Retail
Chronicles Monthly Newsletter | Volume 5 | Issue 4 | July 2020Â
CONTENTS
03
THE MODERN MARKETING
CONTENT TEAM
Customer Co-creation and UGC are the two concepts taking on the digital age of marketing by a paradigm shift
Janhavi Shirkhedkar (Guest Writer) | Parth Reshamiya | Keerthana Sontam | Abhishek Wakode
08
NETFLIX REVENUE STREAM AND BUSINESS MODEL Over the last decade, the way in which we watch television has changed dramatically – and no provider has been more influential than Netflix.
12
SPOTIFY
16
ZOMATO - HUNGER THAT WON’T GO AWAY
The most popular global audio streaming subscription service with 286m users, including 130m subscribers, across 79 markets.
Today, Zomato is present in over 10,000 cities across the globe with over 1.4m active restaurants on our platform.
DESIGN TEAM Pushpak Holani | Ayush Goyal | Shikhar Gupta | Jeet Doshi
EDITING TEAM Abhishek Wakode
THE MODERN MARKETING
- JANHAVI SHIRKHEDKAR PGDM RM Retail Chronicles | Page 3
Guest Writer
July, 2020
Tough times teach us a tough lesson; They come not to define you but to refine you. With the ongoing situation of COVID pandemic restricting our resources, methodologies and previous ways of working, marketers are faced with a challenge of attracting customers in minimal ways.
As we go ‘Digital’ we need to look at the plethora of new avenues opened up in that field. Marketing strategies today, are a lot more than social media campaigns and customer engagement is also given great importance. Two of the many ways of engaging the buyer in the process of marketing the product to him are discussed here. Customer Co-creation:
Marketing has always innovative horizon with boundaries in terms of differentiation, and making the sun shines.
been an undefined creativity, hay while
If we shed some light on the history of marketing and the traditional methods, an organic shift has occurred not just in the methods but in the platforms of addressing the target audience.
Retail Chronicles | Page 4
The customer's interest in a product increases exponentially, if he is in some way, associated with that product. A sense of contribution, ownership along with appreciation creates the right mix for this concept of customer co-creation. The realization that customers can help companies improve their new product development activities by
July, 2020
Similarly, IKEA, Lego, Anheuser-Busch, BMW, Heineken, DHL are some of the other brands to have expanded their innovative horizon and looked beyond to know the interests of the consumers by involving them.
both contributing ideas as well as selecting ideas for possible new offerings is the crux. Now over the past decade or so, an increasing number of firms are leveraging the power of online platforms to ask customers to contribute and select ideas for their new products. Thus, in our new digital age, customers are not only buying products, but they may also help design and develop them.
This can be in terms of contests or regular open idea platforms, but each of these brands has a different story and an interesting approach which is worth reading. 58% of businesses are now piloting co-creation projects to help drive innovation. A study has found that customers have a more favorable impression of the products that they have contributed to. However, there are certain hurdles of authenticity, proper screening of ideas, and fair appreciation to the contributors that need to be overcome.
This is a welcome shift from the traditional methods and many leading brands are seen implementing this. Unilever, which is a very reputed and well-known consumer goods manufacturer with a large customer reach all over, has also incorporated the principle of customer co-creation. Although a success in itself, Unilever welcomes solutions from the consumers themselves to some problems posted by them on their innovation platform. Anybody who gives a feasible solution which is implemented into a product can get a share in the product proceedings.
Retail Chronicles | Page 6 5
May, July, 2020
User-Generated Content Most firms are very careful about how they manage the promotion of their products. One reason is that this activity is quite expensive. Digital tools and social platforms like YouTube, Facebook, and Twitter, etc. have reduced these costs and made it easier to target segmented consumers with a higher strike rate. What if these promotional costs are cut down further and a consumer of the product himself becomes the brand advocate by promoting the product in the effective way needed?
