Nike is introducing a shoe that is targeted toward American Indians. The Air Native N7 will feature a design that reflects distinguishing physical and cultural traits of American Indians. This is not your typical new product launch as it has a strong social component. The company plans to sell the shoe only to American Indians, with tribal organizations paying wholesale prices and either selling or giving away the shoes to their members.

Some people might be skeptical about Nike’s motives- is this a publicity stunt? Is Nike trying to build goodwill at the expense of a certain group of people? It appears to be neither; Nike is passionate about promoting health and wellness. People are being put ahead of profits, and it will be interesting to see if other companies come forward with similar strategies to further segment markets. Major corporations like Nike will be questioned about the sincerity of their motives whenever they do good, but in this case the Air Native N7 seems to be a winner for all involved. Link

Green Business Schools?

Increased interest among the general public in the social responsibility practices of Corporate America may spur a new trend in business education: the “Green MBA.” Specialized business programs are nothing new and are a way to further segment the market for graduate business education. Graduate programs that focus on socially responsible business practices are being introduced at well known institutions such as Duke University’s http://www.fuqua.duke.edu/, and relatively unknown institutions like Dominican University of California.

Is this a fad or is it the shape of things to come? Business schools are challenged to offer relevant training in programs that will enable graduates to compete in a global business environment. While Green MBA programs aren’t likely to become standard fare in B-schools nationwide, there appears to be a market for offering such programs. At the very least, B-school curricula should include expanded coverage of social responsibility practices within each business discipline. Link

The Next Digital Divide

The digital divide has been used to describe a situation of the “haves” and “have nots” of internet access. The digital divide was a real concern in the early years of commercial internet, but as prices have fallen for both PCs and internet access, the percentage of Americans with home internet access has surpassed 80%. But, there is another digital divide looming. It will occur with our televisions.

Congress has mandated that all television signals be broadcast in digital format by January, 2009. The transition from analog to digital signals will improve the viewing experience and free up broadcast spectrum space. Manufacturers have been producing models that comply with the new regulations. Making new televisions to support digital signals accomodates the change to digital, but what about the millions of analog TVs in homes across the country? A major concern is how certain vulnerable populations, namely low income and senior households, will be affected by the change. A program will be available that will allow households to request 2-$40 vouchers to help offset cost of boxes needed to handle digital transmissions. However, the vouchers will be issued on a first come, first served basis.

Most people have no idea of the impending change, so they won’t know they need to purchase boxes that will enable them to continue to use their analog TVs. A massive information campaign must be launched, but who will take the lead- Manufacturers? Industry groups? Government agencies? Apparently, a thorough plan for implementing the digital initiative among households with analog TVs has not been developed. In particular, there has been little consideration for those who can least afford additional investments in digital equipment. Link

Free Site Access Another Sign of the Times


The New York Times has abandoned its premium content service, Times Select. As of today, visitors to nytimes.com have access to all content on the site. The Times Select service gave subscribers access to works from Times columnists and the newspaper’s archives. Some industry observers believe the move is in response to the possibility that the new owner of The Wall Street Journal, Rupert Murdoch’s News Corp., plans to open access to wsj.com in the near future.

The decision to open access to NY Times content reflects two things. First, a cornerstone of the internet’s popularity is access to information. Any distributor of information that attempts to restrict access through selling subscriptions risks driving people to other web sites where they can access info at no charge. Second, increased traffic that will come from open access to content makes sites like nytimes.com more attractive to advertisers. The result will be enhanced advertising revenues that ultimately could more than offset subscription revenues that are being given up. Link

Variable Pricing Makes Sense… and Dollars!

A common pricing technique in service businesses is variable pricing. The rationale behind variable pricing is that consumers place different values on consuming based on time service is available or quality. The result is that demand for a service often varies. Some examples include a hotel that has high demand from business travelers during the week charge higher rates on weeknights than on weekends when business travelers are usually not on the road. Or, a movie theater charging $8.00 for an evening showing might only charge $5.75 for a matinee showing because of less demand for tickets in the afternoon. Adjusting the price downward during off-demand times allows capture of some revenues to offset fixed costs. Adjusting the price upward during peak-demand times is a way to reap the full value consumers place on your offering.

The practice is gaining increased use in sports marketing. For example, the Nashville Predators of the NHL have created a 3-tier pricing structure: non-premium, premium, and premium plus. Non-premium games include most weeknight games and represent the base ticket prices. Premium games are weekend games, and premium plus games are the games for which tickets are in the highest demand (4 games against Detroit and season finale vs. St. Louis). Some fans are angry about the new pricing structure, but a business should set prices based on the value of their offerings. Tickets for weekend games and games against Detroit are typically in greater demand. The team has a right to seek out a price premium as long as the market is willing to pay it.

Wal Mart’s Identity Crisis


“Always low prices” has been Wal-Mart’s slogan for nearly 20 years, but it appears that it will not always be its slogan! The company has rolled out the tagline “Save money. Live better.” This move is the latest attempt by Wal-Mart to be relevant in a space other than low prices. A major initiative to change perceptions of its apparel business as trendy and fashionable has been unsuccessful. Now, Wal-Mart is trying to convince us that its brand provides higher order benefits than saving a few bucks. I never stopped to realize that I can pursue my dreams because I spent less at Wal-Mart and can spend the money on other things!

