Tuesday, February 26, 2013

The Nook No More

In early 2010, I said that Barnes & Noble's version of an e-reader, dubbed the Nook, would not be a success.

I believed this because the Barnes & Noble brand was bookstores, not technology.  To compound their problem, it was a late arrival to the market.  The Kindle had staked out the leadership position in the e-reader category.

Regardless, Barnes & Noble took the bait.  According to Leslie Kaufman in The New York Times, Barnes & Noble is now reevaluating its presence in the e-reader category.  This is somewhat surprising news because as of very recently, the Nook received very significant investments.  Last May, Microsoft invested $600 million in the product and as recently as December, the British textbook publisher Pearson bought a 5 percent stake in the unit for nearly $90 million.

But while the category has seen considerable growth, Barnes & Noble recently warned investors that it will fall considerably short of its expectation of generating $3 billion for 2013.

As is often the case, the problem isn't with the product but consumers' perception of it. Despite earning positive reviews this past holiday shopping season, the Nook brand couldn't compete against the iPad and the Kindle.  If the Nook was first to the market, how its perceived is completely different.

Too many marketers neglect such basics in developing a brand strategy and unfortunately, will always do so.  The epitome of this point is the analyst who cites the reason for the Nook failing to be that "the Barnes & Noble brand is just very small, it has done a great job at engaging its existing customers but failed to expand their footprint beyond that.”

Barnes & Noble, whether they know it or not, is getting this one right.   

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