Let’s Get Juiced

19 03 2012

So what’s a company to do once they have so completely saturated a market that there’s little else to be done?

Simple. Buy another business and build it from the ground up. Literally.

Which is exactly what Starbucks is doing with Evolution Fresh, the juice brand it bought last November. The first of what will no doubt be many juice stores is slated to open today in Bellevue WA, a hop, skip and a Venti from what the coffee biz all began some 41 years ago.

It is no understatement to say that the coffee business is pretty maxed out. There aren’t many street corners left without at least one of the iconic coffee shops. There are over 17,000 units worldwide, and over 11,000 in the US. If we drink any more coffee, we may never go to sleep again.

But juice is another story. It’s healthy. It’s trendy. And there are equally high margins.

SBUX plans for Evolution to sell not just juice, but also sandwiches and treats. The emphasis will be on health food, with many vegetarian and vegan items on the menu. Prices are typically steep for the company (lunch could set you back $20), but that’s something Starbucks has never been ashamed to command. That’s why the chain is often referred to as Fivebucks.

But what I like best about Evolution is that, in addition to plans for also pushing the juice line through supermarkets, the company has chosen the Marketing high road. There is no mention of its lineage to Father Starbucks, aside from listing Pike Place Coffee on the menu. Otherwise, it is a brand unto itself.

Which is exactly as it should be. There would be far too much front-end risk to Starbucks were they to tuck Evolution under the flagship name, because if one fails, it can take the rest with it. Sure, it is more costly to establish a new brand, but if the new venture fails, SBUX can make it quietly go away. Not so if it’s under the Starbucks banner.

The real question, though, is how big is the juice market? And for that matter, why is there only one other big player in the field (Jamba Juice, with 750 stores)? Unless Starbucks thinks it can convince us to start drinking more juice, this may be a self-limiting feature of the market. Coffee is viewed more as a necessity, while juice (for now at least) is less of a daily fixation.

Still, if anyone knows how to retail beverages, it is Starbucks. They’re not perfect (I still have doubts about their market tests including alcoholic beverages at selected units), but they know how to spot the top locations and leverage them. Evolution, though, will require a different type of thinking (SBUX normally try to position along major ingress and egress lanes so commuters can swoop in coming and going). The juicery will likely be targeted more toward the lunch crowd, which requires far different locations. It’s certainly not a major risk for SBUX, but it’s enough cause a little pause and not just conclude that, oh well, next door would be a good location. Because knowing the landlord doesn’t necessarily mean it’s a good spot for all of your projects.

The biggest takeaway, though, is that Coke and Pepsi continue to find their markets encroached upon by non-soda players. Our tastes are changing, and fizzy sodas are no longer the mainstay they once were. I would bet money that SBUX will have at least modest success with Evolution, and soft drink makers will continue to watch their sales flatten. To their credit, Coke and Pepsi have played their own little evolution game as well, buying up juice, tea and water companies, and then bringing them in under the corporate umbrella. But neither have the retail advantage as does Starbucks. And that is a hefty dose of truth I find sitting in the bottom of my cup. Custom juices may sound pompous, but so did caramel macchiatos a decade ago.

“I’d like a little wheatgrass added to mine, please.”

Dr “Pulp Friction” Gerlich

Play Time

7 03 2012

We live in good times. Technology is developing so fast we can hardly keep up. While change is a constant, the rate of change is changing. And companies are duking it out in a slugfest to continually offer us the best of everything.

Like Google Play, the latest offering from the search engine giant. Google eBookstore, Google Music, and the Android AppStore have been combined into Play, and are now a direct competitor with Apple’s iCloud service. Basically, everything you do on one device can be accessed or continued on another.

Can anyone say convergence?

Play and iCloud allow users complete control over their content and when, where and how it is accessed. It’s all about mobility. Convenience. Portability. And the cloud.

There’s that word again. You’d think I’d quit hammering this point home with my students, but I happen to think this thing is huge. It is redefining not only how we compute, but how we do everything.

