It’s the Execution, Stupid!

A recent study by Carlson Marketing and the Peppers & Rogers Group provides insight into what consumers value from retailers. In the report, “Getting it Right at Retail,” respondents rated customer service and being “easy to do business with” as very important attributes in a retailer. These service issues, along with price and availability of merchandise, were of great importance to the consumers surveyed. Retailers should be concerned with another finding from the study: over 40% of respondents indicated they were as happy with other retailers as they were their primary retailer choices. In other words, many customers have little problem with switiching to other retailers when their primary retailers do not meet their expectations.

Results of the study are interesting, but are they really surprising? Consumers want to be treated fairly and and have their business valued by retailers. I doubt companies like Wal-Mart, Auto Zone, and Macy’s that scored low with consumers in this study have set out to create bad experiences for their customers. It’s all about execution, or lack thereof. For example, another finding from the study is that many times retailers that have well conceived loyalty programs do not effectively implement them as front-line service employees are too often ignorant of these important customer programs. This problem is not new for retailers; employee turnover in retail organizations has been high for years. A mixture of low salaries, being put in stressful situations dealing with difficult customers, and the saturation of retail outlets that necessitates filling more positions (that are low paying and stressful) has contributed to the customer service woes experienced in this country. Retailers willing to invest in employees in terms of training and compensation are poised to develop a competitive advantage, assuming other elements of their strategy are in place (e.g., merchandise mix, pricing, and presentation/experience). Link

Sprint Hangs Up on Unprofitable Customers

Wireless communication provider Sprint recently made headlines when it announced that it was terminating the service contracts of approximately 1,000 customers. Subscribers in the affected group were identified by the company as being unprofitable because of their numerous calls seeking customer support. The customers’ frequent interaction with Sprint support personnel was viewed as a drain on resources that could be used to serve other customers more effectively.

It takes courage for a business to “fire” a customer. Maybe it’s human nature or at least traditional marketing thought that we want to be liked by everyone. We want our customers to like (if not love) us, and if someone is unhappy with us we should not rest until they are happy. The customer is always right, you know! Perhaps that slogan should be modified to read “A profitable customer is always right.”

I applaud Sprint for taking the step to end its relationship with customers it has been unable to serve to their satisfaction. It is not easy to give up on customers, especially when you consider how hard it is to acquire them. However, it seems ironic that a company that has no trouble binding its customers to a long-term commitment is walking away from its commitment to customers when the relationship is less than perfect. Wouldn’t it be refreshing for companies like Sprint to create a two-way street and allow customers that are chronically dissatisfied to end a contract! Not likely to happen any time soon, but you never know. Link

"You Go Girl"

A study by researchers at Iowa State University reveals that women wield a great deal of power in the home. The study’s researchers were quick to point out that their findings go beyond the amount of communication initiated by wives, such as the popular notion that wives talk more than their husbands. Rather, it is the significance of the issues being communicated and the finding that husbands are often receptive to going along with the ideas communicated by their wives.

These findings are counter to the traditional view of the “lady of the house” having a lesser role in making household decisions. The marketing mindset has been to focus on reaching the male head of household given that he is often the primary provider for the home. The assumption has been that the leadership role of the male wage earner extends to taking the lead on deciding how money is spent by the family. However, it appears that in today’s household consumption decisions are often a joint venture between husband and wife, with many decisions made based on the wife’s influence.

So, rather than believing wives are relegated to handling certain household purchases (food, clothing, and home furnishings), marketers must consider every purchase situation and seek to learn more about the dynamics of the buying decision process in the household. Whether it be complex purchases such as health care services and automobiles or more mundane purchases such as casual dining and entertainment, the “traditional” role of wives in making these decisions no longer applies in many households. Marketers that respond to the more proactive role of women in the household could reap benefits from their efforts. Link

Humor and Aging

A study by Washington University researchers published recently in the Journal of the International Neuropsychological Society on the relationship between age and humor has implications for creative design of advertising messages. Researchers found that adults over age 65 have more difficulty getting the punch lines of jokes than young adults because of age-related changes in processing abilities. Link The researchers point out that their findings do not mean that older adults do not respond to humor, but rather that the reasoning and cognitive skills used to process humorous messages change with age. These findings are similar to those of a Canadian study published in 2003 that found humor comprehension among older adults is less compared with young adults. These researchers also point out that their findings do not suggest older adults aren’t funny or don’t appreciate humor. Link

So, what does these findings mean for marketers? Ad agencies involved in the creation of brand messages must take into account this phenomenon when developing messages aimed at senior consumers. Obviously, any copywriter or creative person would take into account characteristics of the demographic being targeted. But, these results suggest that it’s more than just recognition of age differences in the processing of humorous messages. When marketing to seniors, encoding humor into messages is still a viable option, but the approach taken to developing a humorous message must be different than that used to create humor for younger audiences.

