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Iterative Path

Marketing Strategy and Pricing

Just Add Mind

This is the age of abundance. More than that, abundance that is easily accessible anytime, anywhere and using any method.

dataThere is abundance of data – On every possible economic and social activity imaginable. All accessible with tools you already know or with just few lines of code. More data in more quantities on more topics are now available than ever before and it will only increase with time. Granted, sometimes it is easy but not free, but for less than the cost of good bottle of wine you can tap into incredible data sets.

AWS_Simple_Icons_Compute_Amazon_Elastic_MapReduce_HDFS_ClusterThere is abundance of compute – From your own computer to the power to tap into nearly unlimited compute farm in the cloud. All available on demand, when you need it without need for investments or your own IT team. I am talking about individuals with such access to abundance, not just firms.  If what you get for free is not enough, for less than the cost of a bagel (without schmear) you can let loose amazing compute power on that abundance of data you have access to.
moocThere is abundance of knowledge – Do you want to do simple data manipulation with Excel? Or do you want to get data from a source using its API with any programming language? How about unleashing a cloud compute farm on massive data sets? What sounds like a complicated project is broken down to its parts and taught to you in few easy steps.

So there is no scarcity of data, no dearth of tools and no dearth of how to put these together. What is scarce?

mindApplication of mind. There is real and significant lack of critical application of mind. Unless you have a nagging question to ask or a problem that just won’t go away there is no use for the aforementioned abundance. Unless you are insatiable – have bottomless curiosity and persistent in keeping with a problem – there is no value creation. If you willfully suspend your curiosity or don’t feel the constant pain of unresolved problem, there is not much all that data, compute and knowledge can do for you.

What is missing is you. Your mind. A mind that has innumerable questions and feels restless about those questions. Only that can bring together all the abundance to create real value.

Just add mind!

How Product Positioning Helps Set its Price and Define Competition

Does the market really set the price for your product? Do you have any control over price? How can you then succeed with a Gym that charges $500 per month when market decides the rate is $45 a month?

For this we need to start with Segmentation and Product Positioning.

Customers buy products get a job done. And the job to be done varies with customer segments and context. The term ‘job’ really represents the unmet need at hand. It covers both utilitarian as well as hedonistic (and hence needs and wants). It also makes sense to view this as ‘hire’ decision since they can either stick with what they already have or switch when they find better alternative.

Positioning is creating a unique, relevant and differentiated positioning in the minds of the customers for your products. Product positioning is telling customers – specifically, targeted customer segment- what job you want them to hire the product for.

Customer Jobs To Be Done Growth Matrix

. From the jobs perspective it is telling them clearly which job you want them to hire for and why your product is the most suited candidate for that job. While your product could be hired for many jobs you want to go after those where you have sufficient differentiation and also pay well.

Take the case of boutique gyms that charge close to $500 per month when you can sign up for most gyms for $30-$50 a month. In fact you can get an year worth of membership for less than one third of what you for a month at boutique gym. But customers are flocking to the boutique gyms, happily paying far more than what they used to pay (take that reference price). Market research says of the 54 million members of fitness facilities, 42% use boutique gyms paying premium prices. That number is nearly double of what it was the previous year.

Take the more recent example of SoulCycle which filed its S1 for going public. It teaches riding stationary bikes set to music and charges $35 per class and had 2.8 million rides last year from just two states (38 locations).

What happened to market deciding prices? How do you get customers to pay more for what they can get for free or cheap?

It starts with segmentation and ends with product positioning. The target segment clearly has not only willingness to pay but also enough wherewithal to pay. The goal is not market share although that could come later. The goal is give the target customers an excuse to pay their premium prices, willingly.

If fitness is the job to be done the candidates available for this job are very many. Most are free – just put one step in front of other and keep walking. In the organized fitness arena there are many chains that offer equipments and some training. So if you position your new product – the boutique gym – purely for fitness the price you can charge for it is determined by the price of alternatives available to the customer.

On the other hand if you expand the job to be done beyond fitness – more like make fitness as included freebie while you focus on higher order jobs the alternatives shift and hence the price points shift. The boutique gyms focus on different customer job to be done than fitness,

As exercise routines serve more roles in people’s lives—stress relief, psychotherapy, social outlet, even personal identity—the expense of boutiques becomes easier to justify, their devotees say.

Boutique-fitness fans also say they like the fact that most workouts are led by instructors or coaches. Some say they feel a sense of belonging that overrides the fact that they’re spending more for fewer disciplines than what’s available at a health club.

