Tuesday, April 29, 2008

Creative Direct Marketing

One of my coworkers gave me a tip to check out the numerous podcasts and audio files of top executives speaking about a myriad of business topics. It's called the Educators Corner and it's hosted by the Stanford Technology Ventures Program http://edcorner.stanford.edu/index.html.

One recent video post I found intriguing was by Jeff Housenbold - CEO of Shutterfly called "Creative Direct Marketing." Jeff talks about his time with EBay where he used "Widget" technology to really focus its direct marketing campaign to the exact target customers they wanted. This technology appears to still be in its infancy and really seems very powerful to hone in on your target customers.

Check out the video and the numerous other videos and audio files that you can also download to your ipod on-the-go.


Gossip Girl is a show on the CW network that has recently launched the following marketing campaign to attract viewers. I've never seen the show, but believe that it is targeted towards middle/high school girls.

Is this ad appropriate?

I would think that the Y generation would all interpret 'OMFG' with the same definition. But maybe they are just letters that are open to interpretation?

Monday, April 28, 2008

Can Subway Ever Break Up With Jared?

Advertising Age has an interesting article entitled "Subway Can't Stop Jonesing For Jared." Jared Fogle has been the face of Subway for 10 years now. In that time, Subway sales have more than doubled to $8.2 billion.

A struggle now exists between the franchisees and senior marketing and agency executives. Several times marketing personnel have recommended a shift in direction but the chain still benefits greatly from Jared. If sales are sagging, as soon as they put Jared back into the mix sales increase.

This article brought up two questions for me:

1. Are there other campaigns that have survived 10+ years in other industries?

2. What is the secret to campaign longevity?

If people know the answer to #2 there is a lot of money to be made as an agency consultant. :)


What should Microsoft do with XP?

It seems there are interesting things happening in the world of Microsoft Windows.

Microsoft is scheduled to stop selling Windows XP on June 30th (except for ultra-mobile PC exceptions).

Unfortunately, because of customers demanding XP instead of Vista, Dell will be continuing to sell the operating system even after June 30th. They're doing this through some sort of bizarre loophole that lets them ship systems with XP installed, a Vista disc in the box, and report it to Microsoft as a Vista sale!

This seems pretty bizarre to me. I'm wondering what a good marketing approach to the problem is.

On the one hand, perhaps Microsoft should just recognize that some customers want XP more than Vista and extend the official life of XP beyond June 30th.

On the other hand, there seems to be some effort at Microsoft to move customers along and show them that Vista isn't so bad (particularly for newer computers).


Sunday, April 27, 2008

Linguistics and Marketing

When products are described it is clear that word choice is critical. For example, it is much more enticing to hear that something tastes 'delicious' rather then 'good.' However, depending on the product and the target consumer, it is possible that a word other then delicious might be better (e.g. satisfying).

In short I am wondering about suggestions for systematically approaching word choice in targeting a specific consumer audience with a particular product. It would be particularly interesting if anybody had any first hand experience or knew of studies in which groups responded differently to different word choices.


Saturday, April 26, 2008

Comcast or the Other Guy

I recently saw the last TV ad for Comcast. What came to mind was that the ad did not promote products, services, or savings. This was a relief over the last several rounds of ad runs. Previously, Comcast has actively promoted their broadband products over its competitors. Better service and less money, at least for the introductory offer – you need to read the fine print. I think these ads could be easily viewed evening, at least once. They became tiring to me personally. Back to the newest ad - I do not know what Comcast has named the ad; I would think something as simple as “Money’ would work. These ad shows a late teenager/early 20’s male riding a bicycle through an urban neighborhood, soon people from the sidewalk, doorsteps, etc. begin to greet him, his name is Money. The greetings are every day greetings, in the variety that we greet are friends. Money does not say ant lines, just smiles while riding his bike. What is message here? The same one that was active marketed on the previously ads albeit a different method full of linkages. Everyone loves money; and since you love money, you must want to save money. Without viewing the previous ads would not have link the message back to Comcast and saving money though. Yes, I like money, but saving it by having Comcast services is not the firt thing that comes to mind. Guess all that was missing, was having Money pedaling to the local bank and making a deposit. Another thought was, what if you have not seen the previous ads, would you understand the message or just write it off to a weird ad? I know there is not anything new here, several ad campaigns have run a commercial series that told a story from ad to ad, how successful are they?

