I’m always intrigued to find out how digital businesses tackle the issue of user engagement through tailored recommendations. Content providers like Netflix and Amazon notoriously spend a lot of money and effort into their recommendation engines and it was interesting to find about how Barnes & Noble (‘B&N’) are now handling recommendations through their latest “NOOK” device.
Personalised recommendations are a though one to get right. I guess most of us have experiences with using Amazon to buy Christmas gifts and subsequently receiving recommendations on floral craft books during the rest of the year. With the NOOK, B&N introduces ‘Channels’ to try and address this issue:
- Based on personal interest – The idea behind creating specific ‘channels’ is to base each channel on a specific theme that’s likely to interest a group of customers. The titles of Nook’s existing 300+ channels vary from “Janes Austen & Heirs” to “International Intrigue.”
- How is each channel curated? – Each channel contains 40-50 titles, mostly curated by B&N booksellers but also taking into account algorithmic info and user data (e.g. customer profiles and purchasing behaviour). The channels currently only consist of books, but B&N are planning on including other content (like movies and apps) over time.
- Keeping it dynamic – Like I alluded to earlier to with regard to Amazon’s classic ‘floral craft’ example, B&N customers can improve the channels and books recommended to them by ‘liking’ or ‘not liking’ suggested titles. As new titles get released, B&N will add these to the relevant channels (or create new channels around them).
Main learning point: the idea of enabling users to discover new content through ‘channels’ is a great one. The ongoing challenge for content providers like Barnes & Noble is to get the content of each channel ‘right’. This means finding the right balance between human curation and automatically generated recommendations. The value of the ‘channel’ concept for users is that they can access a continuous stream of recommendations within a genre or a topic they like. For B&N, the value comes from being able to retain users (and retain their spend) through an ongoing selection of titles.
Related links for further learning:
Hearing Charles Arthur, Technology Editor with The Guardian, talk about a “price umbrella” intrigued me. He mentioned these two words in relation to the launch of the iPad Mini and I wondered how a price umbrella works. This is what I’ve since learnt:
- Price umbrella – This term refers to the pricing effect typically created by a market leader. As long as competitors set their price for a similar product within the ‘umbrella’, i.e. at or below the price set by the market leader, they will be able to compete within a specific market space. In other words, by setting high prices, a company can leave room for competitors to come in and compete at a lower price point.
- How to avoid a price umbrella – Ryan Jones has done a really helpful analysis of 3 common steps involved in avoiding the creation of a price umbrella: (1) create a new, cheaper product line (2) keep selling old hardware and (3) get someone else to subsidise the product. Offering different versions of the same product is probably the most obvious way of eliminating or at least lowering the price umbrella.
- Apple’s iPad Mini and the price umbrella – In his blog post, Ryan Jones has visualised Apple’s approach to avoiding a pricing umbrella very neatly (see Fig. 1 below). This graph illustrates perfectly how different versions of Apple’s devices (at different price points and with slight variations in product specification) help in lowering the price point, making it much harder for competitors to enter the market. However, with the iPad Mini currently priced at £269, there’s enough room for similar tablets to compete in the market; enter Google’s Nexus 7, Barnes & Noble’s Nook Simple Touch, Amazon’s Kindle Paperwhite and others.
Main learning point: I now know what a price umbrella is and how companies can leave precious market space for competitors to enter if they’re not careful. Even a dominant force like Apple is not exonerated from this pricing effect as is currently demonstrated by its iPad Mini. However, companies like Apple have become extremely good at continuously innovating and introducing new product versions at lower price points.
Fig. 1 – Apple’s Price Points for the iPhone, iPod and iPod (taken from http://www.iamconcise.com/main/the-reason-for-the-ipad-mini.html)
Related links for further learning: