Clever Retail Revamping

The Financial Times has a story about Danish silverware company Georg Jensen, which recently revamped its retail look. How do executives justify such an expense at a down economic time? By being innovative. Jensen got in touch with 25 top Danish companies and offered a swap: use of consumer electronics, furnishings, housewares, and so on in return for a showcase of that company's goods. Jensen isn't selling the products of the other, just its own. It's similar to how many magazines get use of materials from various companies in return for credit. It's a smart bit of business innovation.

The Myth of the Long Tail

As I'm trying to get ready for weekend festivities, I'm putting a premium on efficiency, so I'm going to point to a BNET post I have on a new study looking at the "long tail" concept, and how it simply doesn't seem to hold water when you start looking at what is happening in businesses.

The real question is when does having access to many products really help a business. I'd argue that for a store, money would go out the window because you couldn't get enough people physically through the doors to make money from their interest in the vast majority of items. In my own business experience, I've found that some amount of "extra" items can help a catalog appear to be the place to go for products, even though the bulk of sales still come from the normally hot items, but even then you have diminishing returns because of the cost of printing a catalog. Even in a web-only environment, there's still a cost of bandwidth, of managing a database, and of communicating with vendors to get products in. So, the long tail - in moderation - can help boost overall sales and even profit (higher margins) of resellers. If you're a vendor, though, putting your faith in what this can do for you is probably foolish ... unless you're the vendor that came out with the book in the first place.

Wal-Mart Changes Logo

As the Wall Street Journal noted, Wal-Mart is about to change its logo. "The new logo has white letters on an orange background followed by a white starburst, and the store's name will appear as one word: Walmart. "

Have you thought about what it will cost the company? New bags, new broadcast and print ads, new collateral, web site changes - literally, any and every thing that had the logo on will have to be changed. At least none of us who write about business will have to remember the old spelling. We'll just have to learn and remember the new one. It'll be worse than remembering to change the year on checks after January 1.

Privacy May Dog Online Advertising

A Texas woman is suing Blockbuster for sharing details of her movie rental and purchase activities with Facebook through the Beacon program, according to the Associated Press. An Advertising Age article I recently wrote looks at the privacy issues that are likely to face those marketing online, and this is a great example. It's not that "real world" marketing is any better. In fact, much of it is worse in terms of the information it collects, coordinates, and uses, but because of the time spans between collection and use, and the lack of apparent connection, this has been largely invisible. However, the digital world is making this more obvious, rubbing the results in the faces of people. Those in marketing had best pay attention, because these are issues that can too easily bite when you least expect them.

Can Brands Make You Behave Differently?

According to Physorg.com, a recent study from Duke University and the University of Waterloo suggest that even brief exposures to a known brand can significantly change audience reactions and behavior. The research, which is to appear in the Journal of Consumer Research (they've been coming out with some pretty interesting things), exposed college students to subliminal flashes of Apple and IBM logos. Then they were asked to come up with uses, outside of building a structure, for a brick:

People who were exposed to the Apple logo generated significantly more unusual uses for the brick compared with those who were primed with the IBM logo, the researchers said. In addition, the unusual uses the Apple-primed participants generated were rated as more creative by independent judges.

Apparently a follow-up study found that those who saw a Disney logo behaved more honestly than those who viewed one for the E! television channel. One of the researchers said that this might suggest to company to spend more on product placement and other opportunities for "brief brand exposures." But I wonder 1) just how well-established the brand needs to be, 2) how much advertising you'd have to do to make the flashes do anything, and 3) whether that would actually translate into any market advantage for the companies, or if the only result would be changes in non-purchasing behavior.

Operations Research Valuable in Netflix Prize

Netflix has been running a contest to see who could significantly improve its ability to predict how much someone will like a movie. Lots of high-powered (and less so) groups have been applying huge amounts of scary math to reach the goal. But, as Wired reports, someone suddenly appeared out of nowhere last fall, approaching the few in the lead and making progress at a rate that took them months. What I find amusing about this story is that the guy isn't primarily a mathematician. Instead, he got an undergrad degree in psychology, a masters in operations research, and is a retired business consultant.

