Lairig Marketing

Heineken Good, Guinness Bad. No Taste Test Required.

Not sure what took so long, but after success in Europe and Asia, Heineken just opened its first branded “lounge” in a U.S. airport. God knows Newark’s Terminal C could use a distraction or two to keep passengers from realizing how small they are. The Heineken Lounge will feature free Wifi and, reportedly, “private cabanas.” Say what?

Continuing our earlier theme of experiential marketing, this is a smart marketing move by Heineken.

The Target
Yes, the brewer caught the travel industry at a bad time, but it is well documented that everyone who travels drinks. Even pilots have been known to imbibe just prior to boarding.

The Place
The only setting less uplifting than an airport terminal is a dentist’s waiting room. Heineken could have simply placed two fake palm trees around two kegs in a broom closet and improved on the sterile environment that is today’s “modern” airline terminal. Kudos to Delaware North, the company that helped Heineken pull this off.

The Customer Life Stage
OK, so this isn’t like going from marriage to retirement, but sometimes you feel as if you have passed through a life stage or two waiting and waiting and waiting for your plane. The airport experience stinks on ice, and there’s nothing better than a cold brew to mark the occasion(s). The lounge opens at 9 AM daily. QED.

The Verdict
If just 1% of the passengers who visit the lounge catch themselves the next time they’re about to order at the hometown bar and say, “wait, let me have a Heineken draft instead,” then Heineken should be doing cartwheels.

Guinness, Schmuinness
On the other hand, Guinness wins the “Tin Ear Asshat Award” for its current TV spot showing young revelers going back to work after a night at the pub and playing with the lights across the top-four floors of their office tower. Here we are in the middle of “Green” and an energy crisis, and Guinness thinks it cool to flick lights on and off.

Which goes to show ya…a funny drunk is always drunk, but not always funny.

How B2B IT Marketing Listens, But Does Not Hear

ChannelWeb conducts a ton of surveys of channel partners and business customers in the B2B IT space. Among those is an annual look at how major IT vendors such as IBM, HP, EMC, Cisco, Microsoft, et al., fare when rated by the channel across a breadth of categories such as product quality, service support, and - of course, because why else would I bother bringing this topic up? - marketing.

A subset of marketing examined every year in the survey relates to “partner portals,” the portion of each vendor’s website that acts (or is supposed to, at least) as a gateway to a wealth of up-to-date information, tools, and support for the channel partners who are attempting to market, sell and deploy the vendors’ gear in customer locations.

(Aside for those unfamiliar with “channel“: vendors such as IBM use companies like VARs, Solution Providers, Systems Integrators, etc., to expand reach and coverage they could not afford to do directly on their own).

“A world-class portal could provide current communications, training and post-sales support documentation (even video!) and hit upon all areas that VARs repeatedly said need improvement…but sadly, no vendor has stepped up their efforts. Last year, partner portal averaged a dismal 62; in this ARC, VARs gave the criteria an average score of 57. In both the 2007 and 2008 ARC surveys, partner portal earned among the lowest scores of the ARC criteria.”

Why would these big companies, across the board, ignored the opportunity to improve what the survey clearly says is a source of dissatisfaction for channel partners?

There are a dozen or so reasons that all suck, but here is the one to focus on for a real fix.

Assign someone with a marketing background who has adequate time, interest and the ability to ask the right questions in the right way and draw out the most meaningful conclusions (i.e., what portal modifications will return the most benefit). He or she must be able to build a business case and cut through the organization’s complete lack of interest.

In other words, vendors are not assigning any meaningful or effective resources to their partner portals, nor looking at them from a strategic perspective.

Just another day at the office. And it shows.

Burger King - A Whopper of a Brand Extension

Just like its creepy mascot, Burger King has been sneaking all around you. If you haven’t seen any or all of its recent brand initiatives yet, you will soon. You can almost see the King’s stupid smile on the corporate brand‘s face.

Potato Chips?
Fries-shaped potato crisps, with the ketchup already “built in.” Plus flame broiled regular-shaped chips.

A Whopper Bar?
Smaller-than-standard restaurants featuring open kitchens, circular chrome countertops, and plasma TVs looping open flames, for strip malls, food courts and casinos.

“The King” Greeting Cards?
Not Elvis, but rather a collection of six cards featuring the lurking, deviant, lecherous Burger King King himself. No word on whether the recycled paper used for the cards is from Burger King’s trash bins.

