Your Brand is NOT for Everyone!

Time to face the harsh reality: Not everyone wants what you have to sell. Get over it and move on! For some customers, your product is too expensive; for others it is too cheap. Some people think your product is too hard to use, while others believe your product will not benefit them enough to part with their money.

Good news: It is OK to not be universally loved and accepted! Besides, it is very difficult for a single brand to appeal to diverse segments within a market. The solution many companies have used is to create different brands that target different market segments. For example, Marriott created Fairfield Inn as a brand for serving leisure and business travelers looking for modest accomodations. Fairfield Inn allowed Marriott to serve a segment that would not likely consider staying at its flagship brand, and it protected the equity of Marriott among its loyal customers.

Starbucks finds itself in a brand quandry. The company is looking to stimulate sales, and it is experimenting with going down-market and serving $1 drip coffee. It is possible that coffee drinkers would flock to Starbucks stores to pick up $1 Joe, but what does that do for the Starbucks brand long-term? It does nothing to nurture relationships with existing customers who do not come to Starbucks for low-priced coffee. While stockholders may want to see sales and profits boosted, this move would potentially do much more damage long-term than any benefits realized from selling $1 cups of coffee.

Mergers Could Help Airlines, But What About Consumers?

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.

Hyundai Calls Audible on Super Bowl Advertising

In my last post I commented on Hyundai’s consideration of withdrawing its commitment to advertise during the Super Bowl. Hyundai has since announced its intention to remain on the roster of Super Bowl advertisers. While I give them credit for the careful consideration of whether the Super Bowl ad buy was the best use of marketing dollars, the company’s uncertainty about whether it belongs in the Super Bowl is troubling. If it was a good idea in October when the spots were bought it should still be a good idea today!

On another Super Bowl advertising note, Victoria’s Secret has purchased a 30-second spot slated to run during the second half. It is that company’s first Super Bowl appearance since 1999, according to Advertising Age magazine. I like this move for two reasons. First, the Super Bowl will be played a mere 11 days before Valentine’s Day, a key selling period for Victoria’s Secret. Potential exists for the commercial to be a driver of traffic to stores and the VS web site. From a timing standpoint, the VS spot makes much more sense than Hollywood studios running commercials for movies that will not open until summer! Second, airing the commercial during the second half means that the number of younger viewers who would be exposed (no pun intended) to the message could be lower compared to airing in the first half.

Making Tough Choices on Marketing Spending

This post follows my last one calling for marketers to stay the course of marketing through difficult economic times. A caveat to that position is that while marketing investments should continue in a weak economy, how the money is spent must be scrutinized. While reviewing marketing programs to assess their ROI should be done on an ongoing basis, such review is even more important when business conditions are unfavorable and every dollar of sales and profit is critical.

A great example of making tough choices on marketing spending is the automaker Hyundai. It is scheduled to air two 30-second commercials during Super Bowl XLII on February 3rd. Hyundai is considering backing out of that commitment as it ponders whether spending nearly $6 million for two message exposures is the best use of its marketing resources. Yes, the Super Bowl is a cultural event that draws tremendous interest… even for commercials. Yes, the audience in the U.S. alone will be between 85 and 90 million people. But prestige and audience size are not sufficient criteria for spending marketing dollars.

Would the 30-second spots prompt people to visit their local Hyundai dealership to check out new models and go for a test drive? Are the potential brand awareness and image benefits enough to justify such an expense? Perhaps not during a time of economic slowdown. Kudos to Hyundai for thinking it over. The commercials may air during the big game after all, but it will be only because Hyundai management is convinced it is the right thing to do for the brand. Link

How Marketers Should Respond to Economic Downturns

If you hear a loud rumbling, it is likely the growing group of economists and analysts deeming the U.S. economy in recession or facing an impending recession. Periods of economic decline are nothing new, but how marketers manage their brands and their businesses will not only determine how they fare during a recession but later on when the economy improves.

