Lairig Marketing

What Part Of Abercrombie Don’t People Get?

How far we have come since 2006.

First, proof that online “content farms” are pretty much good for nothing: the stinkpile Business Insider digs up an old quote from the CEO of Abercrombie & Fitch, Mike Jeffries.

Second, proof that our helicopter-parenting-made-everyone-a-winner society has reached a new low: the social-media-sphere is at Defcon 1, vis-à-vis shock and awe, regarding what the CEO said (when no one gave a rat’s ass about it in 2006).

Third, proof that no one understands marketing strategy, least of all the opinion writers at trade pubs like MediaPost and business analysts at sites like Forbes: all of them pilloried A&F’s CEO, and declared the company’s marketing strategy a failure (as of 2013, mind you).

To wit, from MediaPost: “the episode is a powerful reminder that in the Relationship Era, you can do all the soft-porn advertising you want, but your image is not in your control.”

This is one more iteration in a long line of “the consumer controls your brand” bullsh*t statements. Funny that Abercrombie was doing just fine with its image until the public at large took “control” of it a couple of weeks ago – now, we have brand anarchy.

Here are the snippets of the A&F CEO’s quotes from the 2006 Salon article that are currently being cherry picked and replayed ad nauseam:

“We go after the cool kids…we want to market to cool, good-looking people. We don’t market to anyone other than that.”

“We go after the attractive all-American kid with a great attitude and a lot of friends. A lot of people don’t belong [in our clothes], and they can’t belong. Are we exclusionary? Absolutely.”

That in a nutshell is proof that Mike Jeffries understands the starting point for marketing strategy – segmentation and targeting.

In fact, 2013’s revisionist historians forgot that Jeffries runs a successful business. From the same 2006 Salon article about Abercrombie: “…in DNR, a newsmagazine about men’s fashion and retail, the magazine noted that ‘not since Ralph Lauren’s ascent in the 1980s has a single brand perfected a lifestyle-based look so often alluded to and imitated.’ ”

To be sure, Abercrombie & Fitch faces significant secular change in the near term that it must determine how to address. In our humble opinion, however, we don’t believe segmentation and targeting needs any fixin’. Let us cherry pick from the 2006 story and show you what else Jeffries had to say, that everyone else – in their haste to pile on to some kind of cause (see “eating disorder;” “clothes for the homeless;” etc.) – seems to want to overlook:

“Those companies that are in trouble are trying to target everybody: young, old, fat, skinny. But then you become totally vanilla. You don’t alienate anybody, but you don’t excite anybody, either.”

“…we try to be funny, and we try to stay authentic and relevant to our target customer. I really don’t care what anyone other than our target customer thinks.”

We almost plotzed when we saw the word “authentic.” Imagine, Jeffries was using the term long before brand bloggers started tossing it around left and right like so much salad.

Finally, this cherry of a cherry-picked quote. Jeffries must have seen 2013 coming – a politically-correct-on-steroids era, when anyone who feels like an outsider can have his or her day in (an online) court, demanding some tendentious sort of justice:

“It’s all depicting this wonderful camaraderie, friendship, and playfulness that exist in this generation and, candidly, does not exist in the older generation.”

An older generation, passed over and bitter, trying to tell a profitable $ 4.5 billion business how to do a better job marketing to kids. Something Abercrombie & Fitch has been doing pretty well. Since at least 2006.

Online Media Still Working Out The Kinks

In their efforts to report the sad yet important-to-know news from Monday’s tragedy, various online media providers revealed some weaknesses worth addressing over the near term.

[Caveat: This post is not meant to directly address, nor make light of, the Boston Marathon bombing and the ongoing investigation. Rather, our focus is on media, one of the most important components of Marketing.]

Comments
Way back when, we heralded 2010 as “The Year of the Commenter.” True to form, comments became a more formal part of media, with service providers such as Disqus upping their commenting tools capabilities, and publishers taking advantage of them. Another key form of user-generated content gained significant traction.

Yet, we wonder, should online media leave comments open for all stories, all the time? Within minutes of the first reports of Monday’s bombing, comment fields on “mainstream” sites like CNN and Huffington Post were burgeoning with vitriol – anti-everything: Obama, Tea Party, Muslim, IRS, Liberals, gun control, you name it.

