Timing is everything in business. Opportunities often have a rather small time window that can be capitalized. But, when the window is open, one must consider what the opportunity holds for a business. In the case of the current H1N1 flu (a.k.a. swine flu), concerns about health have created opportunities for marketers to appeal to consumers’ desires to stay well. Makers of soaps and hand sanitizers are stepping up their marketing efforts, and those efforts are aided by media reports in which health experts tout hand washing and sanitizing as among the most important actions we can take to minimize exposure to the flu. Brands such as Dial (soap) and HandClens (sanitizer) are responding to an increased emphasis by consumers to use their products. Also, they are promoting good hygiene in general, not “use our product so you won’t get swine flu.”
On the other hand, the H1N1 flu has created headaches for pork producers. The name “swine flu” is not good for promoting pork consumption. The National Pork Producers Council has gone on the offensive to make the case that swine flu is not a food-borne illness and that pork products are safe to eat. Sometimes, circumstances or misfortune bring harm to a brand’s reputation. The pork industry currently faces this dilemma; the proactive response to allay concerns about the safety of consuming pork was the right (and really only) thing to do.
Link: Wall Street Journal – “Soap Makers, Others Hitch Ads to Swine Flu”
Cable companies are often criticized for a variety of shortcomings: inconsistent customer service, billing errors, and rising prices. But, it seems the players in the industry bring much of the scrutiny on through their actions. Recently, Time Warner floated the idea of trying a pay-per-usage service rather than a flat fee but dropped the plan after an outcry from consumers and advocacy groups. Now, Time Warner and others in the cable industry are exploring ways to restrict the impact of municipal wi-fi services. A specific case in North Carolina involves the cable industry supporting legislation that would enact stiff regulations on cities that build their own networks.
The defense used by the cable industry is that taxes levied on their services are indirectly being used to build networks that compete against them. In other words, they now have another competitor. Competition should serve as a challenge to become more innovative, whether it be in the content offered or customer support provided. Also, the cable companies have the advantage of brand recognition in the marketplace. Strengthening brand relationships through products, services, and social responsibility initiatives are ways the entrenched cable companies can take advantage of their standing with consumers. Exerting energy to legislate barriers to entry to competition certainly does not benefit consumers, and it seems cable companies would be better served focusing their resources and energy elsewhere.
Link: The Daily Online Examiner – “Cable Companies Try to Cripple Municipal Broadband”
Childhood obesity continues to be a concern in America. The expansion of the waistline among kids is often linked to unhealthy offerings of fast food restaurants and their marketing efforts to attract children. Now, a new study funded by the National Institutes of Health lends support to calls for prohibiting fast food ads aimed at children under age 12. Findings from the study suggest that obesity rates in children ages 3-11 could be reduced by 18% if children were not exposed to fast food ads.
The study’s findings and the call for eliminating fast food advertising targeting children revives the argument about who is responsible for shaping kids’ choices: parents or the government. The restaurant industry’s assertion that parental oversight is key in this situation is logical, but it also assumes that parents are concerned enough to take a proactive role in educating their children about making healthy food choices. That assumption may be too much of a stretch as we look around and see many adults have their own issues with managing their weight, so perhaps they cannot be counted on to guide the choices of impressionable children.
Much is at stake for both sides of this issue. Fast food restaurants that appeal to children are usually bringing in the entire family to dine, not just the kids. Also, forming brand relationships at a young age can set the stage for creating customers with higher lifetime value (LTV) if brand loyalty develops. So, eliminating advertising to children hurts this long-term view of customer loyalty development.
The general public has much at stake, too. Unhealthy kids, like unhealthy adults, can increase demand for health care services that could be reduced simply making better choices.
A government ban on advertising fast food brands to kids seems like a last resort.If the industry does not step up its self-regulation efforts, it is likely that government will take care of it for them. Some public policy and advertising experts have predicted fast food will be the next tobacco in terms of sweeping government regulation. The more proactive the restaurant industry can be in promoting healthy choices, the less likely the prospect of a ban on marketing to kids.
Link: Ad Age – “NIH: Banning Fast Food Ads Will Make Kids Less Fat”
President-Elect Barack Obama successfully ran his campaign on the position of “change.” Now that an Obama administration will take over in January, will that change include new regulations for marketing practice?
