James Patterson

1. Patterson and his publisher seem to think that selling his books through book clubs is a drain on profits. Do you agree? What should he do about the club channel?

Patterson may be correct that book clubs drain on overall profits because that distribution channel provides the weakest profit margin, but he lacks complete understanding of the roll that book clubs play in overall sales. Reference Exhibit 7 from the case study, notice that initially, sales spike to 130k per week and the next month, sales drop to 70k per week. Suddenly, the books sales re-spike to 110k per week the following month and finally fall until the paperback copy is released. One could argue that the book club channel is what drives the second spike in sales. For example, the book is launched and all of the loyal readers buy the book immediately representing the initial spike. Sales are followed by a drop as those who initially purchased the book are reading and lagers represent those filling the trailing purchases. The following month, readers finish the book and begin recommending it to friends as well as discussing the book in book clubs.

Secondly, for a best-seller, book clubs represent 20% of overall sales, but likely represents an even greater share for Patterson as a recent survey found that book club members bought more Patterson books than any other single crime fiction author. Alienating this significant customer base could be detrimental to book sales. People become members of book clubs because they enjoy discussing the books they are reading just as much as they enjoy reading them. By not distributing to this channel, the book clubs would look for alternative sources of reading instead of purchasing the book from another source.

2. What problem if any do the clubs solve for publishers and authors? What would be lost if they disappeared?

The book clubs act as the customer relation management aspect of the author's brand. Book clubs can collect information on the characteristics of readers of a specific author, identify patterns and repeat purchase behavior, make recommendations on related authors and commission surveys of readers. In addition, the book clubs have direct access to members and previous members through mail and e-mail. This information can be utilized to market to specific book readers or identify trends within a specific category.

3. What are the problems facing the Patterson business? What are its strengths and weaknesses?

The major problem facing Patterson is the evolution of distribution channels within the book industry. Sales within independent and small-chain book stores were deteriorating while sales at mass-market merchandisers were growing. The issue with mass market merchandisers is they would only carry your books for 6-8 weeks and then move on to the next book. This lifecycle represented the amount of time the book was at on the New York Times' bestseller list, once it fell off, mass merchandisers would move on. For a best-seller fiction novel, the mass merchandiser represented 34% of sales followed by Large-Chain bookstores (25%) and book clubs (20%).

4. How is it that the Patterson brand commands such loyalty?

Patterson's brand commands