Saturday, May 31, 2008

What are you doing with your gov't rebate check?

Now that the rebate checks are in the mail and the economic stimulus package is well under way, what are the consumers doing? Clearly the government is hoping you will spend, spend, spend. Unfortunately for retailers, the needle barely moved on consumer spending which was up only 0.2% in April. I had expected more companies to actively market to $106.7 billion up for grabs after Congress passed the bill in February. So far the only thing noticeable is the lack of spending by the consumer and the lack of marketing by the advertisers.

Perhaps overcoming four straight months of job losses, a wobbly stock market, plunging home prices and record high gasoline price hasn't left consumers in a buying mood no matter where the money is coming. But that would be responsible buying behavior and that's NOT the American consumer I know.

Should single product company go with product offerings technique?

Most companies start with a single product line and take time to provide different product offerings. Just as an example some software companies have one single product with 10 features. They segment their features with two offerings. One has 7 features and the other with all 10 features. I see that software companies define their product features with product offerings. For example Taleo, an HR solution.

Is this a good idea to define that company has wide product offerings?

Friday, May 30, 2008

New Targets

With mobile phones being the new big thing in advertising I thought it would be interesting to examine another sector in the mobile market, that of the phones themselves and how they are targeted. Specifically I've been reading a little about the next generation of smartphones and found it interesting to see how trends have been going recently.

Since their inception smartphones have been designed and targeted towards mobile professionals, or people with lots of money and the need for nifty gadgets. But business has really been the target because the features designed into such devices naturally lend themselves to business. You'd only see Blackberries on those that got them from work to keep in touch via email at all times.

But then in the last few years there has been a shift in the marketing of these products. Now Blackberries are being loaded up with features and apps that are meant to appeal to a wider consumer base and not being targeted solely towards businesses anymore. They are trying to become the phone for anyone and everyone who talks, texts and emails.

The flip side is the iPhone, created for the individual, they are now working to incorporate enterprise email capabilities to begin to market towards businesses. While I personally haven't seen much marketing on either of these products yet, except for the writeups online that I've read, I think it will be very interesting to see how things pan out when the next generation of Blackberry and iPhone hit the shelves and start really competing for similar targets.

Thursday, May 29, 2008

Differentiation: The Wii Factor

“We are not competing against Sony or Microsoft. We are battling the indifference of people who have no interest in videogames” – Satoru Iwata, President and CEO, Nintendo Co.

As Microsoft and Sony spent heavily to beef up their next gen systems, Wii has quietly taken a relatively low tech machine and proudly winning the console match. Wii is practically sold out everywhere these days, 16 months after its Dec ’06 launch - an amazing feat in this highly competitive industry.

Here’s a quick comparison for the 3 machines.

Differentiation is exactly how Wii has won it.

Video games and systems are getting more complicated. Think of Wii as the McDonalds answer to Starbucks. By offering less capabilities from its counterparts, Wii focused on being simple, innovative (Wii Remote) and fun. A differentiation strategy is effectively only when it’s valued by the customers. Xbox360 and PS3 are leaps and bounds ahead (technology) of Wii, but by focusing on game expansion, Nintendo is bringing the “fun” factors back to gaming.

Pricing at loss for market penetration

I was surprised to know that when Microsoft first launched xbox, they were losing around $100 on each xbox sold. They had to match PS2 pricing even though they had features like network card, hard drive. But the idea was to make up for that loss on sales of the games. I think it worked great but can only be tried by companies with huge cash reserves.

Wednesday, May 28, 2008

Can you find what's offensive?

Sometimes I really think our country is in this mode of being too hypersensitive about any potential perceived offensiveness in any advertisement. How far are we supposed to go as marketers to ensure that nobody could ever be offended by something in an advertisement? How much resources do you have to spend towards ensuring everything is 'clean'? I'm all for doing a minimum amount of research into other cultures, languages, etc. to see how your message could be interpreted. However, in general I think the hypersensitivity of things that could potentially be offensive is getting a little out of control in recent years.

Could you spot what's offensive by just looking at the picture alone (given you haven't already heard about this story yet)?

Rebates - its one fact of pricing strategy

During class this evening there was lot of discussion on rebates. Whether we like them or not they are part of the pricing strategy manufactures use to "push" their products. I came across an article that you may find useful (sorry it is lengthy) -

As a Marketing Manager I have successfully used rebates in the past to promote a product, and yes sales during the period the rebate was offered did increase by 12%. One may argue if the increase in sales was directly related to rebate or other factors? Yes, most of the incremental increase was directly attributed to the rebate.

Happy reading

Is Customer Service Part of Marketing

If is not it certainly should be!

These companies I would guess do not have and empowered CMO's. One would also surmise that the CMO is shouldering at least some of the responsibility. As you read the article click on the link for the best 25 companies at customer service. You will notice that good and the bad can come from like industries.

All the revenue comes from our customers and I once read that a bad service experience gets told to 11 people on average while good service get passed on only once.

Should the org-chart have customer service under marketing? I would like to read others thoughts on this subject.

Marketing and Sales

How much does marketing really matter?

Maybe that's a terrible way to begin a blog for a marketing class, but I find myself struggling at my small company with making marketing relevant to the sales process. Even when marketing conducts research and analysis that resultsin very specific, targeted plans, the sales force may veer off in an entirely different direction. Obviously that's partly a management issue, but it's also a challenge that I think marketers should be willing to take up to further the strategic advantage of the company as a whole.

It's also a challenge for our MBA program. By definition we have few (or no) people who are in a purely sales role participating in the program because of the travel requirements of their jobs. To better integrate the roles of sales and marketing in my company I think that my marketing programs need to be more tactical and less strategic. Strategy still plays a role, but a gut feeling for effective strategies develops with time, experience, and observation of what sales processes do and don't work.

Over the course of a year and a half I think that I've been able to educate my management chain (VP of Sales) about the role of marketing, how it supports sales, and how it must be fundamentally have a more long-term focus than quarterly sales numbers. How do other people reconcile the conflicting agendas of marketing and sales at their companies?

Should firm focus on WOMM?

Practically every business person or an entrepreneur knows the importance of word of mouth marketing secrets. Talk about B2B or B2C platform, the usability experience is always shared by individuals. The company can improve its lead by providing better customer service to their customers. The customers share their experience with friends and peers around. This advertisement is most advantageous than other marketing techniques.

Advertising Kudos to Microsoft

Some entertaining ads fail to ingrain the product or brand into memory. I think MS succeeded at both missions with this ad for their entertainment title, Flight Simulator.

Have Film For Free...or Kinda

NPR reported that former Disney main-guy, Michael Eisner, is producing 2 minute videos to download for free. At least the first 50 in the series. If you want the rest of the story there is a price.

Videos for sale is nothing new, but the model he is following is the same one Doug and I got to explore with music downloads: selling direct to the customer via download. Customer gets to try it and see if they like it. If so, order on. If not, no investment from consumer's pocket is lost.

I am left with the impression that there are dollar signs in Eisner's eyes - he sees this as a huge opportunity to get big money, big talent, big distribution - reach and in cost savings, big production cost savings.

Releases soon - interesting to see how it goes.

You can listen to an installment here.

I'll Take the Purple Pill, Please

I happened to be in that psuedo-invisible position at my doctor's office: that time when she stands in the doorway talking admin stuff with staff before turning her attentions to me. She said something that really caught my attention. With visible exasperation she said, "If I hear one more color-pill request I'll scream."

I decided to ask what she was talking about. She explained that a patient had just requested 'those yellow pills'. She said that since the drug companies have been marketing to the patient - they used to market to the doctors - she gets color-coded pill requests every week. She attributes it to a pain killer in the 80s advertised as 'Little, Yellow, Different' and 'The Purple Pill' ads. The ads worked, but she says now she hears about green, purple, yellow, red and orange pills that the patient wants her to prescribe. Problem is that they get the colors confused.

I had never thought about the confusion that might occur as patients try to convey what they want using the 'ad lingo' rather than specific drug names.

Next step is the polka-dot pill - stay away from colors all together.

