Tuesday, December 29, 2009

"Post-price" retail marketing

While their competitors advertise holiday clearance bargains, Best Buy is running full-page newspaper ads to inform customers that they ". . . promise to be there for you and whatever you bought for as long as you need us." Wow, Best Buy's got your back (if you're a customer).

These are not simply platitudes. The campaign goes into tangible detail about an extended no-hassle return and exchange program, help with set-up and even recycling when it's time for new stuff.

Why all this altruism? It's easy. The low price purchase factor big box retail relied on as a reason for being and eventual domination is going away. Retail pricing is quickly becoming transparent. Online shoppers regularly use sites like PriceGrabber.com and CNET.com to scour the web for the best deal. More dramatically, it's not unusual to see shoppers in a Best Buy scanning UPC codes using smart phones equipped with apps like RedLaser or ShopSavvy for instant price transparency at the shelf.

When you use these digital shopping tools, you'll note that Best Buy rarely wins the low price race against no-frills online outlets like Abe's of Maine or NewEgg.com. It used to be just the geeks or hyper analyticals who used these tools. I've noticed that bar code scanning is a popular smart phone bragging point this holiday cocktail party season.

So if you can't win on price, you had better change the game. Best Buy is doing just that with its Buyer Be Happy campaign. The tone speaks to a bigger end game than simply changing the rational context of a purchase decision. Best Buy's language signals a fundamentally different social contract with the consumer. They are not just there to deliver a low price or even a better usage experience. They are promising to act with what I term, "social integrity" - essentially "pledging" to treat their customers, employees, communities and even their supply chain with an eye toward a long-term, mutually beneficial relationship. Is all that worth an extra $150 on a flat screen? Time will tell.

When what you buy is pretty much the same from store to store and the pricing is instantly transparent then how you behave as an organization becomes a more important point of differentiation. Maybe the "best buy" is not necessarily the "best price." Let's see if Best Buy can turn the super tanker that is our current shopping paradigm.

Monday, December 21, 2009

Braveheart Marketing

Advertising Age posted an interesting video today illustrating how a buyer's market and a more transparent marketplace allow consumers to dramatically compress their vacation purchase decision window. Vail Resorts responds by doing the same thing with their marketing plan.

Social media and other short-close vehicles allow the company to fluidly read the market and execute more relevant and impactful programs week-to-week.

CEO Rob Katz awaits his Braveheart moment when having kept his powder dry, he can dominate the competition.

Thursday, December 10, 2009

CPG brands tip-toe into a new approach to differentiation

Two leading consumer packaged goods marketers made announcements this week about what they were taking out of their products.

Minnesota based General Mills announced yesterday that they are reducing the grams of sugar contained in cereals advertised to kids to single digits per serving. To be sure, the qualifications would make any corporate attorney proud (some of the "hard stuff" like Franken Berry and Boo Berry will continue to exceed this standard but they are not advertised brands). Even so, this step is consistent with others "The Mills" has taken in recent years to improve the healthiness of their products. In 2005 they guaranteed at least 8 grams of whole grain per serving in all of their Big G cereals. In 2008 the company fortified all its children's cereals with calcium and vitamin D.

General Mills is not the only player innovating this way in the cereal isle. Arch rival, Kellogg Co. reduced the level of sugar in three of its kid's cereals by 1-3 grams last year. Together these actions represent a pretty big shift for a category built by overtly tempting the juvenile sweet tooth via wacky cartoon characters.

The other significant announcement this week was from Nestle. Fast Company reported Nestle's plan to use only fair trade chocolate in KitKat bars manufactured in the U.K. (in essence removing from their product chocolate sourced from exploited growers). Okay, it's one candy bar brand made in one country but Nestle is not alone. Cadbury earlier announced plans to source fair trade chocolate from Ghana while Mars announced plans to go with 100% fair trade chocolate by 2020.

A cynic might argue that these companies are taking these baby steps to diffuse pressure for heightened governmental regulation. Cereal marketers are still certainly cringing from the experience of having to discontinue their "smart choices" program after it became widely known that sugar-laden products like Fruit Loops qualified. Fending-off regulators may be a partial motivation but I don't think that's the primary driver.

More and more consumers see messages pertaining to healthy, green, and even sustainability on the front of packages. The only way a message gets on the front of a package is because some very smart people believe it will sell more product. I expect the pace and degree of innovation on this front to increase because these differences are real (as opposed to manufactured hype like "blue flavor crystals") and they are becoming more and more meaningful to consumers. This trend can only go in one direction as more brands use it to compete. The more pronounced and tangible the innovation, the more powerful the differentiation. Imagine a day where the claims are so clear, universal and compelling that the lawyers won't need to be involved.

