are, no matter what the format is.”

 

NBC Universal’s television networks, cable channels and Web sites compete for advertising dollars with everything from niche blogs to big media peers like Time Warner Inc and Walt Disney Co. In addition fast-growing Internet companies like Google Inc are snatching up advertising budgets.

 

But new rivals are entering the market. Comcast Corp., the largest U.S. cable operator, expects at least $1 billion in online advertising in the next five to six years.

 

Verizon Communications and AT&T are looking at advertising opportunities on their video and wireless services, while startups like social network Facebook are seen as a new frontier for Web marketing.

 

Even Microsoft Corp has made a bold move into advertising with its purchase of Web marketing firm aQuantive.

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THE MONEY FLOW

 

Until recently, the focus was squarely on how much money is moving into online advertising, rather than whether too many companies are making a grab for it.

 

There is little doubt today that a hefty portion of advertising dollars will shift to the Internet from TV, radio, print and elsewhere in the coming years. ZenithOptimedia forecasts that online ads worldwide will rise 28 percent in 2007, while the rest of the market grows at 3.7 percent.

 

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BIG SITES GET BIG DOLLARS

 

The catch, according to some, is that much of the money flowing toward the Internet is concentrated on a few dozen of the most popular sites. That has left smaller, less well-known sites at a severe disadvantage when it comes to attracting advertising money and surviving.

 

In the United States, the top 50 Web sites accounted for more than 90 percent of the revenue from online ads in the first half of 2007, according to the Interactive Advertising Bureau and PricewaterhouseCoopers. The top 10 sites accounted for 70 percent of the revenue.

 

All the while, the number of Web sites continues to grow, creating more competition for audiences — and advertisers — who can also choose among video games, movies, TV, portable music and every other type of media entertainment.

 

_

 

One alternative for Web sites would be to bank on subscriptions rather than advertising revenue, but few existing outlets have been successful with that model.

 

The reason is that unless the site offers extraordinary content, people simply refuse to pay for it, said Mark Miller, president of RMG Connect, an advertising and marketing agency.

 

“If Warren Buffett wanted to put out his own subscription newsletter online, well, I’m sure he’d get a bucketful of people to subscribe to it,” Miller said.

Source

 

 

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Former Chrysler chairman Lee Iacocca once noted, “You can have brilliant ideas; but if you can’t get them across, your ideas won’t get you anywhere.” In their new book, The Art of Woo: Using Strategic Persuasion to Sell Your Ideas, Wharton legal studies and business ethics professor G. Richard Shell and management consultant Mario Moussa provide a systematic approach to idea selling that addresses the problem Iacocca identified. As an example of effective persuasion, they tell the story of rock star Bono’s visit to then-Senator Jesse Helms’ Capitol Hill office to enlist his help in the global war against AIDS.

 

Bono had all the facts and figures at his fingertips, and launched into a detailed appeal based on this data. He was, in essence, speaking to Helms the same way he had recently spoken to executives and technical experts at the many foundations and corporations he had approached about this issue. But within a few minutes, Bono sensed that he was losing Helms’ attention, and he instinctively changed his pitch. Knowing that Helms was a deeply religious man (and drawing on his own born-again Christian values), Bono began speaking of Jesus Christ’s concern for the sick and poor. He argued that AIDS should be considered the 21st century equivalent of leprosy, an affliction cited in many Bible stories of the New Testament. Helms immediately sat up and began listening, and before the meeting was over had promised to be the Senate champion for Bono’s cause.

 

Examples such as this one illustrate what Shell and Moussa mean by “woo”: It’s the ability to “win others over” to your ideas without coercion, using relationship-based, emotionally intelligent persuasion. “The rock star Bono is superb at the art of woo because he understands what it takes to be a super-salesman, in the best sense of that term,” says Shell. “Here you have a rock star with tinted glasses and an elderly, conservative Southern senator. But when Bono had the good sense to switch from public policy talk about debt relief — what we call in our book the ‘rationality’ channel — to religious talk about poverty and disease — what we call the ‘vision’ channel — he touched Helms’ heart. He sold his idea and, in the process, created trust.”