And both Google and Apple have now effectively created their own ecosystems that reinforce each device. It would be foolish, for example, for an iPhone owner to buy an Android tablet. What these companies have done is basically make it hard (and silly) for anyone to consider jumping ship. Which is why my family’s tech toys are all Apple products. Once you sip the Kool-Aid, you have to take a refill, not a different cup.

And it must be repeated (as I have said numerous times before), that Apple and Google have accomplished such ecosystems in entirely different ways. Apple’s is one based around both hardware and operating system, whereas Google’s is just about the OS. Either way, though, both have a way of locking the door on you.

All of this convenience must have a price, though. Apple offers 5GB of free storage, but is giving the legacy MobileMe users a free upgrade to 20GB for a few months, at which time we will be given the option to pony up an unspecified premium. It remains to be seen how Google will handle the revenue side. Of course, since Google is nothing less than an advertising company, maybe they will be able to offer everything for free, the “price” being that we have to endure more ads.

Orf course, one big piece missing from all this bundling is television, but not for lack of trying. Google TV was supposed to bridge that gap, but landed with a thud. Google is rumored to be in development of its own line of TVs with built-in Google TV features; Apple is also rumored to preparing its own line of TVs for introduction this year. Once we get all of these devices linked via the cloud, there won’t be much left that we do not already have.

Which is another way of saying I may never have to leave my recliner to do anything. These really are good times. Now if I can just train my Golden Retriever to retrieve some food and beverage for me.

Dr “Refill, Please!” Gerlich

Does This Register?

7 03 2012

I thought it was pretty cool when Square introduced its little plug-in card reader and app for iPad. It allows individuals as well as businesses to accept mobile payments anywhere you can grab a wifi signal. Can’t figure out how to scrounge up the bills and coins to split your group dinner tab? Simple. Let one guy pay, and the others can take their turns swiping their card on your iPad. Or, in the case of my small business, I can accept cards this next week while I am hosting my annual cycling camp.

But Square just raised the bar by introducing an entirely new app called Square Register, which effectively makes the iPad a true POS (point-of-sale) device for in-store transactions. No need to have expensive cash registers or credit card terminals. And the low 2.75% fee is competitive with that of many credit card companies. Oh, and in a retro-chic kind of way, it also handles cash transactions for those few people wishing to remain anonymous in the digital era.

Can you say retail revolution? This is forever going to change the way small businesses operate. I know plenty of small business owners, and the cost of acquiring (and maintaining) such equipment can make the difference between a profit or a loss.

Better yet, the new app includes analytics that allow the storekeeper to track individual customers and item sales. Now just imagine yourself being the proprietor of the local taco truck and wondering what’s selling and what’s not selling at lunch.

Bingo. This thing is priceless.

And, of course, it is just as mobile as the original app, so it can go to the flea markets, swap meets, trade shows and other events.

Which is another way of saying that another dinosaur may very well be on the slippery slope of extinction. Who needs credit card terminals when you have Square Register? Who actually needs a cash register?

The change in payments started with Paypal, and has progressed now through Square, as well as the Apple Store app that allows shoppers to basically check themselves out without benefit of human interaction. Companies making and/or servicing hardware have been served notice: We do not need you anymore.

Let’s just hope this message registers. There’s still room in the tar pit of extinct businesses. In fact, I see a seat right beside the travel agents.

Dr “Charge It” Gerlich

In The Clouds

7 03 2012

I love being able to say, “I told you so.” Three long years ago I said that one day soon we would all be clamoring for a seta in the clouds to be able to store all of our stuff. A place that we could access from anywhere so we would no longer need to carry flash drives. A day in which we would no longer need to email ourselves copies of our own work simply so we could have a copy for home or away.

Of course, most of my students howled with disapproval. “No way!” they said. “That can’t be safe! And why would we want to give up control over our own portable drives?”


As it turns out, we did. I have been happily throwing my stuff on clouds for what seems forever, simply because it is the most convenient thing to do. And never mind reliable. Between a slew of files on Google Docs, a million pics on SmugMug, and hundreds of lit review articles and drafts of our own from the MediaBuffs project on DropBox, I never have to worry about being without my stuff.