Thursday, November 5, 2009

CMO turf wars?

This is my response to an article in today's Ad Age Daily by Scott Davis regarding the challenges of the modern CMO.

The CMO won't have clout until the entire organization realizes that the entire organization is on the hook for marketing outcomes today.

The quality of the product and the usage experience is exposed for the world to see thanks to peer-to-peer opinions shared online.

Same for the "social integrity" of a company. How an organization treats its customers, employees, community and environment are all on the radar.

People more and more rely on this type of information to make purchase decisions. What has traditionally been defined as "marketing" can't really blunt the effect of a black mark on TripAdvisor.com (in the case of a resort destination) or indifference when a musician's guitar is smashed by luggage handlers (in the case of United).

Likewise, regularly delighting customers (and doing right by them when you screw-up) often has an exponentially positive impact on a brand power, sales and profits.

Even the most politically adept CMO can't succeed if his or her organization does not see the bigger picture. Bringing that reality in focus, not waging turf wars or power grabs is the role of the modern CMO.

Tuesday, October 20, 2009

It's not about fighting or controlling

Tools like Google Sidewiki are helping transform the marketplace into a meritocracy. You can't fight or control a meritocracy. As a marketer, your job now is to help it do its thing. Job one is to make sure your product is great and the user experience nothing short of fantastic. Once you nail that, find your enthusiasts - reward them and give them the tools to share. Find those who do not love you and convert them. The meritocracy can help you if you respect it.

Friday, October 9, 2009

Hell's fury - avoidable

Joseph Jaffe launches into a fairly amusing rant today (Hell hath no fury like someone who's credit card hath been declined). Once you get through the apoplectic part, Joe makes a razor sharp observation about the damage caused when the ads run by American Express conflict with the way the company treats its customers in real life.

Interestingly, Mr. Jaffe is not bent out of shape so much over having his credit limit halved but how the brand did and did not communicate in this time of transition. Amex could have done a few inexpensive things (like reach out with preemptive text or phone call warning that he was reaching his limit) that might possibly have made Joe a more loyal customer. But now he's mad as hell and going for the jugular on this. Let's keep an eye on how many people visit his site, see this video and read his tweet.

In today's transparent marketplace (where everyone has access to YouTube), the way a brand treats its customers is a more powerful driver of brand awareness, affinity and most importantly trust than any ad. Do you think the Amex marketing people should invite themselves to the next operations meeting?

Monday, September 28, 2009

GoodGuide gets it.

The good people at GoodGuide are providing a fantastic service to consumers. They are also changing CPG marketing.

GoodGuide has created "the world's largest and most reliable source of information on the health, environmental, and social impacts of the products in your home.
" What's in it? Who makes it? Where and how? What is the environmental impact of this product across its entire life cycle? These are some of the questions GoodGuide seeks to answer. They rate products to make it easy to quickly make better purchase decisions.

Over a million people have visited website (still in beta) and already there are over 70,000 products rated.

Over 100,000 people have downloaded the free GoodGuide iPhone app making it easy to take this knowledge to the store shelf. A bar code reading capability is due out shortly.

GoodGuide is candid about building a platform for "normal people" (not just bleeding edge, environmentally conscious, health freaks) to make healthier, socially and environmentally conscious decisions everyday.

It's somewhat ironic that people must seek out resources like GoodGuide to get the information they want on the products they buy. The extraordinary lengths GoodGuide has had to go to sleuth-out this information is equally ironic.

One of the founders, Dara O'Rourke in an interview today on Minnesota Public Radio shared anecdotes about how some companies were maneuvering to keep information pertaining to ingredients and environmental impact out of public view. Other more enlightened brands are actively working with GoodGuide to improve their scores.

Eventually brands will realize that transparency is a powerful differentiator and path to growth. First movers will likely reap disproportionate benefits. GoodGuide is dramatically accelerating this process. What's your product's GoodGuide score?

Friday, September 25, 2009

Hyatt exposed

Hyatt Hotels has been getting a lot of press the last few days for firing housekeeping staff after instructing them to train "vacation replacements" that turned out to be lower cost contract workers who would soon take their jobs. Thanks to Sara Peterson @ Megaphone for pointing me to this HBR Editor's Blog post by Paul Michelmanon assessing the damage.

What are the odds that Hyatt's marketing leadership was aware of the plan to sweep out the housekeeping staff in this fashion? In our transparent marketplace, the marketing department needs to do more than make the ads and brochures. They must be engaged in operational decisions that directly impact the brand. The ramifications from these "simple economic decisions" are often more impactful than any ad or brochure. Today "marketing" is more about brand behavior than glossy images. Wake up Hyatt.

