Trevor Morgan's Blog

I have been raised a sports fan, and plan to stay that way throughout my life.  Whether it is NHL, NFL, NBA, it doesn’t matter to me.  The excitement of a last minute finish is something that can’t be replicated by other sources.  The dedication shown by athletes is something I draw inspiration from.  They decide at a young age to pursue something that they enjoy doing, and want to continue to do throughout their life.  It is important for them to recognize obstacles and strategically navigate them in a way that re-focuses their attention.  Injuries are a prominent obstacle for professional athletes to overcome, and the dedication they show getting back to pre-injury form is phenomenal.

I can translate lessons from professional athletes to my own life.  Goal setting is an important aspect because it creates focus and a way to measure success.  It also helps with possible unseen hurdles.  Sometimes events occur that at first do not seem to affect your overall goals and aspirations, but if you have concrete goals set it is easier to recognize a possible obstacle and avoid it successfully.

Corny I know…

In an extension of my discussion on Music Piracy, I’d like to draw a comparison to the movie industry. This industry has been equally affected by the the advent of file sharing.  Torrent websites are shut-down weekly, but at this point the attempts to supress movie downloading are futile.  This is the same thing that happened with music downloading.  Napster was the pioneer and was shut down in a lawsuit by band Metallica.  However, out of the ashes rose more and more programs providing the same service.  I believe the movie industry has recognized this fact and accepts that times are changing.  Film studios have begun the evolution by finding new ways to market there movies in a way that maximizes profits.  The two fundamental sources of revenue for movies are theatre sales and dvd sales.  Of these two, dvd sales has taken the enormous hit as a result of movie downloading.  A consumer can download a movie, attach it to their TV as satisfy the same need for free.

Film studios are now emphasizing theatre sales are their main profit driver.  Several changes have been made to the way movies are produced and marketed.  3D technology has become increasingly popular among movie goers.  This, along with being a technological progression, is a way of driving up theatre attendance for a movie.  At this point, 3D technology does not transfer well to a flat screen at home and it certainly can’t be downloaded and viewed off of a laptop.  This causes a call to action as consumers are forced to see the movie in theatres if they want full value.

Film studios have changed their marketing methods to increase attendance, but at the expense of movie quality.  Nowadays, I find movie quality has taken a precipitous fall (partly due to lack of movie ideas available).  Trailers, the primary way to spark interest around a film, are beginning to reveal the entire plot line of a movie.  They don’t care if this has a negative effect on theatre experience as long as the seats are full on opening day.

In my last post I talked about music piracy’s emergence as a dominant social factor, influencing how consumers access music.  I also stated my belief that artists have benefited from music downloading, generating exposure which contributes too bolstered concert and merchandise sales.

However, in life, things do not come free.  With two groups benefiting from downloading, it is inevitable that someone has to feel the pinch.  Record companies are the unlucky group.  With artists generating such a minimal amount of revenue from record sales, it is the record companies who financed the production, hence, they require the highest portion of revenue.  Because of this, the record companies have been shattered by music piracy, being basically removed from the supply chain process.  Different forms of financing can be used by artists because they don’t require the same amount of marketing prowess and notoriety provided by the record companies.

With record companies becoming essentially obsolete causing a rapid shift in the music market, like you would expect, many new businesses have sought to profit from the shift.  Itunes has successfully taken control of the online music market.  Youtube is the most common place to sample music.  Companies have recognized the opportunity of limitless exposure, ramping up their advertising efforts on the site.  However, record companies have been left in the dust.  In the future, I expect to see these companies finding unique ways of re-establishing a relationship with artists to regain their prominent position in the industry.

Since the dawn of time humans have been intrigued and mystified by music. Society was drawn to music because of its appeal to all classes. This universality of music is why it has survived centuries of transformations, and why it will continue to thrive no matter the circumstances.  However, recently there have been warnings about the stability of the music industry.  Spawned from the emergence of the internet, file sharing, which allows an internet user to obtain copies of musical recordings without payment, is threatening the foundations of the industry.   Some researchers conclude that music piracy is to blame for the decline in record sales over the past few years.  The truth to this claim is widely contested.

Regardless of the cause of the decline, musicians have begun to adapt to the changing times by shifting the industries prior reliance on CD sales towards a new breed of marketing.  The fact of the matter is, artists (not counting the successful ones) rely on concerts and merchandise sales to create wealth.  CD sales amount to a minute fraction of revenue (somewhere around 12 percent per sale or around $1.25).  Because of this fact, I believe the emergence of music piracy has only helped less known artists by increasing exposure which in turn causes more concert and merchandise revenue.  Stay tuned to part II on this topic, outlining which business entities are hurt by downloading, and how the times are changing..

Now I know that these two competing powerhouses in the video-game system jndustry have been on the market for a long time now (xbox 360- 2005, ps3- 2006), but it would be tough to argue that their usage is in decline.  With sales still skyrocketing and new games being released weekly, the popularity for these two consoles is hardly waning.

What has interested me recently about these two products is their marketing strategies.   The products are basically identical.  They both satisfy the needs of gamers and they both play movies as well.  Apart from their different outside appearance, these systems are interchangeable.  With this in mind, how have the two parent companies, Microsoft and Sony, diverged so noticeably when it comes to advertising.  Xbox 360, in my memory at least, has not aired a single commercial since its creation.  Maybe in the first year of production they had an introductory ad to spike consumer interest, but since that first year there has been nothing.

