Apple's gross profit margin on new iPod Nano

Apple's gross profit margin on new iPod Nano is about 70% (330% markup), according to Boy Genius Report. This is with Apple's strong pre-existing market position, a large and experienced manufacturing ability, and nearly guaranteed sales of a bazillion units.

Each $149 iPod Nano costs Apple about $45 to manufacture, says Boy Genius.  

Market gap analysis - Setting the reference point

The beginning is the most important part. It is here that you set your goals and constraints about an opportunity that has not yet been discovered. It is important because it is so much easier to be hard-headed about the business practicalities before you fall in love with an idea and get carried away with wishful thinking. When I say "business practicalities" I do not necessarily imply a project optimized for monetary profit. Non-profit organizations labor under the same "business practicalities" as everyone else. They just don't have to pay income taxes.

Goals and constraints relate to what you want to get out of a project and what you are willing to put into it. Just for the sake of simplicity, the discussion will focus on business-for-profit. Monetary profits are so much easier to measure, but the same considerations apply to a not-for-profit opportunity search.

Instead of "business practicalities," you can also read it as "sustainable."

A comprehensive set of goals and constraints, established in writing at the very beginning, is important because of the powerful distortions inevitably introduced by the emotional attachments that arise once imagination is engaged. You fall in love with your own ideas and wishful thinking swamps rationality and prudence. But, with a written set of goals and constraints, it is sometimes possible to pull yourself out of your own business fantasies.

One common tendency is to understate both goals and constraints. You think you can succeed with a smaller profit margin than what you actually need, it will take less time than is realistic, and it costs more in money and effort than what you imagined. Overstate goals and constraints in your written reference point, and understate the expectations for any particular opportunity.

As the maxim goes, "Aim High. That way you will at least avoid shooting off your own foot."


Market research - Trade publications

Whether you are searching for business customers, partners, vendors, or competitors, industry trade publications are an efficient source for current information. Finding trade publications is made easy through TradePub.com.

TradePub.com offers an uncounted number of industry trade publications and white papers, most of which are available as digital downloads. The purpose behind making these publications available for free is to generate qualified leads. The idea is that you are a potential customer, and the publications are made available to you only if you agree to be contacted with quotes and offers.

It's a small price to pay.

The digital publications are easy to obtain, but there are a few which are available in print only. These, I suspect, are screened carefully and are more difficult to get.

Even at that, if your need is great enough and you have a compelling story, you can probably talk your way into receiving a complimentary copy.

Other sources:
Yahoo directory
Entrepeneur Trade publication directory
ImportExportHelp.com - Directory of trade publications
Directory of Engineering and Scientific Trade Technical Magazines


Market gap analysis - Introduction

A first milestone for any start-up business is to uncover a market large enough to support your financial profit goals, in which demand exceeds supply. The tool of market gap analysis couples with market verification will assure your business with a lucrative market.

Like the selling funnel metaphor so well known to marketers, a market gap analysis starts with a large mass of everyday observations collected though research and exploration. Curiosity is a useful trait to have here. The process of analysis narrows the possible opportunities to a manageable number. Those candidates that survive the funneling process will consist of viable market opportunities and mirages. The mirages will out-number the real opportunities.


To scroll or not to scroll

Six Revisions dot com has provided us with a fine selection of web usability insights in its post, 10 Usability Tips Based on Research Studies. However, the conclusion they offer on the question of user scrolling behavior seems doubtful.

Web design wisdom, generally attributed to Jakob Nielsen, is that web site visitors frequently do not scroll down a page that is longer than screen height. Best practice, therefore, dictates the most important items on a page be located at the top, "above the fold." This has the power of common sense behind it, to place important items where they can be seen whether a visitor scrolls or not.

However, Six Revisions' usability tips advise, "Don't Worry About" vertical scrolling. This is based upon user testing that shows the percentage of people who scroll, as expressed in the following graph, which I have borrowed.

image of graph

Strictly speaking, the test and the graph show the percentage of users who scrolled down at least 90% of pages that ranged from 500 pixels in height to about 10,000 pixels. From glancing at the graph, it looks to me that overall only about 25% to 30% of the users that were tested scrolled down that far.

