Lairig Marketing

JC Penney Earnings Call – He Said. She (Didn’t) Said.

Back in mid-February, Lairig Marketing examined the “extreme J.C. Penney makeover” plans announced by new CEO Ron Johnson, ex-Apple Store genius (get it?!?!). We raised three issues:

- The new everyday-low approach wouldn’t make it past this Fall
- The idea of 100-stores-within-a-store seemed more Dhaka than Dallas
- Was there no end to Ellen Degeneres’ spokesperson dilution?

The J.C. Penney Q1-2012 earnings call transcript is hot off the press. It is a great read. And, sorry to use this line again…but the transcript ensures that we have another Harvard Business case study underway.

JCP’s Q1 results stunk on ice. The big story was traffic, off 10%. This was the main driver for an astounding drop of 18.9% year-over-year in same-store comps.

But here is something no one mentioned, and not a single Wall Street analyst asked during the Q&A. Online sales were down – what’s a bigger word than astounding? – nearly 28%.

Just like that. J.C. Penney dropped out of shoppers’ consideration set.

Johnson and team spoke at length about how his team was on the right track, but investors took JCP to the woodshed yesterday, giving it a 20% beating.

One question future MBAs will deal with: was Johnson right in starting the makeover with his new pricing scheme? No more sales. No more coupons.

The bigger issue we feel is how it was executed. The three tiers – everyday, month long, and best – aren’t exactly self-evident. On the call, Johnson fell not just a little on his sword regarding the confusion:

- “One of the thing we concluded…is that our marketing…is not doing the work it needs to communicate our pricing strategy…”
- “You will also note we started to put the compare [of month long prices] to our everyday.”
- “We now have TV supporting [our best price promotions].”
- “…in June, it will be the third time we have changed our point-of-sale signs [in stores].”

There’s a lot of fixing on the fly to undo the erroneous notion that retail customers will embrace a “simpler” pricing structure. Still, J.C. Penney execs don’t seem to feel they need anything akin to the old “$X off for all purchases over $Y” coupon to replace lost weekend traffic. Expect to see them revisit that misconception soon.

As for Ellen Degeneres? J.C. Penney wasted millions. She was used to explain new “fair and square” concepts like easy returns, full-dollar pricing (none of the $x.99 thing), and coupon-free shopping. None of these attempt to address the biggest problem – the confusing pricing tiers.

Ellen would be the worst person to do it, anyway. Imagine her trying to explain the difference between “everyday” and “best” pricing in her sing-songy A.D.H.D-ish stream-of-consciousness manner. Whose head would explode first – hers or the viewer’s?

As for the 100-stores-within-a-store strategy, Ron Johnson needs shoppers, and investors, to wait four years to see that come to fruition. Which, in the retail world, is equal to two eternities.

In the meantime, J.C. Penney will need to keep reaching into its rabbit hat.

Jim Beam Branding – Something To Toast

For a long time, Fortune Brands served as an excellent example of a “House of Brands” – a company with no rhyme or reason from a marketing perspective. Fortune was a company with well-known but disparate brands like Titleist, Moen, and Jim Beam.

Wall Street typically hates mashed-up conglomerates as much as good brand strategists do. They hated Fortune Brands. After severe hounding by activist investor/hedge fund manager Bill Ackman, Fortune sold the golf-related businesses and created a new company for the spirits side of the “house.”

And, for what it’s worth, Fortune Brands is STILL a classic house of brands. The newly and imaginatively named “Fortune Brands Home & Security” includes classics like Moen (obviously), Kitchen Craft and Master Lock. Nothing named “Fortune.”

But this story is about Jim Beam, and how, from both investor and marketer points of view, being on its own would let it achieve its full potential.

In theory at least.

You see, even though it renamed its business within Fortune Brands as, simply, Beam Worldwide way back in 2006, this wasn’t going to be a “Jim Beam-only” story.

Back then, Beam Worldwide was buying up companies left and right, across the entire spirits spectrum, among them Courvoisier, Maker’s Mark, Teachers, Cruzan (rum) and EFFEN (vodka).

As a stand-alone company, now Beam Inc., the acquisitions continue. Two weeks ago Beam announced it would add ANOTHER two brands – Pinnacle vodka and Calico Jack rum.

So, here we are again. Beam has become a house of brands. On steroids.

Should we hate it as much as we hated Fortune Brands? No.

Beam Inc. is laser focused on the categories it should be in (and knows where it shouldn’t be, selling off its wine business years ago). The many Beam brands might not have any direct synergies – for example, EFFEN marketing programs aren’t going to help Courvoisier’s sales one lick (!!!) – but the marketing best practices, passion, and operations can be leveraged across the entire portfolio.

This is a house of brands that will indeed be greater than the sum of its parts. So much so that today we add it to the Lairig Marketing Index.

