Category: Marketing Strategy

I came very close to using a phrase I vowed never to use on this blog, but I couldn’t help myself!

I contend that marketing is rather simple. It’s marketers that make it complex, over analyze situations, or otherwise screw it up. A great of example of observing, learning, and responding in a straightforward way was featured in a recent issue of Business Week. Big box electronics retailer Best Buy is breaking from traditional top-down marketing planning by getting more input from stores about the product mix in each location. Among examples mentioned in the article were moving the location of iPods to the front of the store in a Houston area Best Buy to accomodate Eastern European ship workers on leave and a Savannah, Georgia store expanding its offerings of products targeting soldiers that will be returning in the coming months.

These adjustments to marketing strategy could be made because Best Buy managers had a good understanding of shoppers’ buying behaviors in their markets. Such observations are impossible to make from corporate offices. This shift to market level action falls in line with Best Buy’s “Customer Centricity” strategy. Yes, control is ceded to the field to a certain extent. But, if managers hired to make decisions cannot be trusted to do so, a company has bigger problems than where strategy decisions are being made.

I saved the best for last. A Best Buy store in Mooresville, NC, invited a seniors group to the store one morning before opening for a demonstration of products. A group of 85 showed up and bought $350,000 worth of products. The store manager indicated his costs totaled $99 for labor, doughnuts, and coffee. That is ROI that one can only dream of achieving! What small investments could you make that could potentially deliver an unexpected return?

Link: Business Week – “At Best Buy, Marketing Goes Micro”

The past several years has seen consolidation occur in many industries: airlines, banking, and department stores just to name three. Many forces lead to the consolidation of firms in an industry: high costs, plateauing demand, and overcapacity are frequent drivers of consolidation. In many cases, mergers among firms in an industry is seen as the best option for long-term profitability and ultimately, survival.

The candy industry recently experienced consolidation among its members. Iconic gum marketer Wrigley has agreed to be acquired by candy marketer Mars, which has the backing of Warren Buffett’s Berkshire Hathaway. The merger creates an industry giant that will give the combined companies more resources to compete than either one could on its own.

So, who should be worried when consolidation like the Wrigley-Mars deal occurs? All of the smaller players in an industry. Small firms do not have the economies of scope that a Mars-Wrigley would have. It is almost impossible to compete on price; the distribution and selling efficiences a large firm enjoys are almost impossible to replicate in smaller businesses. Value must be added in other ways: superior product features or benefits, unique user experience, or outstanding customer service. There is always a market for firms that can excel in these ways.

Link: Brandweek “Small Candy Makers not Sweet on Consolidation”

Concern abounds about consumer confidence, spending patterns, and maintaing sales volumes. Add to that anxiety problems with rising costs of goods produced and transportation costs, and it is easy to understand why marketing budgets are prime candidates for trimming. No choice but to hold the line on expenses if sales are sluggish. Or is there a choice?

Conventional wisdom says be conservative or even cut back on marketing during down economic periods. That formuala works… if you subscribe to the view that marketing is an expense that follows business activity. On the other hand, if you view marketing as an investment that stimulates sales, should you not be exploring options for increasing marketing investments? Look at the recent performance announced by General Mills. It announced a 61% increase in earnings for the most recent quarter despite negative trends in the economy. The secret? One is increased spending on marketing (up 13%). The other is product innovation. Making products that consumers value often command price premiums, which is key to driving profits.

It would be an oversimplification to say spend more on marketing, expect earnings to increase. The challenge is identifying the optimal mix of marketing tools that will allow you to achieve business objectives. In the case of consumer packaged goods like those sold by General Mills, it was sampling, media advertising, and contests. For other companies, it may require appealing to customers using other tools. The point is: don’t go into a shell when tough economic condidtions hit!

The NCAA men’s basketball tournament, which caps a 4-week period known as March Madness, is a marketer’s dream. Why? The tournament stokes the interest and passion of millions of Americans. People fill out brackets, either for fun or in pools that reward the winner with prize money, cheer for their favorite teams, and adopt darling teams temporarily. March Madness is a prime vehicle for marketers to reach consumers who are full of positive emotions and energy whether it be through NCAA sponsorship, television advertising, or sponsorship of bracket contests online.

March Madness is a great way to reach audiences, but not all companies have that luxury. It does not matter. The point is you need to learn what creates “madness” among your target market or your community. In some cases it is sports, but it does not have to be on a grand scale like the NCAA men’s basketball tournament. Maybe it is the local high school sports teams, a half-marathon/marathon race, or a rodeo. Perhaps passions are stirred by things that have nothing to do with sports. It can be an art museum, a community playhouse, a well respected charitable organization, a community school, or other entities that hold social or cultural significance.

People long for meaningful experiences in their lives. Your ability to make your brand a part of your customers’ meaningful experiences can enable you to find your Marketing Madness.

Environmental concern is a major focus for many businesses today. Many companies recognize a responsibility to be good stewards of the environment. Also, socially responsible firms go a step beyond and use their platforms to spread the Green message to customers and other stakeholders. Unfortunately, some companies see green marketing as just a strategy that can be used to “demonstrate” concern.

The days of disingenuous green marketing practices are numbered, if not over already. The Federal Trade Commission’s guidelines on green marketing were scheduled for review in 2009, but that process is beginning earlier because of the concerns about businesses abusing the spirit of green marketing. Companies that are truly advocating responsible treatment of the environment should trumpet their views and actions to make a difference. But, companies that see green marketing as a way to win over a few customers and create sales are likely to be recognized as being insincere by advocacy groups and consumers. It is one thing for a company to boast “we have great service” only to let us down when we interact with their service employees. It is quite another matter for a company to make claims about the importance of protecting the environment yet can show little evidence of making a difference. Link

Talk persists of possible mergers in the U.S. airline industry. Delta, United, and Northwest are companies among those mentioned as possible parties to a merger (esp. Delta-United and Delta-Northwest). Airlines that had staggered under the weight of out-of-control costs in the late 1990s were further hurt by 9/11. More recently, it has been high fuel costs that have hurt the industry. A merger between major companies would allow consolidation of resources and perhaps give a combined company a better chance at survival and profitability.

While mergers could possibly save companies like Delta, United, and Northwest, would their customers be better off if mergers occur? On one hand, the answer could be “no.” When consolidation occurs in an industry, a certain amount of competition is removed from the marketplace, and that includes price competition to attract customers. If a Delta-United merger, for example, led to the combined company dominating flights in certain markets, there would be little reason to keep down prices.

On the other hand, if a merger occurs and airlines become complacent because they dominate a market, it creates a market opportunity for an upstart to enter and attempt to take market share. That scenario makes sense in theory, but it may be more difficult to execute in an industry with enormous fixed costs such as commercial airlines. However, Southwest and Jet Blue have shown it can be done, and mergers by airline behemoths may be the trigger for history to repeat itself.