Today, just about anyone with an Internet connection, a computer or a smartphone, and an idea, and some energy can create and disseminate informational message for just about any product. In essence, these digital tools have democratized the promotional landscape and this is the basic idea behind user-generated content or UGC for short.
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However, one of the best examples of UGC will be that of GoPro, the high definition video camera brand. GoPro strategically asks its customers to share photos and videos taken by them with the camera on their social media handles. With the various ways to mount these cameras and also it's underwater features, it is widely used and shared by extreme sports enthusiasts, bikers, surfers, skydivers, skateboarders, etc. which give the viewers a first-person perspective of how the surroundings would have looked.
Indian eyewear manufacturer Lenskart is another example of how user testimonials and pictures of trying the frames online can have a larger reach. Sony, through its subsidiary called Media Molecule, has recently launched a new game called Dreams that takes this idea to an even higher level by using an enhanced customer toolkit.
July, 2020
The most common and effective methods of UGC include product reviews among others like blog posting and contest submissions. Again, the motivation to contribute to UGC is somewhat similar to that of customer co-creation; social recognition and financial incentives being the primary accelerators. There is a lot of research around UGC and some studies suggest that the key motivators for participating in UGC were on three types of feedbackcooperation, quality, and competition
Retail Chronicles | Page 7
as to whose content was better. These also varied based on gender. Thus Customer Co-creation and UGC are the two concepts taking on the digital age of marketing by a paradigm shift with the approach towards interesting, engaging and involving the customers in the process of creation and promotion to get a better overview of the product they are going to use. So look around for ideas about your necessary products and who knows, you might make a fortune out of it!
July, 2020
NETFLIX REVENUE STREAM AND BUSINESS MODEL - ABHISHEK WAKODE PGDM RM
Retail Chronicles | Page 8
July, 2020
The entertainment industry has had many disruptions. From street shows to magic acts in theatres, from black & white movies to 3D experience, and from street fights to the billion-dollar UFC platform. People still fantasize about visiting the 'Disney Land' today or watching a movie beyond the 3D experience. This is all because of the experience such platforms provide us, they stimulate our senses and add value to our overall experience of the customer journey. Though people like to be adventurous by going out and exploring this for their recreation and enjoyment, they also like to sit back comfortably at their homes sipping their favorite beverages and watching their choice of movies.
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And that is where Netflix came in with arguably the biggest disruption in the entertainment industry.
July, 2020
Started during the era of the 'dot com' bubble in the late nineties, Netflix was clear on its value proposition and hence became a success gradually. They started by renting out the movie DVDs and gradually shifted to be the biggest digital entertainment platform of the 21st century. Netflix has completely revolutionized the digital movies segment as people now have a choice to select the content they want to watch through different parameters like genre, user reviews, age-specific, etc. People now have the liberty to change what they don't like as content and instead watch what they want to watch unlike in televisions where the user just had to accept what was served to him. Not only the movies, but Netflix soon started their original web content in the form of web series based on user recommendations. This was a massive hit and led to other players in the market come up with their digital platforms. But being the first mover, Netflix was always expected to be one step ahead and they have achieved that in style. From the outstanding marketing and brand building to customized plans and content, Netflix made sure that the customer feels like he is the one in charge and this led to people be their brand lawyers, such as the loyalty of its user base.
Retail Chronicles | Page 10
July, 2020
Netflix, now a 150+ billion-dollar company is spread across multiple countries and focuses on creating country-specific content too, so that audience can connect to the content easily. Five years after Netflix was founded, they got their IPO and then there was no looking back. They now have more than 5000 employees and are among the top 20 most popular websites in the world. Earlier, they used to rent DVDs on a one-time small fee basis and gradually shifted to a monthly subscription for the DVDs. Now, Netflix is a subscription-based business model making money with three simple plans: basic, standard, and premium, giving access to stream series, movies, and shows. The company is profitable, yet it runs on negative cash flows due to upfront cash paid for content licensing and original content production.