Tuesday, May 27, 2008

Let's Refuel a Brand: Chrysler's $2.99 Gas Guarantee

I'm sure you've all seen a commmercial or two lately that mentioned Chrysler's new marketing campaign: "Let's Refuel America". Buy any new vehicle and Chrysler will give you a gas card linked to your Visa keeping gas at $2.99 a gallon for three years. My first thought, after filling up at $4 a gallon, was that Chrysler was willing to eat a lot of money to make sales volumes.

On closer examination, this is really a very clever incentive program. Whereas automakers typically give up the farm by offering hefty cash rebates or 0% financing to sell cars, Chrysler is betting gas will stay at a reasonable range (below $5) for three years and actually keeping more profit than it would with financing and rebate programs.

And they're targeting an area where they currently perform quite poorly. Gas prices are everywhere in the news, everybody is unhappy about the cost to fill up their cars, and Chrysler only offers gas guzzlers that no one wants. Even with traditional incentives, the first thing most consumers will be looking at in May is gas mileage. Since it will take a couple of years to get some new vehicles down the pipeline, Chrysler can direct attention away from the gas mileage of its current lineup and say, "but you'll only be paying $2.99 a gallon."

I just think it's a great experiment to take what consumers percieve as one of your greatest weaknesses, poor mileage, and morph it into a strength. They've managed to associate themselves with an issue that's recieving huge nationwide attention. By "doing something" about high gas prices, they may have rapidly entered consideration sets they never would have been in. And if consumers go for it, they'll make more money than on traditional incentives. Here are some early results.

Game marketing

Until recently game marketing resonated with only the in-game ads in my mind. But when I started to understand digital marketing better, I was fascinated by the kind of options that the game marketers have in recent years. I think it all started with a change in perception that gamers are not just typical teen/young male anymore but
it does include both genders and varying age group. Refer the picture embedded in this article (source: "Why game marketing matters?" article from Forrester research) to know about Game marketer's choices.
Clearly there are more options, increased marketing budgets and an increased adoption to try out new emerging techniques in marketing. Check out for instance. This is a gaming website targeted to promote all products sold by Kraft. ALso, surveys indicate that lesser consumers are annoyed (35%) by gaming ads compared to online ads( 85% annoyed). Also they have indicated they might consider the advertised while shopping.

I know we have some ardent gamers in our class. What are thoughts on how this type of marketing will shape up. Do you get annoyed with in-game ads?

Mobile Marketing

I recently read this article talking about how some companies are targeting iPhone users with 'right-sized' websites and advertisements that better fit its 3.5" screen. Next month, Apple will be releasing a software development kit for the iPhone, enabling external developers to create custom software and potentially shape advertisements through 'geo-targeting,' based on user's GPS coordinates. Should marketer's be required to get user consent before placing geo-targeted ads?

Monday, May 26, 2008

Marketing your stock

Not the best way to market your stock:

Two years ago we were selling at 10 times revenues when we were at $64. At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes that with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don't need any transparency. You don't need any footnotes. What were you thinking?
Scott McNealy, CEO of Sun Microsystems, Business Week, April 2002.

Microsoft's Cashback Program: Marketing Genius or Gimmick?

Last Wednesday, Microsoft unveiled its Live Search Cashback program, it's latest attempt to increase Live Search's market share. Consumers can shop for products using this feature, and then compare prices from all featured retailers. Whatever discounts are offered will go directly from the retailer into a cashback account that the consumer can redeem. Here's another description of the program.
While this is a clever way to increase brand awareness for the search engine, it also may prove to be a more efficient marketing tool for retailers. Rather than paying per click, retailers will only pay per action, when consumers actually buy something. This could be a marketing win-win situation for both Microsoft's search engine and its featured retailers.
But will consumers enjoy this feature, or will it be too complex? The cashback can't be redeemed until 60 days after the purchase, and it depends on the retailers offering their best price. For example, I found my Canon SD750 digital camera for $199, or $189 after cashback from Circuit City using the Live Search program. But I could have gotten it for $179 direct from Circuit City's website. How does this make my shopping experience easier?

The Power of Marketing

The ‘standard’ Economic model posits that price is defined by the intersection of supply and demand. In statistics, consumer spending was shown to have increased such that consumer spending is now greater then consumer income. Therefore, because buying power hasn’t decreased and rewards for saving are mostly constant, it appears consumer demand has increased. Are there ‘better’ things to spend money on or has the US cultural perspective changed?

Specifically, what are the effects of marketing on US culture and on savings trends? What is the impact on the economy and national productivity? Considering the number of hours/week that the average US youth spends in front of the television and surfing the internet how will marketing effect their future purchasing/savings decisions?


Friday, May 23, 2008

Nordstrom's in the news

According to the times, Nordstroms is about to start an online buying service, but you'll pick up your items in the store. That's a pretty interesting idea. One may suppose the point is to avoid losing the opportunity to deliver the famous Nordstrom "service", which is quite legitimately part of their brand. Once Nordy's stuff is delivered by mail, its not easy to maintain that brand over any other internet store. However, why bother at all? Clearly, Nordies doesn't want to lose a sale to someone who shops on-line.

I look forward to how this pans out. I don't know anyone who shops on-line for convenience, and likes the idea of having to provide their own transport for the goods after the sale. The mail is simply the most convenient method for me to receive my goods. I would think the shopping experience itself is an important time for enjoying Norstrom's branded service.

Bob B

Cell Phone Ads...Influence in the Pocket?

During the class presentation on marketing through cell phone ads (e.g. alerts of nearby fast food restaurants) the point was raised that some consumers view this form of advertising as intrusive.

An issue that has been on my mind with this and for that matter all types of marketing is the degree to which certain, specific, strategies may annoy the customer.

If you had to wait 10 seconds for a Burger King ad (on your cell phone) when trying to make a call on your cell phone, would you be annoyed? (Maybe a lower cell phone bill might help to render this)?

Anyway, the effects on our view of burger king are at least 2-fold:
1. Burger King is on our mind (good for Burger King)
2. Burger King and feeling annoyed coincide (‘Pavlovian bad’ for Burger King).

Is effect 2 relevant? Should marketers consider this? Is it ok for Burger King but more of a problem for higher-end establishments? (i.e. Is this uniquely appropriate given the addictive nature of french-fries and a Whopper (for some customers))? Could this type of advertising push some consumers over the edge (‘I can’t quit BK!’)?


Thursday, May 22, 2008

Chief brand officer

Off late, I run into companies announcing their new CBOs. Wasn't this always part of a chief marketing officer's role who along with driving all marketing initiatives also took care of promoting the brand? I'm starting to wonder whether its a byproduct of title inflations ( chief xyz officers like diversity officer, cultural officer etc) or a genuinely required title to have more focus on promoting a company brand?
Does your company have a CBO? If yes, do you also have marketing officers? continuing on our discussions from yesterday's class, do you see them hands on at the trade shows evangelizing the brand and listening to customers?

Open Source as a form of branding?

It occurred to me that Open Source software is a form of branding. People tend to have certain associations with the label "open source" similar to the associations that are carried with a brand.

In the case of open source software, these associations might be positive or negative, things like "free", "flexible", "hard to use", "unsupported", "community supported", "dynamic and growing", "unstable", "secure", etc. These associations are contrasted with associations that people might have about commercial software, like "supported", "easy to install/use", "greedy", "unresponsive", etc. Commercial software companies recognize this, and try to strengthen the perception of their brand vs. the open-source "brand".

What do you all think of this?

I did a bit of research, and came across something entirely different:

Apparently some people are promoting open-source brands, in which consumers help define the brand image itself. Interesting stuff.

Wednesday, May 21, 2008

Kobe and Aston Martin Ad - Part 2

This is a spoof and parody to the Kobe/Aston Martin ad.

The original ad was a huge hit. Even the Air Jordans don’t come close.

This is one of the finest examples of viral marketing at its best – low cost (this has to be the lowest cost for a Nike ad EVER), buzz worthy, entertaining and SUPER effective. Since the ad went live in late March, it generated more than 20 million views on YouTube alone. Just the sheer number of spoofs and parodies alone have valided the success. Simply WOW....

Using YouTube as the distribution channel, it opens up a world of opportunities for viral marketing.

Here’s another spoof while we are at it.

