New Marketing Mix for Magazines?

Old media is trying hard to avoid the appearance of, well, being old. Major market daily newspapers are in a fight to avoid the decline stage of the product life cycle. Magazines face a similar challenge as consumers use the Internet as an information source, one that can be more current than magazines that are published weekly or even less frequently.

How can magazines stem the flow of readers to new media platforms? Heavy doeses of advertising? Nope, to easy to ignore the direct mail subscription offers that appear in our mailboxes. Cutting subscription rates to make mags more enticing to consumers? Not worth the risk that increased subscriptions would offset lower revenues per subscription. Before we write an obituary for the magazine industry, Time, Inc. might have the answer.

Time is developing a service called Maghound. This service has been called the Netflix of the magazine industry by some experts. Maghound will give customers web access to multiple magazine titles each month (3 magazines for $4.95, 5 magazines for $7.95, or 7 magazines for $9.95). Customers can mix and match titles, changing them whenever they want. Maghound is scheduled to be launched in the second half of 2008.

Persuading people to consume magazine content this way will be a challenge. We have become accustomed to getting so much information from the Internet at no charge. The ability to customize one’s subscription list at any time is a major selling point of this service. Not only would moving consumption of magazine content to the Internet benefit publishers through reduced costs for printing and postage, but readers’ movements through pages on a magazine’s web site can be measured. The ability to track the pages viewed and amount of time spent on pages will make advertising in these magazines’ web versions more attractive to marketers.

Applebee’s Spokesapple a Rotten Idea

Applebee’s is launching a new advertising campaign featuring its new spokesperson… I mean spokesapple. Yes, that’s right- spokesapple! It’s cheaper than hiring a celebrity endorser, and at least Applebee’s does not have to worry about an apple embarassing the company by getting arrested. That’s where the benefits seem to end. This brand is in trouble, and to expect a reversal of fortunes from an ad campaign led by a spokesapple is a stretch! The spokesapple will serve as the message source to spread the word about Applebee’s menu items, but how much credence can you give to what an apple tells you?

You can see the auditions for yourself and decide if the “winning” spokesapple might join the ranks of the AFLAC duck and Jolly Green Giant as an advertising icon. My bet is “no.”

Online Ticketing: Break the Power of Brokers

The Internet has proven to be a great innovation for shoppers. The assortments of merchandise available to us have grown dramatically, not to mention the convenience of shopping in the comfort of your home and having your purchase delivered to your door. But, making purchases online can become a source of great frustration when you are denied the opportunity to make a desired purchase.

That’s the feeling thousands of people have experienced in recent weeks. First, it was parents of children desperately wanting tickets to Hannah Montana concerts. Then, it was excited fans of the Colorado Rockies seeking World Series tickets. In both cases, intense demand for tickets left thousands empty-handed and crying foul about the online buying process. The culprit appears to be ticket brokers and sophisticated technology some employ to scoop up tickets ahead of individuals.

The result is that many tickets are made available for sale on the aftermarket for event tickets. Brokers profit handsomely as they command prices that are substantially higher than face value. A check of prices on the web site of ticket reseller Stub Hub found tickets for Game 3 of the World Series in Denver are going for between $325-$4900. Some people who are angry about the unfair advantage held by ticket brokers suggest that ticket sales for high demand events should not be conducted online. Such a move might punish brokers, but it probably has more of an impact on the average consumer who values the convenience of shopping online. It beats having to camp out for tickets!

It seems a better way to punish brokers would be for consumers to pass on buying tickets at inflated prices. But, as long as people are willing to pay above market prices for event tickets, brokers will be angling to beat consumers to get highly coveted tickets. While I am bashing ticket brokers, I give kudos to ticket reseller sites like Stub Hub. They provide a valuable service to people wanting to unload event tickets. Ticket reseller sites are a great marketplace for bringing buyers and sellers together.

