October, 2013

Apple Succeeds with ‘Backwards’ Bussiness Strategy

In a recent Mashable article, author Chris Taylor highlights how Apple succeeds using a unique business model to sell its products.

The iconic retail strategy, followed by most businesses in the 20th century, has been to ‘give away the razor handles and make money on the razor blades’.  The idea behind this is that you get consumers hooked on an affordable product (razor handles) and then make money on the essential accessories and add-ons (razor blades) to that product.  In 2001, Apple defied this business model with the launch of their groundbreaking iPod product.  Prior to the iPod, MP3 players resembled bulky, over sized compact disc players.  The iPod came with significantly less storage, a much higher price point (at $399), and yet consumers went crazy over them.  Two years following, Steve Jobs launched the Apple iTunes Store where songs were sold for 99 cents (a price that barely covered costs for each song sold).  People questioned the low price, to which Jobs responded: “The dirty little secret of all this is there’s no way to make money on these stores.” When asked why he would keep the price so low, when most of the profit goes back to the music company and the rest barely covers production costs, he replied: “Because we’re selling iPods.”

How is Apple taking this model to the next level?  At the iPad Air Launch event on Oct. 22, Apple announced that Mac OS X Mavericks and iWork would be Apple Unveils iPad Airfree.  This means that once consumers purchase their shiny new Apple product, the rest is free. All the coveted add-ons, apps, and now the OS itself, will be complementary with purchase.  Most business consulting management advises against such practice, predicting failure for companies who go against the well practiced “razor blade” business model.  However, Apple has proven itself unarguably successful in its unconventional strategy.  The next big question: how will Apple’s competitors compete?

 

Big-Name Brands Focus Marketing Efforts Toward Hispanic Consumers

As the Latino community grows and the demographic increases in spending power and population, big brands are targeting the community through redefined marketing efforts.

An article in USA TODAY Hispanic Living magazine, written by Michael D. Hernandez, highlights a key player in the Hispanic marketing world. Fred Diaz, who joined Nissan Automotive in April 2013 to lead the company’s day-to-day operations in the U.S., was pleased by the automaker’s budget devoted to Hispanic marketing.

“There was no need for me to do any arm-twisting or insisting that we needed to do more,” said Diaz, who had previously served as CEO of Chrysler’s Ram Truck division, and is credited with helping build the truck into a popular brand with Hispanic consumers.

Walmart and McDonald’s are among other brands following Nissan’s lead, stretching their budgets to reach the $1.2 trillion Hispanic consumer market. According to Advertising Age magazine, Hispanic media spending in the U.S. grew to $7.9 billion in 2012, a statistic that justifies Walmart’s strategy in setting out to double its multicultural marketing in hopes enhance outreach. According to research, these companies have the right idea; the Selig Center for Economic Growth reports that this demographic will account for about 11 percent of all purchasing power by 2017.

“It’s a pretty excmcdonalds13iting time, and the (Latino) community is coming into its own by embracing, like never before, these cultural elements such as music, food and novelas,” saids Jorge Plasencia, chairman and CEO of República ad agency in Miami. Audiences can expect to continue seeing more dual-language advertising campaigns in the media, as big-name brands focus marketing efforts toward Hispanic Consumers.

Here at La Voz we offer special expertise in the Latino market, providing unparalleled insight into reaching and positively impacting this community. Led by experienced bi-cultural and bilingual marketing professionals, we connect our clients with this diverse, dynamic and brand-loyal audience through innovative campaigns.

Social Media Marketing for Prescription Drug Companies

At a time when nearly every company can be found promoting their product or service on at least one social platform, there are a few industries that are cautiously engaging in this marketing practice due to a lack of precedent.  In particular, we would like to call attention to the pharmaceutical industry and its social media efforts over the past few years.  An informal survey of seven multinational pharmaceutical and biotechnology companies was recently conducted to gain insight into how these companies are utilizing social media.  The investigation and associated report, produced by Joy J. Liu and Kellie B. Combs of Ropes & Gray and published via Bloomberg BNA Insights, also brings to light some of the issues presented by these platforms in the absence of regulations or guidelines by the Food and Drug Administration (FDA).

The FDA has issued marketing guidelines that broadly apply to all online mediums; however they were written and published at a time when companies had much less direct contact to users and potential users of their product.  Also, these regulations are not social media specific.  The social media environment allows companies to intimately interact with consumers like never before. Likewise, consumers have unparalleled access to information via other users or the actual manufacturers.  Prescription drug and biomedical companies are left to address issues presented by social media marketing – such as monitoring and correcting content posted on their pages – on their own.  The industry has long awaited the arrival of guidelines, which were first formally discussed by representatives in the field in 1996. The matters discussed at that time included communication of product information on websites, chat rooms and other news groups. Since then, however, technology platforms have increased in quantity and provide more exposure, leaving many aspects of modern-day social media still untouched.

SocialMediaAs evidenced in the report’s interviews, Facebook emerged as the most extensively used social media tool by all seven companies.  Each company’s Facebook presence was established prior to an important change that Facebook made to its policy in 2011. Before this change, companies could prohibit users from commenting on their company page. This practice was dubbed as “whitelisting,” and offered a much more low-risk option for social media management.  Since the elimination of this setting, such companies have decreased their Facebook use due to the need for increased monitoring. Also, many companies claimed that the volume of work required to properly maintain and manage their Facebook pages was not worth it (as it relates to revenue).

The use of Twitter was found to be inefficient for many companies due to the 140-character limitation on each post. Twitter accounts also require correction about product information, which creates an endless labor of online monitoring for the companies.  Other social media platforms, such as YouTube, Pinterest, SlideShare and Tumblr, are also employed by some companies and must be monitored on a case-by-case basis using best practices as they see fit.

Overall, Ropes & Gray’s report found that there is a general sense of hesitancy towards engaging in social media marketing and that advocates within the companies are tasked with presenting a strong strategy and related return on investment that must be approved before launch.

For more information on strategic ways to leverage social media within this specialized sector, contact La Voz marketing.  We can recommend useful and risk-adverse ways to build an influential online presence and drive revenue back to your company.

Decline of Women in the Workforce Detrimental to Businesses

womenCEONot only are the majority of educational degrees in the U.S. earned by women, they are considered the most promising assets entering the workforce, according to a recent article by James daSilva of Switch & Shift, a company that focuses on the human side of business.

According to daSilva, “One could argue that women have been and will be a majority of the best.”  While this is seen throughout the business world, statistics still show that an alarmingly low percentage of women will rise to executive level positions.  This will become a serious problem over time, if this tendency continues. I s there hope?  The answer is yes.  The primary strategy to bring about change is to bring awareness to the key target audience: skeptical executives.  In order to change the direction of this trend and sustain it, solid, strategic efforts must begin with today’s youth.  By educating young people on the opportunities that “working life” presents, a new perspective will develop for the next generation.  Mentorship programs, that offer sponsorship to those who have the potential to make a difference, can open up new possibilities and will combat preconceived notions against women (and others) in the working world.

Patti Johnson explains what the potential long-term effects will be on businesses if they do not take action, and why this issue should not be taken lightly.  The decline of women in the workforce is a concerning issue; she states that one frustrating aspect is that this knowledge is not new.  The research she refers to is more than a year old and not exactly shocking.  General awareness has grown to the point where companies or executives must at least make half-hearted attempts at bringing women into executive ranks rather than ignoring or belittling the problem.  Actually turning said awareness into tangible change is proving to be difficult.

La Voz Marketing is proud to have female executives leading the organization and tackling all facets of the business, from client relations and marketing strategy to corporate planning and business development.