Why don't I buy store brands

We were discussing branding the other day and one of the things that hit me is the fact that I never buy store brands. The natural question I get to is "why?". The answer, I have absolutely no idea. On Sunday, while in Safeway I see two cans of corn, a store brand and a national brand. I immediately grabbed the national brand, but having thought about this some this week I bought the store brand which was cheaper. Turns out the store brand tastes exactly the same. Problem is, even with this knowledge I really don't intend to buy it again.

I stumbled across an article I thought I'd share on why store brands don't do quite so well. It seems I suffer from Issue #1 in the article. As it turns out I'm not the only one who discriminates against store brands. With my new found awareness I suppose I should work on overcoming that prejudice and seek out the objective truth.

Subliminal marketing

I was talking to my co-worker who happened to notice a subliminal message in a recent KFC ad. A $1 bill was nicely camouflaged in the KFC snacker. Sure enough I checked on Youtube and I found this :

It makes me wonder whether such subliminal ads are really effective?

I looked up for some more information on companies who do such subliminal ads and KFC seems to be the one who had consistently done that.

"KFC is stepping it up a notch and actually providing an incentive for people to seek out the ad, offering a free sandwich to those who can regurgitate the hidden phrase. Imagine that: there may soon be a day when we record shows not because we enjoy them, but because advertisers have told us that they'll give us free swag if we comply." source :

Many marketers explicitly deny placing subliminal ads and television networks reject such ads when they promptly notice them. For example, ABC network had stopped airing ads that they considered had subliminal messaging.

These ads create enough stir ( especially when mixed with sex ingredient ) that its been followed by avid readers and may be the marketers have succeeded getting attention. But on the other hand, why would you want to bury a hidden message and have the networks ban your ads?

I'm curious to know what your thoughts are on this type of marketing practice.

How effective is branding in Auto Insurance industry?

Consumers want better paid claim processes, good rates, easy to understand policies and company's financial comfort to get attracted in the Insurance Industry. According to the brand equity study on Insurance Industry "Less than five people indicated that their insurance industry has never disappointed them". Geico, a well known auto insurance company has a message which claims that consumers can save 15% or more on their car insurance. I recently switched my auto insurance to All-State because of better rates. Car Rental companies take insurance from the cheapest carrier. It seems that auto insurance industries are more driven by price and rates and branding has lesser impact.

What do you think?

SNL takeoff on NBA playoff ad.

Powerpoint Presentations vs. Hand On Demo

Earlier today John posted on entry entitled "Presentations". Reading reminded of the marketing activities of Caterpillar. Several years ago, okay many, I was one of several people to represent my company on a 1 week tour of the Caterpillar facilities in Illinois. I was one of about 300 people in attendance, visiting their various factories, listening to presentations, round table discussions, etc. Caterpillar hosted this event twice a year and between them and the franchisees paid the full expense of all attendees. We were catered to very well. The mix if people were existing Cat owners and potential owners. All of these years later, I still remember the trip and access that we had to engineers and designers.
From the marketing perspective, that is exactly the impact that I would want to make to customers – long lasting first class impressions. When, I think of construction equipment CAT is at the top of the list (TOMA exercise). Did the trip (marketing tool) bias me? No. I already like many of their products from firsthand experience. Did it reinforce my belief in the product quality or loyalty? Yes. For the largest construction equipment the market is limited and one needs to retain the customers. I also see similarities in the aircraft industry.
A Hands On viewing or demo of a product versus a PowerPoint only presentation is priceless or at least worth it’s weight in gold.

Tuesday, May 20, 2008

How Entertaining/Annoying!

My son asked me about that "great" commercial they showed during the superbowl. He said that he didn't know who the advertiser was, but described the commercial and said, "oh, come on, Mom, you have to know it - everyone knows it. I think its about money. Like a bank or something." He wanted to find it on YouTube.

So I proceeded with a highly unscientific research project. I asked 16 people (co-workers, barista, parking lot garage gate keeper, friends, and stranger in elevator) all could tell me about the commercial but only one could tell me it was an e*trade commercial.

So were is the line between being entertaining and really getting your name out there?

How about the AFLAC duck commercials? I don't really know how that bird helped the profits of AFLAC, but I know I am not the only one who found them entirely annoying. But I bet you'd have a hard time finding someone who didn't know what company was being represented in those ads.

Entertaining or Annoying...hmmm. Which works best?

Quiet Promotion

One Emory University English Professor believes the sales total that Grand Theft Auto IV has achieved is one of the top eight indicators that the younger generation is in peril. Regardless if you believe this assertion or not, the sales that Take-Two Interactive Software and Rockstar Games were able to achieve should cause everyone to take notice of the marking techniques they put into action.

By forgoing the typical marking blitz and keeping tightlipped about the gameplay details, the publishers were able to build a tremendous amount of hype amongst gamers without raising too much attention from the non-gaming community. It also allowed the publisher to maintain a tight level of control of the message that they wanted to convey. Some of the advertising techniques used by the game’s publisher mentioned in this article were:

  • Building Murals
  • Wanted Posters
  • Viral Videos
  • Bus Wraps

Are there any other products that come to mind that have used subtle or quiet promotion to build hype?

The one that jumped into my head was for the Aqua Teen Hunger Force movie, and that campaign did not work out nearly as well as GTA IV’s promotion…

coproate v/s individual branding

Yum Brands own KFC, Taco Bells, Long John Silver's and Pizza Hut ( But common people do not know Yum Brands as a company. Whereas they use this individual branding strategy, firms such as Apple and Kellogg use corporate branding where every product is sold with the corporate brand tag (corporate branding). Which of these branding strategies is better? Corporate branding has advantages that it enables more efficient communication to consumers, employees, investors and channel partners. But it is also risky. If one product fails, it carries its effect on all the other products. For e.g. if next Apple iPhone version is a technological failure then people will shun all the Apple products. But when rats were spotted in Taco Bells kitchen in NYC, people did not think twice while going to Pizza Hut. So, which strategy rules?

Kobe Bryant + Aston Martin = Marketing, Hollywood Style

In Hollywood, anything is possible; expect the unexpected as some might say.

Riding on Kobe’s ascension to the top, Nike has unveiled its new Hyperdunk basketball shoe endorsed by Kobe which will be launched in July. To generate buzz surrounding the new product, Nike enlisted help from Aston Martin to create a tag team that we haven’t seen since the last James Bond movie.

This video has Kobe sporting his latest gear and attempting to jump over a Aston Martin that is directly driving towards him. In real life, this is not only very risky but almost humanly impossible. In true Hollywood fashion, this is made possible by using special effects and camera techniques.

The commercial was released in April (online only) and since then became THE topic among basketball fans around the world. This brings us to the subject – What does this have to do with marketing.

Viral marketing is a term coined by a Harvard professor in 1996 to define marketing techniques that use pre-existing social networks to produce increases in brand awareness or to achieve other marketing objectives (such as product sales) through self-replicating viral processes, analogous to the spread of pathological and computer viruses. It can be word-of-mouth delivered or enhanced by the network effects of the Internet.

This ad was one of the most watched videos on the internet during the initial release. Hoops forum/websites, ESPN, sports radios were flooded with thousands of threads and responses.

Kudos to Nike: this is a winner.

P.S. – YouTube is now part of Google, can you imagine all the possibilities and potentials? If you find another company that is more destined to become the world’s first $1 trillion company, let me know.


Preparing for an article presentation in class I was trying to think of ways to be a cut above the crowd and keep the audience engaged. I found this article about presentations and thought what a great topic for the marketing blog. I also thought how all of us including professors always commit at least one of these deadly sins! Of course that's my opinion, sorry if you disagree.

One of the more recent complaints from sales people I have witnessed is the customer reluctance to sit through a presentation about a product or service. I quote from a engineer' "Don't come with a power point presentation" in a recent appointment setting scenario in an attempt to demonstrate the features and benefits of a product.

Most power point presentations are owner/presenter developed (no fact in statement just a guess) and authored except for corporate logo and or image requirements. Should the marketing group or person with ownership of a product or service be strictly responsible for the presentation content and appearance beginning to end?

Monday, May 19, 2008

Do You Know the Brawny Man?