An article on the web site of Advertising Age magazine addresses the issue by asking 10 experts their opinion about the effects of a recession on the advertising industry. Brian Niccol, Chief Marketing Officer for Pizza Hut, identified a key response marketers should have to economic downturns: search out ideas that deliver value to customers whose value judgments are impacted by changing economic condidtions. Niccol said “The current situation requires Pizza Hut to redefine how the consumer obtains value solutions. We’ve acted quickly to create an everyday value pizza solution, Pizza Mia, which is just five bucks with superior taste.” Just as opportunities exist to move into upscale segments during strong economic conditions, marketers must look to value segments to create business in lean times.

Another pearl of wisdom in the article came from Mark-Hans Richer, Chief Marketing Officer for Harley Davidson. He dismisses the tendency to cut marketing expenditures when the economy is weak. According to Richer, “Our belief is that spending through a market downturn creates competitive advantage for the market upturn, and an extra dollar spent today has extra dividends for tomorrow.” In other words, “saving” money on marketing during a weak economy is not saving at all. Building a brand is a long-term process, not a short-term tactic. The intestinal fortitude needed to stay the course and continue marketing investments during a recession is great, though. Link

Direct Marketers Get It Right with DMA Choice


I can’t think of an industry that has more of a right to have a self-image problem than direct marketing. Telemarketers interrupting meals and TV shows or junk mail clogging our mailboxes (both physical and electronic) are not endearing images for most people. Consumer resistance to direct marketing efforts in the forms of signing up for Do Not Call lists, installing Caller ID, and using e-mail filters provides ample evidence that a lot of people do not want to deal with unsolicited marketing messages.

So what should direct marketers do in the face of this resistance? They should accomodate consumers, making it easier for them to block marketing messages. Yes, I said let’s help consumers keep us away. The more self-regulated and proactive the direct marketing industry is, the less need there is for governmental regulation. That is why the Direct Marketing Association’s announcement of its DMAChoice initiative is noteworthy.

DMAChoice will provide consumers a channel for opting out of mailing lists and offer resources to educate consumers on privacy and preventing fraud. The DMA even talks about DMAChoice being a social networking platform for consumers to interact. Don’t expect DMAChoice to become the next MySpace or Facebook, but the DMA should be commended for the DMAChoice initiative. The only criticism that can be leveled is that it has taken too long for the direct marketing industry to be more consumer-focused. The industry has been reactive, not proactive in this area, but at least strides are being made.

Greenwashing Index Creates Accountability for Green Marketers

Green is the latest “in” color for marketers, joining red (anti-AIDS) and pink (breast cancer) in the marketing strategy kaleidoscope. Concerns about protecting the environment have led consumers and advocacy groups to place greater expectations about how businesses interact with the environment in the manufacture and distribution of their wares. Many companies have hitched a ride on the green marketing wagon in an attempt to demonstate their socially responsible actions… and as a strategy to differentiate themselves from competitors.

What should consumers make of marketers’ green claims? How do we assess the credibility of claims? An effort has been launched to help in this regard, EnviroMedia’s “Greenwashing Index.” The term “greenwashing” has been coined to describe companies whose words about being green speak louder than their actions. Specifically, the Greenwashing Index rates ads that make green claims on a 5-point scale, with 1 being a “good ad” and 5 being “total greenwashing.”

Efforts like the Greenwashing Index provide two benefits. First, interested persons have a resource for evaluating green marketing claims. While many companies can make claims about being green, not all companies have put the same level of effort into protecting the environment. The Greenwashing Index can assess the different levels of focus marketers put on environmental protection. Second, the presence of a watchdog like the Greenwashing Index should make advertisers be careful about the green claims they make. Ads that receive high Greenwashing Index scores do not reflect the type of word-of-mouth marketers want for their brands.

When Diversification Equals Dilution

Growth. It is the quest that fuels businesses of all sizes. Management and marketing texts tout diversification as a key growth strategy. Tapping into other markets, especially if there are synergies with the knowledge and resources already in place to serve existing markets, is viewed as a way to extend a brand beyond its core market. The theory is compelling, but in practice it often leads to disappointing results.