His trick? He's taking human psychological factors into account rather than treating this as nothing but a numbers game. I think this is a great lesson. Too often companies want to reduce people to numbers, and, certainly, you can look for mathematical patterns in group behavior. But sometimes the individuals will start acting in ways you never expected, demonstrating sudden shifts in behavior. The math doesn't explain it because the math is looking at the results, not at the causes. What might be predictable if you could follow the emotional contours of people turns into a jarring lurch if you're sitting blindfolded in a car and couldn't see the dip in the road before the auto dropped down. Will most companies learn anything from this? Probably not. They might nod and say, "Yes, we really should focus on psychology," but they don't grasp this in a practical way in how they do business today. And given that areas like marketing are pure psychology, if they don't get it by now, they never will.

When the Best Marketing Is Keeping Your Mouth Shut

I've run into a couple of interesting stories of marketing. In one, an organization sponsored a class at Hunter College, with the class content being a covert marketing campaign. The other came from a friend who owns an HP computer and who recently received something about extending the warranty - but said invitation explicitly excluded hardware. Leaving what? Telling her to reload software in case of trouble?

There are times that companies make the most horrendously stupid mucks of marketing communications. They lie, they twist things, they try being clever, and the upshot of all that effort is egg on their faces. If marketing isn't about the customer, then it's essentially a con game, in which the company tries to extract revenue without providing any benefit. And if a company's marketing communications is designed along such practices of trickery, it is probably costing the company more in good will and long term financial value than company management will ever realize. If the managers did get it, they'd replace the marketing staff immediately.

Loss in Confidence in Television Advertising

I hadn't run across this survey, but the Association of National Advertisers, in conjunction with Forrester, did a fourth biennial survey of corporate managers on television advertising, according to Advertising Age. The results aren't looking so good for the TV industry. In short, companies are looking to spend more online and less on television because in general - 62 percent of respondents - thought that television advertising had become less effective in the last two years. More than half reported that when half of all households use digital video recording, they'll cut spending on TV ads by an average 12 percent:

Eighty-seven percent of advertisers believe branded entertainment is the key to TV advertising in the coming year, and 65% of them are eager to try ads in online TV shows. And emerging technologies continue to lure marketers looking to experiment. Forty-three percent would like to try interactive TV ads; 55% are interested in ads embedded in VOD; and 32% would like to try ads attached to the set-top-box menu.

But what's bad news for television is good news for online. Maybe that's where the medium will eventually go.

Politics, Business, and Doing Brand

Al Ries had an interesting article in Advertising Age on branding lessons from the presidential race. (Sorry, but you'll need a subscription.) Politics has picked up branding from business and now offers some clear lessons on it. For example, Clinton staked out "experience," Obama went with "change," and then Clinton realized that the latter's pick was more in keeping with public sentiment, and so tried to shift and have it both ways:

It's too late. Obama has pre-empted the change idea. A typical example is the cover of the Jan. 14 issue of Newsweek with a picture of Barack Obama and the words "Our time for change has come."

Now, Clinton looks like a follower instead of a leader.

Ries then asks the question, if you wanted to establish a brand, what idea would you want that hadn't already been grabbed by someone else? He actually writes about choosing a word, but I think idea might be more applicable. The obvious problem that businesses face is that no one remembers their slogans. You don't get too many new hits as you once had with "It's the Real Thing" (Coke), "King of Beers" (Budweiser), or "When it absolutely, positively has to be there overnight" (FedEx).

Little doubt that if you're older than, say, 35, you've heard these and the sayings have stuck in your heads. Ries suggests that companies make three mistakes:

1. developing a slogan independent of the brand and broader marketing strategies


2. trying to get an "exciting" slogan without remembering that it only has meaning in context


3. thinking in years instead of the decades of repetition success can take

I think there's something to be said for all these, but I think they miss a more fundamental point. You can't have brand for something that you're not. Eventually people find out what your product or service is like, and if you're blowing smoke, your marketing will be worthless at best, and at worst will drive business away.