T-Shirts? Sleepwear?
At the beginning of this month, the company seized this brand-extension-madness momentum and announced the launch of Burger King-branded T-shirts and an “exclusive” (huh?) collection of men's sleepwear and loungewear. After the Motrin fiasco, looks like Burger King was wise to stay away from mom’s wear, at least.

Instant Lottery Tickets? Lottery Merchandise?
Do you want some fries with that losing ticket? And what the hell is lottery merchandise - a scratcher-offer device in the shape of the King?

There are brand extensions for the sake of taking new markets and customer segments. This is not one of them (with perhaps the exception of the Whopper Bar). Burger King has been clear what all this is about:

“Through our licensees, Burger King-branded apparel and snack products, provide our customers with new ways to interact and connect with the brand.”

We are at the point where brands can embark on this sort of branding strategy easily. (1) Technology has made marginal costs very affordable. (2) Consumers have the attention span of a gnat.

It doesn’t mean, however, that there isn’t a little crack in the path ahead that leads to a deep crevice into which a brand can fall, having overexposed itself.

Like most falls of this type, Burger King won’t have any advance warning.

The Search Engine No One Wants To Talk About: Ask.com

Remember the good ol’ days? Dot-com mania, and a butler for a mascot? Remember Ask Jeeves, 1996?

The poor guy has been put through a number of makeovers. Yet Ask.com still holds its place as the perennial fourth- or fifth-ranked search engine, regardless of how good or bad the “next great idea” was. Here are some of Ask.com’s major business or marketing strategy initiatives over the past few years:

• Acquired by Barry Diller’s IAC
• Fired the butler, became simply “Ask”
• Launched major TV ad campaign
• Launched major revisions to page layout (since done away with)
• Missed out on the opportunity to be spun from IAC
• Declared it was becoming a “women’s search engine”
• Days later, undeclared women’s search engine idea
• Added in Dictionary.com
• Rolled out the 11th version of the site

Through all these travails, up and down, back and forth, Ask.com somehow hangs on to 4.5% of the search audience, according to comScore and other sources. Not bad, considering Google’s dominant share continues to increase every quarter, seemingly at the expense of Yahoo.

There’s a pony in there somewhere, obviously, most likely technology based. Ask.com was early with innovations we now recognize as natural language search and universal results display, for example. Barry Diller seems happy with the pace of progress, and his market share…even while pundits have been writing off Ask.com for at least the past 3 years.

Nothing lasts forever, of course. That 4.5% share can only go in one direction (unless Ask.com pulls another technology trick out of its bag).

So why aren’t any of these being discussed?

• Barry Diller buys Yahoo?
• Yahoo buys Ask.com?
• Barry Diller buys AOL?
• Steve Ballmer buys Ask.com?

WWBD. What Would (Will) Barry Do?

What Would the Butler Do?

Tech Data: In Your Face

Story after story about Google, and widgets, and user-generated promotions, and Google, and (downward) forecasts for online ad spend growth, and iPhone apps, and virtual worlds, and Google…It’s enough to send a marketing strategist into depression. Or at least a recession.

And then I came across this story/slide show:
http://www.crn.com/it-channel/210600572;jsessionid=LADKIS4JZDEJGQSNDLRSKH0CJUNN2JVN?pgno=1
I cried tears of joy for three days straight.

Tech Data is one of the “Big 4” global IT distributors, who link vendors like IBM and HP to smaller technology providers who service the small and medium business markets. Distributors like Tech Data provide every service under the sun to accelerate the marketing and sales chain to segments of the market that the large vendors would go broke trying to reach on their own.

At $25 billion in annual revenue, you might think Tech Data could coast. But the link above takes you to a recap of a phenomenal effort to connect with its customers and the vendor community.

Tech Data is in the midst of a six-city road show, what it calls the “Technology Solutions Tour” (OK, so Madonna has nothing to fear), presenting a veritable traveling CES, Web 2.0 Expo, InterOp, et al.

SIX TIMES.

Expert keynotes, training classes, vendor booths, product demos, Casino night - not a thing is missed. Over 150 attendees seeing opportunities to grow their respective businesses. Face to face. The best way, still, after all these years, to get it done. This picture illustrates it best. Better than any pic on Facebook.

I’ve posted before about the ongoing war between the Sales and Marketing functions, and I’ll be posting on it again soon (the CMO Council just released another survey highlighting the Sales & Marketing dysfunction).