If ever there were a time to get in on the action, this is it. Startups like Dropbox, Box and a slew of others are showing there is a silver lining to the cloud. And in no small way are they forever changing the way we compute.

While I am certainly most familiar with the services provided by Google Docs, I am an unabashed promoter of DropBox. DB offers a free account to anyone, providing 2GB of storage space, and expandable at .25GB at a time for each referral (up to a total space of 8GB). Additional space can be purchased by individuals and corporate or organizational accounts, starting at $99 per year. It is an incredibly cheap and safe way to back up everything you own. Oh, and did I say it is convenient?

Naysayers still argue that security will always be an issue. True that. But then again, someone could just as easily hack your Facebook or Gmail account. Practice safe computing, and everything should be OK all around.

As for Dropbox, the B-School prof in me likes that they at least have a rev model, even though most users will probably never see the need to upgrade to a premium account. I thus wonder if Dropbox is leaving money on the table, because, to be honest, I would be more than happy to pay for the service (I am currently using about 10% of my 6GB allocation). In comparison, I pay $60 a year at SmugMug to store tens of thousands of pics, and I consider that a bargain. To be able to access my files anywhere, anytime is worth a lot to me.

Perhaps most importantly is that cloud computing signals an enormous switch in the way we store information. It makes the Macbook Air introduced a couple of years ago seem prescient. Now that all the other PC makers are mimicking it, I suppose the idea of a thin, ultra-light laptop sans hard drive suddenly makes sense. We really do not need to have all that on-board storage. All we really need is access.

Which explains why I am all too happy to keep my head (and my stuff) in the clouds. At the end of the day, it’s really no different from having a debit card. It’s the same as cash, but without having to carry it all around. I can live with thinner computing devices. And I can see this only getting begter as we march forward.

Just remember, “I told you so.”

Dr “Mostly Cloudy” Gerlich


7 03 2012

Yesterday I offered high praise for Instagram reaching 25 million users, but then turned around and gave them a tongue lashing for not having monetized the business yet. And since one good tongue lashing deserves another, let’s make this two-for-two.

So here goes: Instagram is giving away the store. Today, Mashable highlighted no fewer than 13 third-party products users can purchase that will feature their clever Instagram photos. These companies have all capitalized on Instagram’s willingness to share its API, which is tantamount to giving away the keys to the kingdom.

Now I realize that free API access is something that helped propel Twitter in its early days. A plethora of third-party services emerged that helped users manage their account(s), schedule tweets and more. But those were all free, too. In this case, companies are making money off of Instagram, while Instagram has yet to make a nickel.

A quick glance will show that just about all of these services are really nothing more than photo printing sites that have already existed in the online arena for years. Calendars. Stickers. Fridge magnets. Posters. Picture books. There’s really nothing new going on here.

Except that that it is now pathetically easy to place these orders. It’s like taking candy from babies. Instagram’s babies.

If anything, this should be a clarion call for Instagram to get it together and resist the pick-pocketing going on. Given the extreme affinity Instagramers have for the site as well as their pics, it’s a natural to sell related products. Nothing beats a little vanity press, you know (he says as he admires his own pics printed on canvas).

Don’t get me wrong. I love Instagram and all its retro-chic filters. I love the photo memes and can make fun of myself for swallowing them (see the video linked in yesterday’s blog). And I can endure the eye-rolling of my wife whenever she says me taking yet another pic of my entree or beer. Whatever. This is fun.

But if Instagram were to ever join the fray of those launching IPOs, they had better get a revenue plan in place before I (or presumably many others) would invest. Because returns on investment are something I value more than a phone full of offbeat pics. And I would love to be able to take a picture of that first dividend check. I might just post it.

Dr “Picture This” Gerlich

25 Million And Counting

7 03 2012

Imagine having 25 million people who use your product. Now imagine having 25 million users who have not yet given you a single nickel.

Welcome to Instagram, the quirky iPhone (and soon to be Android) app that recently became the largest mobile-based social network.

I will admit to being somewhat of an Instagram addict. In an appscape populated by dozens of cool (and often much better) photo editing apps, Instagram stands head and shoulders above the others because it thought to create a social network revolving around the pics themselves. I know…who needs another social network, right?