FedEx had that great slogan, and backed it up with intense efforts to make sure that over 99 percent of the time, the package acutally did get there on time. Bush has had such a large market share that in economic reach, if not in taste, it really still is the king of beers. Coca Cola was the real thing because it established itself and for decades, any competitor, including Pepsi, was busy trying to be as big as Coke.

The single biggest mistake that I see companies make is thinking that a slogan can overcome ineptitude, disinterest, sloth, and greed. If you want a brand that will stick, don't talk the brand, do it. When you do the brand, you have orders of magnitude more repetitions of the branding messages, because they occur virtually every time someone does business with you. You then engage emotional and muscle memory, not just intellectual. This is a brand that will hold on to customers, and promise something valuable for prospects.

More (or Less) on Super Bowl Ads

I had mentioned the Super Bowl ads the other day and thought I was done - and I was. But someone else at MediaPost had a good point. Why didn't most advertisers make better use of email - and other parts of their marketing mix - to tie in the money they were spending in the ad? The one exception that the article points out (and it did have an email bias) was Budweiser.

Budweiser actually was quite clever in tying its online commercials into both an email campaign, a Web site, and a mobile marketing campaign. Weeks before the Super Bowl, you could see an “unaired” Super Bowl ad as well as enter a sweepstakes where you voted for your favorite Bud ad through your phone.

With the amount that companies spend on these 30 second extravaganzas, you'd think they'd want a better return on their investment. Or maybe their agencies tell them that they'll be the next Apple, with the famous 1984 ad, and that no other activity will be necessary. No need to measure results when you're building "brand."

Super Bowl Ads and the Failure of Business

Forget about the game. Forget about the upset and the ugly screw-ups on both sides. Look, instead, to the ugly screw-ups between plays: the ads. Companies spend millions for the time and then for the creative. The spots practically shriek, "We're gonna be on the Super Bowl! Let's show 'em how important we are!" Wtih animation, things blowing up, special effects, and casts that seemed to rival a Biblical epic movie, this was the opposite of tight budget.

But to what end? Other than knowing Budweiser had commercials - because they always have commercials (and I'll admit some fondness for the one about the horse training to join the team) - who do you remember? Hyundai trying to reposition itself as a luxury auto manufacturer but under the same brand? (You want how much for one of those?) Some automobile site, again with a couple of clever ads, but not memorable? CareerBuilders.com, whose ads seemed dull, which is probably not the best association for a business? It was about the commercials, which is fine, I guess, but do any of these companies do research into the history of ads?

Alka Seltzer ran an astonishingly clever series of ads in the 60s: funny, witty, pithy. There was the guy talking about the speecy, spicy meatballs, and the woman whose gastronomic adventures send her new husband seeking digestive relief, and "I can't believe I ate the whole thing. You ate it Ralph." And the company dropped them all. Why? Because while people loved the commercials, they didn't remember the product. Because the commercials became an end in themselves, serving a desire for entertainment, but not directly touching the issue of indigestion in an emotional way that would make people want to try the product for relief.

Does anyone test the results of the Super Bowl ads? I don't mean recollection, but actual sales. Do the companies make multiple times what the ads cost them in total? If not, they are wasting their money. I can't help but wonder if the really smart companies are the ones that avoid the Super Bowl and invest their marketing dollars into things more prosaic ... and profitable.

Sometimes Companies Just Say Yes

I've seen so many companies in which managers put on a false face of bravado, but secretly cower. They are afraid of making any mistake, disrupting their comfortable existence, and avoiding any effort out of the ordinary. The theory is that if you don't do the unusual, you cannot get pilloried for it.

But business is risk, and companies must shake off the dust and try something new at times just to keep from being moribund. Today, IKEA is an example. A comedian and filmmaker, Mark Malkoff, had to have his New York apartment fumigated, so he decided it would be an interesting video to literally move into an IKEA store for the week. He asked - and they said yes. So he's in the store in Paramus, NJ at the moment, having fun and creating an enormous opportunity for positive PR and viral marketing. You can see the ongoing video series here. Realistically, there was little downside for the chain, much potential benefit, but saying no is so easy. Management there didn't, to their credit.