For years the brawny man has had blonde hair, a blue plaid shirt and a mustache. But not anymore... the new improved brawny man was released last October. The new brawny man is clean shaven, dimpled and has dark hair. Do you think the new brawny man will affect the selling of the paper towels? Some articles have speculated that the new image will lead people to believe that the paper towel itself has also been improved...What do you think?

Can a Dead Brand Live Again?

I thought this article in the NY Times was a pretty interesting (if long) look at branding.

They look at the idea that defunct brands can still hold a lot of customer mindshare and, therefore, can be valuable to start re-using. The use the example of Brim coffee.

Branding Changes

An example of how is it done?
In the late seventies and early eighties Black and Decker to compete against Craftsman aligned itself with the discount department stores for hand tools of the electric variety. By the nineties these hand tools suffered from a poor quality image. While sales were still handsome because of the distribution network, image deterioration was allowing Craftsman and others to erode B&D's market share.
B&D in an excellent example of re-branding built a new brand/image for this product line. That product line and it's managers disassociated anything B&D. Can anyone name the new brand that typically is carries the highest price tag?

More on Starbucks

So, if you're branded as 'the latest' or the newest trend or whatever, isn't that a self-limiting strategy? At some point, doesn't the latest thing eventually become yesterday's news, as it were? And if Starbucks has indeed no longer hip&fashionable, does that indicate they are on a 15 to 20 year slide before they are cool again? Are shareholders willing to hold their stock that long, in the hopes that they see themselves once again cool? Like the 80s are to the kids these days?

Sunday, May 18, 2008

Impact of generic Branding

The late 1990s and 2000s saw the emergence of the generic branding where retailers started selling generic goods under a store created brand. Some examples include the generics in grocery stores like Kroger brand, or the clothing lines by JC Penny called “Arizona” and “St. John’s Bay”. These brands are given better shelf place and more advertisement since they potentially generate higher margins for the retailers. In recent years, the quality of such generics has also improved, especially in clothing, to match designer brands.

This potentially drives the price down for the designers since they have to negotiate harder with the retailers for shelf space, and do more promotions. Ultimately, economics dictates that the pricing between branded goods and generics will get close enough to not be significant. Therefore, people can then choose to purchase designer brand goods again since they are cheaper. This will end up eventually hurting the retailer since sales of generic brands could decrease. So, is this strategy of generic branding good and viable?

The Cadillac rebranding

Who remembers when Cadillac’s demographic market was to your grandfather? For most of Cadillac’s history, their brand sold to the older more affluent age group. Apparently, that market has died off and Cadillac is in search of greener pastures.

I think one of the best tag lines I have ever heard is the new Cadillac motto, “when you turn your car on, does it return the favor”. That sends a clear message that the Cadillac brand is no longer for your grandfather. The transformation of the Cadillac brand into a younger, sleeker, sexier model is an example of a bold rebranding. It must have been quite a shock to Cadillac’s original demographics to wonder into a dealership and find the DTS or the CTS. Certainly not the type of models you would want your grandmothers driving or were they accustomed to driving.

However, all this rebranding has paid off for Cadillac because the CTS won the 2008 Motor Trend Car of the year, something a car out of Detroit hasn’t done in a while. Cadillac is quoted as saying, “The CTS obliterates the ‘old man' image of Cadillac”, and it appears it has. Now the only question I have is, what is my grandmother suppose to drive?

Saturday, May 17, 2008

Alka Seltzer advertisements seemed to peter out

At one point Alka Seltzer advertised creatively and heavily..they drove the "that's a spicy meatbal" phrase into the lexicon, but the art within their marketing was quite amazing. Today, I don't see any ads. That's interesting, once you advertise, you can back off?

My favorite ad:

Friday, May 16, 2008

Re-Branding: true value or "pulling a fast one"?

I want to pose a question that was haunting me through the entire class on re-branding. We’ve covered re-branding in relation to mergers, acquisitions, etc., but no one spoke about re-branding in order to change a negative customer perception while changing nothing in the way the company does business. In my experience, about 80% of re-branding happens simply because the company wants to be called something else, to have a new logo, and hopefully, granted temporarily, convince its customer that they are better. Unfortunately, what I don’t see is the change in the actual quality of the product or service; at least to the average consumer (there are always exceptions for the large accounts and squeaky wheels). This, in my mind, makes re-branding “an empty gesture”, an attempt to create perceived value without any sustainable way of maintaining it. So are the majority of re-branding efforts really are “pulling a fast one over your customer” [I want an opinion from your experience] or am I missing something?


Thursday, May 15, 2008

Is a brand worth thinking about if nobody sees it?

My Ladyfriend/partner/mate has her own business, see This is a sole-proprietership, one person business she's run out of our home for 10 years. Its a fine business with capacity limited to her own capacity, and she's worked at her limit for many years. She has business through word of mouth, and has never advertised. We have no idea if her website has ever made a difference, we've only seen a rare interest from the web, and none of these queries have ever resulted in a contract. Does anyone think branding makes a difference in this case?

I am still seeing "brand strength" as a different way to discuss how the marketplace views your offering, and its usefullness as a concept is rendered quite unimportant in a scaled down situation in which connections are personal.

Bob Bernstein

More brand discussion

I came across an interesting article, "Why Weird Words Make Great Brand Names," on Not only did this article have interesting commentary on branding like the following excerpt...

Most of the feedback takes the form of free associations, all in an effort to determine if a name is “good” or “bad.” It goes something like this…

Interviewer: “What do you think of the name Monster?”Respondent: “Ew! They’re scary and dangerous!”

Interviewer: “What about Amazon?” Respondent: “Jungle… drowning… snakes… piranhas…”

Interviewer: “Apple?”Respondent: “A bad apple spoils the whole bunch.”

Interviewer: “Caterpillar?”Respondent: “Squishy, soft, and squirmy.”

Interviewer to new business owner: “I think we can safely assume these would be bad brand names…”

...the site also has lots of additional articles on branding. How to approach it. What not to do. The politics of branding, etc. If this topic interests you, check out this article and more.

The Dumbest Generation.

An Emory University English professor has written a provocative book titled "The Dumbest Generation." The Boston Globe has a great summary of his eight chief arguments-

1. They make excellent "Jaywalking'' targets.
2. They don't read books -- and don't want to, either.
3. They can't spell.
4. They get ridiculed for original thought, good writing.
5. Grand Theft Auto IV, etc.
6. They don't store the information.
7. Because their teachers don't tell them so.
8. Because they're young.

Marketing, Advertising, PR, and Branding

I thought this was pretty amusing (and timely, given our recent branding discussion).

Though it's obviously not meant to be a profound statement on branding, one can certainly make certain observations based on it.

Perhaps advertising is the delivery of a marketing message, whereas branding is customers' perceptions of your product/company? In that model, a strong brand is clearly desirable (people may resist advertising, but branding is internalized). Good advertising/PR is important because it can influence brand quality/image.

Anyhow, I chuckle at the image; figured I'd share it. :)

What the Pho and Pho Shizzle? Pun Branding Sells

I can’t stop laughing when I first saw the name of these two restaurants. Pho is a Vietnamese soup noodle dish served with thin cuts of beef, meat balls and other ingredients.

Needless to say What the Pho has a comic effect. The word Shizzle is a hip hop slang that is known as the "Snoop speak" because it was popularized by rapper Snoop Dogg.

What the Pho is actually a local restaurant in Bellevue. It’s been around for a while and due to its popularity, a 2nd restaurant opened in the Bothell area in 2007.

The owners are using malapropism and bilingual pun to take full advantage of the word “pho”. This is a cleaver tactic to brand a product based on a concept called sly or pun marketing. A good example of a bilingual pun comes from names, for instance, Sum Ting Wong – a name in Chinese that is not unusual.

According to Wikipedia:

A bilingual pun is a pun in which a word in one language is similar to a word in another language. Typically, use of bilingual puns results in in-jokes, since there is often a very small overlap between speakers of the two languages. Occasionally, some puns are more actually malapropisms - a malapropism is the incorrect use of a word by substituting a similar-sounding word with different meaning, usually with comic effect.
The use of the pun/malapropism is a pretty cleaver marketing technique to exploit cultural differences. This is s very un-traditional way to market a brand or product (thinking outside the box) and I am seeing more and more usage of this technique in marketing. There’s no formal definition for it at the moment (I can see why) . But as we know it, the world is becoming more and more flat, we are all very well versed in our cultural/ethnic differences – the potential to use this technique effectively has huge potentials.

