01 Mar 2016
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Case Study: Paper Chase

Re: Wombi Rose (MBA 2015); John Wise (MBA 2015); Laura Troyani (MBA 2010); Jane Greenthal (MBA 1991); Gary Ambrosino (MBA 1988); Brian Barnett (MBA 1983); Joyce Hrinya (MBA 1988); Ariel Galinsky (MBA 1997); Alejandro Paiuk (MBA 2007)

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(photos courtesy of Lovepop)

(photos courtesy of Lovepop)

Lovepop makes greeting cards that open to reveal intricate 3D designs that resemble an artistic take on a children’s pop-up book. The brainchild of two former ship designers—Wombi Rose and John Wise (both MBA 2015)—the two-year-old company operates four sales kiosks in the Boston area, with mobile retail teams that visit local fairs and markets. The kiosks offer a valuable in-person experience with a high conversion rate for the $8–$13 cards. The split between in-person and online sales is roughly 50/50.

Production is vertically integrated, with cards made in a facility Lovepop owns in Vietnam, which allows for greater flexibility. The company is doubling its revenues quarter over quarter and reported a $1.4 million run rate in late 2015. After some small initial fundraising, in December it secured an investment via ABC’s Shark Tank ($300,000 for 15 percent of the company) and an undisclosed amount of angel funding.

The Question:

Traditional card display stands won’t work for Lovepop’s creations, in part because the stands only show the front of a card. They would hide Lovepop’s value—the reveal. “We don’t feel like we’re sending someone a teddy bear card; we’re sending a teddy bear that emerges out of a card,” says Rose. The kiosk model is effective, but scaling quickly can be costly and time-consuming. And while the team has begun investing in their online approach, hoping to build a unique gifting experience for customers, it is hard to match the interaction of the kiosk.

At the heart of the challenge is the question of positioning: Lovepop makes a product that looks a bit like a greeting card, but acts much more like a gift. “How do we position our product in a market that doesn’t understand what we do?” asks Rose. “How do we create a category?”

The Answers:

It strikes me that Lovepop embodies the “It’s the thought that counts” approach to gift giving. Sometimes, you just can’t think of a gift that’s just right because you’re trying to give a gift to someone who has everything or is just so darn inscrutable that you can’t figure out what they’d like. 

This could be an interesting place to position the product. It’s more than a card (heck, it is $13), but it’s not yet another useless item that you’ll regift or send to Goodwill. You can show some level of personalization by picking a card you know that resonates with them (e.g., they love Hawaii, so pick the palm tree option), but it’s not one more thing they don’t need.

The problem with the kiosk as an option is volume and scale. I’d recommend a PR blitz as the fastest way to gain more traction.
—Laura Troyani (MBA 2010)

I’d redefine the value proposition—you’re not selling a product but an experience. It’s the ooh and aah of the reveal that’s the excitement and value. As such, your delivery of this experience should also have the same mindset. In this regard, your kiosks are so conventional and blah that it’s a testament to the cards that they’ve sold so well. Your brand (and name, no less!) are set up for pop-up retail—your entire “shop” could be set up as a “reveal” and add an element of surprise and experiential delight wherever you go. You could create a very unique brand presence that’s not just about greeting cards.
—Jane Choi Greenthal (MBA 1991)

The key to creating a category here is getting the cards into people’s hands and letting them see the value. Relying on purchases at retail value to drive word of mouth will be slow, and will open up the category for a lot of competition (low-entry barrier). 

The secret to driving this is business category use. It’s a perfect direct mail opportunity. (Yup, I said it; much more effective than email.) Send a sample to business owners with the idea of creating orders for business use. At low cost, it’s practical to send out promotional samples that drive in-hand use. The big byproduct is using this introductory effort to cross-sell consumer use of the product. How many times have we used something at work that we incorporate into our personal lives? Plenty!
—Gary Ambrosino (MBA 1988)

You may want to market these cards through an existing gift channel that would view them as complementary. FTD, 1-800-Flowers, and other online marketers could see this as another quality product they could market alongside their own—or maybe a pop-up valentine paired with chocolate manufacturers or [with retailers like] Tiffany’s, with cards that change year to year. You would not have to offer your entire line through each channel, just match each card with each channel. The most responsive channels could be your focus. Videos on their channel sites and on YouTube could be a nice way to jump-start visibility, offering exposure via someone else’s customer list.
—Brian Barnett (MBA 1983)

Partnership is critical to your distribution growth. Reaching out to companies like Hallmark or Things Remembered (already in the card/gifting space) could be mutually beneficial—providing access for your company and needed innovation for theirs.
—Joyce Hrinya (MBA 1988)

Consider cracking the market via targeted enterprise sales. For example, BMW sending thank-you notes to its loyal customers or United sending holiday or birthday cards to top-tier frequent fliers. This would provide volume and rapid exposure to consumers with lower sensitivity to price.
—Ariel Galinsky (MBA 1997)

You may want to position outside of the greeting card market and more in the corporate giving space. There are a couple of designs that I would buy in bulk to ship to our key customers. So perhaps you could market personalized or custom designs for similar sales/marketing executives (or teams) who are positioning their products or services. Instead of selling 1 or 2 at a time, you’ll be selling 200-plus per order. It will raise visibility in your market—you can promote individual purchases of your cards on the back of each one, and you’ll get a third distribution mechanism.
—Julie Walker (GMP 6, 2000)

+ ONLINE
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It’s all about social media! This business will grow from robust word-of-mouth recommendations, and based on my experience, these tactics should work well: (1) Send samples to social media influencers whose blog, tweet, or post about your product will help it go viral. You don’t need a Kardashian for this to work—there are plenty of bloggers and other influencers out there who can help get the word out. (2) Incentivize consumers (e.g. coupons, contests) to like, comment, or review you on social media and then promote those posts to make sure all their friends and followers see it. (3) Make and post videos of your cards in action on YouTube. Be sure to get onto Youtube Kids and pay to get on the homepage. My kids are addicted to watching videos of people opening presents. If you show how your cards are fun, kids all over will beg their parents for these. And if you can incent folks to make and post their videos too, you will have a social goldmine!
—Alejandro Paiuk (MBA 2007)

Got a case? To take part in a future “Case Study,” send an outline of your company’s challenge to bulletin@hbs.edu

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