But Tech Data provides an example of how they can work together. A best practice, really. So, I’m giving Tech Data the “Best Joint Marketing & Sales Effort of 2008.”

The Technology Solutions Tour must be costing Tech Data a boatload-and-a-half. I’m sure they expect several boatloads coming back to shore.
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YEP THEY SAID IT…eBay, in a story about a potential 10% layoff, claims it has 15,000 employees. FIFTEEN THOUSAND? To manage electrons?!?!?!

Don’t Bank On Banks At The Grocery Store

The trend of putting branches of retail banks in grocery stores and supermarkets caught some real steam in the late 90s and early 00s. Since the beginning, expert sentiment has cycled positive and negative as to whether this was good business, for either or both the supermarket and the bank. Looks like we’re headed into another negative sentiment cycle.

Chevy Chase Bank this month gave up the ghost on all of its 54 branches in Giant Food stores. No doubt there are two very large “macro” issues at play - the recession (oops, the NBER hasn’t called it yet), and the overbranching of America (like the overpedicabbing of Central Park). Banks need to make some cost-efficiency decisions - supermarket branches are an easy target.

At its core though, this discussion is about channel strategy - where you distribute your goods or services, and how you market them. I believe the in-grocery banks are failing on both counts.

Distribution
Co-location is good if you understand your customers’ wants and needs around both products. Sometimes you can get away with the weak proposition of “convenience,“ such as a dry-cleaning drop-off or a coin-changing machine at the front of the grocery. But banking isn’t convenience-driven. I think bankers felt this wouldn’t be an issue, as most people make many visits per month to the grocery. However, the current economy has blown that hope out of the water.

Co-location is also good, by the way, if you can do it cost-effectively. An in-store branch requires high investment in both onsite staff and infrastructure (a problem the dry-clean drop-off and coin-changer don’t have). Not to mention the risk of the all-too-frequent Friday afternoon stick-up.

Marketing
“Just be there and they will come” doesn’t work as a channel strategy. You and your partner need to come up with relevant cross-promotions that generate “win-win” for each. Websites, circulars, in-store signage AND signage in the traditional bank branch must let customers know there is value in there somewhere.

The product mix needs work too. If all you are offering is the same thing I can get elsewhere, then we are back to the weak proposition of convenience.

Give the banks credit for this at least - they got it right when they stuck ATMs in the supermarkets.
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DATA YOU SHOULD KNOW…There are reportedly over 6000 people at a FIVE DAY Search Engine Strategies (SES) conference in California as we speak, and NOT ONE was able to do a search and find yesterday’s post.

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.

OKI Data Not OK With Retail Channel

Paper paper everywhere. The technology revolution was supposed to make us all-digital, yet annual growth in printer sales continues unabated. If you work for a large company or agency you might not notice (however, life without parole for those who print out e-mails !!!). But if you are a small or medium size business, I bet you keep a close eye on your printers and their use.

There are a number of companies offering printers, yet most Americans would think of only the two market-leading brands - Hewlett-Packard and Xerox - and maybe one other, the lower-priced model they actually purchased ;)

One of those “other ones” is worth learning from. OKI Printing Solutions is the U.S. brand for Japan’s OKI Data. Recently, it announced it would no longer be selling its products through Staples’ brick-and-mortar locations. The full story is here:
http://www.crn.com/hardware/207200563

“OKI Data's exit from retail began last year when it ended its relationships with other office-centric retailers like OfficeMax and Office Depot and it was painful for the company from a market-share perspective…However, as retail sales built brand awareness that the company hoped would spill over and help it build its share of the small/medium business market, the results were disappointing.”

Pulling your product from retail shelves - a tough decision, right? Maybe, but I’m not convinced of a couple things the OKI CEO mentioned in the story.

To paraphrase, he said the retail presence was a proxy for brand awareness campaigns (which HP and Xerox can afford, OKI can’t), and that retail sales people had been helpful in recommending OKI over competitors. Maybe I go to the wrong locations at the wrong times, but my most recent visits to these “office superstores” revealed poor inventory management and no floor help.

The real insight in this story is the parallel path OKI has been on, and will now accelerate - the reseller channel. There are tens of thousands of small technology companies out there who work closely with their customers designing solutions to problems. An OKI printer would be one component in a bigger package that might include other gear, software, and services such as installation and maintenance. The customer, reseller, and OKI all win.

