Offensive Advertising Hurts Sales

From the “No Duh” Department:

Results of a recent national survey found that most consumers are less likely to buy a product if they’re exposed to advertising for that product that they find offensive or annoying. Only 11% of those surveyed said they were more likely to buy a product after exposure to offensive advertising, while a whopping 86% said they were less likely to buy following exposure to offensive advertising.

You may be wondering at this point what was learned from this research that wasn’t already evident: you turn me off with offensive ad messages and I will likely respond by closing my wallet… no $ for you! The one nugget of insight the study does offer is that while most consumers are less likely to buy if exposed to offensive advertising, they are likely to remember the ad message- 70% of respondents recalled exposure to an offensive ad. This finding reminds us of the dilemma advertisers constantly face. We are challenged more than ever before to get the attention of the target markets we strive to reach. This challenge requires dialing up the “shock factor” or some other means to get noticed. Unfortunately, the means we use to get attention can be the very stimulus that elicits negative response from the audience.

So how do marketers avoid becoming part of the statistic of advertisers that lose sales because they offended customers? If a brand speaks to consumers convincingly in other ways (e.g., high quality, stylish design, convenient to use, etc.), one does not have to resort to outlandish messages that risk creating negative brand associations. The brand can grab attention in ways that are more credible and powerful than any marketing communications message! Link

This Community Brought to You by Nissan!

Branded communities- the next frontier in corporate sponsorship? If Nissan’s sponsorship of an Arizona development is any indication, the answer is “Yes.” Nissan has entered into an agreement to be “the official automobile” of the Westgate City Center, a residential and commercial development in the Phoenix suburb of Glendale. Among the marketing assets Nissan receives in the deal are three 100-foot billboards and sponsorship of a concert series. The reach of the sponsorship extends beyond the 2,200 residential units of the development; the presence of hotels, shopping, an NHL team and NFL team all will contribute to pulling in audiences to the area.

This deal brings out the best and worst about sponsorship. The positive is that Nissan may have found a great way to reach a desirable demographic through means other than mass media advertising. The sponsorship can be particularly powerful if Nissan has interactive exhibits at the concert series events and sporting events as well as utilize direct mail to target residents in the development in an effort to persuade visits to dealerships. The negative is that another demarcation between commercialism and everyday life has been erased. Are there no limits to aspects of our lives that can be commercialized? Nissan seems to be walking a fine line between reaching an audience and intruding on them. The sponsorship has the potential to be effective… if Nissan is mindful of not commericalizing it too much. Link

If Don Imus Returns, Will Advertisers Follow?

Radio shock jock Don Imus appears to be setting the stage for his return to the airwaves. Since losing his radio and television programs in April for making racially offensive remarks about the Rutgers University women’s basketball team, he has attempted to mend fences with those he hurt and has settled his contract status with his former employer. Now, there is speculation that he will return to radio with a program either on WABC in New York or possibly on satellite radio.

What makes possibile an Imus return? Potential for advertising revenues, of course. Imus may be a polarizing figure, but he does attract an audience whose demographic characteristics are coveted by many advertisers. Major companies such as General Motors and Procter & Gamble were quick to sever ties with Imus when the racial remark controversy erupted. Would they consider a return? Reaching audiences in general is tougher than ever today, and the effectiveness of mass media advertising is under increased scrutiny as advertisers need to see measurable results from their ad buys.

Associating with a high profile personality like Don Imus is a way for companies to reach certain audiences using a mass media vehicle. It certainly is a niche market as Imus did not have mass appeal before his dismissal and may pull smaller audiences initially. Also, it would probably be an ideal time for advertisers to be associated with Imus as the “PC Police” would have him under a watchful eye, and it is likely that Imus and his sidekicks would be more careful about what they say to avoid another fiasco.

Johnson & Johnson vs. American Red Cross

Johnson & Johnson finds itself in need of emergency relief to resolve its no-win situation with the American Red Cross. The company has filed suit against the Red Cross because of alleged violations of an agreement that stipulates how the Red Cross can use J&J’s red cross logo it has used for more than 100 years. J&J has become frustrated as the Red Cross entered into marketing agreements with manufacturers to produce Red Cross-branded products that use the iconic red logo, which violates the agreement with J&J (at least according to the company).