It attracted the worst of the worst of the great unwashed, uneducated, and unedited. There is absolutely nothing positive that can come from this sort of expression and “sharing.” Yes, there is a First Amendment – media owners should feel free to shut down comments under such situations as Monday’s, and advise people to start their own blogs if they think they have something others should hear.

Videos – Not The News, But The Ads
Want to see video of what happened? Please wait 30 seconds, while we show you an online video commercial, aka a “pre-roll,” of a family happily bouncing along the countryside in a new SUV ! Or perhaps a housewife happily whipping up some dinner for her happy family with some nifty new food product!

OK, now that we've put you in the right mood, please enjoy this tragic news video...

How is it, in the supposed era of “real-time advertising” and “Big Data,” that no one has come up with an algorithm that stops online video ads from running during times like these? It should take roughly one second to accomplish. Shameful.

Quantity, Not Quality
You could jump on any old Tweet to see that, allegedly according to The New York Post, a dozen people were killed and hundreds wounded. Then retweet it – as fast as you can.

Compare it to the in-depth, quality reporting that The New York Times has published (paper and online). It even took down its paywall.

When, in reality, it should be charging double.

Gen Y and Gen Z won’t know what they’re missing when quality media finally disappears, in more ways than one.

Google Continues To Taketh Away

While Lairig Marketing continues to be ignored by Google’s search engine (as well as the millions of so-called search engine “gurus,” not one of which took our recent challenge), we received more bad news last week from the GOOG’s overlords.

Unless your laptop was under a rock, you heard about the monopolistic search company’s terse and disingenuous announcement that it was killing Google Reader. Google kills products all the time – see Buzz, for example – but this one struck a nerve. Google claimed no one was using Reader, but the public outcry showed that to be a lie.

However, that’s not the part of the story that interests us. We couldn’t care less about Reader – there are plenty of alternatives standing by. Once again finding ourselves pondering something no one else has mentioned, what we do care about is what happens now to a Google product directly related to Reader.

Back in mid-2007, Google purchased a company called Feedburner, for a cool $100 million. And then proceeded to do f&ck all with it. Not as bad as an AOL and Time Warner merger, but a waste of shareholder capital nonetheless.

Feedburner provides, as the name implies, a way for publishers (including bloggers like us) to make their content available to readers on an automated basis, using RSS technology. The reader clicks on a “subscribe” button, and then anytime the publisher creates new content, it is immediately “fed” to whatever RSS collection tool the reader uses – such as, *drumroll*, Google Reader.

Ever since Lairig Marketing launched, we have used Feedburner to “feed” each new blog posting to “RSS subscribers.” Over these past 5 years, Google has added zero features, zero tips, and zero support to Feedburner. Numerous times the service failed for days at a time, with the typical lack of acknowledgement from the GoogleDome (run a search on the terms “my Feedburner count just went to zero” to see for yourself).

Earlier this week, just days after the announcement that Google Reader was on death watch, Feedburner once again failed, listing zero subscribers for all publishers who rely on it. We fully expect Feedburner will be put on the GOOG’s sacrificial altar very, very soon. If Google doesn’t need an RSS reader, then it doesn’t need an RSS feeder either. The only thing to argue about is whether it has the decency to make a public announcement, or whether it just flips the “off” switch one morning.

Knowing that Feedburner’s end is nigh, Lairig Marketing is preparing to deploy an alternate RSS feed service, FeedBlitz. It will require each current RSS subscriber (many of you who probably forgot that’s how you see us pop up on your screen) to re-subscribe, via FeedBlitz.

We will make this transition within a couple of weeks (unless Feedburner shuts down sooner!), and will make every effort to communicate it and guide you through what you must do. It will require a simple, one-time “click” on a new subscribe button.

As simple as it will be, it will be a disruption and a distraction to your typical experience, and many of you will most likely not complete the switchover. We are saddened to think of the number of readers we are about to lose, on a "technicality," if you will. At bottom, that is why we care more about the future of Feedburner than we do the future of Reader.

Technology, when it is at its best, is supposed to be an enabler. Somehow Google always finds a way for its technology to be a maddening, frustratingly unpredictable experience, taking away the benefits we want most.