 

The word “woo,” the authors note, has many meanings, but all of them relate to focusing on the person you are trying to persuade more than on your own needs and fears. “There is the obvious meaning related to courtship and romance,” says Shell, “but there is also the more general idea of wooing people to seek their support. In addition, Marcus Buckingham and Donald Clifton have recently used the word ‘woo’ in their books to describe the ability to easily establish rapport with many different people.” However “woo” may be defined, the authors argue that effectively selling ideas — using persuasion rather than force — is one of the most important skills that everyone from CEOs and entrepreneurs to team leaders and mid-level managers need to learn if they want to be effective in their organizations.

 

The Spirit of St. Louis

 

The Art of Woo presents a simple, four-step approach to the idea-selling process. First, persuaders need to polish their ideas and survey the social networks that will lead them to decision makers. To illustrate this step, Shell and Moussa recount how an unknown mail pilot named Charles Lindbergh turned his dream of being the first person to fly nonstop across the Atlantic into a reality. His idea was radical: He would make the crossing in a single-engine plane flying without a co-pilot or even a life raft. The idea was followed by his campaign to overcome people’s disbelief that such a venture could ever work and to win over supporters in his hometown of St. Louis. Lindbergh started with contacts at the local airport who could see why his plan made sense and eventually worked his way up to the most influential businessmen in the city, using each person along the way to leverage an interview with the next.

 

The second stage of the Woo process is confronting what Shell and Moussa call “the five barriers” — the five most common obstacles that can sink ideas before they get started. These include unreceptive beliefs, conflicting interests, negative relationships, a lack of credibility and failing to adjust one’s communication mode to suit a particular audience or situation. Great persuaders throughout history have shared with Bono an instinct for overcoming this last barrier. For example, when Napoleon was a young officer at the siege of Toulon, he set up an artillery battery in such a dangerous location that his superiors thought he would never get troops to man it. They would have been right had Napoleon relied on the conventional “authority channel” and issued threats and orders to get his way. Instead, he demonstrated his social intelligence by switching to the visionary channel and creating a large placard that was placed next to the cannons. It read: “The Battery of the Men without Fear.” The position was manned night and day.

 

Similarly, when Nelson Mandela was incarcerated on the notorious Robben Island in South Africa, he managed to obtain blankets and other necessities for his fellow prisoners by foregoing the expected high-minded appeals to politics and human rights. He worked instead on the relationship persuasion channel. By learning the guards’ Afrikaans language and reading their literature, Mandela earned their respect and won them over to his idea of fair treatment — even as he continued to face hostility from the officials who ran the prison.

 

The third stage is to pitch your idea in a compelling way. Shell and Moussa note that at Google, employees selling ideas to upper management are given a challenge: to distill their business concepts into short, punchy presentations that get right to the essence of what they are proposing. This discipline forces them to figure out exactly what problem their idea addresses, how their idea will solve it and why their idea is better than both the status quo and available alternatives. The authors offer a template for pitching ideas in this format and give examples of distinct ways one can personalize an idea to make it memorable and distinctive.

 

The final stage of Woo is to secure both individual and organizational commitments. “One of the most common mistakes people make in selling ideas,” says Shell, “is to think that their job is finished once they succeed in getting someone to say ‘yes’ to their proposal. That’s only the beginning. Research shows that in most organizations, a minimum of eight people will need to sign off on even simple ideas. The number goes up from there. So after you move the individual, you also have to move the organization.”

 

Shell and Moussa use a number of cases from business history to illustrate this point. For example, they tell the story of Charles F. Kettering, a brilliant inventor and engineer from the 1930s whom many consider an equal of Thomas Edison. Kettering invented such things as the automatic transmission and safety plate glass, but one of his best ideas — the air-cooled automobile engine — sat on the shelf for decades until the Volkswagen Beetle incorporated it. Kettering convinced Alfred Sloan, GM’s top executive, that producing the air-cooled engine was a good idea, and the company’s executive committee gave the go-ahead to make a limited number of cars with the prototype. But instead of following the idea through, Kettering went back to his lab to concentrate on the technical aspects of the project. The committee handed the production assignment to the Chevrolet division, whose top managers had never been brought into the persuasion process. They let the idea languish and it was eventually abandoned. “Kettering made a fundamental mistake: He didn’t follow up and keep the pressure on,” Shell notes. “He didn’t do the political coalition-building needed to implement his idea.”