Some Airlines Try To Force Better Profits

The New York Times today has a story about some major airlines considering a cut in their capacity to force higher seat prices:

The miserably full flights of 2007 might seem like a good reason for airlines to roll out a few more planes and ease the crowding.

But passengers should expect just the opposite: some big airlines are planning to reduce domestic capacity in 2008 with the hope of driving fares higher to offset rising fuel costs. Barring a recession that reduces demand for air travel, travelers can expect flying to be more crowded and more expensive than it was in 2007.

If competition and their own operational models are combining with higher fuel prices to cause problems, I'd suggest that trying to improve margins by making customers even more misery is probably the wrong strategy. Why not go the opposite way - raise prices by 15 to 20 percent for a class of flight that restores comfort and pleasure to the experience? It's a lot easier to get more money when people are motivated by their self interest to do business with you. The result would be a true, not artificial, seat shortage.

McDonalds and Starbucks Square Off?

An NPR piece recently discussed how Starbucks and McDonalds are each trying to cut into the other's market: the former introducing breakfast sandwiches and the latter introducing coffee bars in its 14,000 locations. I could see some potential conflict here - yesterday, while en route to Manhattan, I got off the road, noted a Starbucks, got a sweet coffee drink, and added a breakfast sandwich when I noticed that they were available and would only take "30 seconds or a minute" as the worker said - or longer, by my watch.

But for the most part, are the companies and the business press nuts? The two have distinctly different atmospheres and roles to play. People who go to one might go to the other, but under significantly different circumstances. Expecting people to head to Starbucks instead of McDonalds for breakfast is absurd - good luck getting what you want instantly. (And no hash browns?) And expecting people to bring in a laptop and hang out with a McLatte is equally wishful thinking. The people covering business should see this and not take the all too easy angle of "they're out for each other." Even if they are, notice that they're both going to trip and hit the ground face-first, not running, in the process. Or could this be the beginning of the new secret advertising campaign: Have It Their Way?

Blogging is No Marketing Silver Bullet

In an article on how some small businesses see blogging as "a low-cost, high return marketing tool," the New York Times has an interesting two paragraphs:

David Harlow, a lawyer and health care consultant in Boston, said he started his blog, HealthBlawg, as a way of marketing himself after he left a large law firm and opened his own practice. Besides, he said, blogging was easy to get started and the technology was straightforward.

Now, after about two years of blogging, Mr. Harlow said he was pleased with the results. He gets about 200 to 300 visits a day, he said. He has also become a source for publications looking for commentary on regulatory issues in the health care field and has even gained a few clients because of the blog. In addition, he has formed relationships with other legal bloggers (who call themselves blawgers) and consultants around the country.

Any business looking for the "magic" of blogging should consider this: two years, a few hundred visits a day, a few clients. Notice the appearance of the word "few." This isn't a quick fix. The owner of an organic chocolate snack company mentioned starting a blog, but not any quantifiable payoff. An ice cream manufacturer experimented for a number of years with different blogs and ended up with one about personal finance, which it saw as a way to attract people and then let them see ads for the actual products.

I'm not suggesting that blogs make no sense. They can, and there may be a number of reasons to have them. Heck, I run five, and I see various benefits. But if you want something that will fill your place of business with no other effort, this simply isn't the answer.

Dunkin Donuts and Brand Positioning

There was a great discussion on NPR this morning with Leslie Bielby, chief strategist for Hill Holliday, who was in charge of tweaking the branding and advertising for Dunkin Donuts. Not only is there a very funny piece about people not being able to say things like latte and cappuccino, underscoring an affinity with people who just want a cup of coffee. But perhaps the most interesting point that came out is how many people from an upscale background are trying to indentify with "regular" folks, and how that could play to DD's strengths.