What are your thoughts?

Thursday, April 24, 2008

Branding a city

As many of you know, April and I are writing a proposal for a UW Study Tour for 2009 to South Africa. While I was doing some research online, I came across this 2006 article on how Johannesburg has sought advice from Rudy Giuliani & leadership guru Michael Porter (a name you should all recognize) to internally brand their city in order to reduce crime for the upcoming 2010 World Cup. Jo'burg was named one of the most dangerous cities in the 1990s and wanted the former New York mayor to help them clean up the streets. I don't think the stats are in on the crime rates, but something must be working because Jo'burg was recently named the international media hub for the event (see article here).

I think that branding is an interesting phenomenon, but I had never thought of it for an entire country! Although it makes sense that branding begins within...think Microsoft printed coffee cups at company coffee stations.

How does your company "brand from within"?

Dilbert on Marketing

I think Dilbert takes unfair shots at marketing (see the examples below). What do you think?

Marketing lessons from the Apprentice

I saw an episode of Donald Trumps 'The Apprentice' a while back that had an interesting task for the teams: Market a lotion that contains yogurt.

What happened next was pretty interetesting.

Both Group A and Group B went about identifying their target market (read: market segmentation) and came up with the following sweet spots:

Group A: Women between 28 and 45 years of age.
Group B: Women between 20 and 30 years of age.

Group A then tried to create an advertisement around the entire lifestyle starting with depicting a stay at home mom who used the cream on waking up in the morning, before heading out to shop/drop the kids and finally at night with a bit of a "sexual twist" added.

The interesting point was that their ads focused on answering the question " Why yogurt in the product is good for you". This theme was depicted across the ad all through.

Group B took a rather interesting approach where their ad showcased bare chested male guitarist (Trace Adkins) in the middle of the desert. They tried to add tons of "Oomph" factor to their ads as well as have the audience make a natural connection between the heat of the desert and the coolness offered by the creme.

Short video of Group B : http://youtube.com/watch?v=gyDA3gznwUY

After seeing both the ad-creatives that were designed, it was clearly evident that Group A had done a fabulous job than Group B.

A question that lingers in my mind is what made Group B's ad bomb more? Was it an overdose of the usage of sexuality or just a bad case of market segmentation or was it really both?

Wednesday, April 23, 2008

Selling Hope

One of my old golf coaches said something to me once that has always held true. He said, more or less, that if you make something--regardless of how ridiculous, outlandish, or helpful it actually is--that promises to take strokes off of your game, the public will beat a proverbial path to your door. What is it about golf that has created a cottage industry of score-improving devices? Are there other activities that are untapped for this type of marketing?

Beyond Advertising

How much of marketing's function is advertising?

As I understand, marketing functions include (but doesn't limit to) advertising, distribution and sales to some extent. But, the more I learn what's described about marketing, the more it tends to be focused towards advertising only. At times, it even feels like both words could be used as substitutes for each other.

Or is it even worthless to talk about the other aspects of marketing beyond advertising?


Quick reading on global trends


"Finally feel clean where it counts!"

Upon arrival at work today I was greeted by one of my coworkers who came in laughing. She proceeded to tell us around her that last night she saw one of the most ridiculous ad/product that literally made her laugh through the entire commercial. She couldn't even say the name of the product without laughing!

I did some web searching and found the link.

I'm still not sold on putting FOAM "where is counts" nor do I think this will be a popular product.

I still can't believe this gal can do this ad with a straight face!

Tuesday, April 22, 2008

Brands and their country of origin

Just recently Tata Motors of India acquired two premium automobiles brands from Ford i.e. Jaguar and Land Rover. But the US dealers were not happy about the deal. Here is the link .

How can countries like India and China build up their brands and get over the country of origin effect? Autoblog.com already makes fun of chinese geely brand in their daily posts. The same applies to Korean brands like Hyundai and Kia.

