Wednesday, March 28, 2012

A Peek Into "The Jungle"

It has been 106 years since Upton Sinclair wrote about the disgusting conditions in Chicago meatpacking plants and the overall corruption in the industry. In those 106 years since "The Jungle" was first published, the industry and how its regulated has come more than along way.

The industry is so trusted that the safety and ingredients of the foods we eat are afterthought to most. Therefore, when consumers discover that it's standard practice for restaurants and butchers to use a beef filler affectionately known in the industry as "lean finely textured beef," it's seen as a significant breach of the public's trust. Add to this the nauseatingly gross details of how this so-called "lean finely textured beef" it's enough to shock any appetite for beef.

For obvious reasons, the meatpacking industry and the companies who profited from the existence of this manufactured filler didn't exactly advertise that they were using it. It's wrong, cheap and takes full advantage of the ignorance of the consumer. Of course they knew this. Around the age of kindergarten everyone learns that if you're not proud enough to have actions publicized, it's something you shouldn't be doing.

Obviously, no one likes surprises in their food. For the last 106 years, most people have been polite enough to not ask many questions of the meatpacking industry but I'm wondering if this incident will change that.

An extra thought: Interesting how the perfect name "pink slime" got consumers to take notice after years of ignorance to the practice. Perfect example of how critical branding and idea is.

Click Me...Please?

I just read via twitter (so it must be true!) that the average click-through rate for banner ads online is less than the failure rate of birth control.


Monday, March 26, 2012

Facebook Wants Brands to Pay

The Wall Street Journal published an interesting article about Facebook's struggles to reel in big brands for advertising.

The Ford Motor Company's experience with Facebook was used as an example of how with a small amount spent, brands are getting big bang for their buck on Facebook. Or so they think anyway.

The old adage you get what you pay for comes to mind. For little cost, Ford was able to generate lots of "likes" and garner plenty of "awareness."

However, like the marketers who swear by this stuff, the article made no mention of the sales Ford's campaign generated.

Saturday, March 24, 2012

The Genius of Lululemon

I want to pass along an interesting article about the yoga inspired retailer Lululemon. The article, published in the Wall Street Journal, raised questions on behalf of Wall Street investors about whether Lulu's would ultimately maximize profits with their unconventional tactics.

I learned from the article that they don't operate like other retailers. The retailer trusts their product and brand enough to use focus groups, record website hits or even past purchases of customers with customer-relationship management software.

According to their Chief Executive Christine Day, "big data gives you a false sense of security."

Rather than use software, Day and Lulu's employees use actual humans to build relationships with customers. They spend hours everyday listening to customers and using their feedback to tweak the products and shopping experience. In addition, in-store chalk boards provide a way for customers to relay messages to management and employees fold the clothes on the sales floor so they can overhear what customers are saying.

Lulu also gets it right on a macro level. Unlike most retailers, they don't overbuild, they don't hurt their brand with discounting and they purposefully stock less than demand to keep the products flying out of the store at full price.

This strategy has lead to record sales. In the past three recession-plagued years, Lulu has seen sales rise 30% or more from the year before in nine fiscal quarters. Also, Lulu is making other retailers envious with an astonishing $1,800 in sales per square foot- which is more than three times that of luxury goods leader Neiman Marcus in 2011.

Despite such inarguable success, the marketing experts on Wall Street are concerned that Lululemon is missing out on sales because it doesn't stock enough items.

They should just stick to stocks. Thankfully, this is one retailer smart enough to realize that scarcity has a little something to do with why they've sold.

Sunday, March 18, 2012

Thanks Verne

Last week I went shopping for a pair of running shoes. I wasn't looking for anything too outrageous but just simple pair to replace the one I had. I wound up visiting two stores and had two very different experiences.