Case in point: apparel retailer Talbots recently announced that it is closing its men’s and children’s’ stores. The move, while costing Talbots in the short-run, will allow the company on what it does best: serve women’s fashion needs. One can hardly fault Talbots for the decision to extend to men’s and children’s apparel; it represents a significant portion of the population. Also, the Talbots name had accrued a great deal of positive brand equity in the marketplace. In hindsight, it appears the extensions may have taken Talbots’ focus away from its core business. As a result, not only were the men’s and children’s stores unsuccessful, but the core women’s stores have struggled, too. If diversification creates a potential situation that leads to strained resources and diluted brand equity, is it really worth it? I think not! Link

The Toyota Effect Positive for the U.S. Auto Industry


Final U.S. auto sales for 2007 have been tallied, and Toyota has overtaken Ford at #2 in sales behind General Motors. Toyota demonstrates a textbook approach to building a business. Several qualities exhibited by Toyota can be pointed to as keys to its success, but one that impresses me is its commitment to improvement. It would be very tempting for Toyota to rest on its laurels as it has grown market share in recent years. However, top management insists on staying hungry and not being complacent with past success. Toyota’s focus on delivering quality automobiles as well as striving to introduce new products to market that respond to current market conditions (e.g., hybrid vehicles) are strategies that serve it well in both the short-run and long-term.

Many American consumers thumb their noses at foreign made cars (although several “foreign” brands are now manufactured in the U.S.), but foreign competitors create a significant positive effect. The presence of companies like Toyota in the U.S. make all auto manufacturers better because they have raised the bar in terms of customers’ expectations of quality and value. The growing market share of Toyota means that it is imperative for the Big 3 to improve their product quality and bring new models to market faster. Link

Don’t Make New Year’s Resolutions

Today is January 2nd, and that means for many people it is the first day that they have broken one or more of their New Year’s resolutions. I never make New Year’s resolutions. Why? They appear to be jinxed, destined for failure given the number of resolutions that are broken. I know my gym will be very crowded in January, but I take comfort in knowing the crowds will be much smaller in a few weeks as good intentions go by the wayside!

When it comes to managing the marketing function of your business, do not make New Year’s resolutions. Instead, set objectives, or outcomes, you would like your organization to reach. You can set objectives within the time frame of the year, trimester, quarter, or month. What’s the difference between an objective and a resolution? Three characteristics make objectives good to have:

1. Objectives are Specific – Objectives that are written with a specific outcome in mind give direction to what you want to accomplish. It is insufficient to say “I want to increase sales.” Be specific and state the increase you wish to achieve- 5%, $500,000, 700,000 units, or whatever metric matters most to your business. If objectives are not specific, you have not created accountability for reaching the desired outcome.

2. Objectives are Measurable – Measurability and specificity go hand-in-hand. Write objectives in a way that it can be determined whether the objective was met. For example, do not state “I want to improve customer service.” Better customer service would be a desirable outcome, but how can you measure whether it occurred? Instead, an objective might be to “reduce customer complaints by 50%,” or “I will personally speak with 5 customers each week.” These are measurable (and specific) outcomes that if reached could positively impact customer service.

3. Objectives are Challenging – The purpose of setting objectives is the growth that occurs as a result of pursuing them… even if you do not reach all of your objectives. Objectives must be a “stretch,” providing a realistic yet formidable bar to clear. If you average 100 web site hits a month, it is probably unrealistic to set an objective to reach 2,000 hits a month. Set objectives with the aim of growing your business and having to sweat to make the growth happen!

Be sure to write your objectives. Post them in many different places so that you are reminded of what you have set out to accomplish. Remember, most people (and organizations) do not go through the process of writing down what they want to achieve, so you create an advantage simply by setting objectives that contain the three characteristics identified above.

Good luck on writing and meeting your objectives!