One exception to that is Samsung. I remember discounting Samsung as a cheap brand compared to Sony few years ago. Boy, have they come far! Another exception is Suzuki motors which is Japanese brand. They are considered in top league in USA when it comes to sports bikes but their cars have the opposite reputation.

Map of the web- circa 2008.

Unsnobby Coffee

The coffee wars are heating up! Check out this website- Unsnobby Coffee.

Monday, April 21, 2008

Information Overload

Marketing Guru Steve Rubel Talks with Brian About Info Overload from Brian Lehrer Live on Vimeo.

Subtle Marketing vs. Overt Marketing

Perhaps it is because I come from a small island where there really wasn't much television choice, or perhaps because it was just a really great show, I took to liking Knight Rider. In after thought I think it was just because I liked the idea of a talking car. When I heard there was going to be a Knight Rider movie these many years later I was excited and I made sure I would be able to watch it. Something ruined the movie for me though, it wasn't the plot, or the acting, it was the cars.

The new Kitt is a Ford Mustang, no problem, I thought the car was quite attractive. As I watched the movie however a familiar theme became clear. Every single car in the movie was a Ford. There were hybrid SUV's, mustangs, Ford Focus', all Ford's everywhere. If that wasn't bad enough the only commercials that aired were Ford commercials. In short it was a two hour long Ford advertisement, or in my case, nightmare.

This brought up an interesting question in my mind about whether it is possible to over market. Based on my reaction to the movie, I believe it is. The movie (advertisement) was so far from being subtle it was sickening. Because of that it was offensive that the history of a show I enjoyed was being so overtly used to market a car. I am certainly not suggesting that no marketing should be done, but I question the effectiveness of something that is so overt and clearly took away from the quality of the movie it was attempting to use to drive sales.

Unfortunately I have not been able to find any data about the success of that venture. Perhaps for every person it turned away (like myself), the constant repetition made four others go out and buy Ford's. By the same token perhaps the result was just the opposite. So here's my question, under what conditions would this type of marketing be effective and are there any known instances of this type of marketing being successful.

Why Ford Might Be Comparing Themselves to Toyota

A previous post by Lane wondered why Ford would make the claim "Our vehicles are equal in quality to Toyota." and did it really signal that things were bad at the company.

Here's an interesting twist on the story. James D. Farley has been Ford’s chief marketing officer for the past six months. He was formerly with Toyota (where he had a stellar career). Now he's at Ford tasked with helping them turn things around.

I am sure there are very few consumers out there that know Ford's marketing is being directed by someone who used to have the same job at Toyota. Most of you probably didn't know it before reading this post. And I have to wonder, if Mr. Farley would have come from Honda, would that company been used for comparison instead?

It also begs the question--How much must marketers believe in the product they are marketing to be effective at their job. Because Mr. Farley moved to a different company, does he suddenly believe more strongly in Ford than Toyota? Or, as a marketer, do you meerly need to provide a compelling message that will resonate with consumers?

What are your thoughts?


Ouch! Undermined By My Own

So I have been trying to resolve a problem with my bank for several months now. It is a problem without serious consequence, but a result of a mistake they made. I have had multiple phone conversations, various conflicting explanations, and been disconnected almost as many time as I have been transferred. I need to call again because the problem still exists. I just don't have the energy to go through the automated menus, re-explain the problem, and eventually get cut off again. Interesting thing is that my bank's ads heavily promote quality service over, say, price or variety of products.

Why am I talking about a customer service problem on a marketing blog?

A lightbulb went off as I realized that at this point I doubt that any amount of marketing will convince me that quality customer service is truly a priority at my bank. How frustrating for the marketing people who have nothing to do with the customer service department - the actions of an entirely separate department have shot my trust.

I've always assumed the important things for a marketer to track would be the competition, market shifts, product innovation, consumer trends, and economic conditions - basically influences that are external to the firm. I also realize that marketing, along with public relations, addresses the hiccups that firms run into: a medicine promoted as safe has rampant allergic reactions or a car presented as high quality requires recalls, etc. Although it makes sense, it didn't occur to me that outside of the 'hiccups' that I mentioned, one's own firm could be the source of undermining marketing efforts.

