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Research on Teens, Adults and Internet Usage

Posted by Paul Christ February 05, 2010

Social Media and Young Adults (Pew Internet & American Life Project)

If you are looking for good research on trends in consumers’ use of the Internet, one of the first places to look is the Pew Research Center and their Pew Internet & American Life Project.  For nearly 10 years Pew has been producing high quality, insightful reports on a wide range of Internet and technology issues.  Their research methodology typically involves the use of surveys distributed via phone.  But unlike some small-time research companies that produce questionable research where methodology is borderline and their intentions seem mostly promotional, Pew follows solid research methods including obtaining information from large representative samples, thus producing acceptable sampling error.

The report featured here offers a nice example of Pew’s work.  It examines how teens and adults compare on their usage of a number of technologies including general Internet access, blogging, social network communication, cellphone usage and several others.  As mentioned, Pew strives to produce good research, and here their survey methodology is clearly outlined and overall shows very acceptable sampling error rates (generally less than 4%).  The report is fully available including the survey instrument, graphics and all data.

There has been much media attention given to Twitter and other microblogging services over the past year and initially the supposition was that, as with other types of social network services, teenagers would be leading the adoption charge on a social, connective technology.  However, data from September 2009 suggest that teens do not use Twitter in large numbers. While a September 2009 survey of adults suggests that 19% of adult internet users ages 18 and older use Twitter or update their status online, teen data collected at a similar time show that only 8% of online American teens ages 12-17 use Twitter.

According to the report, teens are less inclined to use Twitter compared to adults, what are the main reasons for this?

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Making the Price Right

Posted by Paul Christ February 02, 2010

How to Price Your Products (Inc. Magazine)

As a follow-up to our post discussing the Amazon vs. Macmillan pricing controversy, we have another excellent story dealing with pricing.  The story supports our statement that pricing“is one of the trickiest of all marketing decisions“ but goes a step further to suggest that it may actually be the toughest of all marketing decisions.  While we are not ready to agree with that (the toughest marketing decisions really depend on the marketer’s situation), we do agree with the basic concepts presented here.

The story paints a very nice picture of what the marketer needs to consider when setting price and even offers good suggestions for what it will take to get to the right price.  As an added bonus the story offers good links at the end leading to even more pricing information.

"The best way to determine if the product is being priced correctly is to watch sales volumes immediately after making any change," Willett says. "This can be done by watching cash collections (if the business is cash or credit card based) or credit sales (if accounts receivables are used) for the weeks following. If a price increase is too high, customers will react pretty quickly.  Also watching the competition can help - if you've made a positive change in prices; competitors are likely to follow suit."

Is pricing an art or a science?

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An Example of Why Pricing Decisions Are Tough

Posted by Paul Christ February 01, 2010

Amazon.com to Capitulate to Macmillan Price Demand (USA Today)

Setting price is one of the trickiest of all marketing decisions.  Marketers have to take into consideration many factors when coming up with the right price.  Some of these factors they control, such as product costs (e.g., product development, promotion, etc.), which the marketer knows must be covered.  But other factors the marketer does not control and these are the ones that drive marketers crazy.  For instance, what customers expect to pay and how competitors will respond are important considerations impacting pricing strategy.  But for retailers there is another factor that can often override all other issues, namely what do the suppliers want you to charge for their products.

As we discuss in our pricing tutorial, suppliers have an important stake in the price a product is sold for at the retail level.  Unfortunately, for many suppliers when they are dealing with major retailers (e.g., Wal-Mart), it is often a take-it-or-leave-it situation when it comes to what the retailer charges.  That is, either the supplier accepts the price and the retail distribution that comes with it, or they reject the price and lose distribution.  Of course, for most suppliers that deal with a market dominating retailer like Wal-Mart it is hard not to accept the retail price.

But Wal-Mart is not the only major retailer that controls price.  While Wal-Mart dominates the offline retail world, Amazon holds that crown in online retailing.  Which makes this story very interesting.  Here is a case where a book supplier, Macmillan, had little choice but to accept Amazon’s pricing approach to ebooks when Amazon first entered this market a few years ago.  Amazon’s approach was to sell most digital books for cheap, only $9.99.  Macmillan claims they never liked this deal but felt they had little choice but to accept this pricing given that Amazon was the only major ebook distributor.  But now Apple has announced entry into the ebook market with its iPad and is willing to charge a higher price and give publishers a bigger cut of the revenue.  This appears to give Macmillian more bargaining power with Amazon resulting in a change in Amazon's retail pricing of Macmillan ebooks.

Watch for other publishers to follow Macmillan's lead in requesting that Amazon raise prices.

Amazon told customers in a posting on its online Kindle Forum Sunday that it "expressed our strong disagreement" with Macmillan's determination to charge higher prices. Under Macmillan's model, to be put in place in March, e-books will be priced from $12.99 to $14.99 when first released and prices will change over time.

Why would Amazon pursue a low-price pricing strategy when it launched its ebook sales when they essentially had the market to themselves and could have charged significantly higher prices?

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Product Trends in Global Marketing

Posted by Paul Christ January 28, 2010

Functionall (Trendwatching)

The people running the Trendwatching website do a real nice job finding different ways to look at things. As their name implies, they focus mostly on finding trends that may impact customers and businesses throughout the world.  What is particularly appealing about the site are the stories they publish, which contain extensive information and lots of marketing implications.

For instance, their February 2010 story focuses on products they call “Functionall.” This is the name given to products sharing similar characteristics, such as being smaller, simpler to use, energy efficient and several others, and also sharing a similar marketing strategy of being initially targeted to customers in emerging markets.  But while these products were primarily designed for emerging markets, they are now finding a place in more advanced markets as well.  The story offers a number of good examples of products that fall into this category and, consequently, is a must read for anyone interested in understanding how product decisions impact the global market.

Nestlé's Maggi brand of instant noodles was first introduced in emerging markets such as India and Pakistan. The brand has since expanded to mature consumer societies, starting with Australia and New Zealand in 2008, where it is marketed as cheap health food.

What exactly does the story mean when it mentions “the democratization of design is a global phenomenon” ?

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