The first stop I made was to a well-known national sporting goods store. While I was browsing the shoe wall I was greeted with a "can I help you" but didn't get much help once I asked for it. Looking over the shoe wall, I debated the prices in my head and eventually found a shoe displayed that was close enough to my price range and was a style I could live with. Without the help of an associate, I helped myself to the shoes (stored underneath the display) to find the right size. I tried on a couple of pairs, found one that fit but it was the wrong style of shoe for that display. After a few helpless minutes, I tracked down an employee to get the right size from the back room. The employee walked to the back room and came back empty handed.

He quickly told me "we don't have that shoe in that size. If you want I can order it online." I replied with a "no thanks" and walked out of the store empty handed and the employee went about his business. I thought about how flawed their customer service was Their one size fits all solution was to order the shoes online? Couldn't I just do that? I came to the store because I didn't want to wait. I wanted them for my run the next day?

The next day I continued the search for my shoes. I visited a local shoe store that specializes in running shoes and the experience I had was good enough to share. I was helped by an employee named Verne who was also a runner and was clearly an expert in the product that he sold. He measured both feet (I learned they're different sizes) and recommended a few pairs. I tried each one on and was told to take a lap outside after each fitting. Verne even laced up the shoes, checked the fit at different points around the shoe and even insisted on tying them for me. Also during the trip I learned what type of shoes are best for my feet and running style and how long of a life the shoes should have and how to techniques for healing aching joints.

After my visit I walked out of the store with one of the most expensive pairs of shoes I have ever owned - and I'm happy I did. The experience I had buying the product made the price of the product worth it. Verne sold more than shoes. He sold an intangible.

This critical component is not of marketing. Yet, even brands looking to selling premium items simply have a transaction mentality with customers. Whether these brands believe the "premium" is obvious to the customer or not, marketers don't focus on the intangibles enough because they're often what differentiates premium from ordinary in the eyes and expertise of the customer.

The intangibles could be the expertise and knowledge of an employee, they way they enthusiastically care about helping and customer, whether a client or customer can have a product delivered to them as fast as they need it or even how a brand reacts when they make a mistake. All of these are intangibles that affect purchase decisions for customers everyday.

Saturday, March 17, 2012

Word Choice

I opened up YouTube this afternoon and was greeted with this message. Congratulations! You've actually won nothing. But would you be so kind to let us honor you with a survey.

If you have to beg your customers for feedback in exchange for prizes, that should be your first clue that your brand is doing something wrong.

Wednesday, March 14, 2012

The "Solutions" Business

I was listening to Pandora a couple of days ago and an ad came on for FedEx. I don't remember the ad I heard verbatim, but it was something to this effect.

"Most people think FedEx is just for shipping. But we're a lot more than that. FedEx can help you with a variety of business solutions as well."

FedEx revolutionized shipping with their overnight delivery service. The advertising reinforced the company's reliable delivery with ads that reminded consumers that if their package absolutely, positively, had to get there, the choice had to be FedEx. Shipping is a word that has a clear action behind it.

"Solutions" does not; so consumers have no idea what to make of it. Brands like FedEx choose a vague concept like "solutions" to appeal to more people. It's perfect because the word can mean anything. It's fails because it means nothing as well.

Wednesday, March 7, 2012

Sprinkles Cupcakes Strategy Session

Yesterday, a friend of mine shared this article about the beloved cupcake bakery, Sprinkles, which is going to begin 24-hour distribution of cupcakes through specialized cupcake vending machines that are designed to look like ATM's.

Candance Nelson, who founded Sprinkles bakery admitted that she had the idea for the cupcake ATM "after having late-night sugar cravings while pregnant with my second son." The "cupcake automats" will allow Sprinkles to sell cupcakes 24-hours a day for customers who have cake cravings late at night.

After reading about the cupcake ATM's, I sarcastically joked that I already had one installed in house - and it was called a refrigerator. Then I contemplated the idea some more. Although it's creative, I didn't think it was fully baked yet.

First, I thought about why vending machines are popular methods for selling stuff. They're great because they can overcome restrictions to time and place. A vending machine can bring your product most anywhere at a lower cost and stay open anytime. Mrs. Nelson's cupcake ATM's currently seem to be neglecting that second dynamic of a convenient place.