Price Bundling: Added Value vs. Added Burden

My family recently enjoyed a vacation in Canada. A great time was had by all as we took in tourist attractions in Montreal and Toronto as well as visited relatives near Montreal. Being ever-observant of marketing practice as I am, I couldn’t escape noticing the marketing activity going on all around us. In particular, I was struck by the pricing practices of two tourist attractions and how one used price bundling effectively while another’s use of price bundling may actually hurt rather than help.

While in Toronto, we purchased a City Pass to take in six different attractions. City Pass bundles multiple attractions together for a single price. The price of the bundle is substantially less than purchasing tickets for each of the six attractions. Besides being a good deal for consumers, the tourist attractions that participate in City Pass benefit because they are likely to gain revenues from visitors who might opt to not visit an attraction when unbundled. In our case, we visited all six attractions in the bundle: Casa Loma, CN Tower, Hockey Hall of Fame, Ontario Science Centre, Royal Ontario Museum, and Toronto Zoo. We likely would have only visited 3 or 4 of these attractions if the bundle hadn’t been available. Our vacation experience was enhanced because of the added value the City Pass provided.

I wish I could say the same for another attraction I had hoped we could visit on our trip. The Granby Zoo, located about an hour’s drive from Montreal, is outstanding. I have fond memories of visiting the Zoo as a child and wanted to share that experience with my three sons. My enthusiasm was tempered, however, when I discovered that the only ticket the Zoo sold was a combination ticket for the Zoo and a water park. The price itself ($26.95, Canadian) is not the issue. The issue is I want a choice of purchasing a bundle or buying each attraction separately. We did not have time nor the desire to visit the water park, but we could not buy a ticket just for the Zoo. So, we opted not to go.

Price bundling is great because it can be used to deliver greater value on a cost-per-item basis when compared to buying items unbundled. However, price bundling should not be offered as a take-it-or-leave-it proposition, making consumers feel burdened if they buy a bundle of items that they cannot or do not want to use.

Are You Ready for some iPhone?

I think I now understand how football “experts” feel the week of the Super Bowl. All of them weigh in with their opinions about which team will win the big game, keys to success, and other observations that could impact the outcome of the game. For marketing experts, the launch of Apple’s iPhone this week has a similar atmosphere surrounding it.

Depending on which experts you wish to believe, the iPhone will revolutionize the wireless industry and add $10 billion in reveunes for Apple, or it will serve as a humbling experience for the same company that gave us the Newton. I believe conditions are favorable for the iPhone to succeed, but there are three keys to success that must be met:

1.The user experience must be positive. One of the reasons iPod has been a smash is it is easy to use. If users can learn to perform the multiple tasks of the iPhone with ease, they are much likely to sing the iPhone’s praises to others and serve as unofficial buzz agents by giving demos to people in their network. The multiple uses of the iPhone are irrelevant if owners perceive it’s too hard to use.

2.Behavior modification is necessary. Consumers must go from thinking in terms of specialized devices to generalized devices. We have been conditioned to shop for separate devices to serve our needs for wireless phone, camera, music player, and mobile email. Now, we’re being told that a single device can do all of these things. Accepting a generalized device involves making trade-offs in performance as you can buy specialized devices that do each of the tasks better than an iPhone. The iPhone’s promise is one of simplifying our electronic gadget needs!

3.Customer support will be crucial. Service at point-of-sale and post-purchase will be influential in determining whether the iPhone succeeds. This key has a twist in that this is not up to Apple alone. AT&T will be a key partner in educating consumers about the iPhone and keeping them satisfied when product or service failure occurs. Conumers want a seemless experience; they don’t care which partner’s part of the offering is at fault. If they purchase an iPhone at an AT&T store, they will expect support there. If they contact Apple with a problem that is technically a phone service issue, they’re going to expect Apple to provide assistance.

So, for all of the hype surrounding the Apple iPhone the bottom line is that if consumers see value in the iPhone, that it adds to their quality of life in some way (e.g., adds enjoyment, creates convenience, or enhances image),the iPhone will likely succeed.

