Lairig Marketing

February Updates & Highlights

Update #1
This one actually harks back to a January post. OfficeMax just reported its financials, with retail sales dropping nearly $50 million in Q4 compared to same period 2006. We had sort of calculated those Elves would raise sales by $5 million. Hmmm.
Also in February, Staples bid $3.7 billion for Corporate Express. Will OfficeMax make it to the end of the year without a merger? I hear the Elves are getting nervous.

Update #2
On Feb 12 we talked about the sad state of the legacy airlines. While Delta and Northwest continue to piss about merger-wise, one of the Big 6 launched a new ad campaign. Unless you are willing to pay ten times coach fares though, forget it. The advertising is for American’s premium international travel services.

Update #3
The Feb 15 post kicked up a little dust about an overly sunny survey on online viewing of TV programs. Our dreams were answered within days. Nielsen just announced it will introduce “measurement of TV viewing on the PC screen” in its traditional TV panel by the end of 2008.

Update #4
The Feb 21 post was about the insane amount Hollywood spends on marketing its films. DreamWorks Animation shares have dropped $10, to $24, after Bee Movie’s poor U.S. gross. The movie had a rumored marketing budget of $100 million. Try getting some “buzz” on the internet next time, Jerry.

Update #5
Another update from January. More important than its recent barista training PR stunt, Starbucks announced layoffs this month that included Marketing personnel. Sigh. Stay tuned. This one is obviously far from over.

HIGHLIGHTS
Feb 6 – The right way to develop a tagline
Feb 13 – How you could have gotten rich (er, lucky) from the Super Bowl ads
Feb 22 – Why we need to keep digging, real deep, to really understand online social networking (more to come on this topic, for sure)
Feb 26 & Feb 28 – How Marketing can get screwed over during the customer sale

Mr. Will Ferrell did not endorse my blog this month. I’m still predicting his piece-of-poop movie grosses $37 million this weekend.

And anyway, Martha got the big endorsement this month. Way to go Emeril!

Marketing Unplugged. Part 2.

Part 1 of this post reviewed a "near miss" with e-mail coupon disaster. The next stop didn’t turn out so well.

Leaving store #1, my eyes noticed a big sign a few doors down, in the window of another outlet retailer I’ve shopped before. The Scotsman in me couldn’t resist the “70% off” tease.

I was also on a mission. Last fall I had stopped in for a pair of plain black dress pants. They were out of my size. Five months later, what could be the odds they’d be out again?

Just like you could have predicted, I combed through a half-dozen racks and found every combination of numbers (what the hell does a 35x30 look like, by the way???) except mine.

The sales person who checked in the back returned empty handed, as expected. But she volunteered some surprising information.

“We won’t get any new shipments of any size until we sell a set number of all pants.”

Let’s say the store originally had ten pair in my size. Then assume they sold all ten before any other size. If the replenishment requirement is 30, for example, I have to wait until 20 other “odd size” pair get purchased.

This made sense in 1985. But I was under the impression all you alphabet-soup logistics experts solved this already with your JIT, EDI, SCM, RFID, BPR.

B.S.

So, it’s up to the Marketing guys to slip a note to the ERP consultant.
“Dear Genius:
Please code the program to recognize when the store is completely out of a size. Tell the program to find 10 more pair, throw them in a small box, and call UPS. Or the Post Office. Now.”

It can be done.

http://knowledge.wpcarey.asu.edu/article.cfm?articleid=1205

“…instead of having Kellogg's deliver a pallet of cornflakes, they put together different types of cereals, different SKUs [on one pallet], allowing Wal-Mart to move the pallet through the distribution center directly to a particular store...”

Marketing usually takes a pounding when campaigns and promotions don’t produce the sales that were expected. Many, many times it turns out, it wasn’t Marketing’s fault.

We have the technology.

There Is No Long Tail At Procter & Gamble

Chris Anderson, author of The Long Tail, has already started promoting his next book, which carries (at this point) the tagline “Why $0.00 Is the Future of Business.” I am not making this up. So, a quick look backward before moving forward…

The book The Long Tail was released in mid-2006 as you might know. It was subtitled “Why The Future Of Business Is Selling Less Of More.” (Ponder for a moment the similar construction of each book’s tagline.)

Interestingly, most of the illustrations to support Anderson’s proposition in the book (in a nutshell: you can make a bigger killing doing niche business), and in recent blogs, have been centered on Web-based businesses. Think eBay, Amazon, Netflix, Google. So the subtitle should be a bit more precise, no?