Ads and Historic Diminution of Thought

I've been listening to XM Radio and the old-time radio channel. There's a pleasure in listening to voices not engaged in bombast or wrapped in treacle. Aside from the audio drama and comedy, there is the occasional commercial from the 40s or 50s. They often seem humorous in this time, with earnest announcers mentioning the supposed benefits to consumers of some product. The juxtaposition seems humorous because of the contrast - back then, certainly big promised of big happiness from big buying. But the tone is unlike anything you might hear today. There is no rushing breathless voice urging you like a lover moaning in the dark, no dazzling effects to stun someone's senses. The pitches are generally calm and almost reasoned. Oh, it's not as though they were rational appeals. Clearly the marketers were appealing to emotion with a veneer or rationality for respectability. Yet, they were at least a tacit nod to some intellectual capacity on the part of the audience. Think of some of the classic advertisements, like the one asking, "Do you make these common mistakes in English?" Are today's advertisers savvier than their predecessors, trying to bypass any intellectual content? Or are they following a trend that actually doesn't work? Companies often think they are much smarter than their customers - though a quick look at the performance of most would make you wonder whether it was the customers who were smarter. Perhaps, by eliminating the attempt to even talk to the thinking portion of the brain, helping to create at least rationalizations for emotional desires, they are undercutting their own effectiveness.

Branding and USA Network

I've been finding that the USA cable network has a sophisticated and effective approach to branding - a good example for almost any business. It goes beyond the more typical method of choosing some slogan and then publicizing it. the channel's "characters welcome" actually embodies much of its programming, to start. Shows like Law & Order Criminal Intent, Monk, Burn Notice, Psych, House - whether new or in reruns - are quirky takes featuring unusually strong characters that are well acted. (In fact, I think with lesser actors who wouldn't pull out as much of the characterization, many of these series would become insanely dull.)

And then the network extends its branding into its own commercial spots by doing them in such a way as to underscore the characters and an off-beat approach. Having Law & Order CI detectives wondering what is going on around them as movers come in and take dead bodies, set pieces, and props, to signify the show's move to USA? It's genius because the approach uses such classic marketing techniques as showing, not telling - the show is moving to USA, the characters that the audience likes will be found there, and it's all done in such a way that the quirkiness turns the network itself into one of the characters. USA at the moment should become an object of study for those who would like to learn how to market effectively.

Grocery Chain Tests Marketing Concept

The New York Times today has an article on how Hannaford Brothers Company, owner of the grocery store chain, used a one-year experiment with a food "healthy" rating system:

The chain, the Hannaford Brothers Company, said that the program had a major impact on steering purchases in the expansive packaged-food section of the store, including cereals, soups and breads.

Not only is this of general interest to any food company, but it's interesting to see a company actually test a marketing concept. In this case, foods got a zero to three star rating. It worked best with packaged foods, less well with meats, and didn't have a lot of impact with produce, most of which got starred ratings.

AT&T Shows Sometimes Success is Failure

In reading the New York Times article on Apple's whopping 73 percent jump in profits (guess a lot of people are willing to pay big to be cool), I noticed some interesting numbers. The profit jump, exceeding analyst expectations, was boosted by selling 270,000 iPhones. But the company's stock had recently taken a 6 percent hit when AT&T told its investors on Tuesday that it had activated 146,000 iPhones in the day and a half between when the phone came out and when the quarter ended.

That means 124,000 people couldn't get service turned on. That's 46 percent - almost one out of two - being ticked off that they couldn't get phone service when they were told they'd be able to have it. Wow! What a massive pile-up and an abysmal failure. This would be like having the last Harry Potter book come out but with only 4 million copies available instead of the 8 million that sold. It's one of the worst examples I've seen of operations falling that far behind marketing.

Target is in the media target in an NPR story by Cheryl Corley - appropriately aired in June, as it's about weddings. Not only does Target have its Club Wedd site, where brides and grooms flushed with licensed avarice can register, but it had designer Isaac Mizrahi create a selection of wedding dresses, all of which are about $160 or less. The story indicated that these prices were, to use the vernacular, way cheap, but had the requisite expert saying that getting a gown for that special day isn't like shopping online for a blender, and that it's not an impulse buy.

