Group buying - great for services, costly for products

The Asian food kiosks at most Sydney shopping centres run a fire sale an hour before closing time.  They pre-package the leftovers, halve the price and advertise heavily to let customers know that everything must go.  And almost everything does. At the end of the day, most of the food is sold.

The margins in the service industry are good to sustain this daily discounting. The fire sale also brings in new customers and there is repeat business in profitably moving old stock and starting with fresh ingredients the next day.

The ingredients of group buying websites are very much the same.  The sale is time bound, the marketing is centred around discounting. The only difference is that the model is based on a group buy - getting a minimum number of people to eventuate the discount which is atleast 50% of the recommended retail price.

The group buying process is quite straight forward.

The group buying provider signs an agreement with a vendor, a service provider or a product manufacturer. The agreement is to buy a certain number of product at 25% to 40% of the recommended retail price (RRP).  These products/services will be sold on a particular day or over a number of days. An email will be sent out to a registered member base via email prior to the sale period. The sale price will be at atleast 50% of the RRP.   The group buying service provider will pay the vendor once the sale period ends.  All unsold items is returned to the vendor.

Popular group buying websites here are Cudo, Spreets, Living Social and Scoopon.  The model is based on the US based Groupon, which has also  recently opened operations here.  Although member numbers of these websites are not audited,  they all claim to have anywhere between 100,000 to 400,000 registered members and there are member overlap across multiple websites.

Key service provided by the group buying website is marketing,  in promoting the marketed products through landing pages, attractive copy and an email newsletter sent to members.  The uniqueness of the offers lie in the hands of the business development person at the group buying service, who sources for partnerships.

The margins required for vendors to participate in customer group buying make it suitable for services such as therapies and dining.  With a minimum 50% discounting and fees paid out to the group buying operators, profits for vendors through group buying are aquite thin or non-existent.   Product manufacturers should consider online discounters such as Ozsale for pushing discounted items - such as end of life or overstocked items.

Even services who offer group buying vouchers  need to consider yield management and protection of brand equity to balance discounting over the popular and lean periods. If this is not managed, bad customer experience by having customers with discount vouchers arrive at overbooked venues will backfire.

Group buying is one of the channels to be considered in an overall marketing plan.  It certainly is attractive. It could be used strategically for yield management or as a sampling exercise for attracting new customers.

Some angels need a bit more soul

A colleague flicked me a link to Unilever's experiential marketing for its Lynx's Angels campaign.

This time the venue was closer to home, in Melbourne's Fed Square.  Utilizing a giant screen and pre-recorded images superimposed with live feeds of commuters, Unilever gave us a dose of augment reality. The videos and interactions were apparently controlled by a video coordinator with a laptop.

With the event as the epicenter, marketers hope to generate viewership leveraging viral and traditional PR techniques to reach wider audiences through channels like YouTube.  The foot traffic at Melbourne's Fed Square alone will not pay for the event.

It's been done successfully before, also in train stations, utilizing flash mobs.

T-mobile's flash mob dancing sequence received 29 million views on YouTube
A promotion for a Belgian TV show utilizing the sound of music sequence get over 30 million views

So will the Lynx campaign receive the same mass appeal, or will it be a flash in the pan controversial marketing that has been associated with the brand?  Although the use of augmented reality gets top marks - clever editing and a better choice of live participants, would have rendered the video more marketable on YouTube.

Here is the video:

A middleware that connects your life

I have been reading about grid computing and the cloud service of late.   I have been using Rackspace's cloud infrastructure for over a year now.   So when I was brain storming about what's next in financial services, the two ideas collided. 

Consider this my idea on a paper napkin.

Cloud infrastructure helps me run a .net and php service utilizing a variety of servers that connect seamlessly. The beauty of Rackspace's cloud sites is in efficient creation of application through an interface that could have been out of an Apple UI playbook. 

Just as Microsoft and Apache are different beasts, our banking needs are segmented across different vendors who service our different financial needs utilizing different products - the common ones are savings, super, credit card, mortgage and education.

Imagine a service that could integrate all of this seamlessly, one that could translate all of this through an interface that talks to me like a financial planner.  It could have the ability to also compare, suggest and apply for products based on personal criteria.  