The Power of Community: Nothing Rivals It

Yahoo’s acquisition of Rivals.com, a site dedicated to college and high school sports, is a clear acknowledgement of the Web’s prowess as a gathering place for communities of people with shared interests. Yahoo is a destination portal already, and its acquisition of Rivals.com is a sign that it seeks to bond with one of the most passionate consumer communities in existence: college sports fans. Adding Rivals.com content gives Yahoo an advantage over sports-only sites such as ESPN.com. Tapping into the devotion of college and high school sports fans is a way to attract users to Yahoo and keep them on the site to meet their content needs in other aspects of their lives. This move gives Yahoo an opportunity to enhance the brand experience it offers and become more relevant to Rivals.com users.

NASCAR Dialing Wrong Number with AT&T Lawsuit

NASCAR has enjoyed tremendous growth in popularity, television audiences, and sponsorship revenues over the past decade. The growth seems to have hit a bump in the road (make that track) as a combination of higher prices for race tickets and gasoline are negatively impacting attendance and leading many race fans to stay home and watch on TV. Check that, they’re not watching on TV either, as ratings for NASCAR Nextel Cup races have been down from 2006 for almost every race so far this season.

If NASCAR didn’t have enough worries with fan interest, it finds itself entangled in a major sponsorship controversy. NASCAR is fighting to keep AT&T from being a sponsor of driver Jeff Burton and Richard Childress Racing. Burton was sponsored by Cingular Wireless, but when the brand was replaced with the AT&T name the company naturally wanted to shift its association with Burton and RCR to the AT&T brand. NASCAR has 700 million reasons to keep out AT&T as a team sponsor, as in the $700 million, 10-year deal NASCAR has with AT&T rival Nextel. Sport properties should take steps to protect their sponsors from having to fight for the audience’s attention. After all, breaking away from media clutter is one of the attractions of sponsorship as a marketing communications vehicle.

It is admirable that NASCAR is vigorously defending the value of its property and seeking to protect category exclusivity for Nextel. However, preoccupation with this issue could be more harmful than helpful. Despite Nextel’s established association with NASCAR, the fact remains that many NASCAR fans are AT&T customers. Taking aggressive measures to shut out fans’ wireless provider may be received negatively. Management focus would seem to be better utilized by examining how to rekindle fan interest in attending NASCAR races and watching races on TV. Otherwise, NASCAR will continue to lose a point of difference it has enjoyed over other professional sports: its intimate relationship with the everyday fan. Other major leagues are viewed as having “sold out” to the interests of corporate sponsors and media partners. While NASCAR may still have an advantage when it comes to fan access to the sport, it could easily lose that advantage if becomes too distracted with sponsorship issues. Link

Scientific Breakthrough in Cause Marketing?

Results of a study published recently in the Journal of Science may have significant implications for marketers of philanthropic causes or charities as well as companies that align themselves with nonprofits via cause-related marketing campaigns. In the study, subjects participating in an experiment experienced activation of “pleasure centers” in the brain when they learned that money had been transferred from their bank account to a local food bank. The response elicited is similar to experiences such as eating sweets, engaging in social interactions, and sex.

So, what does this mean for marketers? For marketers of philanthropic causes or charities, it could have significant impact on how their organizations should be positioned and the design of advertising messages intended to influence giving. Strategies that seek to link philanthropic support to the benefits of support enjoyed by the giver may be used rather than a more traditional approach of emphasizing benefits received by the cause or charity. Likewise, companies that create cause-linked promotions for their brands can create marketing messages that paint a picture of consumers feeling good (self-image impact) in tandem with the knowledge that they are helping support a company’s social responsibility initiatives. Turns out that cause marketing is not only good, it is also good for you! Link

Demarketing of Kellogg’s Breakfast Products

The Kellogg Co. announced it would drastically change its marketing tactics to children under 12. Kellogg has set certain nutrional criteria for its kid-targeted breakfast products and has pledged to discontinue product placement and advertising in schools. In addition, the company will place place summary nutrition information on the upper right corner of each package. This strategy appears to be a form of “demarketing,” or taking steps to encourage responsible consumption. While consumers bear part of the responsibility to make good choices for themselves, marketers share in the responsibility to serve customers’ best interest by producing products that do not cause harm.

It can be debated whether Kellogg is being proactive in taking a stand to make a better product for children or reacting to pressures from advocacy groups to change its ways. Regardless of the motivation for this initiative, Kellogg is taking action that could to be very beneficial in creating long-lasting brand relationships with its customers. Sure, short-term pain may be felt as the company moves away from a dependence (perhaps overdependence) on advertising and marketing tactics to stimulate sales. However, the long-term impact on consumer trust and the potential impact on perceived quality of Kellogg’s products would seem to outweigh the effects of heavy advertising investments on moving the sales needle. Link