Got a similar brand or marketing experience from your culture or in general? Please share them.

Microsoft and Branding

This spoof video makes a good point relative to our discussion this evening, even though it focuses on packaging:

Wednesday, May 14, 2008

Starbucks = 'Slutbucks'?

On the evening news today, there was a story about a Christian group boycotting Starbucks based on coffee shop's new logo. The new image (below) is very similiar to its original mermaid logo when the first store opened in Pike Place Market.

The group says:

"The Starbucks logo has a naked woman on it with her legs spread like a prostitute," explains Mark Dice, founder of the group. "Need I say more? It's extremely poor taste, and the company might as well call themselves, Slutbucks."

I personally didn't find the ad all that offensive, but maybe other's do?

Is anyone highly offended by this ad?

Tuesday, May 13, 2008

Brands that define an entire product industry.

What kind of advantage is held by branded products that become the representative brand that all products in that industry are associated with? I began to think about this as I was watching people order drinks at a wedding. I thought about how people would order a rum & Coke, or 7 & 7 (for you non-drinking folks that would be Seagram’s 7 whiskey and 7-Up) rather than use the generic terms, rum & cola or whiskey and lemon-lime soda, although to be fair on the last one it’s a lot easier to just say 7 & 7. At this particular event I noticed that several of the alcohol brands used were not those requested by name, basically because there was only a limited alcohol selection. There was no Seagram’s 7, and another Canadian whiskey was being substituted without question. But it goes beyond the alcohol, I didn’t ask about the brands of soda but the bartenders could easily have been substituting Pepsi instead of Coke or Sprite rather than 7-Up.
Based on this initial thought I made a mental leap and began to think about products that are identified by a brand name rather than generic description. A perfect example is Kleenex, because no one I know says they need to buy facial tissues, they go to buy Kleenex. Not that there aren’t some reasonably well known competitors, Puffs for instance. But what kind of advantage do products like Kleenex, Band-Aid, or Q-Tip derive from being the brand that is in effect the industry standard? While I haven’t done any deeper research on this (yet) it would seem to me that these representative brands have a significant advantage over the competition based on name alone.
Obviously there are those consumers who could care less about brand names and go with whatever is cheapest or with another brand they prefer more. But regardless of that, I bet they still use the representative brand when referring to the product in general. Rum & Pepsi… it just doesn’t sound the same.

Monday, May 12, 2008

Marketing for the bad guys?

I sincerely believe that most of us want to believe that we’re good people. Most of us hold respectable jobs, with respectable firms, and bring home an honest paycheck. We use that money to pay our fair share of taxes, make payments on our mortgage, and save money towards our retirement. At night, we kiss our children, tuck them into their beds, and then get a good night sleep before going to work and doing it all over again the next day.

However, we’re also aware of that other element that is out there. The “bad guys”. The people that prey on the suffering of others to bring in their income. Among the most insidious of these are the people in the drug cartels and the dealers that distribute their product. Recently, a new trend has developed in the marketing of drugs: Fruit flavored cocaine has begun to surface in recent drug busts.

The question is: Who is this being marketed to? The answer is obvious; they are marketing this product to the very children we tuck into bed. As stated in the article:

“The case comes as authorities were already wrestling with the emergence last year of pink, strawberry-flavored crystal methamphetamine, which hit the streets in California in early 2007 and has since spread as far east as Virginia, where state police seized a pound of the drug three weeks ago in the small town of Galax.

‘Meth has sort of a bitter, nasty taste, so it’s kind of easy for the young kids to get into this,’ said Henry Spiller, director of the Kentucky Regional Poison Center in Louisville. ‘It’s an effort to make meth more appealing.’” [1]

This begs another question: Who came up with the marketing strategy? Who determined the idea that this might be the demographic that should be targeted? Considering that cartels already employ a large number of other professionals on their staff for distribution, transportation, even accounting and legal resources, is it so hard to believe that they don’t have someone with a marketing background on their staff?

While few, if any, of us could imagine taking money from a criminal enterprise like this, ultimately someone will. The question is whether this is someone who is holding an MBA or someone just trying something new in the market on a hit-and-miss basis. Frighteningly, this particular case smacks of the former.

[1] MS-NBC. Sniffing out a fruit-flavored trend in cocaine. April 17, 2008. Retrieved from on April 28, 2008.

Do you think you’re turning Japanese-a, think you’re turn Japanese-a, you really think so?

Even though the song by the Vapors came out in the early 80’s, there may be something to the sentiment: Somehow, the Japanese culture has found a way to enmesh itself in the culture that has been most successful in exporting its own culture throughout the globe.

While it’s true the culture of the United States has always been an amalgam of every other global culture, there is something about the Japanese culture that is particularly marketable. However, as the referenced article is very good at pointing out, it’s not a “pure” Japanese culture that is being sought out by the American consumer:

"What is interesting about [businesses] that have been successful [selling Japanese products] is they're not going to Japan and seeing what's hot in Japan right now," Kelts says. "They're keeping a very firm grasp on what their American customers would like. So I think respecting the cultural differences is still important. It's not exactly localization. They're not changing the products to suit the American customer. They're just selectively offering Americans what might work here." [1]
Simply put, even if it is Japanese culture that is being sold to the United States, it’s only those aspects of the culture that Western values will embrace and accept. A good example of something that is commonly accepted in Japanese culture that wouldn’t be accepted in the United States would be the typical cartoon targeted to school-age children in Japan. During one trip to Tokyo, I recall turning on the television and immediately being immersed in a cartoon that would have given the FCC a collective coronary!

The cartoon had no problem showing full frontal nudity, anatomically-correct graphic violence, and implied that even younger children could have a blushing sexual streak to them. I could not even imagine this same cartoon being on HBO, much less in the middle of the afternoon, right after school hours. Western values would never accept this.

So are Americans really buying Japanese culture? I would conclude the only place it seems that other cultures are successfully marketable in the United States (even one as infectious as the Japanese culture) is when the aspect of the culture being marketed is one where Americans can see something of themselves in it.

[1] MS-NBC. Embracing Japanese pop culture. May 11, 2008. Retrieved from on May 11,2008.

how to measure the performance of marketing strategy

What is a good measure to evaluate the impact of a marketing strategy ?For example, does it make sense to increase the advertising budget? How will I know whether the increase in sales is due to this advertising and not because my competitor raised his prices? Sales is a bad measure of performance.
Can we link the effectiveness of marketing strategy to stock market returns of the company's stock? That way we get an objective measure of performance that is determined by the market and that is understandable to the finance managers who approve the marketing budgets.

Is blogging a new avenue to explore in Marketing ?

These days businesses in every Industry need a website to endorse their products and services to make a presence in the world. Every industry is trying to use blogs to market their product. Especially, software industry has content writers who write blogs in context to their products and market them.

Creating business blogs provides interactive information to their customers and makes the firm a better communicator. Blogs are also effectively used by search engines to rate the product. Immediate listing of company's website on the search results highly increases the popularity of the product. Apart from advertisement, firms can also get direct feedback from the customers to enhance their product features. Real estate industries are using blogs to promote their website in the local search engines and get customers.

How essential would the concept of blogging be for small and mid sized companies and whether this viral marketing can be used effectively for large enterprise would be a great topic to discuss.

What do you think ?

Sunday, May 11, 2008

Do you get it? Do you like it?

OK, today, as part of the Mother's Day festivities (a joyful one, unlike the studying for the financial management midterm ;) ), I was clipping pictures from old magazines to make a collage with my kids. I ran into this ad and I really don't like it. Something about food in a place where my sweaty feet would be. It actually took me a second to even get it. Do you get it? Do you like it? You can click on the picture to see a bigger version.

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Remember the AppleTV?

(AppleTV: Multipurpose - Sushi platter, bet Jobs and co. didn't see this one coming)
Photo source: Fortune

When we talk about Apple, most of us will instantly recognize products such as iPhone, MacBook Air and of course, the iPod. But how many of you remember that Apple released a much hyped product in early 2007 called AppleTV.

