Lairig Marketing

Cable & Carlin - Which Is The Real Class Clown ?

First, let us recap the business model for cable companies:
- High prices
- Poor reliability
- No customer service

Add in the high cost of entry, and our choice of provider is limited to five or six large clown outfits.

The following story out of California seems like more grist for the cable mill. This one is so bad, though, it should get its own mill.
http://www.latimes.com/business/la-fi-cable5-2008jun05,0,1794603.story

“The Los Angeles city attorney's office plans to sue Time Warner Cable…alleging that the company caused major havoc and distress…

…claims the company violated its franchise agreement with the city by having subscribers spend hours on hold with customer service representatives and allowing excessive repair work delays…Nearly 500,000 subscribers in the city were affected.

…brochures and television advertisements…gave the false impression that pricing for cable and Internet services would stay the same.

Cable and Internet service was so intermittent and inferior in quality that it was not much better than no service at all, the suit says.”

TWC’s Marketing team had to be either understaffed or underinvolved. During a major transition (TWC was taking over and upgrading Adelphia’s system), normal marketing communications should be suspended. Nobody needs a bill insert offering a “cable triple play” when service has been out the prior three days. Proactive, honest notices (“We may experience system issues over the next month…”) and make goods (“Due to recent customer service issues, we are offering free VOD for a week“) are a must.

What if the late, great George Carlin were in charge? Of Time Warner Cable, or its marketing department, or the FCC? He’d need about a half-day to sort it all out. His job title might have been “comedian,” but his job description was “find the inanity and insanity in anything, in less than two seconds.” He never failed at it. What a gift he was given. What a gift we were given.

Last evening, Keith Olbermann reran an interview with Carlin from October of last year. Toward the end, noting how our government openly curtails some of our freedoms, Carlin said:

“They [people/citizens] don’t want to rock the boat.
They don’t want to make any trouble…
Nobody questions things anymore…”

Seventeen blocks from where you grew up, George, I hear you loud and clear.

Rest in peace, brother. They say the cable is much better in heaven.

How Would You Save Miller Beer ?

This month’s “Save” was going to be Circuit City, but after that company’s earnings release (exhibit #1: same-store sales down 11%) we might have another Sharper Image in our midst. And to think that Blockbuster, yet another candidate on my “Save” list, wants to merge with Circuit Sh*tty…

Instead, grab a cold one. It’s Miller Time.

I’m referring to the original. True, Miller Lite outsells Miller High Life three to one, but the past 12 months shows there is some “Life” in the old boy. After years of falling sales, Miller grew 1%. And anyway, who wants a company selling Lite if it doesn’t have a non-Lite to compare to?

Brand Momentum
Compared to imports and crafts, all domestic beers taste like weasel pee. So Miller’s emotional play is on target. Unfortunately, the current campaign, as good as it is, is muddled by THREE taglines:
- Living Well By Living Smart
- Common Sense in a Bottle
- Good Honest Beer At A Tasty Price

Pick ONE and go for the emotional jugular. By its nature, the positioning slices off East and West coasts. That’s OK - this is a heartland beer. Show what Miller Time is. For ideas, see the campaign for J.C. Penney’s American Living. Or just use it, photoshopping Miller bottles into the actors' hands.

Customer Segment Targeting
The good news is you can target two segments outside the core 35-year-old mechanic. First, you can get the younger drinkers before Bud does. Second, think Hispanics - the fastest growing, soon-to-be-a-majority demographic.

Local Marketing
Sponsor every local music event and pig roast you can find. While we’re on the topic of music, run a “vote for you favorite up-and-coming band” campaign, just like everyone else.

Consumer Content
This pains me to suggest it, since most “send us your video” stuff is pure, unadulterated bullshit (Swiffer dance, anyone?). But “How do YOU define Miller Time?” is tailor made. The winner should get a twelve-pack a week, for life.

The High Life situation might be low priority as the MillerCoors combination officially kicks off next week. The guys at Miller must be praying InBev’s acquisition of A-B goes through and has the typical (lack of) success most mergers do.

In the meantime, Miller has what many brands cannot claim - two time-tested, core brand elements: High Life and Miller Time.

Not a Clydesdale, but a gift horse, nonetheless.