It’s almost as if Wal-Mart feels inferior to be known only for low prices, that the brand is not sophisticated or important in its current position. It is difficult for a value brand like Wal-Mart to move upscale. Other companies have succeeded by creating separate identities for brands targeted beyond the value-driven market (e.g., Toyota>Lexus and Black & Decker>DeWalt). Wal-Mart made the right choice in not abandoning the low price position completely, but it faces a tough task in moving itself toward being a lifestyle brand. Link

Better-for-You Gatorade?


People who exercise are typically concerned with what they put into their bodies. Pepsico is hoping its Gatorade brand extension, G2, will appeal to consumers who seek hydration benefits after exercising but want less calories contained in regular sport drinks (including Gatorade). A serving of G2 contains 25 calories, half of what is in a serving of regular Gatorade.

Extending into low calorie sport drinks is not new for Gatorade. It tried it in the early 1990s with Gatorade Light and failed. What’s the difference this time? There appear to be several differences. First, Pepsico got the brand name right. By avoiding the “Light” tag in the brand name, there is less chance that consumers will feel they are getting a “diet” version of the product. It is similar to what Coca-Cola is trying to do with its branding of Coke Zero. They are diet drinks that are not positioned as diet drinks! Second, more consumers are involved in recreational activities and pursuit of a healthy lifestyle. Market demand for products that meet their needs stand a better chance of gaining acceptance than they did 15 years ago. Third, the marketing know how of Pepsico and its channel relationships should benefit G2. These factors, coupled with the benefit of being able to learn from the failure of Gatorade Light, make G2 a more viable brand extension. Link

Hyundai = Quality: "Think About It" or "Forget About It?"


What do you do when consumers like the products you make… until they find out you made them? That is a problem facing South Korean automaker Hyundai. Research about attitudes toward Hyundai has found more than 2/3 of consumers like the styling of Hyundai models, that is when they see the models without the Hyundai nameplate on the cars. When the same cars are shown to consumers with the Hyundai nameplate visible, that percentage shrinks to barely 1/2. Hyundai is attempting to reshape attitudes with a new campaign titled “Think About It.”

Hyundai fares well in quality ratings for its models. Unfortunately, while Japanese brands have enjoyed quality reputations, Korean brands such as Hyundai and Kia have been unable to create the same brand beliefs. “Think About It” is a campaign designed to persuade people that Hyundai’s quality should be perceived as on par with brands such as Toyota and Honda. It will be a challenge to shift consumers’ perceptions about Hyundai. On one hand, buying a car is a purchase decision that usually involves a more extensive information search. This extensive search could include learning that Hyundai offers high quality models. On the other hand, consumers may not let go of long-held beliefs that Hyundai is not on the same plane as Toyota and Honda. Or, consumers may be reluctant to take the risk and spend thousands of dollars on a car that they have not previously perceived as high quality. Lower priced items like consumer electronics- maybe, but a purchase decision that they have to live with for several years? Link

Price Cuts on High Tech Products Are Nothing New


Surprise. Anger. Outrage. All of these words have been used to describe the reaction of some customers of the Apple iPhone. Apple has announced it is dropping the price of its 8GB iPhone by $200 to $399. This move infuriated some customers who paid $599 for the product when it launched in late June. The noteriety the price is receiving is surprising because it is a common practice for marketers of high tech products to skim the market at product introduction, then lower prices to make products more appealing to a wider market. People who buy products when first introduced are considered to be risk takers, have higher incomes, and like being among the first to own innovations like the iPhone.

There are two major differences between typical pricing for new products and the iPhone. First, the timing of the price cut is surprising. The product has not been on the market 100 days yet, and the cut signals either the product was overpriced or Apple misread the market’s desire for a multipurpose device. Second, it’s noteworthy because it’s the iPhone, which even got the label of the “Jesus phone” when rolled out because of all the hype and buzz about it. Apple has been on an amazing roll in recent years, fueled by the success of the iPod. But, Apple has failed before (its Newton PDA being one example), and it is conceivable that the iPhone could fail, too. However, the price cut may be the bait consumers needed to bite, especially with the Christmas selling season just around the corner.

New Product Category: Energy Chips?


If the energy rush of downing a can of Red Bull isn’t enough to stimulate you, help is on the way! Birmingham, AL-based Golden Flake has introduced NRG Phoenix Fury, a caffeine-coated potato chip. The product has the taste of hot and spicy barbeque, but a 3.5 oz bag packs the same caffeine punch as 3.5 cups of coffee. NRG Phoenix Fury is the latest extension of energy products arising from the popularity of energy drinks.

This innovation falls under the category of “just because it can be done, should it really be done?” It is logical that the energy products category can be expanded beyond energy drinks, but the potato chips category does not seem as compatible as extensions such as energy gum or energy bars. NRG Phoenix Fury is likely going to be a fad product that will join the annals of product failure. Golden Flake could make a greater contribution to society if by improving the nutritional value of its snack foods! Such innovation would have greater long-term value in the marketplace. Link

P.S. – Interestingly, there is no mention of the product on the Golden Flake web site. A new product should be touted, not kept quiet!