 

Andy Grove’s ‘Constructive Confrontation’

 

Individual personality plays a key role in how you influence others, Shell adds. The book therefore includes two personalized “diagnostic” tests that readers can take to discover their persuasion strengths and weaknesses. One of the diagnostics is the “Six Channels Survey,” which is designed to help people learn which of the key channels of influence they feel compelled to use most often at work and which they would prefer to use if given a choice. These channels include Authority, Rationality, Vision, Relationships, Interests and Politics. The idea is to help readers understand both how these six channels work and when they should adjust their pitch — as Bono did with Senator Helms and Mandela did on Robben Island — to appeal to different kinds of audiences.

 

A second self-administered test, the Persuasion Styles Assessment, helps readers determine the degrees of assertiveness and natural social intelligence they bring to the idea-selling process. The authors point out that there is no one “correct” style of persuasion; rather, the key is being self-aware so you know how you perform and how others will perceive you.

 

For example, Shell and Moussa illustrate the “Driver” style (a highly assertive type who gives only limited attention to the social environment) by examining how Intel CEO Andy Grove managed the persuasion process at Intel during his years as that company’s leader. Labeled the “screamer,” Grove could be intimidating to people who didn’t know him well. But he was also willing to listen if people stood up to him and matched his passion. To facilitate communication, Grove instituted what he called a culture of “constructive confrontation” that freed everyone to be as blunt and assertive as he was. The result was a high-stress environment, but one in which everyone could speak their minds.

 

The Art of Woo goes on to describe four other distinctive styles with examples drawn from business history. Banker J. P. Morgan is given as the model for the Commander (a Grove-like person who has a quieter demeanor), John D. Rockefeller exemplifies the Chess Player (a quieter person who attends strategically to the social environment), Andrew Carnegie’s life provides the example for the Promoter style (a gregarious type who uses high levels of social intelligence), and Sam Walton is the model for the style that strikes the balance among all the others — the Advocate.

 

Three Typical Mistakes

 

Both Shell and Moussa have wide experience in the area of negotiations. Shell is director of Wharton Executive Education’s Negotiation Workshop and author of Bargaining for Advantage: Negotiation Strategies for Reasonable People. Moussa teaches executive education courses on negotiation and organizational change and is head of the Negotiation Practice Group at management consulting firm CFAR (the Center for Applied Research). This year, Shell and Moussa launched a new Wharton Executive Education program called the Strategic Persuasion Workshop.

 

The idea for the book arose from the comments of executive education participants who frequently spoke about internal negotiation problems they were facing in their companies. These conversations gave the authors the idea to “talk about persuasion inside organizations, with a focus on selling ideas,” says Shell. “We had a laser beam into the crisis moment when you’re sitting at the table and you’ve got an idea or an initiative or a program, and you’re trying to get buy-in from a decision maker. From there, we built out the strategic process that can prepare you for that moment in the best possible way. By doing that, we were able to identify the key personality traits that great persuaders share and develop the diagnostic surveys to help people gain insights into their own styles and approaches.”

 

Asked what the top three mistakes are that people make in selling ideas, Shell notes that the number one-error is “egocentric bias,” or “focusing on yourself instead of your audience. People assume that the person they are trying to sell on their idea is just like them, that he or she has the same primary goals and frame of reference, and that what they are talking about is important to the other side. But other people may not care at all about what is important to you…. It’s a killer assumption.”

 

A second mistake is the belief that there are no systematic ways to persuade people to accept an idea. “A lot of people just wing it, thinking they can count on their own experience and instinctive powers of persuasion to carry the day,” says Shell. “But in fact, you do need a strategy. That is what this book is about.”

 

The third most common error is to forget about organizational politics, as Charles Kettering did at General Motors. “Whenever a new idea might affect resources, power, control or turf,” Shell says, “politics will be part of the problem at the implementation stage. You need to prepare an idea-selling campaign, not just a presentation.”

 

The authors suggest that people working in any group — from the largest Fortune 500 company to an entrepreneurial startup — can benefit from improving their skills at the art of persuasion. As Shell notes: “Influencing others in an organization to accept and act on your ideas is a challenge that never goes away.” Source

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The following tactics for success will help ensure your site grows its audience and revenue and maximizing profitability by harnessing the power of the Web 2.0 state-of-mind.

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