Dubbed the “DVD Killer”, the AppleTV is supposed to usher in a new generation of entertainment and be the centerpiece to our living room. AppleTV promised to stream videos and multimedia contents from PCs through our wireless network and providing playback capabilities on HDTVs.

The strategy was simple – link all the killer apps from iPod to iTunes and create a happy medium to play the music, video, and pictures through the big-screen. The result however, was as bad as the Apple III.

Several factors why AppleTV failed to take off.

First, the device requires a HDMI (Hi-Def Multimedia Interface) connection but very few contents on iTunes produces HD quality videos. The result was a very bad combination of low resolution videos playing on a HD capability TV. This is almost like requiring a HDTV to play VHS tapes, not a happy marriage.

Second, AppleTV has streaming capabilities through our PCs and it also has a separate connection to the internet. However, users are not able to directly order contents via AppleTV and download the contents directly to the device. Instead, a PC is required to be the middleman doing a very non-value added and time consuming task.

Third, yes, it was dubbed as the “DVD killer” and so AppleTV chose to come without a DVD drive. Sure, from a differentiation perspective, it works, but how many of us are ready to shell out $300 to pay for another device that we don’t really need. I can spend $300 on a quality home theater entertainment system or the AppleTV and the decision won’t be the latter.

Fourth, AppleTV has a HD, 40 GB worth to be exact. You would think that it would be awesome to replace that old TiVo of yours and use the AppleTV to record television shows. WRONG. The AppleTV does not have any capabilities to record anything.

Finally, the AppleTV fails to compete with newer laptops who are HDMI capable. Why need another device when I can connect my laptop directly to the TV and play real HD contents without ever having to stream through the network.

In summary, AppleTV does have some nice features such as the signature design from Jobs and co, but it lacks the most fundamental features that even the most novice users would want. There will be lessons learned from AppleTV – so much for the DVD killer.

Multigenerational Marketing

There are days when I think that there is really nothing new anymore. If you think about the number conversion of old tv shows into movies for the "new" generation it makes you wonder if people have really run out of good ideas lately.

The latest thing I noticed today is bringing back the horror flick of my past "Nightmare on Elm Street" from 1984 into today's generation of kids. The link on the title just makes me shake my head once again asking when can we get some decent new ideas going? What are the iconic shows/characters/films of today that we'll see 25 years from now? Is it taught in marketing somewhere to look up stuff from a generation ago and see how you can repackage it again for more bucks?

Saturday, May 10, 2008

Apple 1984 Commercial

Early in the quarter I put the Apple 1984 commercial ( forward as one of my favorite ads of all time. I was very suprised at the number of people in the class who had never seen this. Take a look and tell me what you think.

This commercial was incredibly effective because it leveraged a well-known association (George Orwell's 1984, which had been discussed endlessly in the media at that time, because the year 1984 was approaching/just starting) to portray Microsoft (and IBM I think) as purveyors of brainwashed conformity, and the Apple Macintosh (and by extension, those who bought it) as rebellious nonconformists.

Interestingly enough, in the book 1984 I believe the rebel group was actually a government front to indoctrinate/control all the people who didn't conform, to keep genuine dissent from arising. When Microsoft purchased a share in Apple and made agreements to cooperate in some areas, I couldn't help but think about the parallels.

(And no, this is not meant as a cheap shot at Microsoft).

Friday, May 9, 2008

Customer Loyalty & Pizza

In timely coincidence, we were talking last week about customer loyalty and discussing this week top-of-mind and consideration of pizza joints. My family tends to alternate between Pizza Hut and Pagliaccis, because the kids like PH better and my hubby and I like Pagliacci's better. In the several years that we've been ordering pizza for delivery in our current home, on average we have probably been good for an order from one or the other once every ten days. Because we all like different toppings, this isn't the cheapest habit! Our typical order from Pizza Hut is $25-30 and our Pagliacci order is regularly over $32. Due to various reasons, when we placed our order with Pagliacci last week, it had probably been a good four months since we had last ordered from them. When the pizza order arrived (early and correct), I was surprised to hear what the delivery guy had to say - "This one is on us!" He then handed me a "Thanks!" card with several staff member's signatures. This was only the second time this happened in almost five years, but boy is it effective. I'm sure we'll only order Pag's for the next several orders, so it will pay off for them. They have made us loyal. After I tipped the man and closed the door. I thought to myself how there's probably no chance that Pizza Hut would ever do that, and how cool it was to have such nice surprise!
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Do you see everything in ads?

Effective advertising is memorable, in such a way that you remember what the advertiser wants you to remember (the product, service, brand, what-have-you). How vulnerable are you to having your attention directly diverted? Take the test!

Sex or insinuation of it sells? Real estate firms in Mukilteo thinks so.

I was driving to Mukilteo the other day, and saw an interesting billboard off the side of the Mukilteo Highway. This board depicted 3 fairly attractive and “presentable” women, dressed in business suites, but with devilishly cute and, one might argue, promising smiles. Text right above them stated “. . .foursome required. . .”. If this isn’t an attempt to get more of the first-time, young buyers to come and see an “up-incoming and happening” housing complex, I don’t know what it is. Does sex, or insinuation of it, sells? Well that real estate company certainly things so.

Stop Shady Marketing of Private Medicare to Seniors

There has been a wave of consumer complaints, specifically from seniors stating that they had been talked into private Medicare plans without being given full disclosure of its coverage and how it might even force them to change doctors. Aggressive marketing techniques by these private insurance agencies have included cold-calling, cross-selling of products, unsolicited marketing in waiting rooms and senior centers, and pushing customers to repeatedly switch plans to drive up commissions.

This raises the question as to whether the decision by the Bush administration to contract with private insurance companies was a mistake. Do the benefits of sometimes lower rates outweigh the problems stemming from shady marketing practices?

Redefining the word "green"

Recently there has been lot of talk about sustainability, beyond just the firm's corporate strategy to survive over a period of time. Philips Electronics, a global leader in healthcare products, lighting, and consumer electronics, is at the forefront in its efforts to promote green. To learn more on sustainability and taking green to another level please click on

The intent of this blog is not to advertise Philips or its products, but merely share knowledge on how a firm positions green from a fellow Marketing student.

Thursday, May 8, 2008

US advertises on Google to snare surfers

This is an interesting article, so far we have been learning about various marketing strategies for “for profit” companies. This article speaks to one of the marketing strategies for the government, in this case the government of the United States. Where the article is discussing how the US state department, with a help of Google’s AdWords service , draws various internet users searching for words like “terrorism”, “Middle East peace”, “food aid”, etc. and redirects them the website in order to introduce/educate them with the country’s foreign policy, culture and society. Is there a place for marketing in “every home”!?!

Advertising the Crap Out of a Product

I think that advertising a product extensively may be a way to achieve TOMA, but not necessarily resounding success. If you look at the delivery pizza exercise from last night in class Domino's certainly had TOMA among the class, but that didn't extend to actually considering a purchase. I suspect that if there were no other options available and we *really* wanted pizza (or were more price sensitive) most of us would settle for Dominos.

Because of segments they target not all products will be of high perceived quality, and I think that we are confusing high perceived quality with product success. There are successful mediocre quality products when they are successfully targeted, priced appropriately, and promoted and distributed through the right channels.

In terms of advertising, at least those who advertise extensively care enough to talk to consumers about their product offering. Psychologically, this gives them an advantage over companies who think their products are so good they don't need to advertise them. Maybe it's the tone and style of blanket advertisements that make them more unsophisticated and offensive, instead of the fact people like Shane Co, Sleep Country, etc are advertising at all.

Might have example for "market the crap out of it" debate

After reading Sandeep and Doug's debate below I happen to do my typical rounds of looking at the latest news on products and low and behold here might be something worthy of the challenge.
How would you spend 100 million? 3 million for a 2009 super bowl ad... CHEAP!

Wednesday, May 7, 2008

Advertising The Crap Out Of a Product.

I recently had a student say that all that really mattered was advertising the crap out of a product. We have since started a conversation that might be of great interest to the readers of this blog.

What is posted here is my e-mail to him with his rebuttal to it.