Rather than "don't worry" about vertical scrolling, I interpret these test results to confirm the common wisdom that most people do not scroll to the bottom of a long web page. Placing the most important items at the top of the page is still good advice, along with advice not to ignore the bottom of the page.

CafePress tests brick & mortar retail outlets

CafePress is known on the web for custom imprinting of nearly everything, and for providing designers with a platform for selling original art imprinted on almost anything. CafePress has opened three walk-in brick & mortar retail stores in two Louisville, Kentucky malls and one strip mall this year. CafePress is also buying local TV advertising to promote them. CafePress Louisville stores.

It seems likely that Louisville was chosen for this new off-line venture because the main CafePress production facility for its on-line business is located in Louisville. Gateway computers had also previously tested walk-in retail locations in Louisville for a few years, with limited success.

CafePress Mall St. Matthews
5000 Shelbyville Rd. Suite 1590
Louisville, KY 40207
(502) 891-8933

CafePress Hurstbourne
2048 S Hurstbourne Pkwy
Hurstbourne Acres, KY 40220
(502) 491-7400

CafePress Jefferson Mall
4801 Outer Loop, Kiosk #T77
Louisville, KY 40219
(502) 966-2415


Ingenious promotional marketing with Twitter

Element Fusion Internet Development is giving away 10 iPads, one a day in ten days beginning September 13.

The only way to enter the daily drawing is to post the specific message provided by Element Fusion on your personal public Twitter account, every day during the contest period. The daily Twitter posts are what establish your eligibility for that's day's drawing.

One problem with promotional contests is the necessity to promote the contest itself. The inherent structure of the Element Fusion's contest assures that the contest is self-promoting.

Entering the drawing spreads word of the promotion, which also spreads word of the company.


Marketing principles - The law of settlement

The law of settlement
Been there, done that, and got the tattoo.

Once a decision has been made and acted upon, it shifts state from fluid to solid. Once a decision has been made and acted upon, it is difficult or impossible to change for a minimum period of time. Depending upon the agony that went into the decision making process and the nature of the investment in the deed, that minimum period might be measured in decades. If you buy a house or take a spouse, all other alternatives evaporate for a while. Sometimes it is for a long while.

As one who wishes to influence other people's decisions, there is a window of opportunity while the question is under consideration and still undecided. Once the deed is done, the window is sealed shut for the winter, and the matter is settled. If, as a marketer, you miss the window of opportunity, you are just out of luck.


Optimization - Landing pages

Optimizing a web page for business purposes frequently involves an invitation for further conversation. That's a fancy way of saying web businesses often strive to get a web site visitor to divulge her email address, as a business prospect.

There is much that goes in advance of an invitation like this and more that goes after, before an anonymous web window shopper is transformed into a paying customer. But, as party planners have known for centuries, the form and the delivery of an invitation has a direct effect on turnout.
"The mistake we often make: thinking that the problem is that there's not enough people starting the process, not enough people being exposed to your offer. In fact, it's almost always a problem with how efficient the funnel is and how likely it is that loyal customers tell their friends." - Seth Godin
In a back-handed way, it could be said that the goal of doubling the number who accept your invitation does not require you to double the number who reject or ignore it.

Improving your conversion process may be more efficient than increasing your site traffic.

Marketing Experiments Blog provides us with a specific example of how this was accomplished in practice. This Just Tested: An aesthetic design that produced 189% more leads - by Austin McCraw


Marketing principles - The law of authority

Because of a human infant's unusually long period of total dependence upon parents and family for survival, humans are conditioned at a very deep level from the beginning to obey authority figures. In later life there may be an element of selection as to whom or what one accepts as an authority, but the psychological response of follow-the-leader is built in as part of our behavioral foundation.

