Wednesday, August 31, 2011

Saturday, August 27, 2011

Gatorade's Three for One Strategy Failing

Advertising Age recently published an interesting piece about Gatorade's struggle to reposition its brand into three unique drinks- prime, perform and recover.

According to the article, a big reason that the repositioning hasn't fully taken hold with consumers is because Gatorade's retail partners haven't exactly cooperated with their effort. Gatorade's gripe is that their full line of products have been are scattered throughout the store and not displayed in one place. In the article, Andrea Fairchild, Gatorade's VP of brand marketing laments the fact that "We can't change the entire retail landscape overnight."

Sounds like their trying anyhow. The key they believe is to educate retailers on the products and why they should be sold together.

However, I think consumers still might need educating on the new Gatorade. As a consumer, it difficult to understand why what one Gatorade used to be able to accomplish now requires three different ones.

The line extension strategy cannot work unless the previous branding is undone.

Monday, August 22, 2011

When Business Gets Personal

The expression is said often- it's not personal but it's just business. The chances are that the people who use this expression are not liars. It's really because most people trudge through their daily grind and to them, it really is just another resume, RFP or business plan to examine. Or perhaps it's another customer with a problem that needs a solution or the a supplier/buyer to negotiate with.

Of course, the expression can certainly be useful in that it can help ease the pain of failure or disappointment. All those needing employment now certainly know this.

But what if the expression was flipped and suddenly it's not just business, it's personal. Obviously, something that is personal requires a higher level of emotion labor. Although, it's that higher level of emotion labor that is necessary for doing work that's better than average- whether it be completing a project, meeting a deadline, pleasing an angry customer, meeting with a supplier or hiring people who are just as invested as you are.

Consider the work of a successful entrepreneur. Most new businesses are born out of a specific problem that an entrepreneur is able to recognize. But it's their impulse to internalize these problems which drive them to find and build a solution for the rest of the world.

Great things can happen when people take things personally. Even greater things can when they align themselves with people who take things as personal as they do.

What are you doing to nurture the emotion labor your employees invest in your company?

Thursday, August 18, 2011

Groupon's Fatal Flaw

It was reported earlier this week that the beloved social-discounter Groupon is losing money. A lot of it actually. Even a little creative accounting couldn't transform a $113 million loss with an $80 million profit.

Speaking from a financial perspective, the author makes several excellent points- mainly, be profitable small before becoming big. A common sign that the owners are angling to cash out with an over inflated initial public offering. That's the game. Flip it to someone else willing to pay for the name. However, as a marketer, I think it's most interesting to understand why Groupon is not profitable, despite achieving scale and recognition as the leading brand.


However, the graph above is a great indication of why. It tells the story of Groupon's Sales per Merchant in the Boston area. Despite gaining more subscribers, more revenue and more merchants in the area, it's revenue per merchant is dropping. Thus, merchants are trying Groupon, likely seeking the misguided metric of an increase in traffic or attention. Groupon delivers but then the merchants discover the real effect it has on a brand.

That should be an obvious problem to any marketer. Groupon's position in the market is to sell businesses on a discounting strategy, which may bring about short-term benefits of increases in traffic; however, in the end prove the problem of a discounting strategy. Brands cannot make a living off of customers who only pay 50 percent; meanwhile, customers who only pay 50 percent will almost never pay 100 percent.

That's going to be impossible to overcome for Groupon. While it's built to help customers cash in on huge savings, their customers are businesses.

As always, thanks for reading, sharing and contributing your thoughts.

Tuesday, August 16, 2011

Starbucks Cuts Off Its Customers

It's well known that coffee shops today have moved well beyond just places to order coffee and run. Cafe's have transformed into a "third place" between home and work; a place for meetings, working, relaxing, dates and generally spending a lot more time.

Of course, this didn't just happen by accident. This phenomenon is was created as the invention of marketers. The thought behind this innovation is simply if customers spend more time in the store then they'll spend more money at the store. Therefore, cafe's and bakeries are now designed to look and feel less like restaurants and more like living rooms and backyard patios- complete with big comfy couches, area rugs covering the floors, fireplaces warming the air and coffee filling real mugs and not paper cups.

Most of the credit for sparking this revolution in coffee consumption in America belongs to Starbucks. Without question, these innovations in where and how people enjoy their joe greatly contributed to differentiating the Starbucks brand from the coffee once consumed. Naturally, consumers were more than willing to swallow the higher prices because the experience was better or at least made them feel it.

It was a brilliant strategy that not only built the Starbucks brand but also an immeasurable number of followers. Which is why the story about Starbucks customers in New York City complaining about fellow customers "squatting" in the seats for too long is so interesting. It's a problem created by the fact millions of people live and work on an 18 mile stretch of land and there is likely not enough Starbucks to go around.

Yet, New Yorkers are certainly not people that take kindly to inconvenience. One customer commented in New Yorker-like fashion, "if there’s no more space to sit, they should get up and leave.” A contrarian might offer the tried and true adage of first come, first served. If you want a seat then get there earlier.