OKI’s strategy is to find capable, hungry resellers and partner with them in the same high-service way it treats its customers. And one other thing that is not really new to the technology space, but still a major strategic effort to undertake - segment and address the market by industry. This allows OKI to prioritize resellers, products, and marketing.

The channel part of marketing strategy is so often overlooked or taken for granted. OKI seems to have remembered one other essential too - a thorough plan of execution. Without that, it’s just another strategy.

Per CMO Council: Sales Hates Marketing. Zzzzzz...

I won’t rag on the CMO Council as bad as I did last time. Still, you can file its Channel Performance Outlook 2008 under “Old News.”
http://www.cmocouncil.org/news/pr/2008/040108.asp

At the very least, the Council is to be applauded for periodic looks into the technology industry’s multi-tiered distribution channel. For most marketers it is difficult enough to influence end users directly. Imagine the challenge to also influence a layer of channel partners (such as resellers) in order to help them connect with the ultimate end user.

Here is a sampling of what the CMO Council says 500+ technology dealers, resellers, and distributors are dissatisfied with:
- Vendors as a valuable source of leads
- Quality of leads from vendors
- Effectiveness of vendors’ marketing campaigns
[Note: a vendor is the highest level in the channel, such as IBM, Cisco, HP]

This is “old news” because these results were just as likely five, ten or fifteen years ago. I’ll eat my hat if anyone in the channel is surprised. And it’s not a stretch to think you could get similar results by surveying any sales person in any organization, with or without a channel of distribution.

It boils down to what may well be an immutable law of business: Sales doesn’t get Marketing.

Let’s illustrate Marketing's challenge, using a typical, long, technology decision-making cycle. Marketing runs a branding campaign to get 10,000 people aware of the product. More-specific marketing influences 5000 of those to consider the company. More marketing moves 2000 to the preference stage. Qualification processes narrow those down to 100. These “qualified leads” are handed over to Sales. And each channel partner will get much fewer, only its share of the total lead pool.

The greatest levels of dissatisfaction with this Marketing process will arise where there is:
- Impatience for letting the marketing cycle align with the purchasing cycle
- Poor guidance on how, and how many, leads will be allocated to the channel
- Disagreement on the definition of a “qualified” lead
- Lack of accountability in tracking disposition of every lead

The CMO Council concludes that vendors must work more closely with the channel blah blah blah. Too bad it doesn’t acknowledge that these efforts have been ongoing, at great expense, for years on end. The lack of success is not for lack of trying.

Address the four issues two paragraphs up, and we won’t need any more of these silly surveys.

America Runs On Dunkin Running Over Franchisees

One of the most overlooked players in the business chain is the independent business person running the local branch of a well known brand. He or she is called a franchisee.

When you walk into your local Subway or McDonalds, you probably don’t have any clue as to whether the people running that particular location are independent or not, and you probably could care less. You simply expect an “on brand” experience.

Behind the counter though, there and in many other stores, is an interesting dynamic. Franchising is a big business, and many franchisees run companies that own dozens of locations. These owners invest more than just money in order to be successful.

One of the biggest dynamics is the working relationship with the “corporate office,” the franchisor (such as Subway) who dictates much of what the local operator can do. And that relationship isn’t always smooth.

http://publications.mediapost.com/index.cfm?fuseaction=Articles.showArticle&art_aid=76579

“Dunkin Donuts’ franchisees in New England and New York are publicly opposing the company's partnership marketing strategies involving P&G, Sara Lee and Hess, asserting they will ‘ultimately devalue the iconic coffee brand…’ “

“…98% of surveyed franchise owners oppose the Sara Lee partnership that calls for the installation of self-service stations in office building break rooms, cafeterias and other venues with large food-service operations.”

Set aside for a moment that Dunkin Donuts may be squandering its Starbucks moment, to go down a path that led Krispy Kreme to disaster. The Dunkin Donuts’ brand experience can not be replicated in the grocery store (P&G partnership), the gas station (Hess), or the lowly break room.

What is most troubling here is the notion that a company with over 7200 of its stores worldwide run by franchisees creates business and marketing strategies that run counter to their interests.

I usually defend the Marketing function. Here I won’t. Franchise relations can’t be left to the Franchise Relations office. Marketing needs to work with franchisees all along the strategy development path. From idea generation, to customer research, to program development.

Franchisees are the point of contact with your customer. Where all the efforts at branding, product development, training, marketing, and more come together.

Why would anyone put that at risk?