Pricing by the Page

Amazon is again a price innovator. This time, Amazon is going to pay authors according to how many pages are read by customers who 'borrow' e-books from the Kindle 'library'.

Here's how Amazon explained it to authors (italics added for emphasis):

Beginning July 1, 2015, we'll switch from paying Kindle Unlimited (KU) and Kindle Owners' Lending Library (KOLL) royalties based on qualified borrows, to paying based on the number of pages read. We're making this switch in response to great feedback we received from authors who asked us to better align payout with the length of books and how much customers read. Under the new payment method, you'll be paid for each page individual customers read of your book, the first time they read it. 

Media coverage of the new pricing mentions how it could influence authors to write page-turners to encourage readers to read quickly so Amazon will pay quickly. Or influence authors to write longer books to get paid more as readers read. Canadian Business notes that this pricing policy is a way to objectively assess the value of an e-book to readers, and pay authors according to that value.

Although some authors worry that they will see lower payments, others believe that the new pricing will lead to higher quality. However, books by best-selling authors are generally not part of Amazon's Kindle library and therefore not subject to this new pricing. So pricing by the page is mainly an innovation applied to e-books by indie authors, at least for now.

Overall, pricing of books has gotten increasingly complex over time. Buyers can purchase a printed or electronic book, or 'borrow' from the library (at one low subscription price per year) or 'hire' a textbook for a specific period. Not surprisingly, the complexities can be confusing to both readers and authors. Will pricing by the page establish itself as a long-term policy?

Competitive changes in the UK chocolate market

The UK market for chocolates is increasingly split between mass-market brands such as Cadbury Dairy Milk and upmarket brands such as Hotel Chocolat.

In fact, Hotel Chocolat's founder says: 'It's an emotionally charged food product that people are buying for the taste and the way it makes them feel'. With a decade of experience in marketing the emotional and taste benefits of luxury chocolates, Hotel Chocolat has established a distinctive brand image and built considerable brand equity.

On the mass-market side, Cadbury Dairy Milk (owned by Mondelez) continues to top the list of leading UK chocolate brands, with year-over-year growth. Mars and Nestle both have chocolate-bar brands in the top 10--and private-brand chocolates are also among the top sellers.

However, the competitive situation is about to change. Thorntons has been struggling for some time, caught between the upmarket brands and the mass-market brands. Now Ferrero has acquired it, which may lead to a new marketing strategy, not to mention a new positioning for the products and the retail shops. This will cause all the aspirational brands to work harder to connect with customers and reinforce loyalty.

So the hypothethical marketing plan for Lost Legends Luxury Chocolatier (which is included in my Essential Guide to Marketing Planning textbook) must be updated to reflect these important market changes.

England's new cigarette marketing rules

From May 2016, the familiar brand colours and logos will no longer appear on packs of Marlboro and every other well-known brand of cigarettes sold in England. Instead, all cigarettes will be sold in standardised, 'plain' packaging, complete with easy-to-read health warnings. The new rules, years in the making, are designed to discourage children from smoking.

Brands are battling back by preparing legal action to force the UK government to compensate them for the loss of value of intellectual property, namely the considerable financial value of their instantly-recognised brands. 'We respect the government’s authority to regulate in the public interest, but wiping out trademarks simply goes too far', according to Philip Morris International’s senior vice president and general counsel.

Electronic cigarette marketing must adhere to different government standards. For instance, e-cigarettes can now be advertised on television if not associated with youth culture or set to appeal to under-age buyers. Grocery retailers are seeing large increases in e-cig purchasing, in fact.

Tesco reduces its global retail reach

Tesco's Homeplus retail business in South Korea serves 6 million customers weekly. This thriving retail empire has annual turnover of £4.1 billion and has been a leader in virtual retailing for several years.

Now, after the failure of the Fresh & Easy expansion in the US and a challenging accounting scandal, Tesco is exploring the sale of the Homeplus unit to reduce corporate debt and refocus on its other business interests. Private equity firms are preparing to bid, and the Hyundai Department Store group may bid, as well.

Despite this reduction in global retail reach, Tesco's retailing strategy still includes non-UK operations in India, Malaysia, Czech Republic, Hungary, Ireland, Poland, Slovakia, China and Turkey. It also offers financial services and marketing research services.

What does the Tesco brand stand for? The corporate site explains:

Today, our brand must be about more than simply function. It’s about the way we work, the values we live by, the legacy we leave. We can’t solve the world’s problems but we want Tesco to always do the right thing, to inspire and to earn trust and loyalty from all of our stakeholders.

Greener packaging for soft drinks

Coca-Cola has been highlighting its green-tech credentials through the development of earth-friendlier packaging such as the PlantBottle. Just a few days ago, Coca-Cola displayed the latest version of the PlantBottle, which 'looks and functions just like traditional PET plastic, but has a lighter footprint on the planet and its scarce resources'.

The soft-drink company first introduced PlantBottle in 2009, and began selling beverages in it in UK markets in 2011. Now it has distributed more than 25 billion 'green' bottles worldwide, as the infographic shows.

When influential brands such as Coca-Cola commit to environmental efforts on a large scale, they not only encourage consumers to participate but also add a new point of differentiation for competitive purposes. And that's exactly what happened in this case.

Not long after Coca-Cola launched PlantBottle, which was originally made in part from plant-based material, PepsiCo announced its own 'green' beverage packaging that was 100% plant-based. This kind of competition surely benefits the planet: Coke's latest bottle is now 100% plant-based--and it is using its corporate resources to continue developing additional packaging that will biodegrade instead of lingering in landfills.

Food for thought: pricing at two London cafes

Two London cafes have interesting (and different) approaches to pricing. Whether either or both will attract loyal, long-term customers is the biggest question--but the novel pricing is attracting attention now.

Caffix uses the strapline 'eat fresh, pay less' for its value proposition. 'Give people a great quality product and do it at a lower price', says the founder. The cafe's pricing strategy is simple: every menu item is priced at £1. Salads, sandwiches coffee, juices, everything is sold at the same fixed, low price. The portions are, of course, small -- but that allows customers to enjoy the variety and try new things. Follow Caffix's latest on its website,  Twitter page, Facebook or Instagram.

Ziferblat has a different approach: food is free. Instead, customers pay for the time they spend at the cafe, at a rate of 3p per minute. This pricing strategy originated at the founder's first Ziferblat cafe in Moscow, and now the company is spreading it around the world, to London and Manchester and beyond. The cafe's logo subtly promotes its pricing strategy through the use of the clockface. Follow Ziferblat's latest on its Facebook page or on Twitter.

Top UK brands--and branding insights

The 2015 Brandz study (methodology by Millward Brown) puts Vodafone on top as the most valuable UK brand of the year. In order, the top 5 UK brands, by value, are:

1. Vodafone (telecoms)
2. HSBC (financial services)
3. Shell (oil/energy)
4. BT (telecoms)
5. BP (oil/energy)

 The most valuable brands in the world are all US-based:

1. Apple (electronics)
2. Google (Internet/electronics)
3. Microsoft (electronics)
4. IBM (computers and services)
5. Visa (financial services)

Millward Brown's top 5 insights for increasing brand value are: Innovate and delight the customer; be meaningfully different (in ways that customers value); stand for a purpose; act according to the purpose; build and maintain trust.