Late as usual. BEAM has already run straight up 50% since its October “relaunch.” (And we are down already 0.5% for today, due to the stock market’s once-a-week “Greek spasm.”) But that shows how confident we are.

There is much more potential value in and across Beam to “unlock,” as investors say. You can drink to that.

Your Tag. Your Line.

Two of Lairig Marketing’s most popular posts are here and here, in which we reviewed the big waste of time known as taglines.

The most recent was a 2010 takedown of Pizza Hut’s amazingly awful tagline, so bad it was launched in stealth mode. “Your Pizza Hut.” Duh.

As we predicted back then, that tagline has disappeared. The same way it came in – stealth mode. What’s next? “Pizza Your Way,” we predict.

You’ll note we kept the “Your” in the tagline, as it seems to be a requirement. Our friends at the Lifetime Channel – friends because they stepped up and took America’s Most Wanted off the chopping block – met the requirement twice.

“Your Life. Your Time.”

Get it?

Lifetime execs admitted this TOOK A YEAR to come up with.

To spare the other cable programmers from wasting time studying and thinking up names and testing, etc., Lairig Marketing has submitted the following taglines to the respective company managements:

- Your Arts. Your Entertainment.
- (Or, as an alternate, You’re A. Your E.)
- Your Home. Your Box Office.
- Your Animal. Your Planet.
- Your Comedy. Your Channel.
- Your Food. Your Network.
- Your Music. Your TV.
- (Or, as an alternate, You’re M. Your TV.)
- Your Sun. Your Dance.

Pizza Hut should take a page from sister company Taco Bell, which recently announced its new tagline. Not “Your Taco. Your Bell.” Instead – “Live Más.”

Take note, future “Your” tagliners – No Más.

What Does The USA Not Get About Microsoft ?

If you read yesterday’s post – and shame on you if you did not – you would have been linked through to an older story in which we highlighted how Microsoft was awarded the #1 ranking in the Australia “Authentic Brand Index” for 2008. (The world – or Australians at least – are still waiting for the results to be released from the 2010 index research.)

What’s up down under, oi?

There must be something funny in the water in Canada too. In late January, Adweek and researcher Ipsos Reid released their first ever (and, based on the results, maybe last ever) “Brand Influence Index” covering Canadian companies. Guess which brand is the most influential up dair, eh?

• Tim Hortons? No.
• Loblaw? Not even top ten.
• The Ottawa Senators? No. And please lose game 7 tomorrow night, you bums!

Once again, Microsoft. Eh.

Eh?

Better than Apple? Better than Google? Why don’t we Americans hold Microsoft in anything near the same regard?

The Influence Index was based on consumers’ ratings of brands in six areas, including “Relevant,” “Leading Edge,” and “Engagement.” Again we ask, how could Microsoft rank higher than Apple? Or Facebook, for that matter?

This really ought to signal the death knell for brand rankings. All of these attempts – Interbrand, BrandZ, Ipsos Reid, et al. – are just variations on a mash-up of objective and subjective “measures” that call for the loudest “So What?!!?” possible in response.

With these types of measures, a brand can only be compared to itself – a la “is our brand getting stronger and more influential over time”?

In other words, stop sweating over those brand rankings.

More “Brand Authenticity” Writ Grande

The social media and brand gurus must be eating up the Walmart Mexico bribery scandal. “Oh my, Walmart should have been upfront about its business practices in Mexico all along, and asking its Facebook fans for input on how best to work with Mexican officials.”

One of our most read posts was this one: “Brand Authenticity – Bullsh&t On A Stick.” The Walmart “scandal” gives us reason to update the point made then – there is no such thing as brand authenticity.

But let’s look at two others first. Start with Best Buy, one of the most touted brands vis-à-vis proper use of social media. Which ipso facto makes it an “authentic brand.” Yet, Best Buy’s CEO, now ex-CEO Brian Dunn, gets caught canoodling with the help.

It must have been something to see. Dunn with his pants around his ankles watching HP’s ex-CEO Mark Hurd go through the wringer for the exact same thing, yet obviously believing the Best Buy board wouldn’t ever know.

How “authentic” is the Best Buy brand now?

Or how about Goldman Sachs? Thanks to The New York Times Nicholas Kristof, we now know that Goldman was invested in a company that runs Backpage, the number-one enabler of sex trafficking of children and young adults in the U.S.

Makes the Goldman brand sound even worse than that chap who wrote his pissy exit letter a month ago.

So, back to Walmart. Doing business in Mexico the way all business gets done in Mexico. And China. And Russia. The only problem with this stuff is when you get caught.

There is business reality, usually quite ugly. And there are brands, built on lofty perceptions.

Never the twain shall meet.

