Marketing

More Fare for the Fat Fan

05-22-2012 1:41 PM with no comments

The days of hot dogs and beer are far behind us as sport properties began ramping up their concession offerings back in the early 1990's. Dozens of new stadiums have been built and most of the remainder have been remodeled in the past 25 years, and the fan experience, from seating to concessions, has improved as a result. It appears that teams and the facilities they play in are finally listening to what consumers want as the entertainment market continues to become more hyper-competitive every day. But do consumers know what's good for them? Here is a look at a few of the latest offerings at parks around the country:

Progressive Field, Cleveland:  Offering the two extremes, the facility features a $30 craft beer as well as a "Your Dad's Beer Stand" with $4.50 Pabst, Shlitz, Blatz and other "old school" offerings.

Petco Park, San Diego:  A result of a social media contest, the park now features fare from local favorites Hodad's Burgers, Bull Taco, and Lucha Libre.

Yankee Stadium, New York:  A high end bar with views of the Manhatten sjyline is now available for those with the appropriate means.

Rangers Ballpark, Texas:  This park features a $26, two foot-long hotdog. How's that for America's waistline?

Nationals Park, Washington DC:  How about an 8-pound StrasBurger for only $59? The traditional hot dog and beer is starting to sound a little better.

Aramark:  A third-party food service provider has introduced its Extreme Nacho Makeover at its 11 Major League Baseball accounts, resulting in the creation of several new dishes.

It appears that most sports properties are not aware of the obesity epidemic, as one in four teenagers is now developing diabetes according to a recent CNN report. Recent research also reveals that the obesity rate has leveled off, but  the folks who are already obese are just getting fatter. Ten years ago, the trend in stadiums was geared more toward healthier offerings. So much for the health and wellness trend and corporate social responsibility! Is bigger and more expensive what people are looking for? Or are they simply looking for more choices beyond rubber hot dogs and pre-cooked burgers? The answer lies somewhere in between, but it does seem that, although few people prefer to munch on carrots during a game, there is a disconnect between our social problems and the concessions offered at stadiums.

Do corporations have a social responsibility to their customers or should they be motivated primarily by profit? The answer tells us much about what kinds of products a company will offer, and how they respond to consumer wants.

DDS

Posted by Darrin Duber-Smith

Previously Made in China

05-22-2012 1:22 PM with no comments

Good news job seekers! There is a silent but growing trend in manufacturing towards the practice of "onshoring", that is moving manufacturing back to the USA from all points around the globe, namely China. There are several factors driving this important shift. First, marketers are growing weary of having to answer to the public for the poor product quality, safety issues, environmental and labor exploitation, and political instability that surrounds some of these "developing" nations. This doesn't discount the myriad disruptions in the supply chain that can happen due to natural and man-made disasters such as what we recently experienced in Thailand and Japan, respectively. These concerns are combined with the idea that many consumers are worried about the lack of "Made in USA" products and are becoming privy to the fact that jobs shipped overseas do not count towards our Gross Domestic Product, but rather that of the competing country. Had enough? I have.

All of the above are perfectly sound reasons in support of onshoring, but there is an even more significant factor in play here. The cost of doing business in these places is rising precisely because of their success in manufacturing over the past 30 years. With a growing economy, wages rise, environmental and labor regulations are put in place and suddenly, the country isn't as attractive as a low cost producer as it once was. Indeed these countries will end up producing as many consumers of goods and services as they do goods and services. Ultimately the jobs created by manufacturing in teh U.S. will help other areas such as marketing as more business is done within domestically. Watch for this trend to begin to attract attention from the mainstream media when a very large company makes a very big announcement. This is only a matter of time.

DDS

Posted by Darrin Duber-Smith

Social Media Sells Tickets

05-18-2012 6:23 PM with no comments

The above may be one of the most non-thought provoking statements in recent memory, but a lot of things in science are not intuitive. This is why we engage in market research and study human behavior, which is largely an effort to support existing hypotheses and to develop entirely new ones This information is invaluable in the strategic marketing process.

So, a recent study conducted by Ticketmaster's Live Analytics research arm confirmed what we all knew anyway, that social media sites like Facebook and Twitter are very effective at getting tickets into the hands of the people who want them. As a matter of fact, the research revealed that these sites are as much as three times more effective than other mediums. This is a significant finding, and the study affirms the necessity of engaging consumers via social media for all sorts of goods and services..

