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The Cost of Value (and how it is changing) via @DavidAmerland

The Cost of Value (and how it is changing) via @DavidAmerland | BI Revolution | Scoop.it
The dynamic equation between value and cost is being redefined by the semantic web.
Martin (Marty) Smith's insight:

Another great "value system" post by author David Amerland. I'm going to quote a big chunk and then come back with some thoughts:

From David's Post
The message of the 21st century is clear: The cost of production is immaterial if the value of a product is uncertain. Companies that understand that operate differently. Amazon invests an incredible amount of money in warehousing technology and delivery infrastructure to make shopping easier (the value is being transferred to the experience). Google spends untold millions in research and development of products it gives away free (the value becomes apparent only when a brand-based purchasing opportunity arises, like in advertising or a Google product). Apple now disregards the cost of upgrades to its iOS because it values the sustained attention of its customers.

These three companies understand that the real value comes in achieving a balanced equation of personal use of their products (uniqueness) rather than scarcity. As a matter of fact their value equation then becomes Value = Uniqueness/Scarcity where the lower the scarcity value is the greater will be the delivery of overall value even if uniqueness remains the same.

Marty Note
I read those paragraphs several times and then did the math. Doing the math helped (lol). Let's say a product has a uniqueness value of 10 and a scarcity value of 2:

Value 5 = 10 (uniqueness) / 2 (Scarcity)
Value 10 = 20 (uniqueness) / 2 (Scarcity)

Now let's up the scarcity value and see what happens to the product's
"perceived" or overall value:

Value 2 = 10 (uniqueness) / 5 (Scarcity)
Value 4 = 20 (uniqueness / 5 (Scarcity)

This reminds me of a conversation I had with J. Langdon when he was the President of Topps baseball cards. I knew J from my tenure at M&M/Mars. J. explained how he knew he was feeding a losing proposition.

His product, baseball cards, needed to have a high scarcity value for it to continue to matter in the artificial marketplace they and other manufacturers created.

The rub was Topps needed to sell baseball (and fantasy) cards in numbers that drove their scarcity numbers down.They suffered a Sophie's choice: either sell enough cards to be able to pay their fixed costs and stock holders and so destroy the market (of perceived exclusivity) or sell too few cards to cover costs keeping perceived exclusivity up but destroying the business none-the-less.

And then the mobile phone was born and bye bye baseball and fantasy cards. Topps needed an Apple-lke pivot. They needed to GIVE the baseball cards away free in support of something ore unique and valuable - the experience of a crowdsourced mobile game or a Threadless-like community where people compete to win coveted printing contracts much the way baseball players compete to get paid God-like sums.

Topps was a casualty of David's "new math". The greater the scarcity of the core product the more nails in the business model's coffin. This discussion reminds me of another conversation. When the founder of Tough Mudder said, "Experience is the new branding" it struck me as highly significant.

I would build on David's thoughts to note the reason scarcity wrecks such havoc with a product or brand's value is COMMUNITY CAN"T FORM. Community is the experience we seek. If community can't form value or "perceived value" as J used to call it  goes down rapidly just ask any baseball card collector :).

David's core "value system" post is here (and a #mustread):
http://davidamerland.com/seo-blog/692-what-if-we-had-a-new-value-system-for-goods-and-services.html

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malek's curator insight, March 11, 8:34 AM

A great piece about going back to basics, human psychology. Understanding the mental triggers  of cost vs value,  novelty in tandem with scarcity. Hidden between the lines is dopamine, the pleasure hormone. 

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Amazon Groceries? AmazonFresh set to expand? [+ Marty Note]

Amazon Groceries? AmazonFresh set to expand? [+ Marty Note] | BI Revolution | Scoop.it
After five years, Amazon’s local grocery-delivery service remains in limited test mode, but the Internet giant recently has made some moves that could set the stage for expansion.

Via Eric Kramer, SwipeZoom
Martin (Marty) Smith's insight:

Can Amazon Succed Where Others Failed
Not a month after comScore comes out with their "over/under" report showing verticals such as grocery and health care where underpenetrated by the Internet Amazon opens up an old wound. 

You may not remember PeaPod from back in the bubble days, but others have attempted to solve the grocery dilemma. All previous efforts have been hoisted on the petard of "local delivery". 

Local delivery is a logistical killer. Think about it. The last time I went to my Super Target I purchased 20 items for a little over $100. With an Average Order Value of $100 you would have to add a hefty shipping charge. 

Problem is my Super Target is almost across the street from my house, so any hefty delivery charge seems a foolish waste of money. Funny how human psychology is because we don't hesitate to pay as much as 100% markup on our pizza to have them delivered. 

If Amazon can bring our minds around to the pizza zone they win. The pizza zone is about:

* Being lazy.

* Not wanting to go OUT (to cold, too crowded, whatever).

