Is There A Formula For “Virality”?

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Ever use a great product or service that inexplicably fails to catch on and is soon discontinued…and you wonder what in the world went wrong?

Welcome to the world of “virality” – where that thing you thought was the best thing since sliced bread falls off the market with barely a whimper. And something that should never have existed sells 25 million copies and its  founder retires to St. Thomas in 6 months. 

So what does make something go “viral”?

Wharton Marketing Professor Jonah Berger has a book out about that called “Contagious”. Since I haven’t read the book yet – and probably won’t for a while – here are some excerpts from an interview with him on Knowledge@Wharton that might serve as a short-term substitute (if you’re going to find yourself in the same boat as me).

1. The science:

Knowledge@Wharton: In the book, you actually outline a framework of six principles for why things catch on, using the STEPPS acronym. Can you describe those for us and discuss how you developed them?

Berger: The books talks about the six key steps to drive people to talk and share. STEPPS is an acronym for:

  • Social currency:, It’s all about people talking about things to make themselves look good, rather than bad
  • Triggers, which is all about the idea of “top of mind, tip of tongue.” We talk about things that are on the top of our heads.
  • Ease for emotion: When we care, we share. The more we care about a piece of information or the more we’re feeling physiologically aroused, the more likely we pass something on.
  • Public: When we can see other people doing something, we’re more likely to imitate it.
  • Practical value: Basically, it’s the idea of news you can use. We share information to help others, to make them better off.
  • Stories, or how we share things that are often wrapped up in stories or narratives.

2. And, here’s an interesting example about everyone’s favorite amazing-product-and-brilliant-marketing company Apple:

Think about Apple’s headphones. It used to be that we all carried portable CD players. It was like carrying a pizza. You had to run like this, to make sure it didn’t skip. Then, they came out with these things called mp3 players. Really great technology, but they were super expensive. Is it worth adopting this new product? How do I know if it’s worth adopting this new product? If you looked around on the subway or the bus, you couldn’t tell [which products people were using] because everyone’s headphones were black. It was impossible to see what device someone was using, as opposed to another device.

But what Apple did really smartly is they used white headphones. Once you start seeing a number of people wearing white headphones, you say, “Wow. A lot of people are using this. It must be really good,” which encourages you to adopt that product as well. It’s just like if you’ve gone to a foreign city and you don’t know where to eat. How you decide? You look for a restaurant that’s full of people. It’s a totally offline example. But you assume if it’s full of people, it must be really good. Thinking about how to make the private public, particularly in an offline environment, is a great way to help your product catch on.

Find the full article here. When you get there, if you have 16 minutes, watch the video – or skip it and scroll down to the transcript. 

Adventures In Marketing A Delicious Yet Unfamiliar Product

What do you do when you have a delicious (and nutritious) product, but it sounds unfamiliar and off-putting to most when they hear about it?

You roam the country and indulge in reckless sampling (a theme that I cover a few days ago when talking about Kind Bars’ ballooning “sampling” budget).

Today, we consider the case of Sabra’s hummus – something that many Americans have been running into a lot over the last year or two.

Consider this:

Lucille Jennings is sitting in a mall in a suburb of Salt Lake City, about to have her first taste of hummus. The great-grandmother peels back the seal on a small cup of Sabra and peers at the beige mass inside. “You know what that reminds me of?” she says. “Chicken mesh. My mom and dad were farmers, and they ordered baby chicks through the mail. They fed them this kind of stuff.”

But,

According to Sabra, more than 70% of people who try it at a truck purchase some within 60 days. In the past five years, Sabra’s presence in households has gone up 118%. America is ready.

So, how did they respond?

 …in both product and marketing, Sabra has recalibrated to meet Americans where (and how) they already eat. Chief among its efforts: It has six colorful trucks roaming the country to hawk hummus, stopping in cities like Phoenix and Milwaukee for four to six weeks at a time. Staffers hand out tiny packs of the product at supermarkets and churches and Little League games, hoping to lure newbies.