An "appeal to authority" is a well recognized logical fallacy, where it is argued that a statement is correct merely because the statement is made by a person that is regarded as authoritative. It is such a well recognized logical fallacy because it is encountered so frequently, and it is encountered so frequently because it works so effectively to influence behavior. This form of false reasoning even works to influence the thinking of people who recognize it to be a logical fallacy. It is bred in the bone.

Being an authority figure is relative. For every authority figure there are always bigger authority figures around somewhere, and lesser authority figures below. To a sheep, a sheepdog is perceived as an authority figure.


Marketing principles - The law of confusion

A mental and emotional state of confusion, the combined subjective experience of being confused, frequently is felt as acute anxiety. Mental confusion is potentially dangerous, from a survival point of view. Confusion triggers an immediate and sometimes frantic search for meaning and clarity, to reduce the anxiety caused by uncertainty. If you have ever lost a pet and don't know what has become of her, or Heaven forbid if you have ever misplaced a child, you understand how extremely urgent finding a solution to the mystery becomes.

The anxiety that comes with confusion produces several strong responses.
  1. Increased attention and alertness.
  2. Frequent scanning of the environment for clues to the puzzle.
  3. Increased likelihood of grasping at straws, or willingness to assume causal connections that are not true.
In short, confusion is a problem to be solved. If you have a working solution that solves some type of common confusion, you potentially have a product to sell. The conditions are ripe for success. This who are confused are looking for a solution (you) and they will latch on once they find you.
"Anybody who is confused is likely to jump to conclusions by holding onto the first apparently reliable piece of evidence that he detects through the fog of his confusion." Watzlawick p. 28


Marketing principles - The law of the middle

The law of the middle
Always color inside the lines

Some decades ago McDonalds sold only two sizes of soft drinks; an 8 oz. small and a 16 oz. large. When McDonalds introduced a new 32 oz. large size and re-named its 16 oz drink as 'medium,' total sales increased. A significant percentage of customers switched from the small size to the new medium size, even though the absolute size of the drinks had not changed. The perception had changed.

One theory involves a human tendency to avoid extremes. With only two options there is nothing but low price - high price extremes. The addition of a third size created a middle option, and people feel comfortable keeping to the middle. Not only does it work to introduce a middle ground where none existed before, it also works to raise the average sale by adding higher priced options to the menu. Moving the high side extreme up moves the middle up too. This has been demonstrated to work, even if the highest priced options are never purchased themselves.

If the theory has validity, one might expect the same effect should be seen on the bottom side when lower priced options move the minimum extreme down. Average sales will decrease when the middle shifts lower.

But, maybe make it up on volume.

Marketing principles - The law of games

Classic game theorists have called out two general categories of games: Zero-sum and non zero-sum. Broadly speaking, a zero-sum game necessarily involves a win/lose transaction. Sport competitions can be viewed as zero-sum games. When one team wins it means by definition that the other team has lost. Non zero-sum games allow for the possibility that both parties can win, or both parties can lose, as a result of a transaction.

Classic free-market economic theory explains voluntary market transactions as being non zero-sum games by bringing more value to both buyer and seller at once. Classic game theory and classic economic theory have both embraced the use of mathematical modeling and analysis. These models seem to work best with easily quantifiable units, such as money or money equivalents, and where the participants are most rational. These theories find practical application in financial markets and mass marketing. It is a game of playing the odds, trusting the numbers, and measuring results. It's pure business.

Direct marketing to people, on the other hand, does not derive much benefit from the classic theories. There are many reasons for this, and the first may be the fact that marketing to people is not particularly rational.

Eric Berne's definition of interpersonal games may be more useful:
"A game is an ongoing series of complimentary ulterior transactions progressing to a well-defined predictable outcome. Descriptively it is a recurring set of transactions, often repetitious, superficially plausible, with a concealed motivation."
Being a psychiatrist, Dr. Berne was preoccupied with the examination of neurotic games, but it's hard to deny that a lot of neurotic game playing goes on in marketing, human resource management and customer relations.