Thursday, September 24, 2009

Beyond the sound bite

An ambitious if somewhat wonky experiment is taking place. Is it possible for two opposing parties to calmly and rationally debate an issue using in-depth, fact based arguments? Can anyone actually be persuaded to change their opinion on an issue after witnessing such a debate? Interesting questions given the pundit-charged, polarized nature of our "national conversation."

Intelligence Squared US is bringing the formal, "Oxford style" debate format to key issues facing the U.S. They've been at it for three years now and are starting to get some visibility. IQ2US tackles issues ranging from the demise of mainstream media to the efficacy of "Buy American" policies. The radio broadcast is available on over 190 NPR stations nationwide and is televised on Bloomberg, reaching over 200 million homes. I encourage you to listen to one of these debates. They are informative, surprisingly fun and charged with same kind of drama that kept millions tuned into Perry Mason.

A citizen making a voting decision is analogous to a consumer making purchase decision. Based on available information, both make a choice. Poor decisions generally happen when the information is incomplete or inaccurate. It's an understatement to say the quality of information available to the average citizen or consumer today is less than ideal.

Is there an appetite for more rigorous and in-depth public debate? Viewership of the 2008 presidential debates indicates there is. Are consumers open to more and better fact based information in making purchasing decisions? It appears so when one looks at the popularity of sites like TripAdvisor.com and Yelp.com (where consumers have essentially filled this need on their own).

Bottom line: Politicians and marketers have an opportuity to improve their standing (and outcomes) by taping into this appetite for deeper dialog and better information. Could the pendulum be swinging from the era of superficiality to one of substance?

Tuesday, September 15, 2009

Former ad guys concur

It seems fellow recovering advertising executive, James P. Othmer has a similar perspective regarding the ability of social media to help President Obama persuade the masses. Check out his recent New York Times op-ed piece here.

Friday, August 21, 2009

Social media failing health care debate. Turn on the TV.

It's painful to watch. President Obama makes speech after speech detailing the rational argument for a health care overhaul. His opponents serially attack elements of the proposal creating fear, uncertainty and doubt among much of the population. Those opponents offer few meaningful alternatives for fixing the situation. Liberals are livid that "red meat radio" mis-characterizes the issues and distorts the facts. Conservatives worry that they will be left on the sidelines of a liberal stampede. The cycle repeats.

Social media and the larger blogosphere, key drivers of Obama electoral success, are disappointing in their ability to influence this debate. This should not be surprising. Most of social media vehicles are self-reinforcing in nature - people who share common interests or perspectives talking to one another. The "lunch bucket" voter who might genuinely benefit from a health care overhaul is not hearing how he or she could benefit. The progressive, hell bent on a public option, is not hearing from those who sincerely believe it will ultimately subsume private options. We're effectively at a rhetorical standoff in the digital universe on this issue.

Social media was a potent tool for rallying supporters to elect the president. Surveying my in box, it's clear the Obama Administration is attempting to leverage social media again on this issue. One problem: the health care debate is a very different animal. The Democrats hold the White House and majorities in both branches of congress. The base is rallied. If Obama genuinely wants consensus, he needs those who are not his supporters to actually hear his argument.

This is where good old-fashioned traditional media could be more effective than the cool digital stuff. Imagine a nationally televised debate (or series of debates) where the President spends an hour sparing with a notable Republican (or health care industry leader) on the health care issue. Just the spectacle of a real human-to-human debate might cause us to look up from Huffington or Hannity to see what's going on. Remember that well over 50 million viewers tuned into each of the most recent Presidential debates.

A televised debate could provide the one element sorely missing in the health care conversation: drama. Sominex would be envious of the sedative powers of the President’s most recent New York Times op-ed piece making the case for health care reform – the boilerplate for his recent speeches. What’s needed is the drama of a heated exchange or a “gotcha” moment on national TV.

Most importantly, a debate could raise the level of dialogue from rumors, innuendo and finger pointing to a serious, thoughtful exchange of ideas. A well-viewed debate could provide a common context and language for more productive "water cooler" debates in our offices the next day. That’s the only route I see to any form of consensus. In the end, consensus may not be a realistic goal. Regardless of which way the health care issue is ultimately resolved, it would be nice for most citizens to at least be accurately informed.

Setting politics aside, social media excels at building enthusiasm among the like minded. It sucks at enabling dialogue between disparate perspectives.

Thursday, August 20, 2009

Whole Foods' values train wreck

There's a lot of clamor today regarding Whole Foods CEO John Mackey's recent op-ed in the Wall Street Journal where he came out against many of the ideas contained in the Obama administration health care overhaul initiative.