You Are Not Alone – But John Hancock Is

While they still exist (* sarcasm *), let’s talk about four typical ways a company can use a 30-second TV spot:

1. Let the customer know that you understand his challenge/pain
2. Talk about what your company does
3. Focus on the benefits the customer gets from using your “stuff”
4. Portray how great life is for the customer once those first-order benefits are realized

Good commercials get at least two done. Great ones do three. The best do #4 in dramatic fashion (think “1984”).

Some companies, for reasons unknown, spend the full 30 seconds covering only the first item. Example: new work from John Hancock, themed “You Are Not Alone.”

A strong positive here is that JH’s new CMO has halted the much-parodied campaign of 55-year-old bald men INSTANT MESSAGING each other with their most deeply held thoughts about retirement.

In all other ways, though, the “YANO” work delivers the same thing it did before: a message that the broad economy, and thus your personal economy, is f&cked up. This time, instead of private, digital conversations, we see multiple people in each spot speaking the same lines over each other. Hill Holliday did a beautiful job with casting, scripting, staging, etc.

But…does any U.S. citizen believe they “are alone” in thinking about these things? The comments sections on Yahoo Finance and Reuters would seem to indicate, resoundingly, “no.”

Worse, the issues introduced in each spot aren’t resolved. Are you better off putting your money under the mattress? Should you wait to invest in the stock market until (whenever)? Is the sky falling? Don’t know.

Ahhhh, then the payoff in the last two seconds: “Talk to your financial advisor.” Which John Hancock doesn’t have. It does have the products that an advisor could sell you, though.

Got it?

No?

You are not alone.

As we have said in prior posts about financial services marketing and positioning, the way to skin this cat is to deliver on the third item listed above. People need a clear understanding of the first-order benefits of a financial plan. Bad on John Hancock for not providing any practical website assets associated with this campaign – no landing page, no Twitter, no home page call-out, etc.

For now, this campaign is simply the sound of one hand clapping.

Who is going to sign up for that?

It’s “National Pat Yourself On The Back” Day

We interrupt our short series on the near-term direction of the U.S. economy (see part 1 here and part 2 here) to highlight a big story from yesterday’s business press.

You might have heard that Best Buy plans to:
- close 50 of its big-box stores
- cut 400 corporate jobs
- open 100 more mobile-only stores

Most important was this decision:
“Best Buy will be deploying…its new Connected Store format…remodeled big-box stores that focus on connections, services and multi-channel experience through a total transformation of both the store and the operating environment.”

Translation of that last line of corporate-speak = “out with the toasters, in with the focus on Interwebs stuff.”

So, why a pat on the back? In our most-read post ever, December 1, well before anyone could have known how Holiday Season 2011 would finish, and therefore what Best Buy management should do in 2012, we said this:

“This is not a marketing communications story, nor a ‘branding’ story…This is one of those big ‘P’ stories – ‘Place' and ‘Product.’ Best Buy is spread way too thin in both for focused growth in sales and operating profit.”

Place and Product. Exactly what Best Buy management is going to fix. And not a single mention in its new plan of any branding, marketing, or social media communications.

By December, of course, just about anyone could have pointed out Best Buy’s problems. And many business journalists did, as well as pi**ed off customers who flamed the comments section of any article about Best Buy.

But we humbly believe Lairig Marketing was the only one to (A) look at Best Buy from a business/financial perspective (as well as a marketing one, of course) and (B) prescribe a strategic solution, and (C) have it match what Best Buy announced yesterday.

Show us Seth Godin’s Best Buy post.

Show us Guy Kawasaki’s Best Buy post. Or tweet. Or “speaking engagement.”

Exactly.

Time to go pick up a Mega Million ticket…

Fidelity Says UGH To UGC

Sorry to come back to the “branded content” topic so quickly, after beating it to a pulp (!) last week, but this one is near and dear for a couple of reasons.

Firstly, we were there two years ago, so to speak, when Fidelity Investments gleefully launched a contest asking people (not customers, mind you) to submit their own videos. The task was to make your own commercial, in which you would present your take on the company’s “Green Line” brand theme.

The response was underwhelming – a handful of user-generated submissions, each one ten times worse than the other. Fidelity kept it hush hush from there, picking a winner with no fanfare and pulling all the videos down as soon as possible. A painful lesson.

The second reason another “branded content” piece is being posted on Lairig Marketing so soon is that it is once again about Fidelity. With a very different twist.

Pretty much everything we posted last week about best practices for branded content is being illustrated in a new video-based campaign from Fidelity. It took two years to get over the hurt of 2010’s UGC effort, but it was worth the wait.

Fidelity has gone DIY with this one. All the way. The company has launched a mini campaign called “Thinking Big.” The work will feature PROFESSIONALLY MADE videos of its equity analysts talking about common topics in very uncommon ways.