Promoting the benefits we want least seems to be Google’s forte. Look no farther, pun intended, than Google Glass.

Should Target’s 2013 Target Be Your Target? (Part 3)

At last, the conclusion to our three-part series, illustrating how an earnings call transcript can be an excellent source of insight for marketing strategists. Lest we led you to believe in Part 1 and Part 2 that it’s all wine and roses for Target, here we show how you can also spot the “bad news” that management doesn’t always make obvious.

During the discussion, Target management touted its fairly new loyalty card program:

“Red Card guests save 5% on practically every purchase, receive free shipping every time they shop on Target.com, and benefit from an extended return policy.”

Sounds nice. But then some comments that seemed to counter Target’s loyalty program appeal:

“Our fourth quarter gross margin rate went about 60 basis points below last year, reflecting the ongoing impact of 5% Rewards…”

Translation: The loyalty program isn’t ROI positive.

Why? Because EVERY Target customer is eligible.

Loyalty programs need to discriminate. They need to focus on the highest-value customers first and foremost, to make sure they spend every next penny “with us,” not “the other guys.”

When you invite everyone to the party, the bottom feeders end up working the program to their advantage. Here’s more evidence that indeed happened at Target in the previous quarter:

“…[for the loyalty program] the debit card is the one that has really surprised us…we’re doing three accounts to one debit to credit now…that’s really what has driven the significant increase in our Red Card sales.” This debit imbalance implies lower-quality, lower-value, less-profitable customers in Target’s loyalty program.

“…sales results have been softer than expected so far in February.” This implies that the program is diluted – not enough focus on the highest spenders.

“…comps in hard lines declined in the midsingle-digit range and were softest in electronics.” Again, a one-size-fits-all loyalty scheme is not going to get Target the uptick it needs in the higher-value categories.

Target’s Q4 earnings call transcript leads one to believe that its Red Card loyalty program needs a few more tiers to keep from being a dog. A few more shades of Red.

Should Target’s 2013 Target Be Your Target? (Part 2)

Here we are, a day late with Part 2 of our three-part series on Target’s business and marketing strategies for 2013. (See Part 1 here.) As a reminder, the underlying theme of this series is the advantage a strategist gets from reading a company’s quarterly earnings transcript.

It would be a definite advantage if you took a look at an article on Ad Age yesterday, in which some daft woman recommended that bricks and mortar retailers institute a Black Friday EVERY DAY so they can survive. Target’s recent earnings call reveals such advice as idiotic (unless a retailer was looking to go out of business as quickly as possible).

“Whoa,” you might say, “didn’t Target just announce it would 'match any price' - even of some online retailers (read: Amazon)? Isn’t that an indication it will take the daily-Black-Friday race to the bottom?"

Yes. And no. Dig this part of the earnings transcript:

“…that [price match] is such a very low portion of the total transactions…”

Stunner, eh? To think that very few customers, according to Target, actually force the issue on price at the register.

So, there goes your “showrooming” bullsh&t right with it. But we’re not done. Here was a bonus “showroom killer” comment:

“…following the launch of free wireless in all of our stores in the fourth quarter, Target.com was, by far, the site most commonly accessed by guests while they were shopping in our stores.”

Ponder that one, showroomers. Not Amazon.com. Not BigAssDealOfTheDay.com. Target.com

Better yet, Target understands the in-store experience is, will, and has to be, its competitive advantage over Amazon, et al. Again, to the earnings transcript we turn:

“…[we are] ending our current relationship with Radio Shack in our mobile phone business, and begin working with Brightstar…as our new in-store labor partner; demonstrates our continued commitment to mobile as a key element of our electronics offering, and we believe it will enhance Target’s position in the wireless retail marketplace.”

How come people don’t buy their new smartphones online? Where’s the showrooming there? Why aren’t we reading about “The End Of The Apple Store”? Ha. F&cking. Ha.

And even more:
“…last October we launched a test with Geek Squad to provide in-store service agents in 20 Denver Target stores. Based on positive feedback from our guests, Target expanded this test by offering Geek Squad service and replacement plans in 20 stores in Kansas City beginning February 17.”

Genius! Target takes the only thing Best Buy has going for it!

