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.

NFL Pro Bowl To Be No Bowl?

To help undecided Commissioner Goodell make the right choice, here are ideas for what the NFL can do in place of its annual impersonation of a feisty home economics class, aka “The Pro Bowl.”

The NFL will never hold this event midseason, as the other major sports do. Who cares anyway? Baseball, hockey and basketball give infinite opportunity for individual players to shine – football does not. That’s why Sydney Crosby can score four goals every night, but Adrian Peterson can’t run for 100 yards every weekend.

So, Commissioner, cancel the Pro Bowl, but keep the focus on the end of the season. Let fans vote for first and second teams for each conference. With special-team players, we’ll end up with roughly 100 Pro Bowl “ambassadors.”

Rather than lean on each other for 60 minutes in Hawaii, consider these options. Each one aims to address the flat-to-slightly falling attendance the NFL has struggled with over the past five seasons.

Super Bowl Fun
Go nuts with our favorite social media tactic – user-generated content. Let fans submit videos explaining why they should get to attend the Super Bowl with one of the 100 ambassadors. Each winner gets four tickets. The NFL films the interaction between Pro Bowlers and fans, selling the rights to HBO or Netflix (or whomever).

If what they say about social media is true, those 400 winners will Tweet and Facebook and Tumble and Stumble and Pinterest like banshees, propagating their message to roughly a trillion people (feel free to check our math).

Public Service
Option 2 takes the good will path. Here, two players each are assigned to one of the 50 U.S. states. Again, fans submit videos, this time to win a “visit to your hometown” from Pro Bowler “X”.

Within that day is a four-hour exercise session, which bolsters the NFL’s focus on “PLAY 60” (in this case, PLAY 240). The Pro Bowlers could chase chubby kids around a running track for a couple of hours. If they have energy left, the kids will Tweet, etc., about how out of shape they are and recommend ways for a trillion other kids to lose about 30 pounds each.

Option 2 is an indirect method for attacking the NFL’s attendance issues. But think of it this way – if we don’t end child obesity, attendance will plummet in response to all the “0 to 0” final scores.

Because at the pace we’re on now, pretty soon NFL games will feature nothing but linemen.

Guy Kawasaki – Marketing’s “Golden” “Guru”

After two upbeat posts in a row, we are feeling especially cranky. So ornery that we are going to cancel today’s traditional “Fast Follow-Up Friday” and instead take the piss out of one of Marketing’s top-five gurus. This is not to be confused with “taking the piss,” a favorite phrase of George Parker’s, which means “to take liberties.”

We take no liberties when dissecting the phenomenon known as Guy Kawasaki, as he has taken them all for himself.

As background, Kawasaki’s claim to fame are the six years he spent at Apple, first from 1983 to 1987 as a “Software Evangelist,” then from 1995 to 1997 as “Chief Evangelist.” Again, no liberties taken here – this is real. In fact, this is how Kawasaki describes the latter role:

“My job description was to protect and preserve the Macintosh cult by doing whatever I had to do.”

In addition to running a venture capital portfolio of many Silicon Valley-ish companies, Kawasaki has spent the ensuing years aggregating other people’s stuff. To wit:

- Established “Alltop,” a site that scrapes dozens of well-known blogs and sites into a crude directory.
- Established “Truemors,” a collection of the “most interesting stories” handpicked by "truemorists" around the world.
- Recently knocked out his tenth book, titled “Enchantment,” a busman’s tour of existing material that starts at Dale Carnegie and ends up nowhere (unless you don’t know what a proper handshake is).
- Churns out articles for American Express’s OPEN forum that are basically one-sentence introductions to the work and words of others (with fawning “Great post, Guy!” comments pouring in…WTF?).
- Auto-pushes roughly five tweets per hour, 90% of them pointing to someone else’s nonsense (example: “USDA to announce food recalls by Twitter”).

An admitted front-runner, who has twisted the Midas phrase to define himself as “Whatever is gold, Guy touches.”

For all of this and more, Guy Kawasaki is rewarded with 646,824 Twitter followers, within spitting distance of the #1000-ranking Un Curioso Dato (whatever that is). A master of the “self-promotion” part of marketing, still introduced as “former Apple evangelist” which as noted above is FIFTEEN YEARS AGO, guest speaking nearly 75+ times per year at an estimated $40k+ per, the rest of the time given over to interviews.

And what a doozy from Inc.com, repeated on Business Insider at the beginning of this week. Here are key excerpts:

- “You really can't spend money on social media unless you really try.”
- “It's very difficult to create goals and strategies for something…if you're not familiar with [it]…”
- “The start of all great marketing is to have a great product.”
- “I love that you can edit your posts and comments [on Google+] after you've posted…I edit almost every one I do.”
- “My recommendation for SEO is very simple. It’s Write Good Stuff.”