Although I knew communication between departments, especially during times of 'hiccups', is important, I now see that communication at all times is critical. It is easy to assume all departments have the firm's goals at the center of their systems, but their individual objectives may conflict with each other. For example, what if the goals for the customer service department have more to do with speed of service than quality while the marketing is placing quality above all?

My banking example shows me how quickly the actions of any department that deals with the public may easily undermined marketing efforts. I've added constant internal firm communication to my list of important marketing activity - let's hope the next time I expand my list I can look to a more personally pleasant example!

"Going Green"

More and more companies and their products are moving towards the "green movement", including the company I work for - Philips Electronics. This is a very noble cause by the corporate and private citizens. Tomorrow, April 22, 2008, is Earth Day (more details - http://ww2.earthday.net/). As part of this Blog lets do our part in taking a pledge on Tuesday to change one behavior that results in an environmentally friendly outcome.

You can find other interesting reading at - http://money.cnn.com/magazines/fortune/greenbiz/index.html

To continue this thread furhter please do share with the rest of us your one pledge you took to a greener future.

Green is beautiful!

Saturday, April 19, 2008

Funny thing about humor

Advertisers have long thought that humor sells products. About one third of all advertisements contain humor, according toAdrian Furnham, a professor of psychology at University College London. She also says that research shows that humor in an advertisement can help people with a sense of humor remember products; it sells products better than sex or violence.

The latest issue of The Economist claims that businesses that encourage humor in the workplace are more profitable and have lower employee turnover. Businesses who hire people with a sense of humor are "laughing all the way to the bank." [see link].

This is all good news for someone like me.

Karen Klein, writing for BusinessweekOnline, agrees that humor in the workplace increases business performance. However, she goes on to say, "Should
you select the funny guy for a job? I don't necessarily think you want to select the class clown..."


A Marketing Challenge

How do you explain to the public in a 30-second TV ad a new multi-layered voice technology. That is the challenge T-Mobile is faced with in their new @home service. This $10 add-on service allows customers to use their T-Mobile wifi embedded cell phones to make calls from home over the internet (VOIP) to anywhere in the U.S. without using up any of their minutes. A router captures the wifi signal from your cell phone or a handset and directs it over your cable internet.
This slightly complex technology is difficult to explain to potential consumers. So the question becomes, do you try to educate the viewer about a complex technology or do you merely peak the consumers interest enough to ask questions? Here is a TV ad that try’s to address that concern.

This ad, although entertaining, does little to describe what the @ home service is. Will the public after seeing this ad call T-Mobile and ask for more information about T-Mobile @home? I seriously doubt it. However, to run an informative ad about this technology and its advantages would probably require more than a 30-second TV ad and most consumers would almost certainly tune it out. So how can T-Mobile get its message out to the uninformed market?

Friday, April 18, 2008

Ford: We're just as good as Toyota!

Today, I saw a commercial from Ford that claimed "Our vehicles are equal in quality to Toyota." Now I'm no marketing genius, but that kind of campaign seems to be an admission of failure and impending doom. If Ford has no other basis for differentiating itself than to claim to be equal (but not better) in quality to a competitor - and one with issues of declining quality no less - than I can only conclude that things at Ford are really, really bad.

My Blog

I'm posting the link to my newly created blog!

Hilarious German Commercial.

Thursday, April 17, 2008

Strange ads for pasta sauce.

Tuesday, April 15, 2008

How Starbucks Encourages Loyalty in its Coffee Drinkers

I thought that the Sandeep’s post about why he left Starbucks was timely because my wife (a long-time Starbucks barista) was recently telling me about her Starbucks’ initiatives to hold on to drip coffee drinkers (who, she says, the company values very highly because of the frequency with which they visit). So, here’s another perspective on what Starbucks is doing for its drip coffee drinkers – this time from the other side of the bar :) Some of what Sandra told me addresses issues Sandeep raised, other parts seemed to address other issues.