Retail Chronicles | Page 11
Netflix's business model is to focus on competitive advantage and intensive growth, however, instead of focusing on music, they focus more on movies and other video web content. With more than 150 million active users every month, Netflix is a highly scalable model. But, Due to increased competition, lack of pricing power, and loss of licensed content – it leads to a simple conclusion. Netflix is no longer a revolutionary tech platform, it's just another TV network. Netflix is now $15 billion in debt and has fierce competition from Amazon due to its high capital inflow, better content rating, and much appreciated customized payment plans. Can Netflix regain its top spot as a master of innovation, technology, and spin? Can they disrupt this competitive digital entertainment space yet again? Or will the world witness a slow fall of this tech giant? only the future will tell us.
July, 2020
SPOTIFY - KEERTHANA SONTAM PGDM RM
Retail Chronicles | Page 12
July, 2020
Imagine having a wedding without music and dance ritual or watching a Bollywood film without the hero singing songs about the heroine or better imagine commuting every day from home to college and not have music playing in your ears, what a boring life it would be than. Music is something that people irrespective of age, gender, religion, and country enjoy. It has become an important part of our lives.
Retail Chronicles | Page 13
But there is one thing about music, even though everyone likes music the type of music people like varies from person to person, depending on the mood, occasion or just preference. So what if I say that service, with constant use, can recognize what you are in the mood for and selects songs accordingly. Yes, such a service exists and that application is known as “SPOTIFY�.
July, 2020
WHAT IS SPOTIFY? Spotify is a Swedish music, podcast, and video streaming service launched in 2008 by Daniel Ek and Martin Lorentzon. Spotify entered the music industry when services like Napster were failing and apple music was charging extreme prices to listen to music. The company’s mission was to provide consumers with good quality music that they can listen to at a very cheap price without the problem of slow downloads and piracy. The frictionless experience provided by Spotify is what attracted the consumers and quickly become the most popular music service. In 2015 Spotify to keep with the competition, introduced new features like algorithmically curated playlists and personalized recommendations. These playlists were curated based on the consumer’s preferences and listening habits, and this feature becomes immensely popular with the consumers. It is now house to almost 35 million songs and has 286 million active users all over the world. But to provide such features, acquire music legally, Spotify has to spend a lot of money, so how do they earn money and profits?
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HOW DOES SPOTIFY MAKE MONEY? Spotify makes money through its subscription model as well as its advertisements. Though Spotify has a freemium model, there a few limitations to it, like a lot of advertisements, no offline streaming, quality of the tracks, limited skips being allowed. The premium model which costs $10 per month (Rs 119/month), and doesn’t have all the limitations in the free model. Spotify also has a family version of the premium version which costs $14.99/month (Rs 179/month) for up to six members in the family living under the same roof. It also has a student version which costs $5/month (Rs 59/month). The subscription models account for 90% of the company’s revenue. According to reports out of the 286 Million users, almost 130 Million people are premium subscribers.
July, 2020
The other 10% of revenue comes from advertisements. The company has different advertisement models like Branded moments: Ads that tell the right kind of story, at the right time to the right user. For example, a sportswear brand targets its audience when they hit the gym Sponsored Sessions: Ads that offer an uninterrupted listening experience to users in exchange for a video. Audio Ads: Ads that are played at an interval of 15 minutes and have a maximum duration of 30 seconds. Video Takeover: Available for computer devices only, these ads are commercial breaks that are shown to users between the songs. Display Ads: Ads that are displayed at the bottom of the Spotify app and are clickable images shown for 30 seconds.
