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.