Right or wrong, Mackey's POV conflicts with the leanings of many Whole Foods patrons who reportedly tend to support the Obama approach. Quite the social media furor is underway. Over 20,000 Facebook members have pledged to boycott the chain. The debate has prompted a new forum on the Whole Food website with over 14,000 posts.

The image of the original hippy store used to illustrate the "values" page on the Whole Foods site paints an image that does not line-up with the viewpoint of the CEO. Shopping at Whole Foods (and paying the significant premiums involved) is an overt values statement for most customers.

In this transparent era it would seem that either Whole Foods needs to migrate to a less progressive values position or the CEO needs to recant or even possibly resign. The current "values dissonance" will only erode the Whole Foods brand and franchise.

What would you do if you were on the Whole Foods board of directors?

Thursday, July 30, 2009

Alfa Insurance touches a nerve

AdRants today pointed me to a fun new commercial for an insurance company that exploits the frustration we often feel when attempting to extract payment from an insurer.

The insurance industry certainly has created the conditions where this type of appeal has resonance. It's actually surprising more brands aren't exploiting the status quo.

Do you think Alfa Insurance touches a nerve? Do you believe they'd be any different when you need to file a claim?

Thursday, July 23, 2009

New way to differentiate: Don't screw the customer

David Pogue's column today in The New York Times nails what's wrong with the wireless phone industry. People (probably marketing people) at the big wireless companies find new ways to grow revenue by tricking, gouging or otherwise abusing customers.

Pogue notes many examples in his article including this, “Why has the price of a text message gone to 20 cents, from 10, in two years? There was no big technology shift. There was no spike in the cost of electrons.” Pouge goes on to guesstimate that Verizon pockets $850 million a year by forcing you to listen to those annoying voicemail instructions every time you try to leave a message. He wryly suggests congress investigate. Read the article and your blood pressure will go up.

When will wireless companies realize that not treating customers with contempt is a powerful way to differentiate, build genuine brand loyalty and profits? I don't think government will ever be able to enforce social responsibility in business. I do think social media's ability to make bad corporate behavior transparent will eventually force companies to change. Social media will also steer new customers to brands with real integrity. Now is the time for a company with foresight to preempt their competition by not playing the same old game with their customers - by making the inevitable changes today.

Monday, July 20, 2009

Ikea - Operations understands the brand

A recent article in The New York Times noted the increasing popularity of Ikea's Smaland play centers. "Ikea estimates that Smaland attendance has jumped roughly 20 percent so far this year in its stores in major American cities."

Many of the parents using the free baby sitting service openly admit that they are not in the store to shop. As the article states, parents can be seen "depositing their children at Smaland and plopping into a display couch for an hour of peace and quiet, and then leaving without ever buying a thing."

In many companies, the operations group would note the increase in Smaland usage and quickly calculate the cost for the incremental staff required to maintain the 12-1 employee/child ratio in the centers. New rules or restrictions would be put in place to contain costs. Eventually, someone would dream up the requirement that parents submit a purchase receipt (dated that day) to liberate their child from Smaland. That's what happens when operations and marketing (or whoever is in charge of the brand) don't communicate. When push comes to shove, a tangible cost argument generally wins out over a fuzzy concept like brand affinity.

Not at Ikea. The company understands that the value accrued to the Ikea brand from the hour and a half playing in the ball pit, reading the paper or munching meat balls vastly outweighs the potential impact of any TV commercial, banner ad or online game for kids. The quantity and quality of the interaction is priceless. It's not a cost, it's an investment. Maybe that's why Ikea's sales were reported to be up 5% earlier this year.

What other companies get it like Ikea?

Thursday, July 16, 2009

Wal-Mart changes the game

Wal-Mart’s announcement today that they are planning to make the "social and environmental impact" of the products in their stores easily visible to customers is certainly interesting and the most visible evidence so far that I may be on to something with my Transparency Principle™.

Not only does Wal-Mart create a new way to differentiate their shopping experience on a basis other than price, they will likely save money and lower costs for customers over the long run. Their tag line, “Save money, live better.” certainly takes on a new dimension.

I think a bigger ramification is the legitimization of a new paradigm for consumer brand differentiation. Clever brands will find a way to lessen their footprint and get paid for it when consumers vote with their purchase decisions. Sure beats trying convince someone your laundry detergent is better because it contains "fluorescent whitening agents." This initiative could eventually do more for the environment than any governmental regulation.

Do you think Wal-Mart will succeed in forcing/enlisting other retailers to play ball with the same rating system?