- Posted by: Paul Christ
At KnowThis.com, we are big supporters of innovation in marketing. We have noted many times how innovation has positively and negatively impacted a variety of industries including grocery stores, textbook publishing, print media and toy companies. Innovation can affect all marketing areas though innovation in product development tends to attract the most attention from customers, the media, financial backers and others.
As we note in our Managing Products tutorial, when it comes to product development, innovation can fall into three categories: 1) an idea that improves upon an existing idea; 2) an idea that is new for the marketer but not new to the industry; or 3) a radically new idea that has not previously been introduced to the market. Of the three categories, the most compelling are ideas that are viewed as radically different. These ideas can transform companies and industries in ways that other innovative ideas cannot. For example, Uber and Lyft have transformed the people transportation market with their unique ride-sharing services.
When marketers sit around and discuss radical innovation, they seek an idea that is so different that it will “disrupt” their industry. The idea of disruptive innovation first emerged in 1995 when Harvard professors Joseph Bower and Clayton Christensen first wrote about it in the Harvard Business Review. Christensen has since that time become the leading guru of disruptive innovation including authoring many books and articles, and also regularly speaking on the subject.
Now, 20 years since the first article, Christensen returns as co-author of a new Harvard Business Review piece. The main point of this writing is that what many believe to be disruptive innovations are not what he had in mind when he coined the term. And as a key example in the article Christensen points to Uber. By Christensen’s definition, while Uber is innovative it does not meet the test for being disruptive. Christensen reasons that Uber is neither creating a new market nor is it solving a need of underserved customers within an existing market. According to Christensen, one of these has to happen for an innovation to be considered disruptive.
Of course, whether or not Uber is labeled as a disruptive innovation does not mean that much, and certainly does not diminish the impact of their business model. Rather, the takeaway from this story is for marketers to understand the theory behind disruptive innovation. Once they have a good handle on the theory, they may suddenly see marketing opportunities they did not see before.
- Posted by: Paul Christ
For over 80 years, Black Friday has been one of the most important days in U.S. retailing. Not only do retailers consider the day after Thanksgiving to be the kickoff day for the holiday selling season, but it is also one of the highest revenue generating days of the entire year. Retailers are so fixated on having a strong Black Friday performance that promotional spending to attract customers to their outlets is enormous with retailers spending millions on TV spots, multi-page newspaper inserts, online coupons, special mobile apps and much more. Add this to excessive media coverage and unrelenting social network postings, and it is easy to see why Black Friday is considered by many retailers to be more of a national event than a single shopping day.
The leader in redefining Black Friday is mass retailer Walmart. It started back in 2011 when they moved the start of Black Friday from Friday to Thanksgiving night at 10 pm. The next year, Walmart and several other retailers opened their doors even earlier at 8 pm. In 2013, Walmart further muddled the perception of what Black Friday means by promoting online deals nearly four weeks in advance of Thanksgiving. With all the changes Walmart and other retailers have made, we wondered last year if Black Friday will even be relevant within ten years.
Well, another year brings another story that once again seems to support the idea that Black Friday, as a special day, may soon be dead. According to USA Today, electronics retailer RadioShack will officially have its in-store Black Friday sales start on the Wednesday before Thanksgiving. While this announcement is probably not that impactful, given how poorly RadioShack has done in recent years, it will almost certainly create attention and could lead other retailers to offer Black Friday deals in their stores before Thanksgiving.
However, while it is pretty clear Black Friday is quickly being viewed more like an extended sales event rather than a specific sales day, it should be noted that not all retailers are on board with the importance of Black Friday. Just a few weeks ago outdoor retailer REI said it was not going to open on Black Friday and instead is encouraging its customers to use this day to go outside and be active. While REI obtained a good deal of publicity for their decision not to open, so far it does not seem to be an idea other retailers are embracing.
- Posted by: Paul Christ
Well, things continue to move quickly in the fantasy sports world. Just a few weeks ago we discussed how companies in this industry, such as DraftKings and FanDuel, were thriving with hundreds of thousands of participants and billions of dollars in revenue. At that time, we discussed how marketing was playing an enormous role in the growth of this industry, thanks in large part to the staggering amount these companies spend on advertising.
However, in our post we also noted this industry is coming under increasing scrutiny by the U.S. Federal government and state governments, who are questioning whether fantasy sports is a form of gambling and, thus, should be regulated. It is pretty clear that constant advertising is a major reason this industry has experienced wild growth. But it is also possible the industry would not have captured governments’ attention if it had remained a small, niche market and not attracted well-known investors.
And it now seems like government scrutiny is shifting into even higher gear. According to this story from Re/code, another state, New York, has labeled fantasy sports as gambling and has ordered these services to cease activity in the state. As more states move to block fantasy sports, the viability of the industry has to come into question.
Expect DraftKings and FanDuel to respond by denying they are outlets for gambling. Yet, given the constant news about this industry, whether it makes much sense for these companies to continue to spend huge sums on advertising is a question that must be asked.