Thanks for this post Catherine! While I too am skeptical of the ability to mimic an in-class experience through such a digital offering, I think Peleton also offers some advantages that traditional brick and mortar studios cannot. In particular, your point around the boutique studios being located in metropolitan areas highlights that there is an opportunity for Peleton to be very intentional about targeting consumers in areas that are currently underserved. This could in fact, ultimately serve as an entry point for their brick and mortar studios as they would be able to leverage their data to identify locations where they have developed critical mass to justify setting up a physical studio. With the $2,000 price point being a significant barrier to entry though, they should definitely look to address this. While R&D could help them to lower the price point in the long term, in the short term, offering a financing option where customers enter 12-24 month contracts could not only make it more affordable, but also lock new customers in for a longer period of time. Additionally, partnering with health insurance companies that incentivise their members to have more active and healthy lifestyles could also be another option. I’m definitely rooting for them and hope to join a Peleton class from my home one day when I’m back in Johannesburg!
Thanks for the post Nancy. Like everyone else, your post caught my eye because I didn’t think anybody was still using the yellow pages in 2016. In thinking about how YP can effectively play a role in marketing small businesses to consumers, I am reminded of our FRC case on Alibaba. A key lesson that stood out for me from Alibaba was how responsive they were to their SME-customers’ feedback and how that in turn, fuelled their growth. With a declining customer count threatening the viability of this business, I think they may need to take a step back to reassess what is really important to their consumers so that they can develop a compelling service that truly meets their needs. It appears that there is a misalignment between what YP thinks customers need and what they are truly after so doing more of the same is unlikely to yield the desired change. While I agree that they should milk print for as long as possible, this should not detract from efforts to keep the business relevant in such a rapidly changing environment.
Having seen the success of mobile payment platforms in African countries, where credit card use similarly lags more developed countries, this definitely sounds like a promising path for Tencent. With Alipay already having paved the way for consumer adoption of this channel, this is a case where it appears to have helped to be a second-mover. Further, with its captive market of WeChat users, the opportunities really seem endless for Tencent. I wonder however, how these very users feel about data privacy – not only with respect to their Tenpay transactions, but also their WeChat conversations. Could there be a concern that by ‘spying’ on their WeChat conversations, Tencent could be in a position to start pushing tailored products to increase mobile payments? How is privacy between the two platforms managed? Globally, consumers are increasing becoming wary of companies’ use of their data so while I’m all for the use of data analytics to personalise services, this is an area Tencent should proactively manage to avoid potentially bad publicity around a conflict of interest in this regard.
I find Domino’s adoption of the ‘Internet of Me’ concept quite interesting. Digital strategies such as this one provide companies with a large amount of data that puts them in a unique position to truly tailor their experience to the individual. Allowing customers to re-order their favorite meals is one approach to this but I wonder if Domino’s could take this a step further to increase sales. If I use my online florist to send flowers on a birthday or anniversary, I receive an e-mail reminder the following year as that date approaches with a link to the website. This has actually saved me from the embarrassment of forgetting a friend’s birthday in the past. I wonder if Domino’s could leverage the data it is obtaining on its customers to employ similar strategies – I can imagine there are people who order several pizzas to watch sports games with friends for example, and it could add further to the convenience element to have Domino start to use analytics to predict such purchases. Of course, there is always the risk of being labelled an annoying spammer for clogging customers’ inboxes with such e-mails so it would be important to approach this in a controlled way.
This is an interesting approach for a clothing retailer to adopt in the face of increasing popularity of online channels. I think brick and mortar stores will always maintain the advantage of allowing customers to physically try on clothes and make immediate purchases rather than have to wait 24 hours for their goods to be shipped. However, I am definitely one of those customers who has abandoned purchases while waiting in line and gone home to make an online purchase. In some cases, I actually end up making the purchase from a different store’s website in which case the brick and mortar store bears the cost of sales associate’s time spent convincing me to make the purchase but none of the revenue. In that respect, I definitely see the value of offering customers the convenience of a mobile check-out but also think this is a great morale-booster for sales associates as it improves measurement of their performance. While to Eric’s point, this may make associates more aggressive in closing sales, I also think there is value to making it easier to attribute customers’ purchases to individual sales associates’ efforts. A win for customers and employees alike!