Apparently a bunch of us.

And, of coruse, we can opt to push those pics to Facebook and/or Twitter if we are so inclined.

To say that Instagram pics have spawned numerous photo memes is an understatement. In fact, so mememic are some Instagram photo themes that this parody video has now surfaced. Yeah, guilty as charged. Wait…the foam on my beer is just screaming to be photographed.

True story.

And while marketers are starting to hitch their wagon to Instagram (New Belgium Brewery has some very nice pics), the One Big Problem that remains is how to monetize the business. Had my students submitted a business plan for a start-up with no clear plan of making money, I would have failed them. Instagram cannot afford to let these 50 million eyeballs get away so easily.

So how to capitalize on this? The obvious answer is advertising (yecch), but the better answer is in-app purchases. It is painfully obvious to any Instagram user that the number of filters on the app leaves a lot to be desired, especially when apps like Camera+ have at least a couple dozen more, plus a nice array of borders. For 99 cents, Camera+ users can buy add-on filters and effects.

I will also admit to doctoring up my pics in other apps, and then importing them to Instagram to post. While Instagram gets the credit, it’s not exactly what they had in mind.

Now I do understand the argument for simplicity. It’s actually one of the reasons why I love riding my single-speed bikes. There is a certain zen state to be enjoyed while accomplishing something with only minimal gear.

It is also hard to argue with 25 million users (up from 16 million only two months ago). When the Android app comes along, expect another big surge. But they still have to pay the bills, and venture capitalists are only interested in profits in the long run.

Given the fickle nature of social media users, today’s cool Instagram meme could become tomorrow’s yawning chasm of boredom. It’s time to set up the cash register, and sell something, and start counting the money.

Because I just downloaded a bunch of other photo apps (check ‘m out at iPhoneography). And you never know, because one of these days, someone might just start pulling those 25 million people a different direction.

Dr “Ooh! Sunset Pic!” Gerlich

Hard Habits To Break

2 03 2012

We live in unsettled times. Google’s new privacy policy went into effect yesterday. Just a week or so ago, the story broke about how a Dad discovered that Target knew of his daughter’s pregnancy before he did. And the book The Power of Habit: Why We do What We Do in Life and Business by Charles Duhigg hit bookshelves (or tablets, as in my case).

All the while underscoring the hard reality that marketers want to, and in many cases already do, know alarming amounts of personal information about us. Everywhere we shop, we are being monitored. Tested. Tracked. Digitized. Analyzed. Theorized. It’s almost like we shop in a laboratory, and retailers are the experimenters.

All in the name of profit.

But this is not new news. Actually, it is rather old. When I was in grad school in the 80s, I did an MBA paper on motivation research, a marketing method used in the 40s and 50s to try to apply Freudian psychiatry to buyer behavior. A few years later in the PhD program, I built my dissertation foundation by studying supermarket research, specifically how shelf space allocations were made.

And how supermarkets tested various combinations to find the right mix of this and that, as well as store layouts, all with the idea of maximizing profit.

So if you feel like a rat in a maze next time you shop for groceries, it’s OK. Isn’t it comfroting to know we are thought of as human rodents?

Today the in-store testing is far more sophisticated, because cameras can be hidden virtually anywhere, including inside digital signage. Those loyalty cards we use, along with our plastic payments, are mere foreplay in the world of retail research. Eyeball tracking tells retailers what parts of the sign we see first, and where we tend to linger the longest. That information is golden, because retailers can then better utilize the available display space to appeal to us.

Some stores are using electronic price tags, which can be altered from a central location depending on time of day or week, and, I am thinking insidiously here, by who happens to be standing nearby. Think it hasn’t already been done before? Amazon got in a little hot water a few years back for doing just that same thing, but in an online arena.

As Duhigg writes (and I am reviewing the book for possible use next Fall), our shopping habits tell our story. We are an open book. We may not realize this every time we cross the retail threshold, but what is known about us may indeed even rival that held by an omniscient God. And if you don’t believe in God, then maybe you had better consider the pantheon of information systems owned by Walmart, Target, Citibank, Visa, et al, as coming close.