Sandra mentioned that the wait time while coffee brews is a known issue. She said that Starbucks has determined that coffee is only fresh for half an hour after it’s brewed (it used to be an hour, but someone at Starbucks decided that an hour was too long to let coffee sit). That means that for four minutes or so out of every half hour, the coffee is brewing. She said that Starbucks has tried a couple of approaches to ease that pain. She said that in busier stores there are now two brewers for their new Pike Place Roast (more on this extra-special coffee later), that way it’s never out. Also, she said that it’s common for baristas to offer customers americanos instead of drip coffees (at the drip coffee price) when the customers have to wait, or to charge the customer for a size-smaller cup when the coffee is finally ready. And, in some cases, when people have expressed that they’re not able to wait the several minutes necessary for brewing, baristas can give out free drink coupons as way of apology. Also, Sandra said that with regular customers, a common apology is to offer a free refill on the coffee later in the day. (the idea of reaching out specifically to regular customers made me think about our recent marketing class discussions related to CLV). Overall, she agreed that the frequent brewing was bad, but emphasized that it was necessary given Starbucks’s commitment to providing high-quality coffee.

Another thing Sandra said about drip coffee drinkers (as indicated above) is that they tend to be repeat visitors (even within a day). Because of this, she said that Starbucks has tried to embrace drip coffee drinkers by offering a free refill with every coffee purchase to customers who are registered Starbucks card holders. (This made me think of our marketing class again because Starbucks is able to track the behavior of customers with registered Starbucks cards in much more detail, which helps with their customer analysis). The details of how the refill work are up to the store manager, but because Sandra’s store is in an office building, she said that they let customers come get their refill later in the day. She said that her customers really appreciate that.

The other issue that Sandra said drip coffee drinkers have raised a lot in the past is the issue of not having a predictable coffee available. She said that since Starbucks serves different coffees each week, there was some feedback that it was difficult for customers to know what to expect when they came to order their coffee. In particular, some customers who liked cream and sugar in their coffee found that some weeks the coffees available didn’t go well with cream and sugar. It’s to address this concern of predictability that the new Pike Place Roast has been introduced. Sandra said that this new coffee blend was developed specifically to be a coffee that a lot of people could agree on. It’s a medium coffee that is supposed to taste good with or without cream and sugar. Now at Starbucks’s, there will always be these three varieties of coffee available: Pike Place Roast, Pike Place Decaf, and one rotating bold coffee (since many customers associate Starbucks with bold coffee and Pike Place is medium). She said that the hope is that this can enable people to know what to expect when they go for their morning coffee. Also, as mentioned above, with Pike Place Roast being a popular coffee, some stores are able to have two brewers of it so that it’s never out.

So, there’s the perspective of a very loyal Starbucks employee of what they’re doing to keep attrition low in their drip coffee drinkers. I suppose time will tell if it’s enough to offset the offenses mentioned by Sandeep. Though I think Sandra is curious whether you’ve tried the Pike Place Roast, Sandeep, and whether it was mild enough for your tastes.

Oh, and regarding the lukewarm coffee, Sandra was aghast at that. She said it should never have happened and that you shouldn’t have had to pay for it. She mentioned that the recent ‘all stores closed for training’ event was, in part, to try make sure that all the baristas were well trained in the basics like this.

And though I forgot to ask about the increasing coffee prices, I do know that she’s told me before that Bellevue has a ‘latte tax’ (not sure if it applies to drip coffee or not). She said it’s part of the city’s effort to tax luxuries (though I like to kid her by calling it a sin tax :))

Marketing and Friendship

I am a marketer; have been for 12 years. I know what a good marketer looks like--I have seen the best. The best marketers act in their client's best interest. If something goes wrong, they represent the client's interests to the company, as a friend would. They make sure that all parties to a deal get a fair shake, or they don't do the deal. A great marketer will be a true friend to their client as well. Nothing false or dishonest. The best deals are the ones where everyone is happy, and you can make friends and be a friend as well.

In a previous post, I described how to be a good friend and a good client to a marketer, by describing someone who is both. This man, the best in the electricity business in my opinion, shows respect and compassion, concern and true friendship. This is an important skill in marketing. I would go so far as to say this is THE MOST IMPORTANT SKILL in marketing. Too often, the human element is left out in teaching. The numbers show you should to this or that, but HOW you do whatever you do will mean all the difference in the world. People will do far more business with a marketer who shows sincere compassion and interest than with one who does not. This is not only common sense, it is my experience.