Oddly, the decision on a solution to this problem is being left to the individual store owners, leaving the door open for the troublesome potential of differentiation within its own brand. Further, the solution that some store owners have settled on is covering up the outlets used to keep customers wired to their computers. Although, I'm not sure this a good idea for a few reasons.

First, this could initiate the problem of creating cracks in Starbucks' brand consistency. Second, squatting is ingrained in the fabric of the brand and a custom largely their own creation. If they end that, what other reason will they give customers to pay $5 per cup?

Finally, I'm inclined to trust the original equation of more time spent in the Starbucks results in more money spent at Starbucks. Perhaps viewed over the course of one day this may not be true; however, viewed over the course of a month or a year, I believe the customer who treats Starbucks as that "third place" between home and work will spend more than the average customer. These so-called "squatters" are the ones that Starbucks is more than coffee to; it's a lifestyle and are likely their most valuable customers.

What do you think Starbucks should do about the problem of too many customers? As always, thank you for reading and contributing with comments on, suggestions for and sharing this site.

Sunday, August 14, 2011

A "P'Zone" For Your Trouble


I was watching television yesterday and saw a very interesting advertisement for Pizza Hut. The ad said that if I was willing to "Like" Pizza Hut on Facebook or sign up to receive spam mail from the chain pizzeria that I would be entitled to a free 'P'Zone,' which is the calzone looking thing in the picture.

Slumped over in my chair, I shook my head and asked aloud what the hell these marketers are thinking about when they analyze the power of social media. How is executing a promotion that's the equivalent of begging for friends (or buying them) going to help the brand distinguish its position in a category that's nearly reduced to pure commodity? Is having a presence in my newsfeed enough to do so?

Perhaps it would help. However, a quick scan of Pizza Hut's Facebook posts will reveal otherwise; it's basically used as an avenue to distribute worthless content and pizza-related entertainment with the hope of getting anonymous friends (as opposed to real customers) to send them a virtual pat on the back- which has become habit and social custom among many in the crowd. There is very little real utility to the social tool and it's difficult to come up with a single reason why a virtual friendship with Pizza Hut might be necessary.

I'm sure the bargain hunting crowd and the marketers who hope to justify their commercially-flawed social experiments will be quick to rumble something about the delivery of coupons or Groupon-like deals on pizza.

However, this only serves to prove my argument and the flawed logic used too justify many social campaigns such as this one. If the social tool cannot work without using other tools like price discounting then perhaps it doesn't really work as well as advertised; just as if it requires a free 'P'Zone' to be called friends then maybe we aren't really friends.

Yet this is the game a lot of marketers are playing these days. These broken campaigns are justified not because of their impact on sales or market share but with completely new metrics created by the inventors of social tools and the people that push them in sales meetings. The new currency created for marketers to blindly chase are clicks, comments, likes, follows and something called impressions. Which might just be the real genius behind the invention called the social media campaign- it's fooling a lot of the marketers in the same way they used to fool consumers.

Only if there were less 'followers' among them.

As always, thank you for reading and commenting. I look forward to reading them.

Thursday, August 11, 2011

But Why?

Who, What, Where, When, Why. Although, for marketers, the fifth "W" should be first because building your marketing strategy is entirely about answering the why.

A brand position must answer for the customer the question of why do you exist. Your advertising should convey this reason. To develop this, it's critical to understand the specific reasons why customers buy what they do.

Successful new brands possess this key insight. Therefore, they don't generate demand but simply reveal it.

Tuesday, August 9, 2011

Most Interesting Guy in the Room

One sure fire way to become interesting to other people is to take a serious interest in them. Remember, the guy at the party or the bad date who only wants to discuss himself gets boring/annoying and easy forgetful very fast. Being "social" is a two way connection.

Let that be something to remember next time you or your brand hits the tweet button.

I sincerely thank you for reading and taking an interest in this blog.

Sunday, August 7, 2011

BlackBerry's Get Less Different

The Ontario-based smartphone maker appears to be losing it's heated battle for U.S. market share to competition from Apple's iPhone and Google's Android.

So I think it's interesting to note that BlackBerry is introducing new phones that more closely resemble the competition, as opposed to differentiating them from the competition. BlackBerry is introducing new touch screen only models to attempt to improve it's position with consumers who desire improved internet browsing on their phones.

However, in doing so, BlackBerry is sacrificing a position they dominated. Their keyboard is highly regarded for it's ease of typing, which is something that's commonly said to be sacrificed with the touchscreen typing.

What does everyone think? Do you believe sacrificing their keyboard in order to catch up in internet browsing is a smart branding move in the long run? What other battlefield can BlackBerry own? Also, feel free to share you smartphone experiences for both brands. As always, thank you for reading and sharing your insights.

Friday, August 5, 2011

Backwards Bud

According to AdAge, the design of the new Budweiser can is more youthful and contemporary than the last one, which will help the brewer attract younger drinkers.

Don't believe this because Bud has it backwards. The design of the can doesn't give "the brand" meaning. It's the brand that gives the design it's meaning. So the new can still says "your dad's beer."

Monday, August 1, 2011

Spark

When was the last time the spark needed to innovate came from looking at an income statement?