I would have liked exploration of a slightly different angle. Brides aren't buying a collection of things: dress, favors, flowers, catering, and so on. They're buying an experience they've been brought up to believe as their birthrights. That explains all the bridal magazines - with nary a groom in sight. The wedding is all about her. That means the bride will want people to know she's important, to cater to her, and, most importantly, to play their designated parts in her fantasy-come-true. It's hard to expect that white charger to come roaring through the computer monitor.

Being Honest About Customers

Amp'd Mobile - a relatively new type of cell company called virtual, because it leased capacity from traditional carriers, filed for bankruptcy on June 1. That's not a long time from one measure, given that Amp'd only debuted in the U.S. in 2005, but it's an eternity to show how unwise a business model can be.

Information in a BusinessWeek story suggests that the problem facing the company wasn't a lack of customers. Instead, in a way, it suffered from too many. Amp'd's target market was "an edgy upstart geared to free-spending youths," according to BusinessWeek. It racked up an estimated 175,000 of them.

Certainly the services were designed for a young market, as indicated in the company's Wikipedia entry:

Amp'd mobile's service is built around Amp'd Live, a permanently installed BREW application on all Amp'd Mobile phones, which features downloadable and streaming video on-demand clips, live events such as Super Cross, streaming phonecast radio stations, downloadable content such as games, ringtones, and songs. They are currently the only carrier licensed to show clips from the Ultimate Fighting Championship.

Unfortunately, the youth market it tapped appeared not to enjoy paying its own way, according to the story's quoting of some court filings:

Collecting payments from these subscribers proved to be a challenge, however. "Approximately 90% of the debtor's customers were on 18-month service contracts," according to the filing. "The debtor began to find a host of credit and collections problems (that) contributed ultimately to a liquidity crisis." By May, the number of nonpaying customers reached 80,000.

Almost half of the customers weren't paying their bills, though I would be surprised if the carriers that were wholesaling capacity would be understanding.

Not all growth and not all customers are good. One of the subtle strategies that some business experts use is to allow a competitor to succeed in target markets that are poor customers because of payment issues, high costs of servicing, or any other reason, for that matter. But to pull off such a move, a management team must have undertaken the research and data analysis that would allow such an identification. It comes back to that adage about doing what you know. If you don't really know about your customers, what makes them tick, what they want, and what they're like, then there's not a whole lot you'll be able to do.

Saturn Takes on Competition - in Its Own Dealerships

It takes confidence in your own products and services to run an advertising campaign that directly targets your competitors. But Saturn is going that one better. According to MediaPost.com, the company will have top competing sedans at their dealerships for comparative shopping. The program is to launch June 11, incorporating television and print advertising as well as direct mail and point-of-purchase materials.

Such a campaign is nervy and nerve-wracking. There is always that chance that someone says, "But these other products are better." Yet maybe it's not as dicey as all that. Edmunds.com says this about the Aura:

After years of producing forgettable cars, Saturn steps up its game and brings out the Aura. With its well-rounded personality and attractive design, the Aura finally gives Saturn a legitimate contender in the midsize family sedan segment.

The prices of the cars are roughly comparable, as are the features. But Saturn has a couple of built-in advantages. The division of GM is coming off a stretch of under-performing, so any improvement will appear magnified. Then there is the very act of challenging its competitors. Even if few consumers actually try out the other cars, they walk in thinking that the product has to be good, because they'll willing to show them side-by-side. And then the only salespeople around will be working for Saturn. This seems like one of the smartest marketing pushes I've seen in a long time: no unrelated hype, all customer focus.

Hardee-Har-Harrible Burger PR Campaign

Here's an item, in its entirety and with the owner's permission, from a mailing list that goes out exclusively to the more-or-less working press (sorry, not allowed to provide a link):