If you believe any of this flip batshit, then you have learned firsthand Guy Kawasaki’s biggest marketing lesson. You have been enchanted. You have been evangelized. You have been converted.

Not least of all – you have been aggregated.

Ads Ads Everywhere, And Not A Drop To Drink

Imagine you are making a close connection in some metropolitan airport. Every second counts. You cheat your way to the front of the plane. When the door opens, you sprint down the jetway. Just inside is an airline employee offering connecting gate information for $15 per request.

You opt for one of those big, FREE digital displays, just 25 yards away. You race toward it, knocking down little children and old people. You check your watch as you run. Less than three minutes.

You arrive at the gate information display, sweating and short of breath. You look for “departures.” Then you look for your gate number.

Except, what? WTF? You stare at a full-screen advertisement for Hilton Garden Inn. WTFITS?

After ten seconds, which seems like an hour, the screen goes back to normal, with gate information. You find yours, and start sprinting once again, overturning people in wheel chairs as you go.

You arrive at your departure gate. The agent sighs, “Oh, I’m sorry sir, we closed the boarding process ten seconds ago.”

Think you’ll be staying at Hilton Garden Inn anytime soon?

While this story is exaggerated, the part about the advertisement on a gate-info display is true. Welcome to the theory of ad “impressions,” which posits that the more places you see my brand’s name, the more likely you are to remember it, fondly.

It’s been done before – ski lifts, grocery conveyor belts, escalator handrails – anyplace that people are “captive.” Of the 67 million opportunities, there are approximately only 588 left.

The airline industry is doing all it can to make that list grow shorter, and in the process, make the flying experience more miserable than it already is. Take Spirit Airlines (please!).

This bucket-of-bolts operation has the following advertising opportunities available:

• $14 million to advertise on the exterior of its planes
• $200,000 for ads on overhead bins
• $119,000 for tray tables
• $18,500 for the puke bags

This is essentially a staring contest. You stare at your tray table – the ad stares back at you.

We’ve said it before. Marketers should add value in these captive audience situations – ideas like sponsoring the in-flight WiFi, or funding free beverage service or free box lunches on board.

Or maybe you could sponsor a slidey chute Olympics for flight attendants.

One Potato Two Potato Three Potato…NONE?

That’s it. I’m joining the Tea Party. Or at least the Potato Party.

In one more illustration of its wrongheaded meddling, our government wants to legislate the number of spuds kids eat at school. Sounds like a paradox, coming from the U.S. Department of Agriculture, no? One would think it would be on the side of the farmers.

But, no. It is part of the “federal school lunch program,” probably one of the least effective initiatives per dollar of input ever created (thank you, Harry Truman). The USDA has the time and energy to waste on declaring that, starting next year, school lunchrooms must limit the number of servings of potatoes to twice a week if they want to continue receiving federal subsidies.

It’s all part of the war on childhood obesity, of course. However, until the USDA, or other federal agencies, can legislate the following for schools, the “potato cap” will get us nowhere:

• Mandatory exercise during the school day
• Inspection of bagged lunches brought from home
• Eradication of in-school vending machines

This whole thing has set off a Congressional battle, with potato-farming state Senators defending their literal turf. Won’t be long before we hear something like this in a Republican debate: “Mr. Romney was for potatoes before he was against them.”

Now you know why we have lobbyists and industry associations. Like the National Potato Council (hurry – tickets on sale for the January Potato Expo in Orlando – Orlando?!?!). They are a tax on every industry, to keep government hands off.

What doesn’t happen often enough, though, are responses directly from the marketers of “end products.” The CPG guys who market potato soup, potato pancakes, potato this and potato that, should think about the messaging they could add to their normal marketing efforts to counter what could become a slow, secular decline in potato demand promulgated by a school lunch cap.

