Friday, May 13, 2011

CAMEX questions answered: marketing

This week's question provides a good example from a store of "why digital," the importance of relationships, market share orientation, and other topics:

Q. We have had good relationships with our publishers and faculty in crossing the digital divide hand in hand. We have come to find that the MyLab products and other digital content have helped secure market share and lower prices at the same time. We even have created displays to highlight those ebook products to our students. [Example provided with data on sell-through, savings for students, and percent of market share captured]. Has NACS looked at in-store merchandising, loss prevention, and in-store promotion material for publisher's ebook options?

Thanks for your question. It sounds like you have started off in the right direction -- building positive relationships, paying attention to market share in addition to margins, and thinking about how to merchandise digital products as something different from traditional products.

To answer your direct question, yes, we have thought about some of these questions. In particular the in-store merchandising and in-store promotion materials. In fact, we convened a short-term task force who helped us develop a first phase marketing toolkit for stores. That toolkit was about 85-90% complete, but then stalled with the departure of the key staff person who managed the project. It is our intention to resurrect that project later this year as the task force did some excellent work and we do not want that information to be lost or go unshared with stores.

We have observed that the stores who report higher sell-through on digital content are typically the ones who provide more transactional education to students about what they are buying when they buy the digital option. Students know what they are getting when they get the physical printed textbook. The same is often not the case with digital. Different DRM, different licensing terms, different user experience, and other differences between products in the same category make it a more complex (and potentially less satisfying) purchasing decision.

I saw a statistic earlier this week that reported consumers weigh trust as nearly 10x more important than price when making an online purchasing decision. The same is true, in a sense, with digital. Students are not as sure of what they are buying (they trust the product less) and so are more reticent to purchase. Stores that have recognized this challenge and provided educational information have seen sell-through on digital sometimes up to double the typical average. This educational information can be displayed in a number of ways -- whether comparison details on an in-store sign or terminal, explanatory information provided along with the student course list, or creating a "demo-bar" concept to let students "see what they are buying."

Because of differences among products, the transaction cost of selling digital is higher for retailers because it requires more education of the consumer. Focus your in-store marketing efforts in that direction and you should see some success. Beyond that, our marketing toolkit initiative looked at a variety of methods to promote digital options in-store, and again, we hope to get those resources out to stores later this year.

A final quick note -- the question also asked about loss prevention. This is not an area we have looked at closely as it relates to digital options. Perhaps some of the other readers on this list have some suggestions to share -- either marketing ideas or ideas for loss prevention.

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