SPECIAL REPORT: PIMPING FAT AS A PRESS ACTIVITY
Every once in a while, we come across a PR program that is so innately insensitive to press people we feel compelled to share it. This one, on behalf of the Carl's Jr. (West) & Hardee's (East) "Spicy Buffalo Chicken Sandwich" asks press people to shill in some especially unpleasant ways. The first stops are at 2 Web sites. One offers images & video clips of Ashley Hartman, the skimpily-wardrobed young blonde actress from their commercials, in which double entendres about breasts & nudity are a big play. You're supposed to fill in a Web form to send an e-mail that a friend will misinterpret as being an invitation from Ashley to rendezvous at the restaurant, only you surprise & fool your friend by showing up instead; they send you a coupon for a dollar off the sandwich as your "reward". (Note that they just brought you & your friend to the restaurant to spend your money there, while the coupon saves you enough to consider a quarter of your sandwich as free). The other Web site expects you to put their graphics & links on your Web site; the only difference between what they're asking & an affiliate program is that they're not offering any payments in return. We're supposed to also buy into promoting the sandwich as the latest in "boneless hot wing technology". Despite their wishes, we boned up: according to their customer phone center, their Spicy Buffalo Chicken Sandwich (just under $4) has 2.59 grams of sodium & 780 calories, of which 330 are from its 36 grams of fat (6 grams saturated). Gee, that $1-off coupon is like getting 9 grams of fat on the house! To recap, they're asking press people to pimp their sandwich & their fake-date-with Ashley promo in exchange for a coupon. We're not seeing respect on that menu.

Some PR and marketing campaigns are honest mistakes and some are the results of mishandling. Then there are the ones that are so poorly conceived and structured that you have to wonder whether the company's competitor broke into the corporate headquarters and left a folder labeled "Do this" on some marketing wunderkind's desk. I haven't seen the PR materials, but if this report is accurate, then I'm surprised that the company's shareholders aren't storming the gates. Oh, wait, they won't have to because management forgot to lock 'em.

Wal-Mart Shows Problem of Moving Outside of Brand

The New York Times has a fabulous piece on Wal-Mart's attempts to expand its brand outside the strictly discount realm and even posts a report done for the company by its former advertising agency last October.

It's interesting to get an inside lok at the troubles Wal-Mart is having in expanding its market. I find myself almost feeling sorry for management there because of the relentless drive of financial markets to keep seeing growth. The company has 138 million shoppers a week, for gosh sakes. Just how are they supposed to grow a number like that?

Yet that is the expectation, and so Wal-Mart is trying for more affluent shoppers. But that goes smack up against its brand identity as a discounter, which is a bad idea. No company can be all things to all people, no matter how large it is. As the story and report say:

But now, as Wal-Mart experiments with contemporary clothing, flat-screen televisions and nine-layer lasagna, that format has become a hindrance. To a shopper who wants to purchase a single dress for an evening out or a DVD player to watch a movie, "Wal-Mart’s one-stop shopping format becomes a time-consuming irrelevant obstacle," the report says.

That environment is conducive to "zero-time" shopping, in which a customer spends just a few seconds thinking about a product, like a new bottle of dishwashing soap. "But people don’t buy electronics, home décor and apparel in zero time," the report says.

The inevitable result is a loss of focus that will eventually cause financial problems. You'd think there could be other options for the company. For example, let it ship orders of commodities to more affluent customers - products they're associated with but at higher margins for the convenience factor. Maybe there are services they could provide as shoppers spend time in the store - dry cleaning, oil changes, photocopying - that don't require the sense of expertise and trust. Some of these it could provide through partnerships with companies that are already in the business. But going upscale? Time to send management out into the stores to work for a week and see what their business is really all about.

Cocaine Energy Drink Un-Shelved

Redux Beverages, makers of the energy drink Cocaine, is withdrawing the product from the market, at least until it can devise a new name and packaging, according to the New York Times. This is the sort of business story that makes you wonder what in the hell these people were thinking. Ah, yes, here's what they were thinking according to Clegg Ivey, a partner in the venture:

“Of course, we intended for Cocaine energy drink to be a legal alternative the same way that celibacy is an alternative to premarital sex,” Mr. Ivey said. “It’s not the same thing and no one thinks it is. Our product doesn’t have any cocaine in it. No one thinks that it does.”

“We like to think we have a great sense of humor,” he said. “And our market, primarily folks from ages 20 to 30, they love the ideas, they love the name, they love the whole campaign. These are not drug users.”