When networking, for example, you are marketing yourself. The idea behind networking is mutual help. Why should someone help you if you do not care about them, do not show compassion, concern or respect?

Is this "Brewed Coffee Card" effective?

Sandeep's repost of his dislike of Starbucks reminded me of my recent trip to Starbucks last Wednesday. I was running late and was dragging my tired carcass to the only Starbucks on my way to work seeking my liquid injection of caffeine. I typically frequent Starbucks 2-3 times a week only because I'm too lazy to prep my own coffee machine the night before to be ready for me when I wake up.

When I walk in one of the barista's recognized me even though she didn't know my name. In her way-too-early-piercing-cheery-voice slid this double card pack across the counter to me. Given my brain-pistons were not firing yet due to lack of caffeine, I grumble "what is this for?" Again, in her way-too-early-piercing-cheery-voice she says that since I'm a "preferred" customer they want me to use this card to bring a friend in every Wednesday to enjoy their new Pike Place Roast on them. Rubbing my blood shot eyes to read this card it says the card holder is entitled to one free 12oz cup of Pike Place Roast. There were two cards attached to this cardboard, one for a friend and one for me.

It wasn't until I got to work and had a chance for the caffeine to fill my veins like a heroine addict when I sat down and thought about this promotion. First, this is only good on Wednesdays. Does Starbucks really think I'm going to drink coffee with a friend on a workday?... no. Second, I'm typically a "grande" coffee drinker, not a tall drinker, so is Starbucks going to force me to reduce my habit so I can take advantage of it being free?...no! Lastly, do I really need to carry ANOTHER card in my wallet that's already overflowing of expired and pointless cards?

Honestly, I have enjoyed the "new" roast and have had it a few times since they introduced it. The strange thing is that I do not see much being said about this promotion and I wonder how I was "targeted" even though I'm not at Starbucks as frequently as other caffeine junkies. If I go to Starbucks regardless of this promotion then is the whole point for me to give this card to someone else who enjoys coffee and doesn't frequent Starbucks? I don't think I'm going to covert former Starbucks converts who are now diehard anti-Starbucks coffee drinkers. I don't know if I want this pressure of holding onto this extra card either!

Engineer your ad

So I was on YouTube last night while having my late night dinner in front of my lap top as usual and I came across this ad. I normally hate ad with a passion, especially car commercials, but this ad really captured me. I was fascinated by how well the ad is "engineered", and how well it relates to the product. It definitely sent the message across with few words, if any. People talked about German engineered cars, but I'm definitely amazed by this non-German engineered ad. Watch and find out what car they are trying to sell.

Monday, April 14, 2008

Why I stopped being a loyal Starbucks customer (repost).

I used to be a loyal Starbucks customer. Every morning, I trudged to my local store where my favorite team of baristas concocted a brew that I loved. Yet, I am sad to report that I have stopped this pattern. I am no longer a loyal Starbucks customer.

In order to understand my decision, you need to first accept the fact that Starbucks simply does not take good care of its customers who order drip coffee. These customers are typically heavy drinkers and predominantly male. They tend to drink a large cup of coffee in the morning to get a jump start. These customers have always been treated as second-class.

The evidence for this comes from many places.

First, the new drip coffee brewing machines take way too long to brew coffee. If the coffee you want is not available, you have to wait four and a half minutes- four minutes for it to brew and 30 seconds for an energetic barista to jettison the lukewarm coffee and load the new batch. This is NOT ACCEPTABLE.

Second, some of us have frequented Starbucks for its mild drip coffee. This has proven to be a fool's errand. The demand for mild drip coffee is low. As a result, baristas are likely to not want to brew it at regular intervals. In the location I frequented, it was most common for me to not have mild drip coffee available when I arrived. The baristas were nice and offered to make me a new batch which would take the aforementioned 4.5 minutes.

