In the U.S., it is common to see a supermarket cover as much area as large commercial airplane hangars. In fact, one store located in Ohio, Jungle Jim's International Market, claims their selling space alone is over 200,000 square feet. That is more than four and half acres! It is so large the company offers guided tours. And this measurement does not even include the vast backroom and storage space.
The movement to construct bigger supermarkets started in the 1990s and, in some ways, was fueled by companies' desire to surpass their rivals. At the time, grocery firms usually saw promotional value in the increased size by stating larger stores carry more products (Jungle Jim's claims to sell over 150,000 products) as well as claiming that just being bigger must be better.
For many years, consumers bought into this. But now it appears the allure of bigger-is-better is beginning to wane. According to this story from Time, many grocery chains are shrinking the size of their new stores. It is believed the success of several smaller grocery chains, such as Trader Joe's, Aldi and Whole Foods, is forcing grocery companies to reevaluate store design. In some cases, the new smaller designs are needed in order to open stores in urban areas where real estate is limited and expensive. However, for stores located outside of big cities the smaller footprint appears to be in response to changing consumer shopping patterns. Specifically, shoppers seem to be tired of exerting the energy and time needed to shop in massive stores. They now are looking for shorter shopping trips that do not require extensive walking and hunting among thousands of products.
As would be expected, in order to squeeze into smaller spaces, grocery stores must reduce inventory. If the shift to smaller store layouts catches on, watch for a significant ripple effect up the supply chain. In particular, smaller space will make it more difficult for product suppliers to secure shelf space. It also may become particularly challenging for new, unproven suppliers to be accepted by grocery stores.
Over the last 40 years or so, environmental groups have taken marketers to task for their handling of product packaging. Environmentalist complaints have been well documented with most of their focus being on the negative impact packaging has on the environment. While early on many marketers ignored these criticisms, the need to understand packaging's impact on the environment has led nearly all companies to take into consideration these consequences when designing the materials that holds their products. Essentially this has led companies to consider three options for the material that surrounds their products: make it recyclable, make it returnable or make it biodegradable.
Marketers, not surprisingly, have turned these three options from a negative to a positive by turning these into promotional opportunities (e.g., highlight how their product is good for the environment). Well now there appears to be a fourth option that marketers should consider when making packaging decisions – make it repurposable. Using the repurpose option, marketers can suggest that once their product is consumed the packaging can be used in other ways. An excellent example is presented in this story from Advertising Age. It discusses how Coca-Cola is actively promoting ways its used plastic bottles can be turned into new products with the addition of add-on items. Coca-Cola is offering 16 screw-on tops that can be used to create such products as pencil sharpeners, water squirters and paintbrushes.
Currently, Coke is only promoting these repurposed products in Asian markets. Yet, if consumers in these markets buy the add-ons, expect Coke to expand the idea to other parts of the world. Also, expect to see more add-on options.
We often mention in our blog posts and in our tutorials of how vital it is for marketers to continual introduce new products. As we note in our Managing Products tutorial, marketers need new products for several reasons including: new products tend to be more profitable than older products; new products can help fill out product lines; and new products help reposition a company in the minds of key customers.
For the majority of new products, once developed the key challenge in getting these on the market is primarily focused on making sure customers are aware of it and can buy it. This is why promotion and distribution decisions are so critical after a product is created. However, for products, such as medical equipment, drugs, electrical products and a few others, marketers face a significant roadblock prior to a product reaching customers. For these products, a regulatory agency must often approve a product before it can be sold. Yet, some products seem to walk a delicate line between needing or not needing approval.
This story from Time presents an excellent example. It discusses a product claiming to offer UVA sun protection by simply drinking a fluid. In other words, they promote that protection from harmful sun rays can be obtained by consuming a drink instead of by spreading skin cream. If you think this is farfetched, you are not alone. The medical community, and specifically dermatologists, are questioning the claims of this product and are demanding research results backing up the product's effectiveness claims. But the company promoting the sun protection drink, Osmosis Skincare, has apparently not yet offered any research support.
Since this product appears to fall within the organic products market, it would seem the company neither needs regulatory approval nor needs to back up their claims with research. However, until Osmosis produces scientific evidence, expect the news media to continue an onslaught of questions about this product's effectiveness.
One of the most important job requirements that attract someone to become a marketer is the almost constant challenge of coming up with new ideas. As we discuss in our What is Marketing? tutorial, being creative is a key characteristic separating marketers from those in many other professions. Those attracted to marketing find it stimulating to be challenged, nearly every day, to come up with something new. The most obvious examples can be found in the need for marketers to continually create new products, new promotions and new pricing programs. These and many other decisions require active exploration of new ideas using research techniques including: internal marketing research methods, such as brainstorming; customer research methods, such as focus groups; and competitive analysis.
Yet, there is one area within marketing that seems somewhat limited in what can be presented as new. These are the general approaches for generating revenue. Most businesses are limited to one of two methods: selling a product (i.e., good or service), or selling space that others are willing to pay to use (e.g., website advertising space).
So it is intriguing to see this story from National Public Radio discussing what seems like a third option, especially for Internet marketers. Essentially the approach, offered by a startup company called Flattr, is a form of social tipping, where someone, who likes what a marketer is offering, gives the marketer an additional thank you reward in the form of a digital gratuity (called microdonations). With this method, once a month the marketer will receive funds based on how many digital gratuity points they receive.
As the story discusses, a reward from one person may be pretty meager, often representing just one cent. However, for a popular website, thousands of visitors offering one cent can add up to quite a nice amount of revenue. Whether there are many websites that can generate significant money from Flattr remains to be seen. But if this takes off, expect competitors to offer similar services and expect more websites to add this as revenue-producing options.
A few days ago we discussed the emergence of a new market for recreational marijuana and how this can be viewed within Product Life Cycle (PLC) theory. Well, today we have another example of a product form that is poised for growth – 3D printers. Unlike the recreational marijuana market, which most people fully understand, 3D printing technology is less understood and, consequently, few non-technical people currently see a reason to investigate this for a potential purchase.
However, this lack of interest should not be viewed as a reason why 3D printers will not be successful. This same mentality proceeded many other significant technology products such as personal computers, cellphones, flat panel television and tablets. People knew so little about these technologies they initially saw no need to purchase. But once they learned the benefits these products provided, their interest rose significantly to the point where they became buyers.
As discussed in this 24/7 Wall St. story, the parallel between 3D printers and other technological innovations suggests all the elements are in place for 3D printers to jump from the Introduction stage of the PLC to the Growth stage. We can see this in two ways. First, there is an increase in the number of competitors offering products. Second, there has been a notable reduction in price compared to the high price skimming approach used in the early Introduction stage.
While price may still seem quite lofty for the average consumer (e.g., $999 for low-end model), if this product can successfully cross the technology chasm, expect to see rapid price drops over the next year or so. Also, expect to see advertising that appeals to a much wider audience than just commercial product designers and the medical community. For instance, we are likely to see promotions directed to artists and craft people as well as educators. And soon we may even see an ad that targets 3D printers as a fun activity for kids.