Sure they love the campaign. They probably also enjoy the red and white design of the can with the quasi-printed looking logo running vertically, a clear take-off on Coca-Cola. But, again, what in the hell were they thinking? Of course a business wants to make money, but people do have responsibilities beyond financial gain. Generating to the backslide of the collective mentality does no one any good in the long run. We've seen this recently in talk radio with Imus getting booted for racist remarks. There's plenty of criticism of the more destructive and misogynistic practicioners of hiphop and rap. We have so-called teen television channels pouring forth an alarming amount of sex, drugs, and other uncontrolled behavior, all to garner ratings and higher advertising prices. There should be some thiings that people are ashamed to do for money, and such activities are at the top of the list. By trading on sex or drugs, for example, they are simply legal forms of prostitution and drug dealing, except not as straightforward and honest.

Can CPG Companies Do Relationship Marketing?

Advertising Age has a piece on consumer packaged goods giant Proctor and Gamble and an interview with Elva Lewis, a 21-year P and G vet and the person who's supposed to help the company move into non-mass marketing. Her grade on how they've done so far? D - "theoretically a passing grade."

According to her, the company has a "decent" relationship with 10 million households instead of "solid" ones with 40 to 60 million. And, mind you, there's no telling from this article what the definitions of these relationships actually are. After so many years of mass marketing, I'd wonder those might be. Lewis talks about the need to spread direct marketing expenses across all the company's brands - and the difficulties in getting those brands to cooperate, as they've been successfully siloed for so long. One problem I could see is that a relationship doesn't exist unless both sides think that it does. If they're not hearing back regularly from their customers, it could be that they will remain in the realm of mass marketing without ever knowing it.

TV Advertisers Get Taken By Their Own Strategies

The New York Times Magazine had an issue devoted to middle age, and one of the article was called TV's Silver Age. Part way in there is the following paragraph:

Every Wednesday morning, newspapers across the country run a chart of the previous week’s highest-rated television shows. Most television executives basically ignore that list. They have eyes only for subsets of those overall figures, particularly one they call “the demo.” That’s televisionspeak for viewers ranging in age from 18 to 49. The demo may seem nonsensical — after all, what does a high-school graduate have in common with someone becoming a grandmother for the first time? — but it drives the television business.

If your company does or even contemplates television advertising, read that paragraph and the three that follow. They lay out the following history of ad buying:

1. Nielsen audience ratings were once broadly based.


2. ABC, being last in the rankings, decided - strictly as a marketing tactic for itself - to emphasize the 18-to-49 demographic because the network was attracting younger audiences and it looked good.


3. Further, ABC argued that the baby boom generation was vital, because it was used to televion and was huge.


4. Advertisers bought into this and the special reports that Nielsen generated for ABC became the important numbers.
   
5. As demographics shifted, advertisers never got it through their heads that the old arguments for skewing young had less and less credibility.

As a result, the advertiers still look for young audiences without ever considering where the most consumer dollars are available to be had. If you've read through this far, here's the conclusion: folks, you have just been taken for, oh, about 20 to 30 years and have largely been wasting the money your companies entrust you to wisely spend.

How do I, a non-advertising expert, figure I can say this? Because I'm willing to look at the numbers. Now some good news: just because you've done everything one particular way for so long doesn't mean that you can't switch strategies. Here are some steps to at least start moving in the right direction:

1. Redefine your market segments. Make advertising segmentation match your customer segmentation as much as possible. If advertisers refuse, mutter "online ads" and the names of competitors, and that should make their spines bend over backwards.


2. Do some research to show how much per capita spending in your category happens in each of the segments.


3. Create a segment weighting factor. If, for example, 30-to-40 year olds buy represent 40% of your sales, the factor would be 0.40.


4. Compare average spending by your customers to the appropriate segment spending as a ratio. The higher the ratio, the more invested in your company the cusotmers are and the more important they should be to you and where you might be looking for more.


5. For any program, multiply the number of audience members in a given segment by the average category spend. Now you have a first approximation of how much money there is for your type of product watching that program.

Sure, "real" analytics would get far more complex, but you don't need to have a Ph.D. in mathematics to start understanding what is going on. Don't get snowed; get smart.