Just as the middleware is the glue across grid computing, this service would make sense of everyday life in the context of finances. 

I know its been done before.  But I used to be part of Kazaa, when file sharing was as bad as witchcraft. Apple came alone and made digital music sexy.   With proper execution, even this can become a popular application.

Land of equal poppies

"It's him, isn't it?," the lady asked. "Wonder what mischief he is going to get to today?"

I had just met her. A lady with shopping bags, who like me was waiting for a bus in Sydney's lower north shore. The question broke the ice between us strangers. The year was 1998 and although I was fresh off the boat, a new migrant to Australia, I knew the alleged mischief maker.

His name was John Howard, the then Australian Prime Minister.

Mr Howard was off on a power walk around Kirribilli House, his official residence. He was a bloke who had the top job in the country, and yet, while he was free with his liberties, walking about town, his subjects compared him to an average schoolboy off to his pranks.

The irreverence of the comment on the prime ministers' job was deliciously liberating. I felt that I made the right choice in coming to Australia, down under. Everybody here was an average Joe. Or an ordinary Shiela. Even the prime ministers, the movie stars and Nobel Laureates mingled with mortals and the irreverence for accolades was as Australian as kangaroo. Here, so it seemed, everbody can wipe the slate clean and have a fresh start.

However, a coin has two sides.

The egalitarian nature of Australian society also has an affliction that sometimes affects new migrants. It often leaves professionals, especially ones from India, in a frustrating conundrum.

A banker that I knew , successful in a few countries, got caught in corporate quick sand in a prominent organisation in Melbourne. Marketing high achievers who were former acquaintances, who's resumes seduced fat pay cheques overseas, hopelessly flirted with job vacancies here in Sydney. Hop into a cab, in Melbourne or Sydney, and chances are that your chauffeur for hire will be somebody from South Asia. For the migrant taxi drivers, after 4 to 6 years of study, the easiest vocation to fit into here, is within Australia's taxi industry.

People have generalised this malady. They now have several terms for it. Some call it the tall poppy syndrome. Some call it professional backwardness, a malady where Australian businesses fail to recognise talent, and go for the lowest hanging fruit, often hiring an individual of average qualities, but nevertheless a perfect cultural fit within the organisation.

Having travelled this lonely road of professional migration mid-career, I now know these afflictions are for the hypochondriacs. The Australian job market is neither backward, nor a talent killer. It is a finite machine, where a deal is not stuck and an individual is not hired or promoted until the fat lady sings.

Although I have taken notes along the last 10 years, both as an employer and an employee, there is no perfect game plan to getting hired here . You have to remember, job ads are created by individuals. Individuals do not come out of a standard cookie cutter, so the rules of engagement change across every hiring process.

Here are the lessons I have learnt, nevertheless.

1) When on a job hunt, empathy is the most lethal weapon in your armoury. You must deliver it through your resume and cover letter.

Every vacancy is created by a need or an inspiration. The creator is an individual or a collective that have particular goals or a talent shortage that needs to be addressed. Empathise with this and customise your resume in a manner that addresses the need. Talk to the individual behind the job application. Tango with their aspirations. You will get nowhere by throwing a truck full of qualifications and the kitchen sink. Rest assured, others will do this. Empathy will help you stand out and get your foot in the door.

2) Research is key to empathy.

Ask for a detailed job description. The Internet is a great resource, utilise it to research an organisation. Networks like LinkedIn give you an insight about a company through the people who work there. LinkedIn resumes will give you an idea about the kind of skills a company attracts. Avoid employers who cannot provide you with a detailed job description - the jobs that they advertise for will have a short shelf life.

3) Get inside information

Be prepared to meet people, whether it be recruitment agents or HR managers of potential employers. Not only will you build contacts, but the conversations will help you collect inside information about the industry, which in turn will help you build empathy. Soliciting these meetings are an art in itself. Be upfront about it's purpose.

Above all, remember paper qualifications and Ivy League education will still have to do the rain dance and the recruitment process filters both the crud and the sediment, leaving people with the right balance of skills and aspirations within the workplace. It certainly isn't dynamic as other markets. But remember, it a market that has weathered the global financial crisis. Tall poppies are certainly the first to be blown away by strong storms.