--- MY E-Mail To The Student---

I wanted to address your comment about advertising. I realize I mentioned the first two in class.

While it is true that advertising generally works, merely advertising a lot WILL not work. Why?

1) Expense- Advertising is very expensive. Superbowl 30-second spot costs $2.6 million. Not sustainable.

2) Targeting- Blanketing the market leads to poor targeting.

3) Not Coordinating Product, Price or Place- High advertising levels hasten the demise of a sub-optimal product if distribution, pricing or product is not in place.

4) Attention- but not trust & value- High levels of advertising build attention, but not trust and value. It does not necessarily build a brand.

5) Price may be more effective- If market is price-elastic, you may be better off reducing price.

6) Competitive War- Advertising a lot will buy you a competitive war a lot of times. Your competition will not sit idly by when you ramp up advertising. The result may be a market share battle with eroding profits.

Let me know what you think.


I'll be glad to rise to the occasion. I am not sure I agree that "merely advertising" a lot will not work, (depending on your definition of "merely,") and I think you missed a few things above. For example, you say that advertising is very expensive. Agreed. Then you say that $2.6 million Superbowl ads are not sustainable. What about Budweiser, Dodge and McDonalds? If I am not mistaken, I believe they buy Superbowl ads every year. I bet they buy again next year. Are you sure expensive ads are not sustainable?

Although blanketing the market leads to poor targeting, a lot of companies do just that, and seem to not only survive, but thrive. Some examples are: Shane Co., Sleep Country, Beacon Plumbing, McDonalds, Vern Fonk, Coke, Pepsi, etc. More about these later.

It is true that there can be sub-optimal production and distribution, but in the above examples these were all managed.

As far as a sub-optiimal product goes, I would claim that all of the above are examples of either sub-optimal products, or products that are priced well above otherwise prevailing levels.

I agree that logically massive advertising should not build trust, but somehow it seem to. Some very intelligent people seem to continually buy from these companies, even though they should know that the value is not there compared to other alternatives. Nothing about the Vern Fonk ads seem designed to build trust, yet they seem quite successful as a business.

I disagree that competitive wars (Coke and Pepsi, for example), necessarily result in loss of market share or eroding profits. In case of the cola wars, independent studies have consistently shown that brands other than Coke and Pepsi have higher ratings in taste tests. Yet Coke and Pepsi have the highest prices and are clear winners in the profit wars. I believe marketing is the difference, since if the difference is not taste, and it is not price, it must be marketing.

Advertising or marketing is by its very nature an attempt to convince people to do something they might not otherwise do. It is my general contention that beyond a certain level of marketing needed to let customers know about the benefits of a product, marketing tends toward brainwashing. Brainwashing, after all, involves repeated messages without contradiction.

Taking this further than products, some very nasty things have been successfully "marketed"--Nazism, for example. An entire country was somehow convinced through propaganda (a form of marketing) that Jews and Gypsies were of lower quality than other people. Slavery, torture, suicide, and killing are just a few more examples of horrible actions that have been successfully "marketed" to acceptance, at least to the "target" audience.

I will restate my assertion: "Anything can be successfully marketed." Sad, but true.

Perceived vs Objective, continued

The NYT food section had a sobering article that speaks to some of Sandeep's questions from his earlier post. Perceived vs actual quality in wines, apparently, is all in your head. The article cites a study showing that the more expensive consumers think a bottle is, the more pleasure they get out of it. Sifting through the lees from a marketing standpoint, it would indicate that wine is about increasing the perceived value, raising the price--quality is secondary as long as the consumer buys into the fluffery. But when you get right down to it, or distill it if you will, isn't that the job of the marketer?

Perceived vs. Objective Quality

Given my undergraduate degree in Chemical Engineering, I understand the engineer's passion for maximizing objective quality. After all, an engineer is driven by a passionate need to create a high-quality product which may be defined as "zero defects/bugs" or "built to specifications."

At the same time, in marketing, the quest is for perceived quality. Marketers strive to maximize perceived quality. How does one reconcile these two perspectives?

As Doug mentioned, blind taste tests are a great way of separating these two effects out. For instance, see this study on search engines.

Does the pursuit of perceived quality imply capitulation on the objective quality front? Does the maximization of perceived quality equate with the sale of products with low objective quality and hence, harm to society?

One way that I am able to reconcile these two in my mind is to adopt a threshold model. If the objective quality is above a minimum threshold, then the pursuit of perceived quality is not problematic. At a minimum, the product should not cause physical, financial or psychological harm. It must be reliable. It must work. Beyond that, it is fine to use marketing to gain a perceived quality advantage.

There are some that will argue that a perceived quality advantage is bound to be transitory since the market will figure out that the objective quality is poor. What is very relevant here is the classification of products as search (quality is ascertainable through an objective search process), experience (quality can only be ascertained through an experiential process such as taste, smell or touch) and credence (quality can never be reliably ascertained by an average consumer). Perceived quality advantages are likely to be highest for credence products and lowest for search products. In the case of credence products, perceived quality effects may never be detected and may persist over a long period of time.

Next, there is the ethical issue. Is it unethical to pursue high perceived quality when the objective quality is poor? In some cases, yes. If the product does not work as described, causes harm or is excessively unreliable, I think you have a problem. If you are claiming that your product/service is something that it is not, you have a problem. Beyond that, I believe it is fine to get a perceived quality bump from your marketing activities.

Early on, I made a case for three marketing goals- attention, trust and value. I think perceived quality affects both trust and value.

Tuesday, May 6, 2008

Ford in Brazil. How will that affect brand image in the US?

If you click on this link, you will see a video shot last year of a new Ford plant in Brazil.

One look at this and you will instantly be able to tell what is wrong with the domestic manufacturing plants of US auto makers. It pointedly shows why there are problems building auto plant in the US and why more will go off shore. U.S, unions have fought this kind of automation for years for fear of losing jobs and now ironically they are losing jobs because they haven't automated.

Ford and GM are in an impossible spot with their employees in the U.S. The theory is that high wages by world standards and rising health care are squeezing all the profits from these companies. But then there is Toyota building more plants in the U.S. and showing a nice profit to boot. Maybe Toyota will begin to advertise, "Made in America" while Ford and GM go south of the border just like their profits. Toyota should play up the fact that they are increasing jobs in America as a part of their marketing strategy.

Costco's source of low marketing expenses

Here is an extract from Costco's 10-K statement for 2007:

We generally limit marketing and promotional activities to new warehouse openings, occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection, a magazine we publish for our members, and coupon mailers) to existing members promoting selected merchandise. These practices result in lower marketing expenses as compared to typical retailers. In connection with new warehouse openings, our marketing teams personally contact businesses in the area that are potential wholesale members. These contacts are supported by direct mailings during the period immediately prior to opening. Potential Gold Star (individual) members are contacted by direct mail or by providing membership offerings to be distributed through employee associations and other entities. After a membership base is established in an area, most new memberships result from word-of-mouth advertising, follow-up messages distributed through regular payroll or other organizational communications to employee groups and ongoing direct solicitations to prospective Business and Gold Star members.

I wanted to check the marketing expenses as a proportion of net sales for Costco and its main competitors. I was not able to do it directly because none of them report exclusive marketing expense, but they report SG&A expenses that include marketing expenses. Here's each player's SG and A as an allocation of net sales:

Costco - 9.8%
Walmart - 18.8%
Target - 22.3%
BJ's Wholesale - 7.9%

Since BJ's is in the east coast only, I have never been to its store, so I don't even know how they work. I am still working on identifying the factors for difference in S,G and A between Costco and BJ's.

PS: I can't believe Blogger doesn't allow ampersand character in its blogs. One more reason why I like MSN Spaces better. :-)

Monday, May 5, 2008

Will that be one McLump or two....wait, that would be tea, wouldn't it

Marketing consistency (another post regarding McDonald’s coffee)

After class last week, I’ve thought a lot about the comments from the McDonald’s marketing manager. A few things have been bouncing around in my head.

The reason for entering the espresso side of the coffee business was described by the McDonald’s marketing director as “60 Billion dollars”. Perhaps the forum was wrong to discuss that number. I tried but the timing was difficult. I wanted to discern whether a significant portion of that dollar value was the result of consumption from non-McDonald-izable customers. (new word, you heard it here first!) I realize that even half of that number is still desirable, but if the real number is 1/1000 of that number it may be a bad bet.

