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iPhone Winners or Losers?

Apple’s iPhone 4G has safely secured itself as the top-selling mobile phone in the United States and has positioned Apple as the third largest mobile phone brand in the US. According to the San Francisco Chronicle, these achievements came because Apple expanded iPhone service beyond AT&T through its new partnership with Verizon. Specifically, since February, Verizon customers have been able to buy the iPhone and keep Verizon service. This new partnership appears to have contributed significantly to Apple’s impressive second quarter gains in income and revenues – another winning move for Apple.

But what about Apple’s new partner Verizon? Verizon spent much of its time during the first days and weeks of its iPhone launch targeting current AT&T customers. But in the end, only 14 percent of Verizon’s early iPhone sales were the result of customers switching networks, according to an article in the Epoch Times. This fell short of expectations. Instead, the largest portion of sales was to current Verizon customers, who (perhaps) had been waiting for the carrier to launch its version of the iPhone, a move that had been rumored for at least the past two years. In spite of this, between February and the end of April more than 2.2 million “Verizon” iPhones were sold, according to numbers from research and measurement firm comScore. And Verizon executives now are touting the iPhone as the company’s most successful introduction of a new phone in the company’s history. So Verizon also appears to be an iPhone winner, at least for now.

However don’t discount AT&T. During this same time period the company won more new iPhone customers than Verizon. And in spite of loosing exclusive rights to the iPhone, the company achieved sales of 3.6 million iPhones (according to the New York Times). Therefore AT&T might be considered a bigger winner than Verizon. But will it last?

Which service provider will emerge as the long-term victor remains to be seen. But what is clear is that Apple is still in the driver’s seat, providing innovative new products and new choices for customers.

Categories: Leadership

Free Shipping: A New Twist on an Old Marketing Tactic (Price Reductions)

January 7, 2011 Leave a comment

“Free Shipping unlocks shopping frenzy for online buyers!!!”

Free shipping! Free shipping? It was one of the major strategies to drive online retail sales during the recent holiday shopping season. And it seems to have worked. 

According to the Wall Street Journal, web sales were up during the month of December between 12 and 18 percent from the previous year.  If not the deciding factor, it seems to have at least been a key factor in driving traffic. In contrast, in-store sales showed a modest increase of about 2 percent for the month of December.

International mega-retailer Wal-Mart took the lead in free online shipping, but they certainly weren’t alone. Toys R Us, Williams-Sonoma, Target and J.C. Penney (just to mention a few) also offered this no-charge incentive. And of course, Amazon.com has been offering unlimited two-day shipping for an annual fee for quite some time.

While shoppers may have been skeptical, it does not seem as though the cost of shipping was passed along to the consumer in disguise. Product prices remained steady and shippers like UPS and Fed-Ex were not pressured to absorb the extra costs, according to a recent report in The New York Times.

It’s not clear how this strategy of the giants affected smaller retailers. Companies that don’t have access to a vast inventory and warehouses like those of Wal-Mart or Amazon usually can’t afford to offer the same deals on free shipping.

So the big question is: What’s next? Will shoppers continue to expect incentives such as free shipping? Or was the recent success more a sign of a swelling economy? Only time will tell.

Steve Nave, senior vice president and general manager of Walmart.com, told The New York Times that it’s a trend that he predicts will turn into a standard. “I would expect to see us continue to have offerings similar to this in the future in some way, shape or form,” he said.

So, bottom line, free shipping for the holidays appears to have been a successful “temporary” price reduction tactic that might not be so temporary.

What do you think?

Categories: Leadership

Another Business Tsunami for Starbucks?

November 15, 2010 Leave a comment

Instead of getting your daily buzz from a tall double-shot latte… how about a nice glass of chardonnay?

Excuse me? Yes, that could be the case, as about half of Starbucks’ U.S. stores are making plans to retrofit their operations and sell patrons beer and wine, in addition to the usual coffee-based fare.

In fact, some stores have already begun testing out the market. According to the Orange County Register, a Starbucks in Seattle is offering eight wine selections and three bottled beer choices for customers after 4 p.m. While the selection and timing may be receiving lackluster reviews, it is quite a change for the corporation that largely created an entirely new coffee industry in the United States.

What’s going on? Executives of the coffee corporation are hoping this move can bring an entirely new type of business to the chain. In other words, by expanding their business definition to allow for a new type of product, they hope to stimulate growth, even in this challenging economy.

Business definition expansion is something that Starbucks has done before with mixed results. So what makes Starbucks’ leaders believe this is a good move? Starbucks is the world’s largest café chain and is expected to double its profits for the fourth quarter of this year. However, Starbucks receives an estimated 70 percent of its business BEFORE 2 p.m., according to a report in TIME Magazine. So, the idea is that this alcohol-infused change could bring an entirely new customer through its doors.

Could such a simple change create a disruptive business tsunami? While the idea of a coffee bar that serves alcohol is really a model of most European bars, it is an innovative idea for the United States. There are wine bars. There are coffee shops. Starbucks is bringing them together and hoping to reap big rewards.

And it may be the perfect time. Times of economic downturns are notorious for boosting alcohol sales. So why not cash in on this social trend? Really isn’t Starbucks just combining two simple and successful concepts… going from one buzz to the next?

Sometimes, it’s easy to forget that business tsunamis aren’t just something to be survived. Even though many businesses are still operating in a defensive mode in order to deal with the possibility of a double-dip recession, it can be the right time to stimulate growth through innovation. And keep in mind that innovation doesn’t have to be complex. Should you consider expanding your business definition? For more information, visit our management resources website (nhbventures.com) and check out this month’s “In the Spotlight” topic.

Categories: Leadership

An Introduction

September 21, 2010 Leave a comment

Can you buy a mechanical typewriter or a vacuum tube radio today? Why not? And what happened to Olivetti and RCA, the companies that manufactured those products? Do you even know anything about them? What about companies that exist today? Will they be around next month or next year?

Owners of businesses (big and small) still are filing for bankruptcy at a high rate even though the recession is “officially” over and there are (literally) thousands of books teaching strategic and business planning and a few on how to survive the recession. With a somewhat improving economy and so much advice available, why are there still so many business failures? Of course, some of the failures are a result of management incompetence, but what about the others? These are companies that have been managed for years with a fair degree of competency but are in serious difficulties because the economic and competitive landscape around them has changed drastically, nullifying previously successful business strategies.

Why do so few of these companies survive? What should management do when its company is caught in these situations? How can management use a changing business environment to its company’s advantage? These are some of the key questions that we will be addressing. Stay tuned.

Categories: Leadership