Secondly, I thought about the connection that they were making with cupcakes and banks. Both don't really have too much in common, so the mental hurdle that the consumer must leap to arrive at "open 24-hours" is a tall one.

I continued to think about connecting banks and baked goods beyond 24 hour operations. If that's the only hook to selling an single cupcake, then wouldn't it make more sense to put those resources into selling them by the dozen for customers who want their cupcake ATM a little closer to their bedroom.

To connect them I thought about the product and why people buy them. The product is an individually wrapped cupcake that devours most of $5 bill so Sprinkles cupcakes are a very obvious indulgence. And people indulge when they want to reward themselves.

One possible linkage is branding the cupcake ATM's as the "Sprinkles Cupcake Reward Bank." With the cupcake reward banks, the automats can distribute cupcakes in places where an indulgence is most needed. People can reward themselves with a cupcake from the ATM after a difficult day at the office (lobbies of office buildings or train stations), reward themselves for actually getting to the gym (outside of course) or even in malls when they're already in the process of rewarding themselves with retail therapy.

If Sprinkles Cupcakes doesn't also think about the place aspect of it's cupcake vending machines, I think they will be really shortchanging their idea of a cupcake "reward bank." Now I think it's finally done.

Tuesday, March 6, 2012

Sears Pays The Price

Last night, Gawker made an interesting discovery at The website was selling a variety of not so subtle t-shirts with overt sexual themes on them. Just how overt you ask? A shirt with phrase I [Heart] Butt Plugs could be all yours thanks to Sears.

Apparently, this was news to Sears. A spokesperson responded to an inquiry from AdAge reporters and said "Thank you for bringing this to our attention. While products like this may appear on marketplace through a third party seller, Sears does not sell them. We are removing these products from the site."

It's unfortunate that Sears must learn this (umm..) the hard way. However, this type of thing should have been anticipated and the site should be monitored. Neither was the case and Sears found out they were selling smut through Gawker.

The lesson here is not everything is as good as it sounds in some dim-witted PowerPoint presentation. The risks seem obvious (it is the internet after all) and from a marketing perspective the decision to chase competitors on their own turf with third party businesses models is further evidence of the larger problem - Sears cannot focus its brand.

Sears has been undefined for decades. There strength is their household and appliance brands, where it's a actually still number one in appliances. Strong brands like Craftsmen and Kenmore should be their focus.

But instead Sears is perfectly executing the everything under one roof strategy. With no identity for itself, it embarrasses itself with associations with third party retailers (for a tiny slice of the pie) and subsequently lost $2.4 billion in four months. That's how you know the strategy is working.

Saturday, March 3, 2012

Follow Up: Chevy Volt

I've have questioned the strategy decisions made by General Motors on this blog before. The basis of argument has been that they're driving too many unfocused auto brands. Each brand doesn't truly have a definition to it and they even cannibalize one another.

After facing some real adversity with the financial crisis, GM sought and received help from the taxpayer, which certainly didn't win them any popularity points at the time. General Motors proudly proclaimed to the consumer, "May the Best Car Win" when smart marketers know that's not true. The best marketing does.

In January of 2011, General Motors appeared vindicated in saying "May the Best Car Win" when the Chevy Volt was named North American Car of the Year. It's marketing position was that the Chevy Volt was "More Car Than Electric." Again I quipped that the marketing will win and that the Volt's unfocused approach wouldn't win in the marketplace.

Although the game isn't over, it scoreboard is now saying that General Motors isn't winning anymore. According to today's Los Angeles Times, General Motors will be halting production on its Chevy Volt for five weeks, forcing 1,300 workers into a temporary absence because an unforeseen lack of demand has created a surplus of vehicles.

It's terrible that the factory workers, who are building that better car GM promised, have to sacrifice for the GM team again. At least to me, it's obvious that the coaches who strategized such a gameplan should be the ones getting their pink slip today.