Catch the rest of the story here.

Marriott And The Millennials

Large global companies that sell to consumers directly are in the process of making sure that they continue to be relevant to tomorrow’s buyers – the millennials, who will shape their profits and growth for the next two decades. And you can see this not just in terms of marketing and Ads but also products and platforms across diverse industries – cars, electronics, food and so on and so forth.

Marriott, which operates more than 660,000 rooms across 16 brands globally, is no different.

So what is it trying to do? Brooks Barnes writes in a highly readable NYT piece that

To win over younger business travelers — and, even more important, to keep them in the Marriott fold when they travel for leisure, particularly overseas — the energetic Mr. Sorenson (Arne Sorenson, the first non-family CEO at Marriott International – Ed.) is relying on a range of strategies.

Core hotels are getting gussied up. In September, the Chicago Marriott O’Hareunveiled $40 million worth of improvements, including a better bar, historically a Marriott weakness. (Some analysts trace that to the company’s Mormon roots.) The Detroit Marriott at the Renaissance Center begins a similar $30 million upgrade in February. The company has been trying to improve what it calls the “guest-room beauty experience” at Marriott-brand hotels — stocking bathrooms, for instance, with a Thai skin care line.

A new ad push, “Travel Brilliantly,” estimated to cost roughly $90 million over three years, reflects Mr. Sorenson’s focus on younger consumers. TV and web ads, taped at international resorts like the Bangkok Marriott Hotel Sukhumvit, intone: “This is not a hotel. It’s an idea that travel should be brilliant. The promise of spaces as expansive as your imagination.” Marriott also offers Xplor, a free smartphone app combining reservations with games; players win loyalty club points by completing challenges at virtual hotels.

“We want people to be saying, ‘Hey, do you see what Marriott just did?’ ” Mr. Sorenson said.

And it is starting new brands and not explicitly associating them with the Marriott name in some parts of the world. In others, it is trying to explicitly link the Ritz Carlton name to its Marriott owners, etc.

A terrific read, that piece.

External Financing – Boon or Curse?

Chobani’s founder Hamdi Ulukaya thinks that it’s certainly not a boon. 

He is quoted in an interesting article on HBR as saying:

But as it turned out, I was able to borrow the money to buy the factory—and after Chobani hit the market, I financed our growth through further bank loans and reinvested profits. This is a crucial piece of the Chobani story. Our ability to grow without reliance on external investors—the venture capitalists, private equity types, strategic partners, and potential acquirers who’ve offered us money since we launched—was vital to our success. Today Chobani is a $1 billion business, and I remain the sole owner. That means I can run the company the way I choose—and plan for its future without pressure from outsiders.

Typically when startups and small companies receive external financing, they also receive advice, wisdom and in that process, become more disciplined than they would be if they were to go it alone. At which point, it comes a trade-off: Capital for growth or “freedom”? 

Good for Mr Ulukaya that he had the money, the business acumen and freedom to do what he wanted, but I am not sure this is always a good idea or a model. 

Y Combinator Co-Founder Paul Graham’s Advice For Startups

As I noted on this blog in the past, sometimes you run into articles, posts and essays that are good from start to finish – and as such, excerpting them becomes super hard. 

But, once again, I shall excerpt from something that Paul Graham (of Y Combinator fame most recently; YC is the startup incubator that invested in companies such as Dropbox and Airbnb) wrote last month, knowing fully well that nothing short of reading the full piece really does it justice. 

The piece in question is called “Do Things That Scale” and it’s his essay/advice to startups. The excerpt focuses on startup “fragility”:

Airbnb now seems like an unstoppable juggernaut, but early on it was so fragile that about 30 days of going out and engaging in person with users made the difference between success and failure.