Third, on more than two occasions, I was served lukewarm drip coffee. If I am paying Starbucks money for drip coffee, I demand hot coffee. The lukewarm coffee is a joke. I had to draw the attention of the barista who brewed another batch for me in 4.5 minutes.

In addition to these reasons, Starbucks has surreptitiously increased the price of drip coffee. At this point, in the Seattle area, I believe a grande drip goes for $1.91. Only a few months back, this was $1.75.

I was recently in New York. What a place! In any case, I found this place there called Guy and Gallard that has unbelievable coffee. I wish they were in Seattle.

As for Starbucks, I think they have lost their commitment to the customer. I worry about their future.

Wednesday, April 9, 2008

Fascinating Read

I'm reading a fascinating book entitled "Predictably Irrational" that provides insight into human behavior. A colleague of mine mentioned it at lunch and a few weeks ago I might have just forgotten about it, but since I was on my way to my first Marketing class, it piqued my curiosity.

Reading the book makes me realize how much all marketers could learn from a lot by studying behavioral psychology. I've taken several psychology classes throughout the years and each one of them helps bring a bew perspective to understanding people, how they think, and what motivates them.

If you get a chance, take a psych class. If you don't have time for that, read the book and tell me what you think.

My guilty pleasure…infomercials!

There’s nothing better on a lazy, rainy Sunday morning than hunkering down with a bowl of oatmeal and a cup of coffee to watch some infomercials. I’ve loved this 30-60 minute commercial format since I was a kid. I just have to know, what else it can do! My favorite part is to guess by how many payments of $19.95 are they going reduce this gem, oh, and what kind of just-for-ordering-now gifts am I going to get?

Currently, the vast majority of infomercials seem to fall into one of three categories: fitness/exercise, healthy/beauty, and kitchen equipment. Although I’ll watch them all, fitness and exercise infomercials are my favorite. I guess it’s because I, like most Americans, want the perfect body with six-pack abs and there has to be some magic bullet (like a bean-shaped mini-air mattress that comes with TWO DVDs, right?). Yes, I ordered The Bean, which I blew up, fell off of it about 20 times during the video, deflated it and sold it at a garage sale for about ¼ of what I paid for it.

I believe most infomercials are hoping for the impulse buyer, which I like to believe that I am not (but my conviction is not strong). I have to watch an infomercial at least 5 times before I buy an item, and I usually do an internet search to find some impartial reviews of the product. I was oh so close to buying the piece of equipment that Chuck Norris hawks, but the reviews were so-so, and I really don’t have the space for it. It’s interesting that I remember Chuck, but not the specific piece of equipment.

The status of my infomercial purchases you ask? Bean: see above; Windsor Pilates DVDs: I haven’t used them in about a year; Slim-in-6 DVDs: they were too easy so I gave them to my brother-in-law (who loves them!); Yoga VHS tapes: oldie but goodie and I still use them occasionally; and my most recent purchase Yoga-Booty-Boogie-Ballet DVDs, I keep trying to get into them with little success (I think it's the name of the product).

I decided to do a quick Google on the genesis and success of infomercials. According to e-infomercials.com, infomercials were born out of the deregulation of TV by Reagan in the 1980s. The most popular channels were religious channels that had cheap airtime available late at night and early in the morning. Infomercials were cheaply produced and provided a quick way that companies could quickly gather consumer data on their products and pricing. Then along came Jane Fonda. Not only did Jane reinvigorate her career by putting out a little exercise video, she put the home fitness industry and infomercials on the map.

Today, infomercials are of a much higher quality than the likes of loud, brassy oldies like Ginsu knives (but I can see the guy cut through the can and then the tomato right now) in order to appeal to a much more sophisticated audience. Again according to e-infomercials.com, infomercials reach over 15 million people, have created billions in revenue for companies, and provide “direct response” to companies about products and pricing within hours of running the spot.

Next, I’m trying to figure out where to put a chin-up bar in my house…I’ve watched the P90X workout infomercial 4 times now…

Marketing "Smart Hiring"

Almost all hi-tech firms emphasize the "We hire smart people" approach. A while back it got me thinking as to how firms stay competitive in this arena. What makes a graduate student look at a company and say "Thats where I want to go". Huge benefits and fat checks with perks are well known reasons, however what got me thinking is the "brand" that companies create and live up to.