Recently, the PS3 has begun an aggressive ad campaign centering around a “manager” that fields questions from PS3 users.  Now I am not looking to dissect the commercial and give an opinion on how funny they are..(not funny at all);  I am interested in the decisions made by the two companies.  Microsoft and Sony clearly have two contrasting opinions on the effectiveness of commercial advertising.  One has decided, after years of not producing ads, to adopt a new campaign aimed at reinvigorating consumer interest.  There are two ways to look at this.  First would be to take this as a last ditch effort for Sony to generate some last ditch sales. Second, you can view this as Sony recognizing an absence of advertising by Microsoft and capitalizing on it.  In my opinion the new ad campaign by Sony is futile.  Advertising their console will not generate enough sales to cover the ad expense.  Consumers are being swayed by new game releases, and not reduced console prices.  Microsoft recognizes this and as a result uses new game releases as a way to bolster sales while saving on advertising expenses.

This past summer I was hired to help out with yacht sales at a local marina.  I had been working on the docks before this, and befriended a few of the sales guys and eventually they hired me on to help out during the busy months.  In a matter of days I picked up off the lingo and sales techniques used by the sales guys who had both been in the business for 20+ years.  Boat sales were at an all-time high during the months of July and August, as the tough economic conditions coupled with the realization of the true costs of boating led to boats being handed off at virtual fire-sale prices.

I had a sit down with my boss who outlined the keys to successful boat sales.  His main point was that selling a boat is about pitching a product that the customer essentially doesn’t need.  A car salesman has the benefit of selling a product that the buyer is actively searching for, and most likely needs relatively soon.  Boat sales, on the other hand, is about selling a product that the owner will eventually be pouring money into on a monthly and sometimes weekly basis  (the yearly expense for a boat is usually around 20% of the purchase price).   The saying in boating goes that, “a boat is a hole in the water into which one pours money.”  Plus, most of the people I would be showing boats to are just tire-kickers (hull kickers in this case?), who are not seriously considering buying a boat and are mainly just looking for a nice stroll down the docks.  Therefore (finally bringing this back to marketing), boat sales is about recognizing the customer and matching their needs with what a boat can offer.  The customer’s need will vary from person to person, but in the end it is about enjoying the beautiful climate and scenery that BC has to offer.  The way to successfully reel in a first time buyer is to let them experience the wonders of boating first hand by taking them out on the prospected boat on a beautiful day.  The boat will sell itself…

Shopping around for a certain good is by no means a static process.  In order to avoid buyer’s remorse, one must devote time and energy and must also realize that the process is never the same for different products.  A couple of years ago I started the long hunt for a new guitar.  The first step was to realize the need.  I had been playing the same cheap guitar for several years and my ability level was long passed what my current guitar could return.  I had been working hard during the summertime and built up a considerable amount of money to portion towards a new axe.  I knew that the guitar I wanted would be expensive so I decided to not rush into anything.  For me there were two main sources of information that I used.  First, was my guitar teacher and friends.  These were people I trusted and who knew what they were talking about.  Throwing different ideas around I quickly narrowed down my search based on criteria that I was looking for.  The second source of information was the guitar store.  If I hadn’t narrowed down my search before heading into the store, I would have been overwhelmed with the amount of choices; therefore, heading into the store with a firm knowledge of what I was looking for paid dividends.  Overall, visiting the Long and MacQuade store was the most helpful in coming to a final decision.  Buying a guitar is a unique experience, where first hand playing is by far the most relevant determinant.  For me, the ultimate decision to buy a PRS Custom 24 was quick, and I was confident that the right choice was being made.  In the end, the decision to buy this guitar was great.  I can’t imagine playing any other guitar, and I am definitely loyal to this brand now.  This search was important to me because I knew I would be investing a lot of money into it, and I would be playing this guitar for years to come.  Overall, before making a purchase I will always think about the price, the difficulty of searching, and the risk of searching before deciding.

In my first marketing blog I would like to talk about techniques that I find counterproductive in terms of generating interest and bolstering sales of a product.  This Sunday, as I was posted on the couch watching playoff football, I was taken back by terrible commercials shown one after another.  Football, in the first place, is known to have an egregious amount of commercials, all of which are tailored towards a male dominated audience.  The vast majority of the commercials I would walk away from, or completely shrug off.  However, there were a select few that caught my attention, but not in a good way.  I’m not going to rattle off specific commercials that caused my blood to boil, but lets just say I won’t be actively seeking out these products any time soon.  The terrible part is that I thought quite highly of some of the advertised products beforehand, but the commercial has completely deterred my interest.  The companies were probably spending a premium to be advertising during such a heavily watched program, which makes things even more mind-boggling.  How can intelligent leaders of successful businesses allow a commercial to air that will have nothing but negative consequences.  The effect of tarnishing product reputations coupled with the high cost is an expense that can easily be avoided.  The commercial could possibly have nothing to do with the product at hand, but still reduce my interest.  How is this accomplished?  By creating a commercial so irritating that I boycott buying it all together.  There have always been, and there will always be annoying/irritating commercials, I understand this.  My quarrel is that successful business executives cannot figure out the ill-effects of a poor commercial.