Best Print Ad Of 2008

[UPDATE: If you also want to see my candidates for WORST print ad of the year, after reading this post come back up to the top and link here.]

Vanguard is one of those “old media” companies that believes not all of its future customers will come from Facebook or Twitter. For years it has run a lifeless campaign about how much of your savings you retain by investing in Vanguard funds (due to way-below-average fund expenses). Strong proposition, with boring content and imagery, time and again.

So the newest treatment I happened on in a recent Sunday New York Times caught my eye. If I could show it here I would, but Print ain’t no YouTube. With apologies, here is a “textual” summary.

Picture two parallel images of six piles of stones. The top series gets higher as you go from the first to the sixth pile. The lower series starts with one stone, then jumps to a high pile, but the third is lower, then up again, then down again, until the sixth and final pile, where the few remaining stones have fallen on their sides.

The headline reads…“Simple Truth: Start early, stay the course.” Under the images are roughly 100 words that express clearly the benefits of not timing the market and retaining more through Vanguard’s low costs. If you hadn’t guessed, the top series of stones represents investing with Vanguard.

I then happened on Drew McLellan’s blog, Drew’s Marketing Minute (also in My Links below). Drew puts forth an exacting post on how to create effective print ads. I’ll use his framework to support my vote for Vanguard’s “stones” being Best Print Ad of 2008.

A headline with stopping power
OK, this is the one criterion for which Vanguard gets a “D,” now and probably forever.

It’s not about you (it’s about the customer)
Grade = A. Having the most toys at the end is a true customer-centric concern.

One message
Grade = B. The topic of personal finance is too complex to boil down to one simple message, so a “B” is a good grade.

Short and sweet
Grade = A. Not one word wasted.

Say it visually
Grade = A+. If there’s better imagery to make Vanguard’s point, e-mail me.

Clear, compelling offer
Grade = B. Clear, but not compelling. Vanguard’s conservative style, I believe.

In the context of the weeklong Cannes narcissism exercise and a TWO DAY conference on widgets, I feel a bit dopey heralding a simple print ad as testament to effective marketing.

Sometimes you gotta have the stones.

Could A $10 Box Of Cereal Be In Your Future?

You get both sides of the recession marketing coin with this post. On one side, the ready-to-eat (RTE) cereal manufacturers, nudging prices up (and up). On the other, the unseen response from cereal substitutes.

For about a year, the major RTE cereal manufacturers have been raising prices, literally or through a back-door move - reducing carton size while keeping prices the same. General Mills started it last June, and today Kellogg announced a similar move, on the heels of outright price increases just a few months ago.

http://www.msnbc.msn.com/id/25217848/
“Kellogg Co. is using smaller packaging while charging the same prices…The company started shipping the new boxes to stores in early June. Boxes were reduced by an average of 2.4 ounces for 14 items…We did an extensive analysis of all of our brands to determine what made the most sense for our business…”

I bet the winning “extensive analysis” had the maximum profit calculation. It certainly worked for General Mills, who today reported higher sales compared to last year. Through the first nine months of this fiscal year, it showed cereal growth at 3%. Not bad for a recession.

If this seems like déjà vu all over again, it is.

Cereal prices rose 91% from 1983 to 1994, double the rate of general food prices. Not surprisingly, demand started to fall for the first time in decades. Store brands and cereal substitutes (breakfast bars, etc.) were fans on the flame.

If you recall, the cereal guys tried an everyday low price strategy soon after. Since volumes didn’t jump and margins fell, we are now seeing a change in that strategy. (Rising input costs aren’t helping, to be sure.)

So, back to the future - people complaining about $6 boxes of cereal. This time Kellogg and General Mills don’t appear to be hurting on the volume front. It’s a risky recession play, but they have set a new threshold. Just like we’ll never see $3-a-gallon gas again…we won’t see a $4 box of cereal either.

The other side of the coin? Time for the cereal substitutes to go for the kill, assuming they don’t get stupid and simply jack prices also (one of the conundrums of course is that the big cereal manufacturers also sell substitute products). How about “Save Money, Live Better.”

Oops, that one’s already taken. Geniuses.

