categorystrategy

The market for post-undergraduate business education is being underserved, but not in the way you think.

Executive MBA programs are gaining stature every year. Many of the country’s best B-schools now offer programs structured for students well into the workforce and with life situations that preclude leaving work and family obligations for two years of full-time study. It’s a wonderful time to be in the position to further one’s education and obtain an MBA. However, with an average cost of around $47,000 and a commitment to two years of nights and/or weekends, an executive MBA program is still out of the reach of most aspirants.

“You dropped 150 grand on a f****** education you could have got for a dollar fifty in late charges at the public library!” - Good Will Hunting

For considerably less cost is an attempt to obtain the equivalent knowledge through books. There’s even a surprisingly well-organized attempt to define a personal MBA. It would seem that with the volume of business books available one could easily access the best current thinking on economics, marketing, sales, creativity, leadership, and management while sipping a latte at Barnes & Noble. But there’s something missing in that equation – the classroom experience. And that leads me to the missing link between business books and an MBA.

At its core, higher education is less about learning than about how to learn. And an effective MBA will be less about core business fundamentals than about the collaborative learning environment during the program. So here’s the opening, the opportunity. How can one get the shared sense of accomplishment, of dedication to task, of focus on a goal without the motivator of a large tuition payment? And most importantly how can one collaborate with a group of similarly motivated individuals so that their shared experience is the real accomplishment?

Somewhere between that $1.50 at the library and the $47,000 to a B-school is a huge opportunity.

I paid my American Express bill late recently and incurred a $29 late fee. I called and innocently inquired about it hoping that it would be forgiven. The nice customer service rep that explained to me what day my payment had been due and what day mine actually arrived didn’t hesitate to help me out. She said that I had been a member for a long time and she would certainly remove the charge. Of course, I thought to myself. I’ve been a member since 1989.

I feel that I get better customer service from American Express. Do I actually? I don’t know, but it seems that way to me and that makes a difference. In fact I didn’t just say that that I had an American Express card, or that I used one. I called myself a member. Think about the power of that. How many other products elicit feelings of membership by their users?

Sharp sells LCD TVs and to me has a great advantage. Their company name is a positive characteristic of the product. What fantastic branding. So how does Sharp capitalize on that advantage? They don’t. Instead they paid some untold sum of money to branding experts to christen their LCD television line as “Aquos.” The name Aquos is fine by branding standards. It conjures up pleasant images water and fluid motion. But LCD televisions are about unparalleled clarity. Water and fluid are about blurred motion. Dump the Aquos branding Sharp and capitalize on your fortunate corporate name.

Here’s why I think that Google’s threat to the world’s largest online marketplace is overblown, plus my opinion on eBay’s plans for Skype.

The benefits that Google Base appears to offer to online buyers and sellers is first that it’s free, and second that it is searchable via Google, whereas eBay and craigslist are not. Two great benefits to be sure. But beyond that nothing is clear and Google is predictably cryptic as to its plans for the service. As I mention below, I think this is simply an attempt by Google to make more information searchable and to make its results more locally relevant. Enhancing the ability of consumers to find things is a laudable ecommerce goal but free listings, even with a Google-sized audience, do not make a market. In addition to a list of things you can buy, eBay offers a secure online payment system, feedback ratings on buyers and sellers, extensive anti-fraud efforts, search via categories and attributes, and policing of the behavior of its members. The effectiveness and implementation of each of those is up for debate, but the bottom line is that eBay is a total marketplace offering distinct advantages for both buyers and sellers.

Google has earned respect as it enters new markets and Google Base certainly represents a new angle on participatory ecommerce. But all this discounts how consumers actually shop at retail. Most of us are browsers focused on the items we are interested and not on the technology used to present them to us. When you are in a mall do you care about the total square footage, the construction techniques used to support the glass dome over the food court, or the volume of air moved by the air conditioning system? No, you probably never thought about the physical infrastructure. If you are an eBay buyer do you care that the seller had to pay a listing fee? Not your problem. The seller will pay that fee for access to the buyers. Right now, and for the foreseeable future the buyers are on eBay. And since most eBay users are buyers and not sellers the critical mass to move to another marketplace will not be there.

Local Advertising

That said, I do see eBay and Google converging onto a new ecommerce market – local services. This is where eBay’s Skype acquisition and Google Base will become strategically relevant. Let’s start with the numbers.

According to Borrell Associates, online local advertising amounted to $2.8 billion in 2004. That’s an increase of over $600 million from 2003, but still represents only about 2% of all local advertising spending. The physical yellow pages still rule as the dominant medium for local services advertising. But it seems that consumer behavior is changing faster than advertising budgets. The Kelsey Group reports (Feb. 2004) that 25% of online buyers’ searches are for local merchants. That’s surprising to me and apparently double what analysts had predicted. So the trend is clearly that buyers are increasingly turning to online searches for local services.

Local merchants and small businesses account for the lion’s share of the $15 billion in annual yellow pages advertising spending. It has proven effective as a search vehicle for local products and services but it has the disadvantage inherent in physical media of not providing a quantifiable return on investment. Online marketing provides this benefit by tracking click-through. This is a key reason why ad spending through Google is now around $500 million a month.