So take that, digital digerati. We say Target has taken the “showrooming” target off its back.

Pret A Manger: Ready To Eat Some Starbucks ?

This UK-based company started its British invasion in the year 2000. Thirteen years later, Pret A Manger’s count of U.S.-based shops has only reached 50. It wasn’t until 2009, in fact, that it expanded beyond Manhattan. Barely “pret” for prime time.

But we’re “pret,” ready to call this a turning point, in what will become a classic case study of a private company that survived and grew by retaining a founder’s steady hand on the steering wheel. It’s time for that other hand to push down on the throttle.

Two chaps, as they are called in London, started Pret A Manger in the mid-1980s. It took them a few years to work out the kinks in delivering on the promise of “ready to eat” food (and drink) in what they call “a cross between a good restaurant, an Italian coffee bar and a bullet train.”

By 2001, Pret had pretty much redefined “business lunch” in London, eclipsing a store count of 100. Time, then, for the made-for Harvard Business School case study strategic detour: a sale of a portion of the company to – *drumroll* – McDonald’s [sic]. Sick.

The two founders departed (but maintained majority ownership). Business success also departed.

Within two years, senior management was tossed like so much avocado salad. One of the founders returned, bringing along a colleague from another business venture. Pret A Manger hasn’t looked back since.

Finally realizing it wasn’t wanted, or needed, McDonald’s sold off its portion of the business in a 2008 deal that gave majority ownership to a London-based private equity firm, Bridgepoint Capital (a minority interest bought at the same time by Goldman Sachs (boo !) was purchased by Bridgepoint in 2012 (yay !) ).

All of this background is important, especially for U.S. readers who don’t know what a Pret A Manger is. We think roughly three years from now, most Americans will know Pret.

Here are the main pillars of Pret’s business:

> On-site kitchens to prepare fresh food daily
> Leftovers given to the homeless, or binned nightly
> Natural ingredients (preservative-free, cage-free eggs, blah blah blah)
> Clean, bright store design
> Fast counter service (goal = 60 seconds max per customer)
> Focus on employee service (more on that in a later post)
> Direct access for customers to top management

Finally, then, here is the Starbucks connection alluded to in our headline: go back to the above list, and give a check mark to any item that applies to Starbucks.

We ended up giving Starbucks zero ticks.

Our eyes were drawn to this comparison of sorts when a Pret A Manger opened weeks ago on a block opposite not one but two Starbucks along our daily commute. “These guys (Pret) will be crushed,” we thought to ourselves.

Yet every time we pass this Pret, it is full of customers, moving quickly in and out. We’ve since become customers, our hands caressing a HOT cup of coffee, and managing to GET A TABLE to sit and hold a QUIET meeting with colleagues.

To be sure, nearby Starbucks #1 and #2 are still jammed with Times Square tourists (a similar phenomenon to that of U.S. visitors to France, who eat at a Parisian McDonald’s three times a day). But we will venture that Pret has taken away a number of hometown customers.

Trailing by some 12,000 locations, Pret A Manger won’t be a Starbucks killer in the U.S. But if it can find the money to open up dozens more stores, each one within sight of a Starbucks, it can easily skim off customers fatigued by the latter’s expansion into, well, everything – food, tea, smoothies, juice, wine, etc.

And as we have reported before, the “coffeehouse experience” that Starbucks built its brand on no longer exists. Americans tolerate the new furnishings (term used lightly), as there is no direct competitor of any scale (Caribou, where are you ???).

Starbucks is now less than the sum of its parts, yet plans to add 15% more U.S. stores over the next several years. Welcome to the “fortress” strategy.

Can Pret A Manger make life a bit miserable for Starbucks going forward? Interestingly, Bridgepoint Capital announced just last week it would forego an IPO for Pret A Manger and raise money for store expansion privately.

Too bad Warren Buffet just blew a $23 billion wad on ketchup. He could have invested some of it on one of the best growth stories of the late 2010s.

By 2020 or so, Buffet would be sitting Pret.

Ed Koch – Did Just Fine

As this is a blog about marketing strategy, we try to limit our “teaching moments” from people who have passed on to truly iconic figures. People like Ted Kennedy, Steve Jobs, Harmon Killebrew, even our dear old Dad.