You have to empathize with J&J in this case. Brand assets are among an organization’s most valuable possessions, and it should do everything in its power to protect the integrity of brand names, logos, and other brand marks. Unfortunately, going after a highly respected non-profit with a mission of providing relief to others in time of great need will do nothing to score points for J&J. Rather than engaging in a legal battle with the American Red Cross over co-branded goods, maybe J&J should have been more proactive in exploring co-branding opportunities for its own products. Combining these two venerable brands into product offerings could potentially command price premiums, but it’s hard to envision such a move now in light of the battle brewing between the two organizations. Link

Signs, Signs, Everywhere There Are Signs!

A recent shopping experience opened my eyes to the tone retailers take with customers on what I would call “warning signs.” We shopped for hockey equipment for our youngest son this past weekend. First, we visited a small hockey shop at the ice rink in Nashville where my son plays. It is an outpost for the store’s main location downtown. It has limited hours, but it was open so we decided to go in. I couldn’t help but notice a sign on the wall that said “You flex – You break – You buy.” The tone of the sign, coupled with the employee who looked only slightly happier to be there than outside in the 100-degree heat, made me want to leave sooner rather than later. Besides, I have confidence in my child’s ability to break things!

At the store’s main location downtown, another sign got my attention. It said, “Unattended children will be sold as slaves.” I was not offended by the sign, and I assume that the signs at both stores were placed as a result of incidents in which customers, probably children, damaged or broke merchandise. However, there is a more tactful way to communicate the message and build positive rapport with customers. A sign with a message of something like, “We value the safety of your children. Please accompany them as they shop. Thanks for visiting our store” is more positive and conveys the same idea. The general message of “Don’t break anything!” can be conveyed in more customer-friendly language. I would argue that it is indeed a child’s safety that is at issue for no other reason than if a child were to damage or break an expensive piece of equipment, he or she could face the wrath of dad or mom!

As you might guess, we made purchases at neither location. We went to a third store in the suburbs and purchased a helmet and stick. I wouldn’t be surprised the next time I visit the other two stores if I were to see a sign that said “Customers not allowed.” That would be ridiculous, but so is creating adversarial relationships with your customers.

Movie Rental Battle Is On!

An intense battle has taken shape in the movie rental category. Blockbuster took command of the movie rental market through its brick and mortar presence throughout the country. The consumer buying process was shaken up when Netflix introduced a rent-by-mail approach. The convenience of having movies show up in the mailbox and more recently the ability to download some movies onto PCs allowed Netflix to grab market share from Blockbuster. The industry leader was starting to look like the industry dinosaur. Blockbuster has fought back. It has rolled out a mail delivery model similar to Netfilx, and this week the company announced the acquistion of Movielink, a firm offers movie download service via PCs.

Blockbuster’s recent moves are a signal that it is refusing to concede the online market for movie rentals. Customers of the two companies should be the winners in this battle, as both companies will likely be aggressive in pricing to lure customers. Also, customer service and product assortment should receive greater emphasis as each company looks to create a competitive advantage over the other. And, don’t count out cable and satellite television providers. They will make a play for customers, too, no doubt touting their advantage of on-demand delivery capability rather than waiting for a DVD to arrive via mail. Link

Can Bob Nardelli Make Chrysler Relevant?

