May 09, 2007

B&H Catalog, Creating Demand

The perfect-bound, 420 page B&H Photo/Video catalog arrived in my mailbox this afternoon. You'd be set back about $2,000,000 if you purchased every item in this catalog.

This "resource" catalog, as it used to be known in the industry, is part of a dying breed. As recently as the 1970s, 500 page perfect-bound catalogs were mailed often, carrying a huge assortment of merchandise. I never knew that there were computerized chess games until Montgomery Wards and J.C. Penney told me so.

B&H uses this style of advertising to tell customers about merchandise that the customer never knew existed. I had no idea there was such a thing as a 5-channel portable field mixer. I had no idea these things could be a few thousand dollars.

Catalog marketing used to be great at "creating demand". Catalogs educated the customer, they taught the customer why she had to have a 5-channel portable field mixer.

But then catalogers figured out how to mail targeted 124 page catalogs, with a limited assortment, to an audience that liked only the targeted product in the catalog.

And then marketers figured out how to put all of this merchandise up on a website. They figured out how to send electronic mail messages to customers. So did deposed leaders in Africa.

And then Google turned everything upside down. For a fee, Google could intercept the customer at the very moment s/he was considering the purchase of a 5-channel portable field mixer. You'll notice B&H in the paid search results of this query.

All of this is wonderful for the customer. Absolutely wonderful.

Except for one little problem.

Over the next ten years, catalogs may become obsolete. It is very likely that the USPS will make it it impractical to send paper through the mail. Baby Boomers may focus less on consumption, may focus more on retirement. Boomer kids will have spent their formative years in a Web 2.0 or Web 3.0 or a Web 26.7 world that doesn't rely on paper.

When catalogs become obsolete, how will you ever learn that you want/need a 5-channel portable field mixer? Is Google going to be able to read your thoughts? How good a job does Amazon do at guessing what you might like?

Web Analysts need to start analyzing customer behavior over time. Online Merchants need to figure out how to make us aware of merchandise we never knew existed, but if we knew it existed, we'd want to purchase. When Online Merchants figure out how to do this, we can put catalog marketing to rest. Online Merchants will eventually figure out an effective way to do this. Today's method of "customers who like 'x' also liked these eight items" fails to capture the imagination of the consumer.

Time for your thoughts, especially those of you who are Online Merchants. How will you create demand for items that the customer will purchase, but doesn't even know exist in your merchandise assortment?

6 comments:

  1. Anonymous4:38 AM

    Quite profound question. Our economy is based on consuming stuff we want... but don't need! You are right: in a search marketing era, consumers need to look up stuff they already know about (at least categories of products and services). If "advertizing" is dead, how will you let the world know about your new XYZ Gizmo that does something wonderful nobody ever thought about? Put banners on Google??

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  2. I've done database marketing for kids clothes, and do not agree that catalog direct marketing is dead. For many items, one "needs" to see the product in a catalog. Many times decisions are made browsing the catalog at night before the lights go out over a period of several days or weeks.
    Cost IS an issue. One can partial replace the catalogs with e-mail campaigns and reduce mailing by mailing the full catalog to only the best buyers. One can database market prior purchases to find affinity products tailored to the consumer which is exactly what Amazon does.
    As usually, a multi channel approach is best.

    Ralph Winters

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  3. Jacques and Ralph --- you will see me walk a fine line on this blog.

    Half of me is trying to push catalogers across the Digital Marketing Divide, into a brave new world where sales and profit are driven without paper. The economics of cataloging, coupled with the demographics of the United States, will hasten this transition. And given what happened at Nordstrom, when we killed a catalog and kept things moving right along, I know that it can happen.

    The other half of me is trying to push online marketers into "better practices". Saying "best practices" would be wrong, it would be arrogant to think I have all the answers. That being said, there are a ton of things that online marketers can learn from catalog marketers, practitioners who have honed their craft over the past thirty years. "Creating Demand" is one of those things that online marketers are not good at --- yet.

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  4. Anonymous10:10 PM

    One way to think about creating demand is understanding the long tail of products that is desired by the customer and then trying to make 'similar' customers aware of those options. Customer and data analytics capabilities will be for this strategy

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  5. Amaresh --- thanks for your comments, and welcome to our discussion!

    You did a good job of stating that a company like B&H is well positioned for a future where customers desire products for their niche interests.

    Outside of a catalog or mass form of advertising, there are not many good ways in 2007 to present these products to customers who might be interested in them. Hopefully, in the next five years, online marketers will figure out how to create tools that do this. Until then, catalogs play an important role in creating demand.

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  6. Great post. I too received my B&H catalog the other day and I wondered what in the world they were thinking sending me this catalog again. I've purchased one inexpensive item from them years ago and continue to get this catalog every time they mail it out. While they are surely losing money on me in the myopic sense of comparing their marketing expense for me verus their revenue from me, they're doing much more -- maintaining their reputation through 400-odd pages as the premier shop for photography.

    It makes little sense for them to send me a catalog containing the 39 MegaPixel Hasselblad digital SLR which costs as much as a house. Based on what they know of me they could have sent a much lighter consumer version of the catalog, as you pointed out.

    That's why I posit that it has more to do with brand-building than the realistic expectation that they're catalog spend on me will return their investment. Unless they're just really poor at customer analytics, and simply don't know any better :) Unlikely, however, because with how much that catalog costs times wide distribution of it, such an ignorance would have put them out of business a long time ago.

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