Retail Chronicles | Page 15
Welcome Back Ads: Ads that are shown to theusers when they return to the app (on mobile or computer). Homepage Takeovers: Ads that have an interactive area on the homepage, meant for showing advertisements. Advertiser Pages: These pages are a micro site, which is seamlessly integrated into the Spotify player. They contain almost every type of content that's found on a webpage. CONCLUSION Spotify which reached India very recently has a lot of competition with the likes of Ganna, Savan, Wynk, Amazon music, etc. With the competitive prices offered by the other players, Spotify cannot solely depend on its features to succeed in India but needs to come up with innovative ideas to make people pay for its premium services and earn profit in India. Let see how it will far in the long run.
July, 2020
PARTH RESHAMIYA PGDM RM
THE COCA-COLA COMPANY Abhishek Wakode PGDM RM
How did the world's biggest beverages cpmpany come about and how it dominates its competitiors.
Retail Chronicles | Page 16 12
September, July, 2020 2019
“Check their rating on Zomato?” has turned into the default reply to “Should we go to this restaurant?” in numerous countries. This transformation didn’t happen overnight; the team at Zomato is behind it for almost a decade now. In the pandemic situation like COVID 19 serving as a grocery ordering application, Zomato has its own success story. Today we will take a look at the value propositions of Zomato and their revenue streams. Currently, operating in 24 countries in the world, Zomato is growing at a steady pace and continually adding restaurants in its online portal. It has become an exceptional platform for diners to review a wide range of different restaurants in their serving area. At the same time, it allows restaurant owners to differentiate themselves in the marketplace, even if they are the owners of more than one restaurant. Retail Chronicles | Page 17
But this question always revolves in everyone’s mind how does Zomato earn money by just listing the restaurants on its online portal. Founded in 2008 this restaurant discovery app is the first which came out with an idea like this. Zomato started its operations as an information portal, providing information about the zillion number of restaurants across India. It recommended nearby restaurants and gathered reviews from customers so that others could know about the restaurant. As per your likeability, Zomato would be your one-stop solution for dining out. Eventually, with growing demand, Zomato introduced online food ordering services and table booking facilities in restaurants with just a tip of a finger.
July, 2020
How Zomato Makes Money? They are concentrating on the Zomato mobile app, and they make money through advertisements, consulting services, and online ordering system and also helping all the users in finding the restaurants of their choice. Zomato makes money by being the mediator between the customer and the restaurant owner. The following are how Zomato makes money:
Online Order Services :The restaurants that deliver food have to pay a nominal amount to get the online service from Zomato.The restaurants that deliver online have to pay a certain fee to Zomato for listing them. This service has proved to be a blessing to several restaurants. Those restaurants that usually looked empty are now getting good business through Zomato. About 30% of revenue originates annually from online orders.
Advertisements : Advertisements are one of the significant contributors to income for Zomato as Zomato provides hyper-local advertising for restaurants that are beneficial for both the restaurants and the customers too. The listing on Zomato is bought by restaurants in the form of advertisement spaces and is very similar to Google ads. Almost 62% of Zomato's income comes from advertisements.
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July, 2020
Consultation: Zomato does something different than the rest of the online food ordering platforms because it not only provides food solutions but also provides consulting services to new restaurant owners by delivering data and information about the where's and how's of starting a restaurant. Zomato quickly recognizes the opportunities and the setbacks for any new restaurant in a particular location and thus, earns by providing consulting services. Events: Zomato has limited edition events on times throughout the year like New Year’s Eve, Valentine’s Day, Christmas Eve, or other festivals. The sale of tickets for these events also is an income source for Zomato.
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Zomato Book & Gold:Through Zomato Book assistance, anyone can reserve a table in their favorite restaurants with a nominal pay. Similarly, Zomato Gold provides membership to customers at a cost and provides additional benefits to them whenever they dine or order from a restaurant. Zomato Gold fetches about 12% of the revenue monthly.Going forward, the maximum revenue for Zomato comes from advertisements, online ordering, and subscription services. Zomato has covered maximum restaurants in India and there is no more scope of ad revenues anymore. But, opening new revenue channels like grocery ordering is a brilliant move by Zomato.
July, 2020
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