Especially when you see articles like this about Procter & Gamble, one of the largest companies to dive into “all things Internet,” well before most blue-chip, brick-and-mortar types. [Disclosure: I worked for P&G from 1981 to 1984. Back when I had hair.]

http://news.enquirer.com/apps/pbcs.dll/article?AID=/AB/20080223/BIZ01/802230331/

Key excerpts, with ribald commentary from yours truly:

“[Procter & Gamble] is looking to cut costs while increasing revenues…To achieve that goal, executives said P&G will increase prices and focus advertising on its biggest 41 brands that generate 80 percent of revenue.”

>>>Ahhhh, the old 80/20 rule strikes again. More like 80/2.

“[CEO Lafley] singled out ‘underperformers...brands that don't have a unique reason to exist in our portfolio or on the store shelf,’ an indication that P&G is likely to sell off other brands in the near future.”

>>>Hmmm, well I guess now we won’t see them on P&G’s Internet shelf either.

“Lafley…announc[ed] it would shed its Folgers coffee business in a split-off transaction later this year.”

>>>Losers, hah! Can’t even hang on to $2 BILLION worth of “niche” coffee business.

If you are going to track just a few companies to see how they adapt their future business practices, history says you should put the guys and gals from Cincinnati on your list. But if the future of business is really going to be $0.00, you probably shouldn’t buy any P&G stock.

Or any company’s stock, for that matter.

Marketing Unplugged. Part 1.

I finally succumbed to a flurry of e-mails from a major retailer last week. I printed the “20% off” coupon and headed a bit out of the way to the outlet center.

The shopping experience was notable for a couple of things:
- An attentive store manager found my size in the back when we could not find it in the racks;
- At the last minute, I grabbed an item I didn’t really need, forfeiting half my savings (a marketer’s dream customer).

At the register, I presented my e-mail print-out. You can almost predict what happened next. The friendly and courteous clerk needed to flag down the manager to get instruction on how to process the discount. When she returned to the register, she required a second round of assistance from the boss. No big deal – I lost all of about 20 seconds.. I left the store very satisfied, and headed to excursion #2 (see Part 2 of this topic later this week).

But…what if the manager was off that day? Or on break? The clerk would likely not have been able to process the discount. If that had been the outcome, I’d have bought the items anyway and left $20 “poorer.” I’m certain I would have felt compelled to unsubscribe from the retailer’s online marketing program, on principle.

You can’t go a day in the marketing industry without seeing another article about how successful e-mail marketing has been. Yet I don't recall seeing an article, or panel discussion, or case study that reaches back into the operations of a business.

Here are just two sources for e-mail “best practices”:

http://www.optinnews.com/email_marketing_best_practices.html
http://www.emaillabs.com/best_practices/

Yeah, we get it – write a good headline, clean your lists, test your offers, blah blah blah. But not a word about integrating the fulfillment end of the business. If that isn’t in tune, the e-mail effort can go to waste.

Next time you’re at an e-mail “cheerleading” conference, ask the experts whether this is a good suggestion: when rolling out an e-mail promotion to your customers, send a parallel e-mail to store personnel making them aware of it, instructing how to execute it, and providing a 24/7 corporate contact in case of questions.

Would you rather be lucky or good?

Maybe Golf’s Scoring System Makes Sense After All.

Imagine you launched a new business many years ago in one of the toughest industries around – entrenched competition, massive capital requirements, high government regulation – with a low-cost positioning. Others tried and failed with that strategy, but you made it work by being efficient and having fun. Against long odds, years later you turn out to be a top company. Legacy competitors do everything they can to unseat you, but they fail.

Now imagine you are a different company. You entered the same industry, also with a low-cost position. You added innovative and simple, customer-centric approaches to your strategy. Customers were lining up for your service. After a while, you beat the long odds too.

Then imagine last week a “brand consultancy” releases the results of a periodic survey it does to show where customers rank the leading brands among several different industries.

http://publications.mediapost.com/index.cfm?fuseaction=Articles.showArticleHomePage&art_aid=76831

Imagine it shows both of you, JetBlue and Southwest Airlines, tied for the number one position among all airlines. We’ve done it, you both think – great job everyone.

But wait. Imagine in that same story you see the president (!) of the brand consultant quoted thusly:

"Ties between brands used to be the exception, but there are more ties than there have ever been. This speaks to commoditization…Many brands are now just placeholders. It's nice to be number one, but people don't perceive any differences between number one and number two in many cases. People know the brand names, but they don't know what the brands stand for."

If only the scores ended up a point in either direction, you think, JetBlue and Southwest would have been the top two. Instead, because you tied for number one, you are reduced to commodities, like so many bushels of grain or tons of copper.

You wonder if everything you’ve ever known about branding – and business – is wrong.

Hard to imagine, isn’t it?

Online Social Networking – The Great Unknown

My new best friend George Parker posed a question a few days ago about online social networks (OSNs) which I shall paraphrase (often required with Mr. Parker ;) as “Are these things really as big as the media typically claim them to be?”