If the job to be done is therapy or a social outlet the alternatives are prices are much higher price point than just gym membership. The visit to gym becomes more than aboring routing, it is an experience that creates sense of belonging. So the boutique gyms get to signal the higher price point and set a price just low enough below the alternatives to get customers to pay.

Take the specific example of SoulCycle which states this in its S1,

SoulCycle isn’t in the business of changing bodies: it’s in the business of changing lives.

What we create: A community for our riders.    SoulCycle is a business built on relationships. It starts with our leadership and extends through our studio teams, instructors and corporate employees.

We build our rider communities by developing relationships with our riders and encouraging them to develop relationships with each other every day. The concept of community and mutual support is reinforced in every single SoulCycle class. We ride to the rhythm of the music, moving on the bikes together as a pack. We are accountable to one another during class, and we celebrate our journey together when class comes to a close. We believe the SoulCycle experience fosters loyal communities of riders whose relationships extend well beyond the doors of our studios.

If I ask you to pay $35 per class for teaching you how to pedal a stationary bike you most likely would laugh at me. If I offer you to build relationship, community and mutual support you will be more than willing to fork over that price.

Market does set prices for alternatives. But you get to choose which alternatives you want to be compared against by positioning your product for the right customer job to be done.

Final note of caution – whether the positioning is sustainable or not is not discussed here. We do not know how defensible is the current positioning of SoulCycle and their ilk. I will discuss the topic of sustainable positioning in coming weeks.

What Data Says on Increasing Retweetability of tweets by adding links

TLDR: Data scientists at IterativePath have analyzed tweets over weeks and break the myth of causality of links in tweets to its retweetability.

Admit it you worry about getting your tweets retweeted.  Hopefully  many times, but you will settle for just once. You wish someone lot more famous will notice and retweet your sparkling thought.You come up with something original, innovative and awesome. After all it is only fair that the world sees it and appreciates it by spreading it.

This applies to individuals or brands (which essentially have interns with fancy social media titles manage tweets).

So you look for ways to increase retweetability – what knobs can you turn.As you do a google search you chance upon this article titles, “scientifically proven ways to increase retweetabilty“. One such proven way from that article is:

Adding links to a tweet increases its retweetability.

That article convinces you to arrive at this conclusion (because you have willfully suspended skepticism) by stating this observed data (mind you, from analyzing 10s of thousands of tweets)

  1. Among the tweets that were Retweeted, 56.7% had a link in them
  2. Among the tweets that were not Retweeted, 19% had a link in them

If you went back and read the article I did on these numbers you will see this does not say anything about retweetability.

I decided to do my own testing. Unlike others who do data dredging I practice data science so I started with the hypotheses

Null hypothesis H0: Any difference found in retweetability of tweets with links and no links is just randomness.

Alternative hypothesis H1: Links do make a difference in retweetability.

Method: I will be non-parametric test — Chi-Square test for test for statistics. This test of statistical significance is non-directional. That is  it is not going to tell us which way the difference favors but only that the difference is statistically significant or not.

Data collection:  Randomly collect a sample of original tweets (that is excluding those “RT @SomeOne …”) and analyze them. I used python-twitter API to collect tweet data and metadata like retweet count, links in it or not etc. I collected about 3500 samples — good enough. In fact too large.

Data Summary:   Here is what the data stands

No Link Link Total
No RT 2248 1072 3320
RT 177 44 221
Total 2425 1116 3541

First observation is just about 6% of any of the tweets got even a single retweet. Vast majority of your original tweets get no love whatsoever.

But that was not the hypothesis. So let us test our hypothesis with data in row 2 by calculating Chi-square value.

Results:

chi-sqr

The difference is indeed statistically significant. That is links do make a difference. But note what I stated about chi-square test being nondirectional. So you need to look at the data and apply mind to see which way is the difference.

You can see that just 20% of retweeted tweets have link in them vs. 80% have no link (row 2 of table above).

More importantly look at column 2. Of those tweets with links, 96% of them have 0 retweets. And just 4% were retweeted.

So links make a difference for the worse, breaking the myth propagated by any previous articles on this.

 

 

Breaking the Myth of Personality Tests

 

 

 

 

 

 

 

This is Prithi, again, the fifth grader with another blog post.

Do you have this interest or that? That means that you are one type or the other.

Most of our lives are based on questions like this: personality tests. What people don’t realize is that most personality tests are based on general information. Take the video (which I linked to the last phrase). Everyone gets the same results, even when they seemed very personal. Take this horoscope for example:

Pisces: Travel or short trips will probably be your best outlet. You are exceptional at presenting your ideas. Don’t overspend on friends or children.