A recent Brandweek article identifies several potential targets for change under President Obama. Among the possibilities I believe are most likely to occur are:
1. Greater Internet privacy rights. This move would spell trouble for behavioral targeting and other tactics that monitor and capture Web surfers online activity.
2. Crackdown on marketing to children. Greater regulation and even an outright prohibition of targeting children with marketing efforts are possible.
3. Prohibition of direct-to-consumer advertising of prescription drugs. What will we do if we can no longer sing “Viva Viagra” or see another naked couple in his-and-her bath tubs in the middle of nowhere? Allowing pharma companies to advertise their products has been controversial from the beginning. Critics claim it adds to the overall costs for health care and helps create a nation of hypochondriacs.
I cite these changes as most likely because they are not too threatening politically. It can be argued that these policy changes would provide benefits to consumers and the general public that outweigh any negative consequences. Marketing practice has enjoyed a fair degree of self-regulation the last eight years, but the party may be about to come to an end.
Link: Brandweek.com – “Obama Promises Change: Is It Bad for Marketers?”
MillerCoors is feeling the heat of 25 state Attorneys General and a watchdog group over plans to launch a new version of its Sparks energy drink with a higher alcohol level. The brand extension, named Sparks Red, would further solidify the company’s hold on the category. One reason is that it has little competition in that space as Anheuser- Busch decided to exit the category following pressure from an advocacy group, Center for Science in the Public Interest. CSPI is now targeting CoorsMiller, having filed a lawsuit last week to stop the sale of Sparks. The lawsuit cites health risks and a strategy of targeting teens as reasons for taking Sparks off the market. Now, the AGs have written to MillerCoors to express their concerns about Sparks Red and hinted at possible action against the company.
MillerCoors is in a difficult situation. On one hand, it cannot ignore concerns about Sparks or engage in an adversarial debate that could appear to promote profits over the well being of consumers. On the other hand, profit is an issue. Sparks has been a successful product for MillerCoors, so exiting the category completely is a difficult choice. What is the solution? MillerCoors could become proactive in promoting responsible consumption of Sparks, going above and beyond the usual “drink responsibly” messages from beer marketers. Even if it takes that step, it is going to be a tough sell to convince people that the benefits delivered by alcoholic energy drinks outweigh potential hazards to the health of those who drink them.
Link: AdAge.com – “Attorneys General Set Out to Stop Sparks Product Launch”
Link: Center for Science in the Public Interest – “CSPI Sues to Stop Miller Coors’ ‘Sparks’ Alcoholic Energy Drink”
A California court ruled earlier this week that early contract termination fees charged by Sprint were illegal and in violation of state law. This issue is far from over, but the involvement of courts in the matter could raise the issue in other states and with the FCC. Wireless carriers have used the leverage of 1 or 2 year contracts and low cost handsets to lock in customers. Early termination fees discourage customers from exiting a contract and switching to a competing carrier.
The ability to move about freely would certainly be a win for consumers in terms of greater choice and freedom to switch carriers if dissatisfied with current service. However, it could have an unintended consequence of driving up costs for handsets. Carriers often sell phones at low prices or even give phones to subscribers in return for a 2-year commitment. If contracts could not include early termination charges, carriers would likely withdraw the carrot of inexpensive phones.
Another way to look at this situation is that wireless carriers should take the prospect of greater customer mobility as a challenge to deliver great service. If customers are satisfied with the quality of the service network, billing, and customer service, there would be fewer reasons to consider switching carriers. Also, if customers have the ability to switch with less financial pain, companies offering innovative products, like the AT&T-Apple iPhone partnership, could gain market share as customers opt to have the latest technologies.
Link: Yahoo! Tech – “California Judge Rules Early Cell Phone Termination Fees Illegal”
A recent article in Business Week covered a movement that seeks to force restaurants to prominently post calorie counts on their menu items. Health advocacy groups want the restaurant industry to provide customers with easily accessible nutrition information in order that they can make more informed menu choices. Opponents to this push see these groups as the “food police” and believe it is an infringement on free choice.
This situation is very delicate for the restaurant marketers. Self-regulation is almost always preferred over government regulation. The industry has taken steps to respond to Americans’ expanding waistline such as healthier menu items and smaller portions. However, for many people critical of the restaurant industry these tactics are token moves that do not address public health concerns adequately.