That initial fragility was not a unique feature of Airbnb. Almost all startups are fragile initially. And that’s one of the biggest things inexperienced founders and investors (and reporters and know-it-alls on forums) get wrong about them. They unconsciously judge larval startups by the standards of established ones. They’re like someone looking at a newborn baby and concluding “there’s no way this tiny creature could ever accomplish anything.”

It’s harmless if reporters and know-it-alls dismiss your startup. They always get things wrong. It’s even ok if investors dismiss your startup; they’ll change their minds when they see growth. The big danger is that you’ll dismiss your startup yourself. I’ve seen it happen. I often have to encourage founders who don’t see the full potential of what they’re building. Even Bill Gates made that mistake. He returned to Harvard for the fall semester after starting Microsoft. He didn’t stay long, but he wouldn’t have returned at all if he’d realized Microsoft was going to be even a fraction of the size it turned out to be.

The question to ask about an early stage startup is not “is this company taking over the world?” but “how big could this company get if the founders did the right things?” And the right things often seem both laborious and inconsequential at the time. Microsoft can’t have seemed very impressive when it was just a couple guys in Albuquerque writing Basic interpreters for a market of a few thousand hobbyists (as they were then called), but in retrospect that was the optimal path to dominating microcomputer software.  

Enjoy the essay in its entirety here

Warby Parker, Wharton, Pricing and Strategy

Warby Parker, as hipsters and others know, is disrupting the “luxury” eyewear market. While “disruption” is a buzzword indiscriminately applied to many things these days, that’s not the case here. 

Coming into an industry that enjoyed near-monopoly concentration of market power (translation: consumers were paying a lot!), Warby Parker is taking on Luxxotica (proprietary brands here + licensed brands here = pretty much a who’s who in this industry) successfully, but still in a small way. 

A very interesting article from Knowledge@Wharton describes various aspects of the Warby Parker story. Students of business will find it especially appealing, because it touches on various elements of marketing, pricing and strategy.

Two excerpts (if you are in a rush) that I really liked from the piece.

1. Before founding the company

Before co-founding Warby Parker, Blumenthal directed VisionSpring, a group that trains women in developing countries to sell affordable glasses in their communities. The job left an impression. “It helped me recognize the power of a pair of glasses to change someone’s life,” he notes. Research conducted by the University of Michigan demonstrated that users of VisionSpring eyeglasses experienced a 35% increase in productivity and a 20% increase in monthly income, Blumenthal points out. “In international development terms, that is a miracle.”

2. Why $95 and not $45

The decision to price glasses at $95 comes with a back story. Wharton marketing professor Jagmohan Raju recalls that when the founders broached their idea to him, they originally planned to sell their glasses at half that price. “I really liked the idea overall … but after examining their analysis, I told them it’s not going to fly. [At $45 a pair], there’s no money [left over] for brand building; there will be no money in it for you and no money for investors.”

In addition to squeezing the business, a price tag of $45 was “too low” to be seen as credible to customers, according to Raju. “It would have put [Warby Parker] in a category I believed they did not want to be in. There are many companies selling cheap eyeglasses. Anyone can go on the Internet and buy two pairs for $99. But there is a perception among customers that the quality is not as good.”

The goal was to create a new price point that was still reasonable, but not low-end.

David Bell, professor of marketing at Wharton, served as an advisor to the founders in an independent study about pricing models and demand analysis. He recalls conversations around the social-psychological reasons for staying under $100. “There was a bit of discussion about what happens [psychologically to the customer] when you get to three digits,” he says. “[At the same time], $99 gets you a little bit of extra margin — $4 — but it doesn’t feel quite as classy. A price tag of $93 sounds more like a Walmart price: There’s too much exactitude there.” 

The price had to be right for another important reason: For every pair of glasses Warby Parker sells, it gives a pair to someone in need. (According to the company, almost one billion people worldwide — 15% of the global population — lack access to glasses.) TOMS, the shoe manufacturer known for its simple cloth espadrilles made with recycled vegan materials, is perhaps the best known company that employs a buy one/give one business model.

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