I want to share with you a theory I’ve been developing over the past few years. It’s a work in progress, my own opinion based on multiple elements, and I think, fascinating!
Let’s start with a working definition (the tough part that initially will sound like greek) and then pick it apart with stories & pictures (the fun part).
The Rosetta Stone ™ Effect is a brand marketing phenomenon where a product’s high perceived value influences consumers to purchase and then recommend the product regardless of actual value gained from it.
As a quick aside, I’m not the first person to use the phrase “Rosetta Stone Effect.” June Cohen, Executive Producer of TED Media, the creators of the wildly popular TED talks, used the phrase in describing TED’s crowd sourcing of translation for their videos and other materials. While I’m referring to the language software, I’m pretty sure June was tipping her historian hat to the original tablet.
I first started to notice hints at this effect while working at Transparent Language, a small shop competitor of Rosetta Stone. I’m no longer at the company and don’t intend this article for product bashing. If anything, it’s a big business model compliment.
Transparent’s consumer flagship, Byki, operates on a freemium model. That is, they give it away for free and a certain percentage of users will ‘upgrade’ to the paid version. That’s a hard offer to beat, but their brand is relatively unknown compared to the mighty yellow box of Rosetta Stone. But it’s not just a strong brand, it’s a BRANDOSAURUS and when your brand has teeth- weird things start to happen.
Part I – The Purchase
Millions of people purchase Rosetta Stone. Have you? It’s very likely that you have, as Rosetta Stone is a high powered marketing machine. The $45 million in sales & marketing is roughly half of the $91 million in revenue for that same period. We’ve all seen the television ads, kiosks in the airport, and maybe even heard the ad on Pandora internet radio.
Rosetta Stone’s products are also anything but cheap. As of May 2011, the basic Level 1 Spanish is $179 and a full set of Levels 1,2,3,4&5 sells for $479. Additionally, 3 month online access starts at $199. (Source)
Instead of driving people away, the high price tends to appeal to people in two ways: First, many people equate price with quality or value. Do expensive jeans last longer? Will expensive razors cut you less frequently? We know this isn’t always true, but it’s not always easy to distinguish between the two.
The second appeal of the higher price of Rosetta Stone ties into level of commitment. The more you spend on software to learn French, the more serious/committed/dedicated you are to actually learning the language. Is this true? Worth a collegiate study maybe. It seems likely that the difference between prices will be most apparent comparing free vs paid. My instinct tells me that the higher spend doesn’t end up equating to higher success rates and most of the people I’ve talked to confirm this.
The subject of commitment to personal learning is a huge topic. With so many contributing factors, it’ll have to be more fully addressed in a separate post. For the current issue, I propose that people are hoping that the more they spend the more they’ll “stick with it.”
The Emperor’s New Clothes, a fable from the school days of nap time and glue projects, may have a modern equivalent in Rosetta Stone software.
What happens if the product doesn’t work? Being wrong about a $0.99 song on iTunes can make you feel a little regret. You might be more grumpy if you paid for movie tickets only to find out that the preview contained the only actual funny parts. How about a $500 purchase?
There is a typical response I continue to hear from people who have purchased Rosetta Stone. “I liked it, learned some words, but never really got far.” They very clearly spell out that it’s their fault, not the software that is at fault for not continuing.
In a way, there will always be personal fault found when engaging a learning tool. Often you get out of it what you put in it. And putting in large amounts of cash don’t fit into that equation. It’s the Mr Miyagi elbow grease that shines cars (wax on, wax off).
Personal digs noted, I propose that there is still fault left over. It is then significant that users assume it all on themselves- especially in a day and age of passing the buck. But perhaps, this behavior is explainable. After all, who could blame you for not having the time to memorize those phrases? The social pain then weighs heavier on the potential embarrassment for being duped in the marketplace.
Part II – The Recommendation
The second part of the Rosetta Stone ™ Effect is the huge amount of recommendations. Many of these referrals come from people who haven’t even used the product, but heard or saw advertising:
Other recommendations come from people who heard ‘something’ about it from a friend- potentially the same friend mentioned above who never actually found success with it . And it’s this instance that most intrigues me. Not only could someone buy the Emperor’s New Clothes, but they then recommend it to friends.
Here is an additional recommendation from Yahoo! Answers that I thought was equally entertaining. The question was seeking the best way to learn a language:
Normally people would summarize and close a topic here. I want to do just the opposite and instead open this up for discussion. This observation is far from over and there are elements you might have picked up on that I haven’t. From broad business theory to experiences with Rosetta Stone, I welcome your insight.
Does a company that spends so much on Sales & Marketing scare you? Or is this ratio the secret sauce of Rosetta Stone- driving brand recognition and resulting sales?
Have you bought Rosetta Stone? Used it? Followed the same pattern, or did you diverge from what I’ve observed?
Update 5/13 – Has the modern social media consumer broken the spell?
The Motley Fool posted an article today titled “Is Rosetta Stone’s Cash Machine Empty?” It appears Rosetta is having some internal financial issues- enough to peak the interest of investment gurus like Seth Jayson, the author of the article. This begs the question of how long a company can sustain the high costs involved with branding and selling within the Rosetta Stone Effect?