Also, this issue seems ripe for government intervention as elected officials could take on this issue with little political risk. For a politican, saying “I believe restaurants should clearly post calorie information on their menus” is about as risky as saying “I think the telemarketing industry should allow people to sign up for a ‘Do Not Call’ list.” This scrutiny of restaurants is not surprising; I see this as another step in legal and regulatory forces intent on making food marketers their next tobacco industry. Link
I am a native Mississippian, so I am accustomed to the state being near the bottom of all states in many categories: education level, income, and other important measuring sticks for a population. Another distinction Mississippi holds is that its people are among the fattest in America. Obesity is a problem in Mississippi and other states, and it is important for leaders in health and education to promote healthier lifestyles.
With all of that said, state lawmakers in Mississippi have done little to overcome negative associations about the state. A bill was introduced recently in the Mississippi House that would prohibit restaurants from serving obese customers. Yes, I said prohibit! One of the bill’s sponsors said his intent was to call attention to the obesity problem and that he did not expect the bill had a chance of becoming law (which it does not). But, the prospect of government telling businesses which customers they can and cannot serve is scary. People should be free to choose whether to enter into a business relationship with a seller of a product or service. Likewise, sellers should have freedom of choice when it comes to their exchange partners (i.e., customers).
While I side with restauranteurs and their clientele with hearty appetites, I also believe that the food industry, whether it be packaged good marketers or restaurants, should take steps to promote responsible consumption. Otherwise, the food industry will be regulators’ and trial lawyers’ next tobacco industry. Link
Clutter, clutter, everywhere. How do we reach audiences that have become fragmented and are inundated with marketing messages daily? We seek new, different platforms to make contact with elusive consumers. So, one can hardly fault McDonald’s for its efforts with one Florida school system to reach young people by paying for printing of report card envelopes. The envelopes include a coupon for a free Happy Meal and are distributed to students with good grades, outstanding attendance records, or exemplary behavior. This tactic certainly passes the challenge of getting around the clutter problem as McDonald’s has entered what is usually a commercial-free zone.
Not surprisingly, children’s advocacy groups and some parents are upset that McDonald’s is seemingly going against its pledge to curtail marketing toward children. Indeed, Big Mac is walking a fine line between clever marketing and intrusive commercialism. It is unfortunate that school systems are even put in the position of having to consider corporate support as a funding source, but in many communities this kind of involvement by the private sector may be preferred over tax increases as a way to provide money to schools.
Another concern is that McDonald’s and the school system are promoting consumption of products that possess little nutritional value. McDonald’s could have anticipated a possible backlash to this program, with a possible alternative to offering a Happy Meal being to offer a healthier menu item (I know, maybe a stretch at McDonald’s) as a reward. Some observers believe the fast food industry may become the next tobacco industry as a target by government regulators. Fast food marketers such as McDonald’s must be very careful to not engage in marketing tactics that raise the call for greater government oversight of the industry. Link
The digital divide has been used to describe a situation of the “haves” and “have nots” of internet access. The digital divide was a real concern in the early years of commercial internet, but as prices have fallen for both PCs and internet access, the percentage of Americans with home internet access has surpassed 80%. But, there is another digital divide looming. It will occur with our televisions.
Congress has mandated that all television signals be broadcast in digital format by January, 2009. The transition from analog to digital signals will improve the viewing experience and free up broadcast spectrum space. Manufacturers have been producing models that comply with the new regulations. Making new televisions to support digital signals accomodates the change to digital, but what about the millions of analog TVs in homes across the country? A major concern is how certain vulnerable populations, namely low income and senior households, will be affected by the change. A program will be available that will allow households to request 2-$40 vouchers to help offset cost of boxes needed to handle digital transmissions. However, the vouchers will be issued on a first come, first served basis.
Most people have no idea of the impending change, so they won’t know they need to purchase boxes that will enable them to continue to use their analog TVs. A massive information campaign must be launched, but who will take the lead- Manufacturers? Industry groups? Government agencies? Apparently, a thorough plan for implementing the digital initiative among households with analog TVs has not been developed. In particular, there has been little consideration for those who can least afford additional investments in digital equipment. Link