In this economy, can the Zune challenge the iPod to a price war and come out the winner?

Microsoft seems to hope so. This week, they announced a web-only campaign to promote the Zune as a more economical alternative to the Apple iPod. The argument used in the ad is that Zune users can get unlimited music downloads with a $15 monthly subscription, but it would cost $30,000 to fill a 120GB iPod with music from the iTunes store. They are using Wes Moss, a CFP and radio show host who spent some time on “The Apprentice” as their pitch man.

It’s no secret that consumers have heavily favored the iPod, even though they are, more or less, the same thing.  Question is, will this marketing campaign help shore up interest or sales for Zune?

My bet is that it might help a little bit, but it won’t change the game.  There are three main reasons why.

The messages don’t relate to how most people actually fill an MP3 player. Most of the people I know have an iPod or an iPhone (or both) to play MP3s, but I can’t think of a single one who sat down and bought 120GB of music on iTunes in a week, a month, or even a year or two.  People often rip the CDs they already have, get copies of MP3s from friends, and yes, download them on P2P networks.   They also put a variety of different media on their devices, like pictures, video, that also come from a variety of sources, some free, some bought through iTunes, some ripped from other forms of media they’ve already bought.  So, the whole premise of the ad doesn’t really make sense because buying $30K in songs through iTunes is not something most people actually do.  If you can’t imagine yourself buying anywhere near that many songs in a reasonable period of time, the Zune argument doesn’t really make sense.  (It turns out you can only keep 10 of the Zune Pass songs you download each month, so you can’t exactly fill your Zune for $15 the same way you fill your iPod for $15.)

Price is not necessarily a silver bullet if you don’t have a brand. Microsoft was wise to create a sub-brand for the Zune, they haven’t done a whole lot with it as yet to paint a picture for consumers about what having a Zune says about them, or enabled fans of the device to do it themselves.  This might seem trivial (especially if you think owning a Zune will save you about $30k), but it’s very real in this market.  This is a device that you use to listen to music (an expression of identity in itself) and you carry around with you.  Other people see you with it on the street – it’s a fashion item as much as it’s an MP3 player.  Do you want the (arguably) cheaper Zune, that won’t be recognized as a Zune (which wouldn’t mean much anyway), sort of looks like an iPod but isn’t an iPod?  Or do you want an actual iPod?

People may want to be thrifty, but they don’t want to feel they can’t have what they want. If you are someone who might be dropping $30K a year at iTunes and don’t care about showing a off a shiny new iPod, I still don’t think this ad would be convincing.  It’s advertising a fun product, but it’s not fun.  It doesn’t help me to imagine all of the great things I can do with the money I didn’t spend on iTunes, or how I’ll enjoy my new Zune.  A financial planner is telling me that the device that you see on the street every day is too expensive, and I should take this as the cheaper option.  Financial planners are knowledgeable about money, but they are also people who tell me I have to hold off on things I want now to get something good later.  This one in a grey suit (that sort of reminds me of the one PC guy on the Mac commercials wears) is talking about a large sum of money that’s hard to conceptualize.  And easy to tune out.

I know it’s all too easy to be a critic, so here’s what I would do instead:

• Focus on selling the Zune and the ZunePass service, not unselling the iPod. Comparisons are fine to make, but never try to beat Apple without a good counterargument for your brand AND your product.  You will lose.
• Use dollar amounts and time periods that make sense in the context of what people actually do. It’s fine to use numbers, but use plausible ones that suit the context and help people contextualize the differences.  And be honest.  You could say, for example, that ZunePass gives you the same number of songs to keep as $10 worth of iTunes, PLUS you can get what you really want by sampling as much as you like.  Less waste, more discovery.
• Don’t make price the only differentiator. This is essentially a fashion and lifestyle product, not a quart of milk.  Why not emphasize how customizable the Zune is, or show people using the music sharing features?    Part of the campaign is positioning the PC as a music discovery device – and that could carry over to the Zune, too, as a product for people who care more about the music than the image…ostensibly, anyway.
• Make Zune people too cool to be iPod people. The Zune campaign is all a little reminiscent of the recent TV commercials where shoppers go out with a pre-determined budget to buy a computer, and find a PC that meets their needs for less than a Mac. In one ad, a woman named Lauren, who can’t afford the MacBook with the screen she wants says a little sarcastically that she guesses she’s “just not cool enough to be a Mac person”.  This comes off as “I would get/consider a Mac, but can’t afford it” not “Mac people just want to buy cool, but I’m not like that”.   The Zune’s advantage in the music player space (which PCs don’t have in the world of notebook computers) is that everyone and his uncle has an iPod, but Zunes are rare.  That should make them exciting objects to see and have, not a plan B.
• Get offline. Whether it’s giving people a free Zune when they get a subscription for a certain period of time, or simply giving them away, we need to see more Zunes on the street, and they need to be distinctive.  If you’re not going to do TV, you need to reach people who aren’t seeing this online somehow.  The product can’t just live if you limit it to computer screens.
• If you can’t get Apple’s style, use humor. The current ads remind me a bit of a retirement planning commercial…there’s a man in a suit with a chart and a bunch of numbers.  Why not have fun with the comparison? A recent episode of “The Simpsons”, for example, took aim at “Mapple”.

The Dunkin’ Donuts ads that took on Starbucks also did a wonderful job of using humor to entertain, but also to take a subtle jab at their upmarket competitor, not on price, but on attitude.  It’s not saying I can’t afford a Starbucks latte or I’m not going there because I don’t know what a venti is, but asking, why would you even want to?

By the way, I love Starbucks.  And my MacBook.  But my iPod’s been crashing and freezing a lot lately so I’ve been looking into replacements.  I did seriously consider the Zune, but there’s a big problem: compatability.  I can’t play my Apple-DRM songs on it, and the software doesn’t work on a Mac.  So I’m saving up to buy an iPod Touch.  Unless someone can convince me otherwise.