And people like Ed Koch. So iconic to us, at least, that we used his trademark phrase “How’m I Doin” as the headline for our ongoing 2011 series that recapped our 12 predictions for that year.

For those headlines, we added a question mark. You’ll note, however, it’s missing in the paragraph above. Because it really wasn’t a question.

Hizzoner couldn’t care less what your answer was. He didn’t give a flying f&ck how you thought he was “doin.” (Unless, of course, you thought he was doin’ great!)

From where we sit, Ed Koch’s “marketing teaching moment” is all about branding. He was the perfect blend of intellect and confidence. Which made the question “How’m I doin?” a redundant tautology.

His was a brand essence that most marketers seem to have stepped back from nowadays, schooled by “gurus” of all stripes that too much confidence is a no-no.

Their battle cry: “The consumer is in control of your brand.”

Koch would have been run out of office if he felt that way, if he worked that way, if he presented himself that way. He was wrong, many times, about the little things, but he got all the big things right. “How’m I doin” was Koch’s way of saying “I’ve got it covered, so you should keep following my lead.” And lead he did, confidently.

The brands who are perennial market winners lead with confidence. Apple, Disney, GE…they don’t need to ask “How Are We Doing?” Each is in control of its brand.

Ironically, many of the “winners” in the “top brands” faux analyses like Coca-Cola and Pepsi – gargantuan businesses – spend so much time, every day, looking over their shoulders, wondering, unconfidently, “Are We Doing OK? You Still Like Us, Don’t You?” Each one believes that the “consumer is in control.”

If Apple or Disney went away, you’d miss them. If Coke went away, you’d drink Pepsi instead.

Mayor Ed Koch was even in control of history. He, and his intelligent confidence, will be missed…forever.

Employees: Great Assets, Lousy Spokesmen

For any business that isn’t pure e-commerce, your employees are your best asset. The bank teller, the receptionist, the sales clerk, etc. – without them doing their job well, you are sunk.

But because this is true for all businesses, employees can’t be your differentiator (exceptions for the legal sex trade).

Way back in the day, we told you here how nutty it was for Nationwide Insurance to pay renowned director Errol Morris a sh*tload to make “our employees care” TV spots. The company pulled the ads off air within just a few months.

We also told you here how Ameriprise squandered its marketing dollars running “our financial advisors care” TV ads. Again, this marketer killed the ineffectual campaign soon after.

And, yes, if you’re really a loyal reader, you’ll recall that we updated this whole topic here.

So what to make of Virgin Atlantic’s new “multimillion-dollar” ad campaign, themed "Flying in the Face of Ordinary," that “celebrates the talents of Virgin Atlantic's employees”? (how’s THAT for writing like Stuart Elliott…hah!)

Simple. See Richard Branson, founder and President of Virgin Atlantic. His outsize passion for the soft skills has led him to this conclusion:

“Our staff hold the keys to the future of Virgin Atlantic; they work so hard…”

As we intimated in paragraph #2 above, replace “Virgin Atlantic” with any company name, and you have formulated a statement of fact.

This is simply “feel good” stuff, an inward-looking view. Branson goes on to say, “We are delighted to dedicate this new advert to [our staff].”

Wouldn’t it be better to dedicate your adverts to your customers?

We guess this is what happens when you spend too much time at your desk, a feature this week from the ever-more cartoonish “Thought Leaders” series on LinkedIn. Richard Branson’s response to “Where I Work” ?

“My most regular working place is on Necker, where I have a wonderful view of the ocean…[for] the MaiTai event on Necker…We discussed new technology and shared some innovative ideas – as well as a lot of kitesurfing.”

The reference to “Necker” is, of course, Necker Island, Sir Richard’s 74-acre private island in and among the British Virgin (there’s that word, again!) Islands. An island so extraordinarily small that it can’t land Virgin Atlantic’s ordinary planes.

Doesn’t matter much, though. Room charges on Necker Island run an extraordinary $30,000 a week. More than any extraordinary Virgin Atlantic employee’s ordinary salary can bear.

American Airlines: We Know Why You Changed The Logo

As we’ve said many times, logos and taglines are so incidental to the true value of a brand, but receive disproportionate focus due to their “in your face” nature. There is no better example than the airline industry, which has churned brand identities in recent years like so much butter.