I was blown away after reading this article: http://www.boston.com/news/local/articles/2004/09/09/comprehension_test/

Long story short, 50 foot manners hanging from the celing of Harvard Square Subway station say " ''[First 10-digit prime found in consecutive digits of e].com,"

This piece of "undisclosed advertising" is certain to pique someone's interest - the chain reaction then follows...where a student then figures out the solution to this problem, hits the intended URL and if he/she jumps through all such hoops on the URL, gets an invitation to submit his/her resume to google!

Surely, this campaign must have created a buzz in the student community.

On the same lines, I recently saw a print ad that said "If you're intelligent, we are hiring!"

How cool is that!

Tax rebates

The tax rebates that will be released this year have been targeted primarily at lower to middle income consumers. These consumers are likely to have a higher “marginal propensity to consume”—that is, they are likely to spend, rather than save, a higher percentage of any additional income they receive. This type of tax rebate, then, is likely to get a greater “bang for the buck” than rebates aimed at higher income consumers.

Research suggests that people will often feel more free to spend, rather than save, this type of “windfall” money than they would be if it had been received as an anticipated raise at work. It is money that had not been counted on, and it is therefore seen as something more “appropriate” to spend. Because money is "fungible"--that is, money is worth the same and can be spent on the same things regardless of its source--this behavior is not entirely rational. However, a great deal of research in the field of "mental accounting" shows that the source of money and the way it is presented have a large impact on the decisions on consumers on what to do with it.

In the coming months, many advertisers will probably come up with numerous “suggestions” as to how consumers should spend this money. A household with two spouses plus two children are potentially eligible to receive 2*$600+2*300=$1,800, which is enough to buy one or more “big ticket” items such as a large flat screen TV or a computer. Alternatively, consumers may spend this money “piece meal,” eating out at restaurants more or buying several small things.

Because food and gasoline prices have gone up dramatically over the last several years, an increasing number of low to middle income consumers are facing a considerable budget “crunch,” especially at the end of the month. Wal-Mart, in the early 2000s, initially seemed to benefit from the declining economy as consumes switched many of their purchases to lower cost outlets. Now, however, many consumers are having trouble making ends meet even at lower price stores and many have, as a result, reduced their purchases. The tax rebate may allow many of these consumers to buy some of these things that they would otherwise not have been able to buy. For such consumers, then, there would not necessarily be any big new purchases; rather, the effect would be to reduce the decline in earlier spending. Recently, food prices have increased dramatically. This occurs both because the cost of production goes up with the cost of energy and because a number of agricultural crops now become more valuable when they are “diverted” to making fuels. When corn and other commodities are converted into gas substitutes, the value of substitutable other commodities in turn face increased demand, resulting in a higher market price.

There may also be some consumers who may actually save their rebate money rather than spending it. Many will choose to do this in large part based on the fear that they may lose their jobs or opportunities to work overtime in the future. This type of saving has been a problem that has limited the effectiveness of this type of stimulus measure in Japan’s economy which experienced a significant downturn during many of the last ten years. Rather than spending much of this extra money available, consumers have, instead, put away the money in anticipation of a "rainy day." Ironically, this is likely a good statetegy for the individual family, but not so good for the national economy.

One potential problem with many big ticket purchases is that many electronic products these days are imported from low wage cost countries such as China. When imported products are sold, the net contribution to the U.S. economy is limited to the “value added” component of distribution in the U.S. That is, such purchases may increase retail and distribution employment in the U.S. but not manufacturing employment.

Part of the effectiveness of any stimulus measure such as a tax rebate is the so-called “multiplier” effect whereby money is re-spent as those who sell—and their employees—in turn spend part of their earnings. If consumers patronize restaurants, for example, their employees will likely work longer hours and receive greater tips, enabling these employees to buy more which, in turn, spurs on the cycle. Restaurant owners may decide to expand their facilities, in turn creating jobs for people who, in turn, spend their money elsewhere.

Tuesday, April 8, 2008

Monday, April 7, 2008

Welcome MBA students!

I look forward to your posts.