In the meantime, the National Potato Council might steal a page from another food group's playbook.

will.i.am: what.a.scam

How did you do it…
Get Ad Age to publish your advertising manifesto…
Written in word bursts…
Style over substance…
Like your music…
Tonight’s gonna be a good night (repeat 100 times)…
I guess it was supposed to reflect the new “conversation” style…
Where one piles on derivative non sequitur after non sequitur…
That is redundant by the way…
Like this sentence you wrote…
“twitter is a physical representation of collective consciousness where you can tap into the consciousness of millions”…
Anyway, not really…
Twitter is collective narcissism…
You wrote 675 words overall…
And not a single thought that was new for the marketing industry…
“…your brand need[s] to be a part of the connection…”
Really? Hadn’t heard that one before…
And this one was a classic…
“today…to have a business…you need to go where the people are”…
Who builds a business where the people aren’t?…
Worse, though, is that so much you wrote…
Or think…
Is wrong…
Like “the ones that are prospering don't have commercials but still succeed”…
Which, by the way, is another redundancy…
Tonight’s gonna be a good night (repeat 500 times)…
Anyway, Apple spends hundreds of millions of dollars on TV ads…
Thought you might like to know that…
Decrying TV ads sounds funny coming from a (disastrous) Super Bowl halftime act…
Your payoff (finally) is that brands should build communities…
Nonprofits, maybe…
But profitable brands should sell shit…
But deep down you know this…
How else to explain this press release from Intel last month…
“Sunday night’s Emmy Awards marks the U.S. debut of Intel’s latest TV commercial…
The first scored by will.i.am”…
I would call you a hypocrite…
Intel calls you its “director of creative innovation”…
Once again, redundant…
Tonight’s gonna be a good night…
Repeat a billion times…
Then fade out…
Please.

Target: Hit Or Miss-oni? (Part 1 Of 2)

Today’s trivia: Kmart, Target, and Walmart were all launched in 1962. Of the three, Target has been the most successful in becoming more than simply a discount store. One of many ways it has differentiated itself is through design.

Part of that has to do with how Target lays out its stores and shopping experience (making the inside of a Walmart look like a third-world country). The other is its singularly successful approach to co-opting name-brand product designers.

With excellent execution (and marketing, I might add), Target’s target, if you will, has become a slightly more upscale, more affluent woman. The continual introduction of top designers across just about every product category entices women on their way to Macy’s to at least poke their head into a Target store.

So what was last week’s “Missoni thing” all about?

Rather than a single-category endeavor, the Missoni partnership put its so-called “zigzag pattern” across nearly every product imaginable. Price points were extremely low – two digits versus Missoni’s usual neighborhood of four.

As you know, the stores were overrun by Missoni collectors. Target’s website crashed. And a complementary Target/Missoni pop-up store at Fashion Week in New York was cleaned out in hours.

Let the debate begin: Did Target make an honest forecasting mistake, or was this intentional, to make current and future customers forget they ever heard of Groupon?

In Part 1 today, let’s consider the argument that this was a serious forecasting mistake (like the kind our friends at Netflix made last week).

It is inconceivable that, over all these many years since 1962, Target hasn’t perfected the art of forecasting demand for new products. Since Missoni products are readily available elsewhere, a data wonk should have been able to run some neat price elasticity curves.

If he did, someone made an egregious error in overruling him. The Missoni prices were too low. In one horrible decision, Target has become the underground railroad to eBay for Missoni and all future design partnerships like it.

In Part 2 tomorrow, we examine why Target would intentionally create a stampede.

Zigzag, indeed.

Citi Strikes Tin Once Again

If you’re reading this, then that means you are not at the annual Mommy Blogger conference, “BlogHer ’11,” in globally convenient San Diego. Thousands of attendees, almost outnumbered by the number of speakers, and dozens of corporate sponsors.

But don’t look for Citi. The financial company couldn’t pony up enough scratch to make the lowest rung of sponsorship (“Exhibitor Level”), where you will find such luminaries as CouponCabin.

Perhaps Citi feels it is doing enough for Moms with its latest marketing initiative. We’ve talked about Citi’s advertising before. And we’re sad to report that the marketer has not found a cure for its “tin ear” syndrome.

To kick off a partnership with BabyCenter.com, Citi recently sponsored a survey of Moms. Guess which of these is the correct title of the study:

A. How Much Will Your New Kitchen Cost You?
B. How Much Will Your Home Equity Line Cost You?
C. How Much Will Your Variable Annuity Cost You?
D. How Much Will Your Child Cost You?

Did you choose “D”? No? Tsk Tsk. Really, what is the difference between a mortgage and a baby anyway?

So far, the study results have garnered zero Tweets (which means this study has zero Klout!) and all of three comments on BabyCenter.com. Here is the first one, verbatim and in full:

“This article is not accurate. I have four children and it has cost us NOWHERE near the amount listed above to raise them. Ridiculous. Who reads these anyway?”

Indeed.

Don’t expect this sort of controversy to be discussed over the next three days. Here are just a few examples of what BlogHer ’11 attendees will be sopping up:

Blogging Your Way to Self-Acceptance
Food Photography That Will Feed Your Soul
Your Blog Can Make You a Social Media Marketer (ed.: Duh!)

