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Professorial Musings form the World of Marketing

March 2010 Product

Recent issues of the New York Times and Wall Street Journal have been particularly rich in their commentaries of heretofore magnificent corporations who have fallen on hard times. In particular: Toyota, Palm and Blockbuster.

Toyota

The temporary demise of Toyota is particularly interesting in that this company was the “poster child” of such techniques as “lean” production and state-of-the-art sourcing and procurement.  They took many of the key premises of the Japanese business culture and fashioned a global marketing superstar.  However, they might have taken a page out of the American business culture’s crisis management doctrine.

The fall of Toyota is not so much the fault of shoddy sourcing and quality control, it is the lame and inadequate response management has taken to the media barrage.  All I can think of is “a day late and a dollar short.”  Apparently, the Japanese culture doesn’t figure for the need for accountability to customers and regulatory agencies and the need to address problems honestly and quickly.

All of this will accrue to the benefit of Detroit.  Now that Toyota has a black eye people who want to buy cars will now give Chevrolet, Buick, Cadillac and GMC a chance.   They may discover that GM builds pretty darn good cars at extremely reasonable prices.

Palm

A few years ago, PALM was a technological leader.  Business executives flocked to this technology where they could have their entire address book and calendar at their fingertips;  The parent company, 3Com, was a Wall Street darling.

But, like so many successful companies, PALM let the competition take the market away from them.  While PALM was building ever more modern PALM PILOTS, Research in Motion (Blackberry’s parent), started using the basic cell phone technology and combining the features of PALM into its Blackberry devices.  Now, in addition to address book, datebook, you had in one device a telephone, an e-mail and text receiver and sender, a camera and a myriad of other applications that connected into various Internet sites.  That old PALM PILOT is as useless as 3-lb. wired car phone.

Add to PALM’s woes, Apple came out with the iPhone , with tons of special applications.  PALM, too, came out with their smart phones but they were “a day late and a dollar short.”  As of today, PALM has 5.2 percent market share;  the iPhone has 18.2 percent and Blackberry has 43 percent.  There are a lot of other hangers on including the new Motorola Droid phone and various others from the likes of Nokia and Samsung.

PALM should be looking for somebody to buy them.  The only thing that have of any values is their brand name.

Blockbuster

Another former growth giant also finds itself in the throes of obsolescence – BLOCKBUSTER.  Only a few years ago, there were hundreds of BLOCKBUSTER stores as millions of Americans used their VCR’s to play movies in their homes.  BLOCKBUSTER would rent a movie for one or two nights for $3-$4 and make the customer bring them back to the store.  A pretty attractive business model.

But times change, technologies change and BLOCKBUSTER, like PALM, lost their edge.  Netflix allowed you unlimited rentals for a set monthly fee and they mailed the DVDs to you and when you were finished with them all you had to do was drop them into a mailbox.  Moreover, Netflix allowed you to instantly play a wide variety of media on your computer.  BLOCKBUSTER tried to replicate NETFLIX’s business model but couldn’t implement it  effectively.  In addition, as for price, there are vending machines at convenience stores where you can rent a moving for $1.

Now, even the NETFLIX system is obsolete.  Cable systems offer Pay-per-view and for $150 or so, one can buy a VUDU player and attach it to your high definition TV.  Everything that is available at BLOCKBUSTER is now available on line and your credit card is charged the viewing fee. You rent the movie for 48 hours and if you start watching and get tired, you can pick it up right where you left off.

BLOCKBUSTER has a great name and lots of real estate, but it is offering archaic technology.  Where do they go?  I’m sure great minds are asking that very question.



About the author

James T. Berger, Managing Editor of The Wiglaf Journal, through his Northbrook-based firm, James T. Berger/Market Strategies, offers a broad range of marketing communications, research and strategic planning consulting services. In addition, he provides expert services to intellectual property attorneys in the area of trademark infringement litigation. An adjunct professor of marketing at Roosevelt University, he previously has taught at Northwestern University, DePaul University, University of Illinois at Chicago and The Lake Forest Graduate School of Management. He holds degrees from the University of Michigan (BA), Northwestern University (MS) and the University of Chicago (MBA). Berger is an often-published free lance business writer who has developed more than 100 published articles in the last eight years. For more information, visit www.jamesberger.net or telephone him at (847) 328-9633.

James T. Berger
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