* Too busy (when I am on deadline it is hard to remember to dress and shower much less cook a meal). 

* Too boring (I started selling P&G soap in Wegman's in upstate New York and HATE going to the grocery store). 

* Not Fun - shopping is the 3rd circle of HELL for many (me included). 

 

Subscription & Mobile To The Rescue
I think there is a mobile enabled subscription play here. Schwan's has proven home delivery can work. Schwan's limitation is they ONLY sell frozen food. Will we trust someone else to pick our bananas and lettuce? Maybe if they create a creative approach (maybe we get a chance to see what fresh produce they are selecting via an app). 

The other way Amazon could resurrect the RIP PeaPod local delivery is to be creative about the money. If I can JOIN and earn social status and points, contribute input and be SOCIAL then grocery shopping is FUN and worth the surcharge. 

If anyone can do it Amazon can AND pushing more through their expanded distribution centers only lowers their fixed costs. Amazon is all about the arbitrage so Amazon Groceries could happen and could work.  

 

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The Art of War & The Commons

Martin (Marty) Smith's insight:

Good idea to review the Art of War with the commons in mind. The commons may be the most misunderstood of Google's instructions. Google's desire is to find relevant authority.

In a recent video Matt Cutts used the New York Times as an example of an organization with quality content. NYT is a content engine built around specific rules and practices to insure content quality.

Interesting to use a newspaper since newspapers are under such pressure. I agree with Cutts that the NYT creates quality content. I don't see the NYT as a leader in other relevant Internet practices (social, mobile).

Cutts is saying NYT starts with an advantage because they are so dedicated to content quality. I grant the point, but wonder if the NYT is a tad solipsistic (self referential) for this time.

Does the New York Times stop the news world as it used to? Not even by a little bit because there are so many other high quality and niched information offerings.

The commons is a tactic every newspaper could benefit from. The commons views whatever we are creating as a combination of US and THEM. By taking an active community approach the quality and quantity of content goes up fast and in affordable ways.

The commons, that area where we've both invested, can now turn around and repay the debt by driving links back to its creators. In the case of the New York Times this would be finding the 1% of contributors who are "Times Worthy" and including them more fully in the paper's content strategies and tactics.

Think of Amazon's Top 1,000 Book Reviewers - a list people fight to achieve - and you see how the Times could be a leader in User Generated Content curation. "Could be" but unlikely TO BE because newspapers don't value, use, reward or curate the rich vein of UGC they could easily mine.

To reward the "Cult of the Amateur" would be below most newspapers (goes the thinking). I used to read the New York Times Sunday edition like a religion. Not so much anymore because I have friends who fill the need for amazing content I care about now.

Every newspaper COULD have become the source of legitimacy for the 1% of content creators who could work on staff at the times or the observer or at any paper. Increasingly these "reporters" leave institutions like the times because they seek freedom to publish and know their following has power.

Is there a role for newspapers still? Of course, but it is a very different role than they are used to or, at least so far, seem to want.

 

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How To Attack An Internet Marketing Castle - Secret Matrix Shows Even Top Websites Have Weaknesses

How To Attack An Internet Marketing Castle - Secret Matrix Shows Even Top Websites Have Weaknesses | BI Revolution | Scoop.it
Even Top Websites Have Strengths and Weaknesses
As a Marketing Director for Atlantic BT I always want to know the same things when a new customer is…
Martin (Marty) Smith's insight:

When new clients come to Atlantic BT we want to know four metrics:

* Traffic Rank.

* Social Following numbers.

* Pages and Inbound Links.

* PageRank (PR) for the home page and top interior page.

I've been an Internet marketer long enough to be able to almost tell a website's entire story from those 4 numbers. Each of these metrics is tied to the other in telling ways.

Strengths and Weaknesses of Top Websites
If you create a matrix of these values for the top websites it are easy to know where even an Apple is strong or weak. Apple has amazing page spread and links, but its traffic position doesn't deserve a PR9.

When you've been playing SEO games for more than 10 years you know Apple's inbound links include .edu links and those are the secret gold of the web. Google values .edu links higher. I just saw a demonstration of this when one of the cancer centers we are working with on Cure Cancer Starter was pulling a PR6 with the least amount of support I've seen.

The difference was in WHO was linking and again it was .edu links that helped the website achieve more than you or I could with the same page spread and inbound link numbers. WHO links to you is very important.

The chart above and on the link shows each website, no matter how all powerful, has areas for improvement. If you are entering a crowded web space do an analysis like this to help determine where to attack existing castles. If you want to attack Apple you would be a fool to attempt to out link them or page spread 'em.

Social would be the right breach weapon to use with Apple. Frankly I wouldn't envy anyone trying to attack Apple, but the point is if Apple has vulnerabilities so do your competitors.

 

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Jeff Domansky's curator insight, January 16, 2013 12:29 PM

Valuable reading and social marketing analysis from Marty Smith...