The first one has been launched on Fidelity’s YouTube channel here. It is about water supply, and the near- and long-term implications of poor quality and access across the globe. It is a bit overdone with infographics automation (infographimation ???), and dwells too long on the problems versus the solutions, but it is infinitely better than Sling Shot Baby.

Let’s set aside for the moment that Fidelity has overly large hopes for the campaign – no TV exposure (which we wager the CMO will rethink in six months), desire to “go viral,” etc.

Instead, let’s applaud the fact that a major brand has recognized that the best branded content isn’t going to come from “the people,” but rather from subject matter experts.

Unlike all the other UGC dilettantes, we should congratulate Fidelity for thinking big about “Thinking Big.”

The More Things Change, The More It Must Be Starbucks

Did Howard Schultz have any idea in 1982 that things would get this messy? According to the “Our Heritage” section on the Starbucks website:

“…Howard traveled to Italy and became captivated with Italian coffee bars and the romance of the coffee experience. He had a vision to bring the Italian coffeehouse tradition back to the United States. A place for conversation and a sense of community. A third place between work and home.”

Today, Starbucks is on a permanent caffeine jag. Working at its headquarters in 2012 must be like participating in one-hundred simultaneous episodes of “Survivor.” K-Cups, VIA, Blonde Roast, beer & wine, Evolution Fresh, and more. Chaos.

Chaos that suits Starbucks to a tea. Same-store traffic and comps are on a tear. Retail is blowing out expectations. A license to print money.

That “third place” thing? Fuhgeddaboudit.

Last Fall, Starbucks announced a plan to remodel up to 1700 coffee shops. Little else was said, except the very “green” statement that the stores would emphasize sustainability/LEED certification.

Starbucks was already pursuing “sustainability,” in New York City at least, in the summer of 2011, allowing stores to cover up as many electrical outlets as management desired. This was a lazy response to complaints that students and freelancers were using the third place as their only place, all day long.

The current remodel blitz will kill off this segment completely (unless they have good battery power). One wonders who else might not come back as Starbucks retrofits its stores.

Test it yourself by strolling past the new Times Square Starbucks “flagship” at the corner of 47th and Broadway. The work has been heralded for its design in every way imaginable (the lights, the furniture, etc.). Take in the view by walking east along 47th and you will note a place jammed with tourists, trunk to tail. From outside, the new “experience” seems somewhat like that of a bus station during the evening rush

Without a laptop or power cord in site.

The windows are lined with wooden counters, where you can stand and enjoy the “coffee house romance.” If you are with a guest, you can speak side to side. If you are with more than one guest, well, there’s that “chaos” word again. This is, apparently, how the tourists do it.

How successful will this remodel be off the beaten tourist path? Stroll a few blocks more to 49th and 8th. Walk past the Starbucks location on the corner and head 100 feet toward 9th avenue, where a remodel has just been completed (P.S. are these the two closest-to-each-other Starbucks in the world?).

Inside are a handful of traditional tables. And a big-ass picnic-like-table in the middle. (This is also, apparently, how the tourists do it.) Two longggggg windows of those dopey counters. Which have yet to be seen with a customer leaning on them.

Without, again, a laptop or power cord in site.

Starbucks has made its claim. Ich bin ein Berliner, if you will. In New York City at least, we are all tourists.

Branded Content’s Dirty Little Secrets

So, if user-generated content is really just a lot of consumer masturbation, what is happening on the brand side of the equation? Are marketers getting their collective arms around the challenge of “branded content” ?

That challenge comes with four main hurdles:

1. Having something valuable to say
2. Having the resources to write it
3. Getting customers to find it/read it
4. Getting the entire company to agree on its value

You will find the above list nowhere else, even though a billion “Five Tips On Branded Content” posts have been published…this week.

It’s incidental, in any case, since 50% of marketers haven’t cracked the code on point #1, and 90% of the remaining 50% won’t rightfully address point #2.

So, there really is nothing to do with this topic but sit back and chuckle at research like the following:

In mid-December, an outfit called “The Custom Content Council” attempted to estimate what marketers spend churning out…er, custom content…coming up with an average of $1.9 million per company. Sorry, carry it out to another decimal place = $1.91 million.

On an absolute basis, that data point fails hurdle #1 above. But there were a couple of “relative” nuggets of value in the council’s research. To wit:

• Around 25% of content spending was said to be in digital formats. Seems low, given the focus on email and website content, and implies there are still a lot of hardcopy newsletters, journals and such keeping the USPS barely afloat.
• Around 25% of companies claim that custom content efforts consume 25% of their total marketing budgets. As the kids would say…ROTFLMAO.

Vis-à-vis the hurdles above, here is where we really are:

1. Talk about our products
2. Assign the writing to an unqualified, low-paid team member
3. Fling it in the customers’ general direction
4. Hope no one in the C-suite asks for an accounting

Garbage out. Garbage in.