“Change” is ’09 Marketing Buzzword, Too

“Change” is in the air. It was the one word uttered by Barack Obama that propelled him to the White House. Change is being forced upon us in the business world as well. First it was escalating prices, then deteriorating credit access and finally, a sharp pull back on consumer spending. With no immediate end in sight, 2009 will require change in marketing and strategies.

An excellent article on the need for change in marketing was written by Jonah Bloom for Advertising Age. Among the most critical points Bloom makes is that short-term obsession on sales and profit growth should refocus and become a long-term view of brand building. In particular, brand building efforts that entail environmental and social responsibility components can elevate the relevance a brand holds for consumers. Bloom points to Jet Blue and Starbucks as two brands that may have gotten too consumed with growth and lost some of its relevance with customers in the process.

There are concerns that weak economic conditions may force companies to abandon social responsibility initiatives given that they often create expenses that lead to higher prices for their products. In Bloom’s view, companies must not back down from becoming better stewards of the places where they do business. In a list of 8 resolutions for 2009, Bloom quotes Nike chairman Phil Knight on the role brands will play going forward: “The performance of Nike and every other global company in the 21st century will be measured as much by their impact on quality of life as it is by revenue growth and profit margins.”

Link: Ad Age – “Recession Provides a Chance to Build a Better Capitalism”

McDonald’s Shows How to Succeed in Lean Times

Economic news is bleak daily. Today’s bad news includes Tribune Co. filing for bankruptcy protection and layoffs at Dow Chemical and Anheuser-Busch. But, a glimmer of good news comes from McDonald’s. Its same store sales in November were up 7.7% globally and 4.5% in the U.S. over the previous year. An obvious explanation for the positive results is pricing. McDonald’s low priced fare is less immune to a down economy like casual dining restaurants. As a matter of fact, fast food restaurants probably benefit as people who might not patronize Applebee’s or Chili’s to save money would venture to McDonald’s or Sonic instead.

Attributing McDonald’s growth to low price does not give proper credit to the company’s other marketing moves. Stores have received makeovers, as has the menu. The addition of Southern style chicken sandwiches and biscuits as well as premium coffees has strengthened its offerings. Customers’ needs do not go away altogether when they are trying to save money. McDonald’s shows good marketing goes beyond offering value prices. It is all about meeting the needs and desires of customers.

Link: USA Today – “McDonald’s Same-Store Sales Jump in November”

BK’s Whopper Virgins Make Point or Make Fun?

Burger King has to take on the underdog role as it goes up against McDonald’s in the fast food burger wars. Its latest approach to making market share inroads is to put BK’s signature burger, the Whopper, against McDonald’s iconic Big Mac in a taste test. But this is not your typical blind taste test. BK says to find impartial judges, it must venture to lands where people are unfamiliar with hamburgers, let alone the BK and McDonald’s brands.

The result is the current “Whopper Virgins” campaign developed by BK’s ad agency, Crispin Porter & Bogusky. The shop that created the Subservient Chicken is back at it again for BK. Comparative advertising can be a very effective technique for contrasting the benefits of your brand relative to competitive offerings. It worked effectively for Pepsi in the 1980s. More recently, comparative ads have been used by Apple Computer to take digs at Microsoft’s Windows platform.

The question surrounding BK’s campaign is whether it exploits or makes fun of less sophisticated consumers (if you consider having no knowledge of fast food restaurants makes one less sophisticated). Having typical customers render a judgment on whether the Whopper or Big Mac tastes better would be accepted common practice. Creating a scene that reminds one of a National Geographic TV special as the setting for a taste test may be too bizarre for some tastes. But, that is the MO of Crispin Porter & Bogusky, push the envelope on conventions to create memorable advertising.

Link: Ad Age – “Burger King, Crispin’s Latest Stunt: ‘Whopper Virgins'”

Black Friday Shopping Frenzy Unnecessary

The tragic death of a Wal-Mart employee in New York last Friday should serve as a call to evaluate how retailers use early morning “doorbusters” on Black Friday. These attractive early morning specials are intended to generate store traffic. Unfortunately, high demand for certain items creates a situation where some people become so obsessed with getting an item they seem to lose their senses. How else can you explain the scene at the Wal-Mart on Long Island where a crowd estimated at 2,000 people took the term “doorbusters” far too literally?