Changing Trends at the Dinner Table

American consumers love eating at restaurants. Advertising Age magazine reports on research that says we consumed 207 restaurant meals per person in the U.S. in 2006. The restaurant industry has enjoyed many years of growth as Americans patronize their restaurants as part of their busy lifestyles. More women were in the workforce, making it more difficult to find time to prepare meals at home. Besides, many Americans enjoyed the economic prosperity of the late 1990s and the last few years. More disposable income (or more credit cards) had people eating more meals out of the home.

The dining out trend is changing; the percentage of women in the workforce has dropped after topping out in 2001. Also, many Americans who are feeling the pinch of rising interest rates and higher mortgage payments may have less financial freedom to eat out. These changing trends are hurting the casual dining segment of the restaurant industry. Chains like Applebee’s are struggling as their rapid growth over the past decade followed consumer trends at that time, but the business is not as strong now. The beneficiary of the trend has been supermarkets, a category that suffered when casual dining restaurants enjoyed their growth. It’s not just that more people are buying meals to prepare at home from supermarkets. To the credit of many supermarkets, they responded to consumers’ desires for easy to prepare meals by offering items that are of comparable quality to casual dining menu offerings.

Customer trends change. It’s one thing to react to them after they happen, as supermarkets did as their business eroded in the 1990s. It’s another thing to look ahead and try to detect trends before they become a threat to their business, as casual dining restaurants now are experiencing. What is the plan to lure patrons in to their establishments more frequently? That plan should have been devised when times were good so that companies do not find themselves in panic mode attempting to overcome changing trends. Link

PS3 Plays the Price Card


While Nintendo is basking in the glory of being named Marketer of the Year by Advertising Age magazine (see 10/17 post), former video game category king Sony is looking to gain market share during the Christmas selling season. Sony is cutting the price on its 80 GB PlayStation 3 model by $100 to $499 and introducing a 40 GB model for $399. These pricing moves make Sony more competitive with Nintendo Wii ($249) and Microsoft Xbox 360 ($280-$350).

Sony’s price cut illustrates the flexibility pricing has in the marketing mix. It is the easiest variable to change on short notice. Product features and specs are set in stone compared to prices, and distribution and promotion decisions cannot be implemented as quickly as price changes. The price cut also signals an admission by Sony that the PlayStation 3 was overpriced. The product contains cutting-edge technology such as Blu-Ray DVD, but loading a product with features that drives up the price put PlayStation 3 out of reach for many consumers.
Sales in the video game console category in the past year speak volumes; customers prefer benefits offered by video games such as the highly interactive experience of Wii. Also, price does matter as evidenced by Wii’s strong sales and the fact that the “antiquated” Sony PS2 outsells PlayStation 3. Link

P.S. Since the last two posts are about video games, I don’t want to create the impression I’m a video game junkie… although I would love to have back all of the quarters I spent at arcades on Pac-Man and Galaga in my youth!

Nintendo’s Worthy Award


Advertising Age magazine has named Nintendo as its 2007 “Marketer of the Year.” Nintendo got the nod over Apple, Nike, Al Gore, Geico, and Unilever. The recognition is for Nintendo’s efforts in bringing its Wii gaming system to market last November. In that time, Wii has become the market leader in video game consoles. Nintendo’s competitors, Microsoft’s Xbox and Sony’s PlayStation 3, may have more technically advanced systems, but consumers young and old have taken to Nintendo’s easy-to-use system.

The message behind Nintendo’s recognition as Marketer of the Year is simple. Products that can engage their users through designs that make the product easy to use or operate add value that may be hard for competitors to duplicate. Unfortunately, not every product maker can expect users to have as much fun consuming their products as Ninteno Wii players experience. The good news is not every product we use has to provide us with fun or pleasure, but we value products that aren’t a source of stress! Simplicity in acquisition and use of a product is a way to add value, one that can even lead to winning Marketer of the Year!

Confined, not Defined by Product Category


The definition of your business and brand in the minds of customers is crucial to marketing success. A recent article in Advertising Age by marketing guru Al Ries illustrates how defining your company by the product category in which it operates can confine future growth. He chronicles the slow demise of Eastman Kodak, a company that achieved status as a brand icon in the photography category. But, as film gave way to digital photography, Kodak has been left to fight to regain relevance in the minds of consumers.