Yet the brand experience – i.e., FLYING – continues to blow like Sandy.

In the past couple of weeks, we watched the anti-intellectual reaction to the first new paint job in 40-odd years for the bankrupt but Q4-profitable American Airlines. Very few mentioned the following…

The Tail of the Tale
Remember when United and Continental merged a couple of years ago? Continental’s logo took over the tail. Now, compare American's new “flag” tail to a US Airways plane.

Any day now, US Airways and American will announce a merger. This might be the first time ever that the liveries were ready long before the merged operations were.

Where’s Your Tagline?
Some of the coverage of American’s new paint job noted the absence of a new ad campaign and, yes, a new tagline. In 2012, American put on hiatus its “We Know Why You Fly” slogan (in case you didn’t catch the reference in the headline of our post) for some features-based “Be Yourself” campaigns (touting onboard WiFi).

We imagine the branding guys have been told to cease and desist on any further tagline efforts until the merger with US Airways is done. Perhaps we’ll get an interim slogan that goes to the “Your” well: “Your Travel. Your Airline.”

Or American could resurrect its post-TWA merger tagline: “Two great airlines, one great future.” No one would remember that. Again.

Who Gets Its Ad Campaign Off the Runway First?
Months later, we’ll also see some interim TV spots (best of both worlds theme, blah blah blah). US American Airlines (talk about a merger of redundant names) will beat United Continental to TV, which will be ironic.

We told you in May of 2011 here how much hard work it would take United’s new ad agency to create a brand campaign, but fully expected to see a new tagline and TV spot at least by the Fall of 2012 - a full two years after the merger with Continental.

There was no sign of either.

Just this past Friday, the bow-tied Lewis Lazare of the Chicago Business Journal wrote:
“…as it works to restore the trust of current and former customers, United apparently will do so without the help of any major new advertising initiative from its ad agency of record McGarryBowen/New York.

Sources at United said top executives at the airline believe it is important to be certain the airline is delivering a consistently great product before launching any ad campaign…”

Which means we might never see United’s new ad campaign.

Where Did All The “Showrooming” Go ?

Another tortured and misunderstood marketing meme we’ve been tracking is that of “showrooming,” which took on momentum in 2012 due to the supposed proliferation of mobile shopping. We shall paraphrase the definition of showrooming as:

“Brick-and-mortar stores are getting wiped out because consumers are walking in to shops, kicking the tires on the displayed merchandise, then whipping out their smartphones to order the same product for less from some online merchant such as Amazon.”

In typical marketing-meme fashion, writing and reading about it means it must be true. (Google the term “showrooming,” and you’ll get over a half-million results.)

We even got one of those “surveys of STATED behavior” at the end of 2012, with a Harris Interactive poll finding that 40% of U.S. shoppers say they already “do” showrooming.

We’d bet less than 40% of U.S. shoppers have any idea what the f&ck showrooming is. And we don’t think showrooming is a retail crisis.

Exhibit A – Best Buy Stores
If any retailer should have had a terrible 2012 holiday season, even with no showrooming, it should have been Best Buy, who we discussed here last Christmas. Now with showrooming taking hold, Best Buy should have been crushed, no?

No.

Best Buy reported last week that U.S. same-store sales held flat over the 2012 holidays, and we quote, “helped by sales of tablets and mobile phones” – the exact type of products one would think would have been showroomed to death.

“Flat” was a major improvement for Best Buy, by the way, given its decline in holiday sales last year. Quite honestly, it was a miracle.

Exhibit B – Best Buy ONLINE
Best Buy also reported a 10% increase in U.S. online sales. “See,” you say, “Best Buy is even showrooming ITSELF!”

Except that in the 2011 holiday season, Best Buy’s online sales grew a much, much higher 26%. Slower online sales results this year blow the showrooming thesis out the store window.

Best Buy isn’t struggling because of showrooming. Circuit City, which fell in 2008, didn’t die because of showrooming. There is a glut of electronics…at ever-falling price points…with nearly annual upgrade cycles…driving retailers into a highly transactional business.

You don’t really need a whole lot of showrooms for that.