Soon after I came across a New York Times article that drew an interesting parallel to OSNs.

http://www.nytimes.com/2008/02/16/business/yourmoney/16money.html?_r=1&scp=11&sq=boeing&st=nyt&oref=slogin

"At least a dozen wineries in Washington have been started by current and former employees who honed their skills as members of the Boeing Employees Wine and Beer Makers Club in Washington…Employees buy grapes from vineyards, store them on the company dime at a Boeing-owned recreation center and then crush the grapes…All that help has turned into thousands of bottles of employee-owned cabernet sauvignon, chardonnay, syrah and cabernet franc…"

"Boeing supports 100 clubs…because it creates camaraderie and helps employees make friends. Any Boeing employee, retiree or spouse can join one…Companies are again finding that adding a bit of social context to work is crucial to keeping employees happy and productive."

Excellent, but it left me to wonder: “Do these same people have the time or interest in online social networking?.” (I’ve reached out to the reporter on the story but so far have run into nytimes.com e-mail hell.)

Here’s our problem, George. We don’t really know much about the dynamics of OSNs.
The data we are currently shown from comScore, Hitwise, MySpace, et al. are meaningless at their aggregate level.

We need the definitive OSN panel. Non-academia, and no survey-driven bullshit. Two-thousand networkers we can follow around online and off, to divine these key elements:

Type: Which networks, in what categories, and how many
Time: Frequency of visits, and duration
Participation: Lurker or leader or in between
Interaction: Views ads, engages with content, does commerce, or not
Satisfaction: Objectives for joining achieved or not
Loyalty: Number of networks unsubscribed from

Not an exhaustive list, and it doesn’t address demographics and turnover. Hopefully a panel expert or two will rise to the challenge.

For now, we really know very little. It’s why you need to keep those waders handy.

Because you never know when another widget company’s press release might come out.

What If You Had Unlimited Marketing Money?

Odds are you would be in the movie business. Imagine someone handed you $100 million and said, “Get out there and promote Spiderman 3. Spend like a drunken sailor.”

The film business is well known (and envied) for having marketing budgets that, as a percentage of sales, are many multiples above most other industries. Lots of TV and print advertising of course, driven by the strange economics of movie distribution.

But you would have thought the investments in online marketing would start to measure up by now. Talk about turning an ocean liner around. Have a look at www.meetthespartans.com/ as an example. Dreadful.

This AdAge article illustrates well the polar opposites of money-that-burns and money-that-earns in movie marketing:

http://adage.com/mediaworks/article?article_id=124758

First the bad.

"Universal Pictures wanted to promote the final film in the Bourne trilogy, 'The Bourne Ultimatum'…Universal's solution was a street-game concept that would engage consumers…in the U.K. Wannabe assassins accepted three-week missions during which they used water guns to try to squirt assigned targets before being tracked down by the people assigned to them…Some 160 people participated, and the last remaining player won a cash prize."

By my calculations, one million people went to see the film in London and environs during opening weekend. I guess it would have been 999,840 without the promotion. And could the “cost per lead” have been less than the price of a movie ticket?

Now the good, from the same article.

"Additionally, Universal partnered with search giant Google to create an online game…and allowed players to…[track] rogue agent Jason Bourne across three continents, solving clues that bring them closer to revealing Bourne's identity. The game used Google tools including search, Maps and YouTube. Google promoted the game though search results…"

Movie marketing and the internet are made for each other.
- The content: story lines, visuals, characters, interactivity, video, music, etc.
- The demos: young males
- The cost: way cheaper than TV, bigger reach than water-pistol fights

We’re not there yet, and I’m not sure what the missing ingredient is.

But we know for certain it’s not money.

How Would You Save The Sharper Image?

UPDATE #1: Well timing is everything. As I was putting this post together, The Sharper Image was filing bankruptcy papers. So now the company really needs our ideas! Read on.

ORIGINAL POST:
We tackled Krispy Kreme in January. This month’s falling star is The Sharper Image, which is in so much pain that a week ago it named its third CEO in the past 17 months. This guy comes with quite the calling card: “crisis-management expert.” Out the door goes a well-respected and oft-successful direct marketer, Steven Lightman. Let’s get ready to rumble.

http://www.washingtonpost.com/wp-dyn/content/article/2008/02/14/AR2008021402041.html

Sharper Image gave no reason for Lightman's departure…
Boom.
In [the past] two weeks, three of Sharper Image's 11 board members resigned…
Pow.
With consumers clamping down on their spending…Sharper Image could be facing even tougher times because it sells so many gadgets that aren't must-have purchases…
Holy ****, Batman.

Since fiscal year ending January ’05 to the one just concluded this January, revenues have cratered, from $760 million to around $375 million. The holiday season was no help, with same-store sales down 10%. The good news is that the inverse theory of large numbers is starting to set in – the percentage declines are getting smaller as the base shrinks.