Ries’ article reminds me of the often used example of the decline in the American railroad industry. Many people believe railroads lost their competitive advantage over airlines not necessarily because airplanes can deliver people faster. Instead, railroads lost their competitive advantage because they failed to understand they are not in the railroad business, they are in the transportation business! Their success depends on meeting the transportation needs of businesses and individuals; trains just happen to be the means by which they make it happen.

Define your business in terms of the benefits you provide, not the type of category or industry to which you belong. Technologies and tastes change, a fact that can seriously threaten businesses whose operations are not guided by the consideration of the benefits people want from products or services they buy. Categories may come and go, but if you are in tune with customers’ needs and wants you will be in a better position to change along with them.

Kats Put Down for Good?


Cats may have 9 lives, but the Nashville Kats of the Arena Football League may be done after only 2! Team owner (and Tennessee Titans owner) Bud Adams has decided to cease operations after only 3 seasons. His operation of the Kats followed a 4-year absence after the first version of the Kats franchise was sold and moved to Atlanta in 2001. The demise of the Kats is not surprising given declining attendance each season. Also, the Kats competed with college basketball, Nashville Predators, and Nashville Sounds at different times throughout their season.

The surprise is the failure of the franchise to gain traction despite having access to the marketing resources and relationships of the Titans. There is no sport property stronger in Tennessee than the Titans. It was expected that the expertise of the Titans in the areas of operations, ticket sales, marketing, and sponsorships could be leveraged to help the Kats. It seemed to be a perfect situation- the AFL season begins shortly after the NFL season is completed. Marketing the Kats could satisfy fans’ appetite for football into the spring. Also, the Kats had a high profile minority owner in singer Tim McGraw. His involvement, which included a free concert for season ticket holders, added excitement initially.

Why did the Kats fail a second time? It wasn’t the price of tickets as they were a great value. There was too little interest in the product; middle Tennesseans are passionate about “regular” football, but the arena product never really caught on. How much of the failure was the product? How much of the failure was how the product was marketed? Those questions must be answered before a third life for the Kats could ever happen. Link

Miller and Coors Form Joint Venture

The battle for market share in the beer category has been fierce for many years. The latest move in this category may be the boldest yet: Miller and Coors are forming a joint venture in the U.S. The aim of the venture, known as Miller Coors, is to combine resources to better position their brands to compete with category giant Anheuser-Busch. Savings will be realized and efficiencies created in marketing and distribution. It is expected that the joint venture will also be beneficial in terms of strengthening relationships with retail partners for all brands involved.

This move couldn’t come at a better time for Miller and Coors. A-B’s market dominance makes it a never-ending uphill battle to take away market share. Also, the beer category has seen its share of total alcohol consumed slip as consumer tastes have shifted toward wines and distilled spirits. Today, all beer marketers are challenged with remaining relevant with consumers. Miller and Coors stand a better chance of success as a result of their joint venture. Link

Nationwide is on NASCAR’s Side


NASCAR will have new title sponsors in two of its three major leagues next season. The Cup Series sponsorship is shifting from Nextel to Sprint, which is simply a shift of brand association within the Sprint Nextel family. The other new title sponsor represents a new partner for NASCAR, Nationwide Insurance. Nationwide will replace Anheuser-Busch’s Busch beer brand as title sponsor of NASCAR’s secondary national series. The deal is for 7 years at an estimated $10-12 million annually.

Nationwide’s commitment to auto racing on this scale is noteworthy. Until a few years ago, insurance companies avoided association with motor sports. The widely held view was that sponsoring a sport in which accidents, injuries, and even deaths can occur would not be a congruent association for an insurance company to have. That position has softened as Allstate and State Farm have both had sponsorships with NASCAR Nextel (too early to say Sprint?) Cup drivers and races. The lure of a coveted audience and the presence of major competitors were too great to ignore. Actually, the association can be used in positive ways. Allstate and State Farm have both used their NASCAR platform to promote safe driving. Nationwide will surely use the 7-year association with NASCAR to promote responsible driving as well as its insurance coverage.