‘Place’ Can Make or Break Brands 

Paul Provost 
President
6P Marketing

In marketing, while most people associate “Place” with geography, it’s actually more about the distribution channel(s) companies use to engage / service its target audiences. As consumers’ buying habits change – purchasing, watching and reading online for example – changing where you offer your products becomes increasingly more important. In 2011, being an innovator is not necessarily a reflection of the types of products you offer, but how and where you offer them.

Over the last year, most of us have watched with little fanfare how an entire industry that employed tens of thousands of people across Canada just evaporated – it ALL had to do with distribution channels. Moreover, the real story is how this one industry, and one company in particular, didn’t measure / monitor / act on its Place and subsequently fell to a very quickly changing market.

In case you haven’t figured it out, I’m speaking about Blockbuster video. Over the last year, both the American and Canadian divisions went bankrupt as a result of quickly changing market conditions. Looking back, it is quite easy to see that the following factors led to their loss of market share:

1. People no longer have or want to visit video stores to rent movies.
2. Streaming on-demand TV shows and movies from big cable networks made on-demand movies accessible to everyone with a cable package.
3. Internet video from the likes of Netflix and Apple has exploded, offering affordable streaming video options to anyone with Internet and the right technology.
4. Bit torrent pirating of TV shows and movies through Person to Person (p2p) systems is still a huge pleasure for people under 40.

So why didn’t Blockbuster see this coming? With all of their resources and their historical dominance in the video market, how did they fall so quickly?

Back in 2010, I read an interesting article that foreshadowed their fall. It highlighted their short-sighted business model based on their new release selection, without any dedication to innovation or market trends. Even before online streaming posed a threat, DVD mail services and kiosks made it clear that place – equaling convenience and timeliness – was just as important as price and selection.

And then came the rise of the online video store, a revolution that Blockbuster refused to join, never mind lead. Instead, they continued flogging the only benefits they had over Rogers on Demand, Shaw on Demand, Netflix and the other options listed above: They carried new releases a month before their competitors, and they had a greater overall selection. 

Unfortunately for them, that wasn’t enough. If people wanted new releases they could still pirate them, save the trip to the store and pocket the money.

With all of these changes in the marketplace, Blockbuster did however make one last-ditch effort to win back their customers: No late fees. This was the proverbial nail in the coffin and I think most people knew it. Instead of adapting, using their huge market presence, selection and agreements with major movie studios to revolutionize online video, they chose to refresh their pricing model. It’s the equivalent of Pizza Hut refusing to jump on the delivery wagon, offering coupons instead… it’s not an astute assessment of the market. This was a shortsighted attempt to retain their client base, not a long-term approach to build a sustainable business.

Rogers saw it coming and they diversified. They focused on the cell phone market, cable services and new ways to offer TV on demand. 

Netflix has grown to become one of the main Internet traffic users based on their business model of complete convenience and an impossibly fair pricing model. Heck, Netflix has even taken a huge chunk out of the pirating market, a juggernaut that I didn’t think could be touched by a paid service. They did this due to their complete and utter understanding of the principles of place: they created a great interface with unlimited streaming movies and TV shows on demand. Even though it’s a pay service, it’s so cheap and easy, so in tune with how people want to watch television that it’s worth the $8/month. 

So yes, don’t discount price (excuse the pun), but remember that as technology continues to evolve and ‘online’ continues to mean more and more to consumers, place should not be ignored. Changing market conditions can have a dramatic impact on your business, so stay alert and open-minded. Don’t be ‘business as usual’. Continuously seeking innovative ways to offer your product or service in ways that truly engage and excite your audience should be paramount to your marketing and business strategies.

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