And profit is a term you use in a historical sense when referring to Sharper Image. Its stock chart tells the tale.

So, what to do?

To his credit, Lightman was able to reboot the catalog and Web operations. That would be where I would drive this business. Start by turning the physical stores upside down.

Two things you can depend on when entering a Sharper Image – (1) a teenage boy hanging out in one of the $5000 massage chairs, and (2) customers pinging around the displays like pinballs in an attempt to make sense of the merchandise.

Do an Apple-like makeover in-store. Target a moderate price point, and take all the junk and mega-expensive stuff and toss it in the nearest dumpster. Clear out the middle and let people walk around. Set up product trial benches. Deploy interactive kiosks. Drop coupons all over the mall. Collect names, addresses, and e-mails.

Then hire the best database marketer you can find to make the Web and catalog channels sing.

In the meantime, start bringing in some revenue by charging people 25-cents-a-minute to sit in those silly chairs.

How The Internet Can Harm A Geek (Squad)

The story of a Washington D.C. woman’s lawsuit against Best Buy has been making the rounds, mainly due to the compensation she is seeking – a cool $54 million. All because Best Buy’s Geek Squad computer-service operation lost her laptop and can’t find it.

http://www.crn.com/it-channel/206504044

What I find most interesting in cases like this are the online discussion forums and blog commentary. So I hit the link to the above story’s discussion thread:

http://www.crn.com/channelcommunity/thread.jspa?threadID=3530

As of Monday night, there were more than 160 posts - the most I’ve ever seen on Channel Web’s site. So many in fact that I double checked to see if I hadn’t landed in the comments area of a YouTube video by accident. What could such a tech-savvy crowd have to say?

After deducting nearly 70 Judge Joe Brown wannabe comments about the size and validity of the lawsuit, here is my “sentiment indicator”:

- Negative posts about Best Buy = 35
- Negative posts about Geek Squad = 21
- Positive posts about Best Buy = 3
- Positive posts about Geek Squad = 1
- Rude, crude and otherwise unusable posts = 35

While this whole event might seem to be about customer service or discussion forums or “the consumer is in control” (ugh), it’s really about how Best Buy got to this point in the first place.

If you’re going to (a) pursue a promising market space (such as PC service); (b) go to the trouble of creating a sub-brand (such as Geek Squad); and (c) give it prominent placement next to the parent brand (such as Best Buy); then maybe you’d want to consider a stronger positioning than “…ready to take the hassle out of your technology woes...”

Computers used to be a hassle. Now they are lifelines. Today, dead-center positioning for computer installation and repair is about getting results.

And, by the way, if your online listing for technology services includes the words “usually ships in 1 day,” you might want to consider hitting the reset button.

A $54 million lawsuit and 7% positive sentiment shouldn’t be the first clues that you’re not positioned well. But they are pretty good ones if you happen to miss the others.

Will Ferrell, Please Endorse My Blog

Somehow Will Ferrell’s Super Bowl spot for Bud Light was among the highest rated ads. Good chance you were one of the 100 million who saw it. But if you missed the tie-in to his upcoming movie, a new campaign from P&G’s Old Spice will drive the point home.

http://www.reuters.com/article/filmNews/idUSN1160137920080211
In one of the spots, his character tells viewers to "cauterize their sweat glands shut" with Old Spice's new Pro-Strength anti-perspirant; in another, he calls himself a "sweat scientist" and says "perspiration serves no purpose much like the appendix, man nipples or most of the human brain."

OMG. I am slapping my knee. Chevy Chase must be spinning in his bed.

It’s a great thing Ferrell’s fee for the advertising effort is going to charity, because I don’t see what else Old Spice will gain.

With a touch of strategic thinking, celebrity or (better yet) “noncelebrity” endorsement can be a powerful marketing tool. I’m amazed more small- and medium-size businesses don’t use it.

Some recommended planks: credibility, uniqueness, on brand, and sustainability. Ferrell/Old Spice fail across the board.

Credibility has to be seen through the eyes of the customer. I get why Holiday Inn’s Crowne Plaza has this Phil Mickelson thing going on, but something tells me if I’m standing over a million-dollar putt I would like it to have been after a night in a hotel at least one notch over the Crowne.

Uniqueness means everyone can’t have Rachel Ray or the top athlete or the top fashion designer or the top fitness guru. Familiarity is expensive and it can breed you-know-what.

“On brand” is another wonky marketing term, but it is pretty self-explanatory. Your endorser should fit like a glove with your key brand attributes.

Sustainability, not the “green” kind, refers to how long you can keep the endorsement fresh and effective. Comedy movies don’t have legs, even if they get a first-week take of $37 million.

Anyway, I hear his next movie is about the 1992 Olympic archery team. You don’t need much deodorant for that.