As I once taught in retail Marketing class, it’s all about putting the right product at the right price in the right place at the right time. Or, to put it more simply, selling more stuff.

George Carlin would be proud.

As for we mere mortals, I truly believe there is little we can do, aside from joining an ascetic cave-dwelling cult. It]s too hard to wean ourselves from the tings and stores we hold dear. We are mere cogs in Machina Economica, modern-day dogs in Pavlov’s laboratory. And I can live with this. It’s the price we pay for living in a high-tech, no-holds-barred, winner-take-all free economy.

Now if I could just figure out how to navigate my supermarket.

Dr “The Bare Facts” Gerlich

The Day Has Come

2 03 2012

It is here. There is no turning back. You cannot hide. Get used to it. Or retreat to a self-imposed Google exile.

Good luck with that.

Today is the day that Google’s new privacy policy go into effect. It has been talked about, debated, feared, and otherwise put through great amounts of hand-wringing. People are upset, but then again, they always do whenever their online privacy is at stake.

Google was even nice enough to consolidate about 70 different policies into one handy document so that we have a better chance of understanding it. Of course, no one ever reads those Terms of Service agreements anyway, so it is rather a moot point. A nice PR-positive moot point, but moot nonetheless.

http://mashable.com/2012/03/01/googles-privacy-policy-effect/But what’s really happening is that Google has now allowed its various services to talk across platforms, whereas prior to today they tended to be self-contained little accumulations of usage history.

And while today is technically the big debut, the policy began leaking out a couple of weeks ago. I noticed that, if I was logged in to my Gmail account, when I went to YouTube it would suggest videos posted my some of my Google+ friends. To be honest, I was creeped out the first few times it happened.

But this is really only the beginning. because nearly everyone on the planet with a computer or smartphone has a Google account of some kind, it basically means that our lives are now completely open books to Google. It can now access our search histories and match them to our emails, our video searches and views, even our pictures on Picasa.

So don’t be surprised if you start seeing more highly targeted advertising in one arena based on what you did in others.

Privacy fearmongers worry that our personal information could easily be breached, as well as used for exploitative commercial gain. But guess what? We have never paid a single nickel for any of Google’s services. And this just in: Google is really in the advertising business.

Not search. Not email. Not document storage. Not videos. Nothing. Nada. Zip.

And the more ads they can sell, and the more they can sell them with frightening accuracy, the more money they stand to make.

So what’s a frightened user to do? Well, for the most part, just suck it up. Sure, you can drill down through your account to delete your web and video searches, and you could use one service (e.g., YouTube) without also logging in to your Gmail first. But guess what? Google also tracks your IP address, so it will still know you.

Aside from simply shunning all Google services, we don’t have a whole lot of options. Sure, we could search at Stealth, but I am not convinced they will be around forever with their business model.

More realistically, just be careful what your searching for, don’t watch any questionable videos, and keep your email clean.

Because Google is watching you. And it wants to help someone sell you something.

Dr “D-Day” Gerlich

Alphabet Soup

2 03 2012

When I was a kid, it was always fun to eat hearty bowl of alphabet soup. It was not the kind of soup you ate when you were sick; no, this was strictly for grins. It was like Scrabble comes to dinner.

In many regards, I feel like we consumers are swimming in a different bowl of soup, one with what seems as many letters, yet all involve shopping and gadgets.

Over 15 years ago we were introduced to the idea of e-commerce (in spite of the fact that nearly 30 years prior, futurists envisioned a day in which we would shop from our then-to-be-invented home computers). Everyone and their brother co-opted the use of the letter “e,” and even to this day, it is used with nearly reckless abandon (think: ebooks and e-readers…you decide whether the hyphen is required).

It was around the turn of the century that folks starting talking about m-commerce, a day in which we would purchase things from our phones. Of course, this was all pretty much Dick Tracy kind of stuff, with all manner of speculation as to what kind of devices we would one day have, and whether we would wear it on our wrists. but they were certain about one thing: we would eventually be able to shop from anywhere.