Cerebrus Capital Management, which recently completed its buyout of Chrysler from Daimler, grabbed headlines by naming former Home Depot CEO and GE VP Bob Nardelli as its CEO. It is unusual for an auto manufacturer to go outside the industry for its top leader. It’s even more noteworthy that Cerebrus tapped the polarizing Nardelli as its leader. While at Home Depot he led the company to impressive earnings results, but the stock price languished and he alienated shareholders and employees alike with his management style. Customer service declined markedly during Nardelli’s tenure as many consumers preferred the atmosphere and service offered by rival Lowe’s. Link

Bob Nardelli might be a good fit for Chryler in terms of strong management of costs and production issues. But controlling costs doesn’t sell cars, style and reliability sell cars! Chrysler has had success in recent years with the PT Cruiser and the Chrylser 300, but it does not have the market presence that Toyota, Honda, Nissan, or even the other US auto brands have. If Chrysler can define a relevant point of difference to consumers, it may have a chance to succeed provided the company backs up its position. A recent move to offer lifetime warranty on powertrains is perhaps one way Chryler can set itself apart, especially from its domestic competitors. Without a relevant position, the brand is likely to remain in neutral.

Sales Tax Holiday: Who Wins?

The state of Tennessee held a “Sales Tax Holiday” this past weekend. It is a 3-day period in which certain merchandise items are exempt from sales taxes. The holiday, held in conjunction with back-to-school, exempts school supplies, most clothing items, and computers. For a state in which the state sales tax rate is 7% and local sales tax rates as high as 2.75% on top of the state tax, it is a welcome relief to consumers!

Tennessee is one of 14 states (and DC) that offer such tax-free periods. Who wins with such a break? Of course, consumers win… as long as they do not take on too much credit card debt to pay for their “holiday” (not much of a holiday if you’re still paying for last year’s purchases!). We bought our kids’ school supplies and updated their wardrobes during the sales tax holiday, but they are purchases we would have made, anyway. Don’t get me wrong, I appreciated the 9.75% discount I knew that was being offered before I even walked into a store.

The bigger winners? One would be retailers, who can thank state governments for fueling a consumption frenzy that even the best devised promotions often fail to create. It’s a mini-version of “Black Friday,” the day-after-Thanksgiving sales event that is the highlight of the year for most retailers. Another winner would be lawmakers responsible for creating sales tax holidays. It is hard to think of a safer position for a politician to take with voters than “I’m against taxes, and I want to help you pay less taxes.” I will gladly indulge legislators as they do me a favor and suspend sales tax collections for a few days each year!

The iPhone Effect

Initial response to Apple’s iPhone has not been at the level the company expected. Forecasts called for initial sales between 500,000 and 750,000 units. Actual sales have been stated to be around 270,000 units, a figure which includes phones and accessories. Price may be one factor limiting sales as well as Apple’s exclusive distribution arrangement with AT&T. The remainder of 2007 will be a critical sales period as opportunities to sell iPhones in conjunction with back-to-school and Christmas could boost sales performance.

Regardless of whether the iPhone reaches sales forecasts (remember sales forecasts are only predictions and just like the weather forecast is often wrong, so are sales forecasts!), the launch of the iPhone is noteworthy in terms of product development. The combination of multiple functions and incorporation of control via touch screen represent innovations in the consumer electronics category. Also, it enourages innovation efforts by suppliers that design components for the iPhone, accessories that can be purchased to complement the iPhone, and future generation products that build on technologies appearing in the iPhone. So, even if you do not buy an iPhone it is possible that products you encounter in the near future have their roots in innovations related to the iPhone. Thus, the “iPhone Effect” is likely to extend beyond the number of units in use and will show itself in the product development process. Link

Purifying Bottled Water Marketing

PepsiCo has said it is changing labeling on its Aquafina bottled water brand to include information that the source of the product is tap water. The label refers to the water source as “P.W.S.” (Public Water Source). The move comes in response to pressure from advocacy groups for bottled water marketers to refrain from misleading marketing practices. In the case of Aquafina, package graphics depicting a mountain scene creates an image that the product must come from a mountain spring. While PepsiCo has shown no signs of attempting to manipulate this brand association, it is a pre-emptive strike by consumer advocates to prevent such a tactic from being used.

PepsiCo should be commended for taking this action. It is not a grand act of social responsibility by any means, but acknowledging the source of the water removes any uncertainty in consumers’ minds and removes the possibility of being accused of misleading marketing practices. The market for bottled water is strong enough that PepsiCo or any other company does not have to walk a line between ethical and deceptive marketing practices in order to make the product more appealing to consumers. Link