It's a big topic.


Marketing principles - The law of opinion

The law of opinion
Everyone always has an opinion about everything

Just ask and you will usually find that everyone always has an opinion about everything at the drop of a hat. If you're lucky, they will wait to tell you their opinions until you ask. The speed with which humans appear to form new opinions is an illusion. The human mind is designed for speed and efficiency, and not for deliberate rational analysis. The mind does not so much quickly form new opinions as it swiftly classifies new people or situations into already well established mental categories. This very dominant part of the mind is programmed to do a quick sort on the most superficial criteria.

It is a survival issue. The fundamental question that must quickly be answered in any new environment or encounter is this: "Is it dangerous?" That, at least, is one issue upon which everyone has an opinion about everything, and the answer we come up with is always based upon the past. Past experiences, training, and indoctrination determine the answer. That is why it is so quick. It does not require any thought.

The mind is a self-organizing adaptive information structure that is also general purpose. The fact that it is general purpose suggests the opinion-forming process that works so well for survival purposes will also be used for other non-survival purposes. Thoughtless opinions are therefor the norm, and not the exception.


Marketing principles - The law of affinity

The law of affinity 
We buy from those we like 

The marketing principle of affinity is simply stated. You are more likely to buy something from someone you like than you are from someone you don't. As a business marketer, then, the challenge of invoking the affinity principle in your favor is to get people to like you. How to do that?

This too is simple: Like them first. 

People like to be liked. It tickles their fancy and it makes you appear friendly. People who appreciate being liked by you are very likely to like you right back. Someone has to get the ball rolling in the first place, and it might as well be you.

Although it's true that giving and receiving occur simultaneously in eternity, everything is simultaneous in eternity. In time, such as we are, the giving must come first before the receiving is possible.

Proactive friendliness has been proven through long experience to produce beneficial business marketing results. The opposite tactic can be well described as waiting for a fried chicken to fly into your mouth.


Marketing principles - The law of leadership

The law of leadership
It's better to be first than it is to be better

Reis and Trout state that the basic issue in marketing is not about offering a better product, it is about creating a category in which your business can be in first place. Maybe that's true and maybe it's an exaggeration, but either way Reis and Trout have been good at challenging conventional thinking. I'm inclined to think that the basic issue of marketing is to generate business profits.  Whether that is short term profits or long term profits, large scale profits or small scale profits, the issue of market position ought be secondary to return on investment, however that is measured. Maybe I'm a closet bean counter.

There is no reason to believe that the second largest company cannot be more profitable than the company with the largest market share.

Reis and Trout make the point by reference to memorable historical events, as in, "Who remembers the second person to fly across the Atlantic Ocean solo?" But the flip side to that is, "What good does it do Charles Lindbergh for me to remember him?" Just as what good is it that I can remember the words to the Oscar Mayer wiener song from decades ago? You say "wiener" and I say "Oscar Mayer," but it's not the brand I buy when it comes down to it.

Memorable is not enough.


Looking for work - from Chris Brogan

I Create Work
" . . . . Today, I deposited two checks, one from Amazon and one from Google. These represent my two lowest paying affiliate sources, and so the checks weren’t for much. They totaled a few hundred dollars short of my mortgage. My affiliate check from Genesis (affiliate link) this month will be quite a different matter. That check will pay 3 to 4 times my mortgage. That means that all my years of hard work of building an audience, building great content, and earning your trust now pays for my family’s home every month, which means that I have a lot more opportunity to say no to work, if it’s a bad fit or if I can’t do it, timing-wise.

"I created that work. I built something. In fact, I created all my last few years of work. I don’t have an employer. . . ." From Chris Brogan - Read More


Refining site keyword relevance

As I mentioned in my post of two weeks ago, Google Webmaster Tools displays, in order of frequency, the keywords that Google search has identified in the collection of indexed pages from a website. For this microEnterprise blog site Google considered the keywords August and July to be significant, listing them each in the top thirty results; 28th and 30th in rank respectively. These months appeared so frequently because I had set the post date format and the archive list format to show date in a verbose format. Nearly all the posts on this blog (89 of 104) so far were posted in those two summer months.