The weekend after Thanksgiving is crucial to retailers in terms of their success for the Christmas season and beyond. But, as shopping has been made more convenient with stores open 24/7 in some cases and always open 24/7 online, the need to orchestrate a customer mob scene is unnecessary. It is one thing for retailers to call on workers to open stores at 3:00 and 4:00 AM, it is quite another matter to put their safety at risk by creating a frenzy for a small number of products. Rather than straining their employees’ energy levels and customers’ patience levels with doorbuster promotions, retailers should explore ways to generate more interest and store traffic throughout the entire Christmas shopping season.

Link: Ad Age – “Lawsuit: Marketing Blamed in Wal-Mart Trampling Death”

Citi Field: This Park Brought to You by Taxpayers


How cool it would be to have a sports stadium named after me one day. It probably will never happen, especially not a professional sports stadium. But, I can take some comfort in knowing that I may be helping pay for naming rights to a Major League Baseball stadium. The New York Mets are preparing to open their new park, Citi Field, next season. Yes, that is “Citi” as in Citigroup, one of the financial institutions in line to receive a bailout from the federal government.

Citigroup committed to $400 million over 20 years for the rights to have its name on the new park. Engaging in a naming rights sponsorship can be a smart branding move… if you can afford it. Apparently, Citigroup can no longer afford it. What a painful reminder to New York and the country of the excesses of a financial institution that seeks a $300 billion bailout and laid off more than 50,000 employees. The stench is almost as bad as Enron Field in Houston, which disappeared swiftly following that company’s demise in 2001.

One New York lawmaker has called for the name to be changed to “Citi Taxpayer Field.” Here’s a better idea: the New York Mets should renegotiate the deal or walk away from it altogether. The Mets must remember that their marketing partner’s image can impact the image people have of the Mets. If Citigroup is perceived unfavorably, the financial gains of the naming rights deal could be offset by hits to the Mets’ brand image.

Link: Fox News – “Lawmakers Fight to Rename Ballpark after Citibank Bailout”

Saturn’s Demise Squarely on Shoulders of GM

As General Motors fights for its life, one scenario for a slimmed down GM calls for deletion of some of its brands. Among the brands on the deletion list are Hummer, Saab, Pontiac, and Saturn. While Saab and Hummer may be candidates for sale, Pontiac and Saturn would more than likely be eliminated like its late sister brand, Oldsmobile.

As an owner of two Saturns, the possible elimination of Saturn is disappointing. As one reviews the twenty year history of the brand from its conception to its precarious state today, there are many missteps that can be identified. Saturn hit a home run early on with its no haggle pricing, folksy image, and dependable, fuel efficient cars. Then, in the mid 1990s the SUV craze hit the market. Saturn continued on selling its fuel efficient cars. By the time the VUE SUV was introduced in 2001, GM had missed an opportunity to take advantage of the SUV market.

GM has been all over the board with Saturn, trying a mid-size sedan that failed (the L Series), and now selling a minivan (Relay), crossover (Outlook), roadster (Sky), and European styled sedan (Aura). These models were pushed at the expense of Saturn’s core product, the economy car. As GM has tried to expand Saturn’s product mix (and raise price points), the market has come back to lower priced, high gas mileage vehicles. Also, GM missed a golden opportunity to use the Saturn brand as a development brand for hybrid or electric vehicles. An experiment with an electric vehicle in the early 1990s, the EV1, was a modest success. GM decided not to pursue the EV1 further and destroyed all of them once their leases expired.

Perhaps the destruction of the promising EV1 more than a decade ago was a foreshadowing of what would ultimately happen to the Saturn brand. I hope I am wrong.

Link: Business Week – “GM, Ford Prepare for Congress”

Black Friday Results: The Good and the Bad

Early feedback on this year’s Black Friday performance for the nation’s retailers is encouraging. Sales rose to $10.6 billion, up from $10.3 billion last year. Any increase is good news as retailers braced for the worst in the face of an economy that has been now officially deemed to be in recession.