Come to think of it, San Diego is the perfect location for this conference. The sun shines there all the time.

But if by chance the Moms do latch on to the “baby cost” matter, the lone Citibank branch in San Diego is just an 11-minute walk from the convention center.

Martha Stewart: A Lesson In Brand Value

Earlier this month, Millward Brown released its ranking of the “top 100 brands.” Interbrand did a similar list last fall. Here is just one example of the utility of such an endeavor: Apple came in first in the former, and barely cracked the top 20 in the latter.

Each of these brand experts uses a different “proprietary” formula, of course. But they follow the same general recipe – one part anecdote, two parts nonsense, three parts bullsh&t financial calculations, and an ounce of secret sauce.

We’ve taken you through some of the finance before – remember the book called “The Brand Bubble” ? No one else has either, since we debunked its premise here two years ago. If you want to tie the value of a brand to a company’s financials, there’s only one accepted way per the accounting experts (see “good will”).

But if you want to look at brand value more holistically, then ignore these “top 100” lists. Let’s circle all the way back to post #1 of this year, and once again discuss Martha Stewart.

Our premise at the time was that dear old Martha had spread her “brand” too thin, and The Home Depot’s big ramp-up of Martha Stewart products wasn’t going to amount to much. In its most recent quarter, HD announced comp-store sales were down 0.7% (this was, of course, blamed on “the weather” – did you ever notice “the weather” never gets mentioned when sales go up?). If you listen to or read the transcript of its earnings call, HD management mentioned Martha just twice, in passing.

So there you have a better way than a top 100 list to value a brand such as Martha Stewart.

And as strong a brand as she is personally, her company – which goes by the tongue-twisting “Martha Stewart Living Omnimedia,” or MSLO – isn’t doing well. Two big recent news items:

• The hiring of a co-founder of the Oxygen network (what an appropriate metaphor) to lead MSLO out of its misery
• The words an investor never wants to hear: MSLO “has retained Blackstone Advisory Partners”

Maybe Facebook will buy Martha Stewart’s company. Or Google. Wait, no – Microsoft!!!

In an Ad Age article yesterday about MSLO’s travails, there was this: “branding experts have long suggested her company move beyond the person who founded it…”

Nonsense. Answer me this – if you could buy MSLO knowing Martha Stewart was not going to be involved on a go-forward basis, how much would you offer? Now, compare that to the price you would pay for MSLO with Martha involved. Subtract the two, and you have “brand value.”

And if you chose correctly, the math should be easy. One of your two numbers on the left-hand side of the equation should be $0.

will.he.ain’t. Will Intel Fire will.i.am?

What a great Super Bowl. Great game (our prediction of a three-point Steelers win was, of course, wrong) and mostly great commercials. The two-minute Chrysler spot with Marshall Mathers gets top prize as best Super Bowl commercial (if you put out of your mind that an Italian company now owns Chrysler).

But what a craptastic, shitasmic halftime performance by the Black Eyed Peas. After all that build up. How embarrassed did Slash look during his cameo, as Fergie screeched and screeched? Fingernails, meet chalkboard. Not even Usher could usher in any excitement. Bring back the Who.

Intel is in trouble. A couple of weeks ago, the company appointed none other than the Peas ringleader, will.i.am, as “Director of Creative Innovation” (or maybe I was supposed to spell that “director.of.creative.innovation”). His job is to, well, here’s what the Intel press release said:

“In his unique role, will.i.am will collaborate with Intel on many creative and technology endeavors across the ‘compute continuum’ that may include such devices as laptops, smart phones and tablets. Complementing his visionary role as the front man for The Black Eyed Peas, will.i.am is also already working on music expressly for Intel.”

OK, that was a little short on detail, which Intel hasn’t been too good with lately. Just a few days after the will.i.am announcement, Intel discovered a flaw in the launch of its self-heralded next-generation “Sandy Bridge” chips. Estimates of the damage to Intel are in the $1 billion range.

From an advertising point of view, Intel’s not had much luck either. We wrote about its lackluster social media initiative back in 2008, which was followed in 2009 and 2010 by equally punchless work centered on “geeks” as “rock stars.” Based on that output, I would have thought it easy for will.i.am (or anyone) to improve Intel’s marketing. Now, after the Super Bowl halftime performance by the Black Eyed Peas, I’m not so sure.

During the game we gleaned another reference point for Intel to consider – the Black Eyed Peas claymation ad for salesforce.com’s “chatter” platform. Crafty but completely incomprehensible.

The Peas, and will.i.am especially, are flying very close to the sun. Intel could end up getting burned. Again.