I suspect there are many Jazz loving customers who do know where Paraguay is, and who feel comfortable using French words. Might there be causality between loving jazzy styles and the willingness to part with 2 to 4 dollars for a cup of coffee? Where is the cause and effect logic that says there is a valuable market for a luxury product sold to NOT-luxury minded consumers?

I struggle with another piece of the logic also. The question was asked how McDonald’s’ will assure barista skill is high enough to make a good Latte. The answer is that machines are built that take the entire human element out of the process. All the worker must do is press a button. Whether or not the end result is equally tasty as a barista brewed concoction, the perception value is far lower for a machine produced product. Imagine how differently it feels to put a quarter into the coffee vending machine vs brewing your own coffee at home. Which is likely better? Not the vending machine in my mind. Now, these are undoubtedly macho high class “vending machines”, but the perception value is important. We know from the soft drink market that producing a cola that tastes as good as Coca-cola is easy. Taking their market share is another question altogether, the competition must overcome brand loyalty and quality perceptions. I didn’t think the McDonald’s reps were very forthcoming on this issue. They certainly know exactly what I’m talking about, and I suspect they have done the math as to what impact the machine concept has on their market.

I strongly doubt McDonald’s has any chance to take Starbucks customers. They just seem to be a totally different market segment. The remaining question then is, how could McDonald’s justify the cost of a marketing campaign based on exposing the differences between Starbucks and McDonald’s customers? Either the Starbucks customers are the target or they’re not. If they are, does McDonald’s truly believe that significant number of Starbucks customers are merely putting up with the inconvenience of hand made lattes in a sophisticated atmosphere simply because no fast food chain had yet provided machine made lattes in a loud and greasy atmosphere? If the Starbucks customers are truly not the target for the marketing, then I wonder how the message is imagined to expand McDonald’s market share.

More on McDonald's

Like Shinobi326, I too was curious to try McD's coffee. Sadly, without a free drink card so I can't comment on any cashiering issues. Anyway, I hit the drive-through, and ordered a large, iced, hazelnut coffee. The coffee was way too sweet for my tastes, and not cheap--apparently I "just don't get it" either.

Their coffee was $1.99, Starbucks runs around $2.30, albeit sans flavorants.

I have a feeling that like the McRib, the McD LT, or any number of failed promotions (although the nice ladies from McDonald's were quick to mention that over the last five years, nothing has been short of success--but upon reflection, I can't remember McDonald's introducing anything new in the last five years) their iced coffee program will be McGone.

Engineering an Ad.

From Lane-

"I think (this is) a great look behind the scenes at how Toyota literally built an ad campaign from the ground up."

Here is the article that talks about this.

Here is the website that includes videos on how this was done.

Sunday, May 4, 2008

Not Lovin' It

After reading Doug's post below I felt compelled to share my experience with McCafe from last Friday.

I must say that when I used my free card the other day I wasn't shocked at my experience given my experiences in the far past. I can't even remember the last time I even walked into a McDonalds, let alone actually order something.

When I handed over the card and said "mocha please" is when the chaos began. It took nearly two minutes for the cashier to input the card correctly into the cash register (after the manager coming over to help). I just chalked that up to how rare those free cards are I guess (yeah right!).

After inputting the card the cashier walked over to the large machine, filled the cup with a few pumps of chocolate, put the cup under the spigot, pushed the button but nothing happened. Again, calling over the manager to help a few more minutes pass by and a line of customers start to form behind me.

During my wait I couldn't help but notice the pricing menu for these drinks. On the left panel was the "Value Menu" where everything was around a dollar as expected. The panel to the right was the McCafe menu. After our visitors from the other day I got this impression that McDonalds is really pricing these drinks fairly cheaply to coincide with the rest of their menu offerings. I was surprised to find out that if I were to pay for my pretty little medium (not 'grande') mocha it would cost me $2.89+tax. I was shaking my head saying to myself "Yes I'd like to dollar menu double-cheeseburger for $1 and a mocha for another 3 dollars!"...something doesn't seem right with this picture on many levels!

Surprisingly, they finally get the machine to work. With my drink in hand I hurry back to my car and start my drive to work. While driving I take my first sip and I said to myself "OHHHH my gosh" (well not those words exactly!) The drink was obnoxiously sweet and nearly undrinkable. Probably a few too many pumps of the chocolate my dear 'barista.' I continue to drink it regardless and I never was able to find the espresso taste or buzz I was expecting.

Am I shocked at my experience? no. I did honestly want to at least say it's worth the money, which for $3 dollars, I can safely say not a chance. Well I guess I'm glad I had my freebie card but I'm now happy to pay an extra buck to get a decent drink elsewhere.

Article or advertisement

The article in FT (Financial Times), titled "Keeping up appearances" has caught my eye, because of its subtitle ("What to wear during recession?"). After reading the subtitle, I thought that it would be an interesting article, perhaps about how frugal one has to be with his or her money, when it comes to buying clothing during the recession. Surprisingly, it talked about keeping up with your tasteful habits, ignoring the risks of declining economy. In my mind almost encouraging people to go out and buy more fashionable clothing, because if you are “dressed for success” you will survive this “thing” and you will set an appropriate example to the ones around you (the article called it “your civic duty”. Needless to say, a question popped up in my head: “Is this an article (i.e. true journalism) or a settle ad for the clothing industry. I certainly think that there is a bit of true journalism in the article, but I believe that the major intent of the article is an advocacy (advertisement) for ones spending habits to be maintained or expending, hence helping the clothing industry maintain its sales. I would be interested to hear what you people think: true journalism or advertisement guised as journalism?


Friday, May 2, 2008

Comparison Commercials

It was a big surprise to me when I came to United States that a commercial could directly specify a competing brand's name. In India, this is against law. So, arch rival brands, especially duopolies such as Coke and Pepsi, engage in showing the other brand with all the characteristics except the name and logo. They usually mimic the name and tweak the logo of the competing brand a bit, and make fun of the their product - making the experience ugly. The extent depends on how aggressive they want to take on the competitor. Needless to say, the competitor would retaliate. Often, it's a series going on. Funny thing is that people enjoy them mostly and there is lot of attention they gain. What else do advertisers care about!

While I find the direct comparison commercials (like in US) really a healthy way of promoting one's own product, I always wonder whether viewers would consider it as a too-aggressive and desperate approach, which might have effects on loyal customers having a high image on the brand. Also, to some extent, it unveils to the customer, the other options the viewers might not have known otherwise.

One comparison ad I still remember is of a Hyundai's car. It starts with showing all the nice features of a Toyota. Though all those features are nice to see, they are all extravagant - which is implied (subtle). At the end, they say that its nice to have a Toyota, but its nicer to have a Hyundai at almost half the cost.

Thursday, May 1, 2008

McDonalds insults intelligence

Did the two McDonalds Restaurant representatives insult anyone else's intelligence besides mine during the discussion after Wednesday night's presentation on "Coffee Wars"? Both stated repeatedly that McDonalds advertisements are not attacking Starbucks and they don't even consider them a competitor.


What about What about the latest batch of TV ads ("now I don't have to know where Paraguay is")? Do they expect me to believe these are aimed at Dunkin' Donuts? Please.

These types of ads are one of the main reasons I have not eaten at McDonalds in 24 years. One representative admitted to another of these borderline-unethical advertisements when she talked about how parents who take their kids to McDonalds for the Happy Meal toy (not the food) often stop beforehand to get a latte. Let's see, we have a child begging mom and dad to take them to a restaurant, and no one wants the food! The kid wants the toy, and mom and dad stop elsewhere first to get something for themselves. What is wrong with this picture? Advertising aimed at getting children to bug their parents into buying a 25-cent toy for the cost of a meal, that's what.

Did you know that chairs in a McDonalds restaurant are specifically designed to be comfortable for about 10 minutes, but to become uncomfortable if you sit in them for more than 20 minutes? The background music is also designed to subconsciously get you out the door in 20 minutes. Don't get me started.

I don't think I'll be using that free latte card.