Getting Social, and Commercial, With Lurkers

A new data point for social media has arrived. Congratulations to the person who originated it, for the “fact” has spread like wildfire across the Web. Goes something like this:

99 of every 100 people reading a blog or visiting an online community are lurkers.

Whether it is a scientific, usable data point is up for debate. But here’s the funny thing. Based on my own experience with this blog, I’d say the number is absolutely spot on.

The connotation for an online lurker is not as sinister as in the offline world. You are an online lurker if you read blogs or content in online communities but don’t post or otherwise interact. Academics are studying what some are labeling a phenomenon, to understand it and, I would imagine, to proffer remedies.

Seems like a fool’s errand.

The motivations seem to me the same online or offline. When you go to a town hall meeting, it’s the same few people speaking. When a stoplight stops working in town, only one or two motorists will bother to call a municipal department - the rest will sit in the resulting mile of traffic day after day. There are a billion more examples. Apathy, time constraints, lack of resource, fear, who knows?

This became of interest to me when I read an excerpt from Marketing Sherpa’s (www.marketingsherpa.com) 2008-09 Business Technology Marketing Benchmark Guide. One of the many interesting topics it looked at was the sources IT people use to get information prior to a purchase of technology.

Of close to 350 respondents, the top choice for what Marketing Sherpa called “interactive” information sources was online user communities at 45%, far ahead of other venues such as webcasts and trade shows.

There is a new article out every day by some social media “guru,” saying your company must start blogging and getting involved in social networks. Based on the Marketing Sherpa study, you’d think the guru was a genius. But I’ve yet to see one of these folks address the lurker issue.

The Web is now the media of choice, right? The one that is most accountable, where “every click can be measured," right?

The next time your social media consultant hands off a strategic recommendation, make sure you ask him/her what the strategy is for lurkers. My guess is you will see more dissembling than a politician caught with a “wide stance.”

Amtrak: Old Dog, New Tricks?

I posted April 29 about a prediction for airline industry growth I felt could not possibly come true. I suggested air travel might actually break down five or ten years out. I should have said five WEEKS.

"Frustration among air travelers has driven them to avoid about 41 million trips over the past 12 months, costing the US economy over $26 billion…"
Travel Industry Association

"It’s now so obvious that there is a significant falloff in air travel that even the bumptious Air Transport Association…is copping to the prospect that ‘slightly fewer passengers’ will fly this summer."
http://joesharkeyat.blogspot.com/2008/05/passenger-push-back.html

Passengers waiting on the DFW tarmac two hours for take-off in early May began yelling and shouting, demanding the pilot head back to the gate - which he did.

Pilots for an AA flight from DFW decided to continue all the way to Paris even after an underside panel blew off ten minutes into the trip.

And, as you might know, extra fees are up and capacity is being slashed.

In my original post, I discounted trains as an option to air travel due to the woeful state of our railroad infrastructure. But something from thestreet.com by David Sterman made me reconsider. Sterman took a look at city pairs for which Amtrak, with some clever thinking about eliminating interim stops, could reduce trip times. Here are examples (current//potential):
- Chicago-Minneapolis: 8hrs 16min//4 hrs
- Phoenix-Las Vegas: 15 hrs//3 hrs
- Atlanta-Charlotte: 5 hrs 17min//2 hrs 30mins
- Houston-San Antonio: 5 hrs 10mins//2 hrs

Assume it was possible. Could Amtrak market it successfully? Here are three critical marketing elements.

1) Reverse negative brand equity
Amtrak is more of a punching bag than a brand. Expectations for clean, reliable service are…well, let’s just say airlines have fallen to the same low level. Taking it head on is not advisable - instead, I would go after points #2 and #3 below.

2) Illustrate the competitive value
A train will never go faster than a plane, but the reduction in all-in time, hassle (TSA screening, shoe removal, etc.) and stress levels should have great appeal. The possible creative concepts seem limitless.

3) Address the “drop point” issue
Not all train stations have the convenient egress airports do. Figure out a solution, and position it as an advantage to being “way out there” at the airport.

Just maybe the federal government could seriously reconsider our country’s “privatization” scheme for train travel. Even if on a test basis.

Instead of “new,” how about “making old better."