I decided I did not want the dates for posts to affect keyword significance or search results, because of their irrelevance to the content of the posts. I changed the date format displays from verbose to numeric.  After nearly two weeks the offending names have dropped from 28th to 31st, and 30th to 38th.  I expect that they will continue to drop further as Google proceeds to re-index the various individual post pages over time.


Putting customers in thier place

I've been a user of the Vox.com blogging platform for about 4 weeks now, which hasn't been enough time for me to fall in love. Still, it came as a surprise when I received an email notice that Vox is shutting down by the end of the month.

But, it was one of the few time that I was personally notified of a significant change like this before reading about it in the public media. It is common for a company to issue a press release and send  the customer notifications afterwards.

I think Six Apart, the originators of Vox, has its priorities straight.  Thanks, guys.  Vox was a nice platform.


SEO vaporware - a note to Sandy

This is a note to 'Sandy," whoever you are. I found your comment in my spam filter. Except for Google Blogger's decision that your comment was spam, it would have gone into my "Awaiting moderation" folder. Nobody with any sense lets comments automatically post these days.

I usually don't give spam comments a second look, but I was curious to see what type of SEO optimization business would leave such a blatantly spammmy comment. I was almost sure they taught not to do that at SEO optimization school. So, the first thing I did was to check your profile, Sandy, to find out who you are. I already told you once four years ago that I insist upon knowing who I am dealing with. You do not have a public profile to look at.

 Then I checked out the link you left and Googled your business name. It turns out that you have two different domain names pointing to two slightly different web sites, both of which have a Google Page Rank of ZERO. I can't help but have a few doubts about your marketing abilities. I deleted your comment.


A good idea is not enough

Did you ever have the feeling that you knew exactly what needed to be done , but you couldn't get others to go along with your ideas?
  • — Did you ever have the feeling others were able to get their ideas taken seriously, even though their ideas were not as good as yours?
  • — Do you constantly encounter roadblocks, resistance and indifference when you try to get others to agree with your suggestions?
  • — Have you tried to follow what the experts say about exerting influence and persuasion, but you watch as they jump on another bandwagon and your ideas are left standing on the sidelines watching the parade pass you by?
  • — How is it that others can get people on their side, win support, convert skeptics, and get results?
Finally, someone has written a logical step-by-step book that navigates the reader through the process of attaining success.

Find out more about it here.


Marketing wisdom of Gloria Estefan

Turn the beat around. Turn it upside down.
Gloria Estefan and the Miami Sound Machine

The orthodox conservative view of affiliate marketing books by blogging and email is to write a glowing review of the "must have" marketing book du jour, and to give an affiliate link. The theory is that your loyal followers will click the link and buy the book, because you recommended it.

There are few minor bugs in the theory. The main flaw is that it does not work in practice all that well. It is a low-percentage conversion process and it takes loads of targeted traffic to make it amount to much. see: Click the damn link.

I suspect the emphasis is misplaced. A good portion of affiliate sales come from anything but the specific product recommended. The critical component is clicking the link and setting the cookie. After that, I don't care what you buy. Look around until you find something you really want to buy today, please.

Rather than a time sequence of  (1) Read my timeless wisdom of a book review and then (2) Clicking on the affiliate link, I think I'll reverse the process using Amazon aStores. If you want to know my opinion of Web Analytics: An Hour a Day by Avinash Kaushik, you have to click through to that specific Amazon aStore product page to see it. Please do so now.

Turn the beat around. Turn it upside down.

The trick is you are limited by aStores to 1024 characters. That is 7.3 times the maximum Tweet size, and it is actually a lot of words. But, writing book reviews is not my strong suit, as you can see.

I don't recommend that you buy this book. You will probably hate it. It is very detailed and technical. All I want is for you to click the link and set the cookie.