It was not too long before Accenture published a white paper predicting devices much like the Palm Pilots of the day that could literally scan a person walking toward you, and then pop up with opportunities to purchase the very clothes they were wearing. Thankfully, we haven’t quite gotten there yet.

During this same time, Apple came along and claimed the letter “i” for what would one day be a enormous product line of devices that played well together. Apple apparently has no problem with after-market companies using the i-letter, and as such we have been inundated with a plethora of cases and doo-dads that work with our iPods, iPhoens and iPads.

More recently, though, m-commerce has gained significant traction, in the form of in-app purchases and interactive “magalogs” created for tablet devices. It’s probably not exactly how people envisioned this a decade ago, but it’s taking off…just like the e-commerce that eventually came about in the 1990s was not the same as predicted three decades earlier.

Other aspects of m-commerce revolve around mobile payments like Google is developing. Essentially, our smartphones will become our wallets. I have been using an early effort with mobile payments with Starbucks. My SBUX app has a unique QR code tethered to my credit card, so I never have to bring money (or plastic) when I want coffee. They just scan the QR and I am on my way to becoming caffeinated.

Now imagine using something like this everywhere you go shopping. Oh yeah…and think about how Apple’s i-products are in the middle of all this.

The big question mark, though, concerns social shopping (or, as some like to call it, f-shopping, for Facebook). Twitter has recently joined the game, and I wouldn’t be surprised if Pinterest finds a way to start selling to all those happy pinners.

Facebook was all the rage the last two years as major retailers built social shopping sites, but recently, many have been shuttered for lack of sales. Best Western hotels just added in-Facebook room reservations, but it is too early to tell if it is working. Earlier this week, Facebook teamed up with several wireless carriers to handle mobile payments, but these are aimed primarily at those who use gaming apps.

Missing from the discussion thus far, though, are three letters used together: BAM, as in brick-and-mortar. Where do these folks fit in among all this emphasis on out-of-store shopping?

Simple. They still exist. And they will continue to exist. The only difference is that their bottom lines will either be padded by their e-, m- and s-sales, or deflated by the lack thereof.

Which means that for the winners, there will be alphabet soup…and for the losers, perhaps chicken soup. Because the soul of their business is going to need it.

Dr “iDeclare” Gerlich

Mobile Mall

2 03 2012

Marketers have a way of following people around. They count rooftops when it comes to deciding where to put brick-and-mortar stores. They built websites once enough people had computers and internet. And now they are placing high hopes on in-app purchase capabilities, as well as e-magazines to make the sale. Within the last year, offerings from Gilt and Google Boutiques offered consumers a magazine-like shopping experience that was optimized for the iPad (side note: Boutiques has since closed, and has been replaced by Google Catalogs and Google Shopper). And now the latest to join the fray is Zmags, with what they promise will blend “the physical store experience with that of flipping through a magazine or catalog.”

And Zmags does not try to hide the fact that its user interface works rather nicely on iPads. Sure, it will also work on phones and computers, but the emphasis these days is clearly on mobile, and specifically, tablets.

The question, though, as Google has apparently had to reconsider, is whether people will actually purchase from an iPad. To be sure, I use my iPad to purchase e-books and magazines all the time through Amazon, as well as to watch streaming movies. But I admit to having never purchased anything else.

The presentation, though, of Zmags is compelling and very user friendly. And when you consider that iPad3’s resolution will be double that of iPad2, then you can probably picture the most stunning piece of marketing material ever produced.

Since tablets have become the new de facto metaphor of everything print, it stands to reason why marketers would be willing to bet the farm on it. Yes, there are wrinkly spots to be ironed out, but with tablets standing in for so many things we once did on laptops and desktops, it is a necessary step to put the stores where the people are.

Kind of like counting rooftops.

Tablet owners are a lucrative target market, because they are proven leaders in technology adoption, and also able to afford the sometimes hefty price of acquisition ($200-800). I have no reason to doubt that we will overcome whatever apprehensions or uncertainties may exist regarding mobile commerce of this sort, because we definitely overcame it with regard to e-commerce.

And that, my friend, is something I think you can count on.

Dr “With Apologies For Ending In A Preposition” Gerlich