Joseph A. Banks The Cash

The economy is in the crapper, no one wears suits to work anymore, and the trade association for neckties folded a month ago. Yet JoS. A. Banks (JOSB if you don’t mind) had a record year in 2007, and continues to outperform in 2008. This 100-year-old men’s clothing business with over 400 retail locations must be doing something right. Let’s take a look.

The Facts
Early this month JOSB reported Q1 revenue 12% higher than Q1-07. Comp store sales were up, I repeat up, 6%. They were also up for full-year 2007. Compare this to any other apparel retailer, especially George Zimmer’s Men’s Wearhouse (“I guarantee it”), which seems to be coming apart at the proverbial seams.

The Brand
This may be JOSB’s weak link. JOSB relies mainly on local media to present itself as upscale at a “value” price. I can’t find any public data on its brand measures, but I’ll hypothesize JOSB has low unaided awareness but good aided awareness and recall. That’s enough leverage for the remaining factors discussed below.

The Website
JOSB has been able to grow both bricks-and-mortar and e-commerce at the same time (while not giving up on catalogs, despite the dramatic increases in postal rates). Its website is distinctive, clean, and very intuitive as far as navigation is concerned. No bells, whistles, widgets, or social networks required.

Marketing
To make up for a weak brand, JOSB does a lot of promotions. This freaks out Wall Street (which isn’t a big fan of JOSB management anyway), never a fan of increasing SG&A and inventory levels. But frequent promotions make sense in that situation.

Customer Management
JOSB has leveraged its channels to build a customer list of 4 million names. Plenty to drive targeted direct mail and e-mail campaigns.

JOSB also pushes customer service as a differentiator. Who doesn’t? However, JOSB’s claim seems credible, given its control of the company-owned in-store experience and the thorough website section for service.

What could go wrong?
- Demand could continue to fall dramatically
- Google could start selling suits
- JOSB management could shoot themselves in the foot

Of these unlikely scenarios, the last seems most likely. The issue I would keep my eye on is the aggressive plan for new-store openings over the next couple of years.

Everyone else is cutting back. Why JOSB isn’t is a riddle.

Going Psycho for Psychographics

Experienced marketers have undoubtedly run into one (if not a hundred) of those research studies that describe customer segments using whacked terminology. “Eco-Enthusiasts” “Advice Seekers” “Do-it-Yourselfers” “Super-Greenies” blah blah blah. Put together random combos of adjectives and nouns and you too can be a consumer research guru.

Nortel and IDC just released one of these gems, with the usual PR bluster, concluding:
“Not only is 16% of the global information workforce already "Hyperconnected," more significantly, another 36% will be joining them soon!”
Those 36%, by the way, are in a segment called “Increasingly Connected.” Sigh.

Reports like this make me crazy due to their lack of utility. They concentrate on a dimension of customer segmentation known as psychographics that cannot stand on its own, other than to give the Creative team a little more focus. If you want marketing ROI, the Nortel/IDC insights aren’t going to do it.

The best segmentation uses three elements at once - demographics, behaviors, and psychographics. The first two can stand alone if need be and still drive marketing effectiveness, because they are identifiable. I can find the 35+-year-old females in Wisconsin (demographics). I can find the customers who buy from my online store 3+ times a year (behaviors). I can’t find the “Hyperconnected.”

Thanks to marketingvox, which dug beyond Nortel’s press release, I can illustrate some limitations of psychographics.
http://www.marketingvox.com/ranks-of-hyperconnected-poised-to-boom-039072/?camp=newsletter&src=mv&type=textlink

- “Hyperconnecteds” are just about equally represented on all continents. Which means if I want to target them all, I’ll need a big (global) marketing budget.
- 47% of “Hyperconnecteds” say a network outage at work would have an extreme impact on them. Um, I thought they were HYPER connected? Shouldn’t that number be 100%? This means I will be wasting half my marketing spend.
- They are found in all industries (again, not helpful = big budget), but have above-average representation in banking and high tech (are there any of you who needed a survey for that?).
- The statement that the 36% will be “joining them soon” violates a key tenet of segmentation: segments ebb and flow, randomly.

Never mind the statistical (in)significance of surveying 2,400 adults across 17 countries.