Aries: Your ability to deal with others will help you in getting the support you need. Short trips will prove to be more fruitful than you imagined. Your home environment may be hectic, which could result in emotional upset if you aren’t well organized.

 

Taurus: Difficulties with female members of your family may result in estrangement’s. You may be offered opportunities that will result in a higher earning potential. Rewards for past good deeds will be yours.

 

Gemini: Deceit with coworkers is apparent. Your ability to put a deal together will surprise others. This will not be the time to give too much to your children.

Cancer: Your professional attitude will not go unnoticed. You should sit down with someone you trust and work out a budget that will enable you to save a little extra. Tempers will mount if you are too pushy at work.

 

Leo: You are best to put your efforts into redecorating or inviting friends over. Look into alternatives that would better suit both your needs. Overexertion and negligence will be your worst enemies.

 

Virgo: You will be inclined to make unwise investment choices. You can learn a great deal more if you listen rather than rant and rave. You may have difficulties finishing projects you start.

 

Libra: Someone may be trying to pull the wool over your eyes. You won’t get the reaction you want from your mate today. Your ability to be practical in business will help.

 

Scorpio: You will be able to get to the bottom of things today. Consider a conservative investment that will stay solid when everything else goes sour. You will be ready to jump on anyone who gets in the way of your progress today.

 

Sagitarius: Get out and experience the spice of life. Use your creative abilities to come up with new ideas and directions. Someone may be trying to pull the wool over your eyes.

 

Capricorn: Changes in your home environment may cause friction. If you’ve been really busy, try to schedule some time to spend with loved ones. Don’t overdo it.

 

Aquarius: Your ability to come up with good solutions for problems related to work will no doubt help you in getting a promotion. Plan a trip to the country or take a drive to the beach. Problems with your partner are apparent.

Does this seem personal? Well, it’s not. I took the horoscopes and switched them around.

Another example of personality tests was emphasized in one of my previous blog posts. The Sorting Hat. The questions that are asked don’t define you. They just group the people up according to their answers, into four houses or sectors.

Remember, don’t believe in those personality tests. They make their money from you. You don’t rely on them; they rely on you.

 

 

Don’t Classify People by Magic

I am Prithi the 5th grader writing this article.

Whether you are a Gryffindor or Slytherin, you are not defined by the Sorting Hat.

I am an avid fan of Harry Potter: I read the books about 20 times each.

In the Harry Potter seriesall characters were classified by a hat as they enter Hogwarts. We were told that the hat decides which one of the four houses to place a student in, according to its reading of their values.

For people like myself, who want to continue the journey through the seven books, there is a website called pottermore.com. There exists a similar classification of  young witches and wizards on the site, pottermore. Instead of putting on a virtual Sorting Hat, we are asked a bunch of questions which are supposed to determine which house we would be in. This can be helpful, as the answers to the questions were based on our values, which can match up to those of Gryffindor, Hufflepuff, Slytherin, and Ravenclaw. This can also be very judgemental, because the questions are multiple choice, and the user has a different answer, so he or she picks the next best one, getting classified by the answer they don’t want to choose.

The same goes for the Divergent series. People are classified according to their aptitudes and values.

Across the board classification appears everywhere, such as

  1. Which movie are you?
  2. Which dessert are you?
  3. I hope that when I grow up, colleges and businesses that I want to join won’t do the same thing: classifying people by magic. Everyone should know that people are not defined by ten silly questions.

May the Likelihoods Be Mostly in Your Favor

This is Prithi, the fifth grader, with another blog post, on probability. This title was inspired by Effie Trinket, in the Hunger Games.

Let’s say you buy a lottery ticket.You either win or lose. You figure that the chances are 50-50. What you don’t understand is that the chances are not 50-50. But you may ask: Isn’t it like a coin toss? The answer is no.

The explanation:

Let’s say the lottery ticket you buy is numbered from one to twenty. On drawing night, they pick one of the twenty numbers, and if you bought that ticket, you win. Otherwise, you lose.

Here’s a sample space for this problem:

{lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, win}.

Only one out of the twenty options can win. Win or lose are the two states you may find yourself in, but you are more likely to lose than win. The lottery tickets that we buy are not numbered from one to twenty, but have six numbers, from one to forty-two. They don’t pick one number, but six to find the winner. That means the chances are {lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose…

, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose, lose…

Oh, I can’t put a win anywhere here, because the chances of losing keep on going}

This is how the math will work: 1/42*1/41*1/40*1/39*1/38*1/37, or 0.000000000264763.

Therefore, the next time you buy a lottery ticket, don’t figure your chances are 50-50, and always make sure the likelihoods are mostly in your favor.

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