The bad news? The cost of attaining the sales increase means lower profits. Retailers had to aggressively lower prices and use other incentives to lure shoppers into their stores. The result is a hit on retailers’ profit margins. The challenge faced by many retailers is the lead time required to place orders. Orders placed for this Christmas season were placed several months ago, in many cases before retailers were fully aware of the economic train wreck that was about to happen. Now, with inventory on hand, the choice is to forgo profit margins and move product or not budge much on price and take a bath in an even deeper sea of red ink.

The big winners? You and I. We need a break from rising prices, and the battle for our holiday shopping dollars means we should continue to see attractive prices through the end of the year.

Link: USA Today – “Early Data Show Strong Black Friday”

Sky Not Falling for Online Advertising

A grim reality for media sellers is that a weak economy triggers marketing belt tightening that almost always includes spending less on advertising. Such reductions occur because they may be a preferred alternative to cutting expenses in other areas such as payroll. Also, cutting back on marketing spending may be viewed as a short-term situation that can be reversed relatively quickly. In today’s uncertain economy, it is not surprising to see marketing spending cut back, but perhaps surprising is that at least one area is seeing more spending… online advertising.

A report released by the Interactive Advertising Bureau indicates that Internet advertising revenues increased 11% in the 3rd quarter compared to the same period last year. Any growth at all is noteworthy; double-digit growth is astounding. The reasons are simple: 1) online ads allow for fairly precise targeting, and 2) marketers like that online ads allow for easier tracking of effectiveness than ads placed in traditional media. Whether it be the number of clicks an ad generates or tracking sales that occur from an ad that directs consumers to a URL created specifically to track ad performance, online ads enable marketers to better understand how well (or poorly) their communication efforts perform.

The need for advertising has not diminished just because of a slow economy. In fact, one could argue it is the time when advertising is needed most. What has changed is the need for greater accountability in how ad dollars perform, and online ads meet this need.

Link: Response Magazine – “Internet Advertising Revenues Up in Q3”

Tiger Woods Fails to Make Cut with Cost Cutting GM

Tiger Woods is second only to Michael Jordan in his prowess as a product endorser. He has associated his name with several products since arriving on the national sports scene in the mid 1990s, but one of Tiger’s most visible endorsements has been of General Motors’ Buick brand. His relationship with Buick seemed both appropriate and odd. The pair was appropriate because of an overlap between the target market characteristics for Buick and PGA Tour followers. The Tiger-Buick link seemed odd because Buick and golf are perceived as skewing toward older males, and here was a twenty-something “kid” endorsing an old guy’s brand. Turns out that the partnership worked for Buick as owner data indicates the average age of a Buick driver dropped from around 50 to 40 during the Tiger Woods-Buick era.

That era is coming to an end as Woods and Buick amicably part ways. Both sides are saying all the right things, but GM’s woeful financial picture has to have played a role in the decision to end the relationship. GM had already announced it would not be advertising during upcoming high profile events such as the Super Bowl and the Academy Awards. Fortunately for GM, the positive effects of its association with Tiger Woods will likely carry over for a period of time following the end of his endorsement deal. While brand building needs are taking a hit at GM these days, the company is in a fight for survival first.

Link: Ad Age – “GM Ending Tiger Woods Endorsement Deal”

Find a Niche to Remain Viable in Changing Markets

Yesterday’s post discussed how print media properties are challenged to remain relevant in a time of rising costs and shrinking readers of print versions of their products. One strategy I identified to overcome this challenge is to explore options for publishing niche publications. Today’s post is an example. The Philadelphia Inquirer, a large metro daily newspaper facing the declining market referenced previously, has launched a glossy magazine, called I. The magazine will publish six times a year and has the advantage of a built-in distribution as it is inserted into newspapers.

Why would the Philadelphia Inquirer do a brand extension at a time of such uncertainty? To pursue a market opportunity, in this case, reaching affluent consumers. I will target upscale areas of the Philadelphia market, making it attractive to advertisers. Revenues from ads are key to the success of a newspaper operation, and if revenues from the traditional daily newspaper product are unstable, it is imperative to look elsewhere for revenue streams.

A continuation of this trend in the newspaper industry will not be surprising. It is a matter of evolving the business model rather than trying to rely on a mode of news delivery that may be past its prime, the print newspaper.

Link: DM News – “Philadelphia Inquirer Launches Luxury Glossy”