This leads to a rich market in local services advertising to be tapped by a service that can deliver the quantifiable results of pay-per-click model on the web with the usage pattern of the print yellow pages. This is where I believe eBay is heading, and where I think Skype fits in.

The Skype Angle

The initial criticism I read of eBay’s purchase of Skype, beyond the seemingly astronomical price, was that connecting buyers with sellers through IP telephony was not something their users wanted. In fact sellers were pretty vocal that they did not want a way for buyers to be able to call them. They prefer to keep them at arm’s length by using only email. Fair enough, but that underestimates the Skype potential by focusing solely on eBay as it exists today. If we look at local services as a future market yet to be tapped by the proper technology, then eBay has a huge potential market for connecting (local) buyers to sellers (of local services). And if that market is now served by the yellow pages then the model for connecting those buyers and sellers is clearly voice phone calls.

So, here’s what I see happening. Say for example that you have a service need. Typically it is a one-time occurrence where you have a leaky pipe or a broken garage door. Maybe you need to book a band or order a wedding cake. In these cases you need someone local and you need to communicate with them to explain the situation. You probably pick up the yellow pages and call a few companies based on the size of their ads. In some cases you may do a web search, but you are less likely to find relevant local results and even if you do you will probably still call them on the phone. This is not like ordering a book that can be shipped from anywhere. Especially if you have something broken and you need it fixed!

EBay can step into this market by providing a local services marketplace with the ability to click to call by using Skype. All the components are there for eBay to make this happen – the market need, the financial viability, the technology, and the market leadership position to establish it. The hurdle is disintermediation, but that’s a topic for next time.

As I discuss things related directly to the field of my employment, I feel it important to publicly issue a disclaimer regarding the content on categorystrategy.com. All original content appearing under my name on this site is my own work comprising my personal experience and opinions. It is not sanctioned or endorsed by my employer or any other organization.

Welcome!

Categorystrategy.com is a conversation about consumer packaged goods, retail, and related technology. It is my attempt to document what I have learned and observed in retail and CPG, and to offer some new insights. I spent eight years in the consumer packaged goods industry working with retailers, analyzing data, and developing technology solutions for a retail sales force. I have worked with some great people along the way, had successes and failures, but most of all developed a genuine passion for the industry.

I have spent the last four years in the technology industry in sales and channel management roles. It’s my goal now to get back into consumer products and return with a new set of skills. I am going to share my job search with a focus on some interesting things I have learned about networking, resume preparation, mentoring, changing industries, and interviewing. I am thankful to those who have helped me along the way and hope to give back in some way by sharing useful information here.

This is a soft launch right now and I will be working the kinks out as I go. So let’s get started.

- Scott Magoon

I’ve been fortunate that most of my jobs have had a field component that enabled me to work outside the office. To me the customer environment is my classroom. All of my major career accomplishments began with direct customer contact in their own environment.

If you are in an industry with a retail component you have a fantastic opportunity to understand consumers – observe them in the retail environment. They will tell you nearly everything you need to know about product assortment, pricing, packaging, shelving, and merchandising by their actions. Other industries have to pay a fortune for the type of market research that’s readily observable by retailers and consumer packaged goods manufacturers.

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One of the most important concepts I will discuss here is that of solutions. I believe that consumers do not buy products and services as much as they buy an end result. They buy ingredients, but they want meals. They buy a video game, but they want entertainment. Knowing what’s needed and what’s important are the keys to designing a solution that a customer will buy. Whether my job has been in sales, analysis, or channel partner management, I have been a solution designer.

The way to turn a product into a solution is to incorporate value for the customer or end-user. Here are my ideas about a value chain and how products become solutions…

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In 1999, I was a member of the Charlotte, NC Company of Friends. Our national coordinator, and “Social Capitalist,” Heath Row was touring the South visiting several COF groups to learn about local activities and meet members. It was billed as “Fast Company magazine’s search for the New Economy in the Way New South.” Below is Heath’s online journal entry of his visit with me.

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Sept. 23, 1999

[…] it was a straight shot in to Charlotte, where I met up with Scott Magoon, a technology specialist for Kraft Foods, which has a regional sales office tucked in the back of an office park south of the city almost to the South Carolina border.
Scott worked for Kraft for three years as a market analyst and sales representative before moving in to IT. “I’d be happy if I changed jobs every year,” he says. “I like trying different things, and it’s easy to stagnate.” Since moving to Kraft’s Charlotte office from Chicago, Scott’s been working on a couple of change efforts. One, he’s currently deploying new laptops to the region’s 120 sales reps.
“It’s the biggest project I’ve had in my life. It’s huge,” he says. “Coordinating everybody is the biggest challenge. They’ve got to mail their old computers in. We’ve got to mail the new computers to them. And they’ve got to be home when they arrive.” Other than the deployment, technology training is a big part of what Scott’s working on. Instead of teaching people how to use a new tool such as Excel, Scott interviews people to learn what they need to do - and then he teaches people how to do it most productively using the tools at hand. “I always want to think of a new way for people to do something,” he says. “But skill levels vary so much, and some people just want to do things the same way. I want to teach people how to use the technology to be more productive, but I’ve got to get over the hurdle of, ‘I don’t have time because I’m too busy.’”
While I expected to spend some time with Scott to learn what he’s working on and learning, I did not expect the 14-person roundtable he’d organized with the regional manager and other Kraft staff based in Charlotte.

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