Thanks for sharing this article arc. I too come from a country (South Africa) where we are grappling with the tension between managing the inherent negative environmental impact of mining operations while also recognising that mines play a significant role with respect to employment. Any interventions in this space therefore necessarily need to consider the potential knock-on effects on the people living in towns that are economically reliant on the mining operations. With that said, the threat to the water supply posed by Cerrejón’s operations is definitely concerning and in such a situation, I believe regulation definitely has an important role to play in setting terms of engagement that support environmental sustainability. Rather than view this as a constraint, I wonder if there may be a potential opportunity for Cerrejón to embrace this diversification more aggressively through a public-private partnership focused on continuing to deliver water to the area.
Hi ijkijk; thanks for the article. To HCL’s comment above, I am one of those that feels very proud when I drop my boxes off in the recycling bin but you raise a good point – that is actually not making a very significant impact on reducing the negative environmental impact of the entire cardboard production process. Thinking back to our IKEA case the other day, which also ultimately included a combination of sustainable forestry and supply chain management, I am quite impressed by the holistic approach PCA has taken across the initiatives you’ve outlined. I’m left wondering what PCA’s version of IKEA’s particle board would be though – a more efficient cardboard alternative could be the next step in their path to sustainability.
The idea of geographical diversification with respect to managing the effects of climate change seems to be one that several businesses are following however, I worry that this is not a sustainable solution. With temperatures continuing to rise globally, there is a very real risk that the neighbouring state will eventually begin to experience similar weather fluctuations to those that are plaguing Sula’s first wine farm. Thinking back to the Indigo agriculture case we did a few weeks ago, I wonder if a similar approach could be followed to grow grapes that are fundamentally more resistant to changing weather patterns. I imagine this could be more challenging than cotton given the need to carefully manage the eventual taste of the wine as well. Do you think this is something that Sula could consider?
Alevo’s batteries are definitely a game-changer for renewable energy. It’s interesting you mention South Africa since Eskom, the national utility has recently been facing some difficulty meeting demand. ‘Load shedding’, the term used for planned rolling blackouts, has been used to maintain the integrity of the grid in periods of high demand. The utility, once lauded for having some of the lowest electricity pricing in the world, has also had to increase tariffs. Overall, this has had a real impact on the economy through increased operating costs for businesses and interrupted operations in the mining and manufacturing industries. To your point on commodities, South Africa supplies 85% of the world’s platinum and mining companies have estimated that hundreds of thousands of ounces of platinum production will be lost until the electricity crisis passes. In the midst of this, the government has set targets for increased use of renewable energy so there is significant pressure on Eskom to not only address electricity shortages, but do so in a sustainable manner. This is a move away from their current practices which rely primarily on coal-fired stations so wind and solar options are currently being explored. Alevo’s batteries clearly have a role to play in addressing this conundrum and I hope to see such innovative solutions being harnessed to truly change the energy landscape as we know it today.
Talk about being caught between a rock and a not-so-cold place! Reading the title of your blog, I immediately assumed ‘diversification’ would be in relation to their service offering so the aggressive geographical expansion took me by surprise. With temperatures on the rise globally, it seems as though acquiring ski resorts in different countries will not address the threat that climate change poses sustainably so if I were Katz, I would also want to figure out how to keep each individual resort profitable. In line with your recommendations, I think developing a more efficient model around the winter activities is critical to that but I think they should also keep looking into new revenue streams from summer activities. They could probably leverage the relationships they have with their skiing customers to drive visits at the resort when temperatures are warmer. There may also be new customer segments to consider; for example, one of my friends lives near a Ski Resort that, amongst other summer activities, offers high altitude training for endurance athletes. It’s pretty popular with mountain bikers and trail runners so there is definitely a range of possibilities for Vail to consider!