You can get a copy of the report at http://www.nortel.com/promotions/idc_paper/index.html
but since registration is required, you might want to consider the value exchange of doing so.

Psychographics alone? As we say in these parts, that and $2 gets you on the bus.

What A “Tell” Can Tell

Like most businesses, you are probably drowning in data but without access to information to make good marketing decisions. The cause could be an unresponsive IT department, lack of analytics talent, or cheap reporting packages, to name just a few.

You can use proxies for the missing data. We call these “tells.” Here’s an example for NASCAR from Tim Melvin at thestreet.com.
“There is a lot to like about living here, but one drawback is that to get to the beach or points east from the Baltimore-Washington area, you have to go across the bay bridge and over the island. When you get the twice-a-year combination of homebound beach traffic and a major sporting event [NASCAR] that routinely draws crowds of 200,000, traffic can grind to a halt.
Here's the tell: It never happened. No backup. No slowdown of any kind.”

Based on Melvin’s observation alone, if I were approaching a marketing negotiation with NASCAR tomorrow, I’d play serious hardball.

Here are a few more illustrations. Of course, the ones you would use are based on your specific business situation.

Door/Floor Traffic
Why all shops don’t put an electronic counter at the front door is beyond me. Sales data might seem obvious enough, but combining it with floor traffic gives you more insight into what your problems might be.

Shelf Inventory
Can’t wait for the detailed monthly inventory report? Put a red sticker on the items at the back of the shelf and see how long it takes them to get to the register.

Security Guards
Notice a decline in the number of security guards you normally see at neighboring stores, mall parking lots, casino boardwalks?

Drawbridges
Live near the water? Any change in the number of times per hour the bridge opens for boat traffic? A nice tell for people in marine or water recreation businesses.

B2B Events
Sponsoring a hospitality suite at the big industry trade show? Compare the bar tab to last year.

Tells work for Web-based businesses too. Get your total number of weekly visitors and transactions. If the former is steady but the latter is declining, your content is stale or your offers are no longer competitive.

The further upstream the tells are, the better. The examples above should make clear you are looking for trends, so make your observations repeatedly.

The beauty part? Tells work just as well in the other direction. Which hopefully will be here before the year is out.

There’s A Reason They Call Them “Mom & Pops”

Every now and then some entrepreneurs come along to try and outfox your neighborhood retailer. When they are able to launch something on a mass scale like a Blockbuster or Barnes & Noble, family-owned businesses can be wiped out in no time. But when they can’t balance scale against customer needs, investors are often the ones wiped out.

Case in point: Zoots, a (former) dry cleaning chain, started by a couple of guys from another category killer, Staples. The business was aimed at improving the convenience proposition with features like order tracking on the Web, 24/7 access, pick-up and delivery, and e-mailed invoices.

“A decade later, Zoots has collapsed…In total, investors lost more than $150 million…”

The trick in trying to create a franchise or roll-up model is to cover the costs of “improved customer convenience” through scaling back-end operations - centralizing administrative systems, technology, manufacturing, etc. This can end up forcing the store owner to spend most of his or her time doing battle with “corporate,” rather than serving customers.

Marketing is often centralized too, moving it away from the people who know their customers’ needs best. The hidden benefit of a mom-and-pop’s service quality becomes a mounting, unbudgeted cost to the franchise owner that erases the slim profit margin. As it did for Zoots.

“...from the beginning, the chain, as it rapidly expanded, had major trouble with quality, spending six percent of revenue on claims for lost and damaged clothes, about six times the industry average…”

One other thing to consider in these situations, which I’ve posted about several times. Keep an eye on the market opportunity. Dry cleaning was never going to be a high-growth business. Now it is an industry in decline.

The full story can be found here:
http://www.boston.com/business/articles/2008/05/15/high_concept_cleaner_in_tatters?mode=PF

Interestingly, the company had finally become profitable in 2006, after eight years. Still, it ran out of cash and dissolved this April. The Zoots name survives, with two former executives buying the rights to the name and 17 mostly Massachusetts-based locations.

Next time a friend of yours mentions a great idea for rolling up a mom-and-pop business, point him or her to the Zoots story.

Unless you want them to be taken to the cleaners.