DDS

Posted by Darrin Duber-Smith

GM Makes Further Marketing Announcements

05-18-2012 6:08 PM with no comments

Oh boy. Here we go. The company at the forefront of the auto industry bailout controversy, Geberal Motors has made some very significant strategic marketing moves this week. It seems that not only has the company abandoned Facebook (and I assume other social media sites) as an advertising medium citing the vehicle as "ineffective", the automotive giant has now announced that it will not purchase any spots in the upcoming Superbowl, citing the $3.8 million for a 30 second spot price as "too expensive" albeit effective.

What's going on? Clearly the company, which failed during the recent economic downturn and received help from the government to remain in business, is pulling back on marketing efforts. Is this due to a lack of cash flow or does it more have to do with savvy marketers being careful abnout where they spend their marketing dollars? Perhaps a little of both, but as Pepsi has taught us, it does not pay to dramatically reduce your marketing budget especially if you have multiple brands, as GM does. The company has made fatal errors before. Let's see if it continues to do so.

DDS

Posted by Darrin Duber-Smith

New DVR Auto Hops Commercials

05-17-2012 3:32 PM with no comments

At first blush, you gotta love a device that completely eliminates commericals. All of them! Last week Dish Network began offering customers a DVR feature that allows viewers to completely "zap" commercials, rather than just fast forward through ads, a technology that has been around since the early VCR days. At second blush, this might be bad news. Why?

You see content, like TV shows and websites, must be driven by some sort of revenue. Generally speaking, one must either subscribe for access to content or watch advertisements to access the content. Either way, someone has to pay for it. So what happens when the majority of people aren't watching the commercials? The content goes away. These days, there is a strange cultural sense of entitlement that content is there simply for our enjoyment, and that we shouldn't have to pay for any of it. This zeitgeist has been exacerbated by the Internet, where it has been hard for advertisers to make much money and where most folks are reticent to pay for any access to content whatsoever.

So, this amazing technology that allows us to skip the commercials will only dilute the value of the ads, since advertisers want ads to reach a large enough target audience, and thus reduce the quantity and quality of content overall. Don't we usually "get what we pay for" in the world of marketing? In the meantime, look for more intrusive forms of ads like product placements and pop-ups to fill the gap. I can't wait for more of those!

-DDS

Posted by Darrin Duber-Smith

Penny's Turning Around or Running Aground?

05-17-2012 3:15 PM with no comments

In a previous column, I lauded JC Penney CO and its attempt to regain market share (and cultural releveance) by engaging in a complete rebranding of the store. This included a new logo, new merchandise mix, new in-store aesthetics, and an every-day-low-price model, rather than the traditional discounting strategy. The company sponsored the Oscars, signed Ellen DeGeneris as an endorser, and it seemed that a new day had dawned. Not so fast.

The company lost almost twice as much as analysts expected last quarter causing the stock to plummet and shareholders to re-evaluate the new strategy initiated by ex-Apple rock star and current CEO, Ron Johnson. Perhaps, we need to give it a little more time, as one or two quarters is not usually enough time to evaluate the implementation of a marketing strategy of this magnitude. Initial problems seem to point to an overall American consumer "addiction" to discounting. This propensity towards sales promotion started over 100 years ago and was put into hyper-drive by the Great Recession, as discounts as high as 75% were commonplace. It seemed for a while that no one would buy anything if it wasn't "on deal", and it will take some time for that effect to wear off, if it ever does. Let's hope the marketers at Penney are paying attention.

DDS

Posted by Darrin Duber-Smith

GM First to Pull Facebook Ads

05-16-2012 10:48 AM with no comments

This has been a long time coming. I have been reading for many years about the doubts surrounding advertising on social media, and now General Motors is the first high profile company to abandon advertising on the popular social media site, citing the ads' overall ineffectiveness. Numerous studies have demonstrated that click and click through rates with regard to Internet advertising in general, and social media sites specifically, have not met the lofty expectations of marketers and early Web 1.0 prognositcators. The literature on this is extensive although media coverage has been rather sparse.

This does not bode well for Facebook's upcoming Initial Public Offering as the company offers stock for almost $40 dollars a share. These are potentially big returns for the hundreds of early investors, many of whom are or were employees, who will become millionaires and billionaires over night; and this is obviously not good publicity on the heels of the IPO, especially since privacy issues are another threat to the company's business model. 

Will more high profile companies follow GM's lead? Just ask an average Facebook user how he/she feels about the advertising, and whether or not he/she pays attention to, let alone clicks on the ads. Marketers must continually assess their efforts, many of which are very difficult to measure in terms of effectiveness. GM reports that the company spends $30 million annually managing their various free Facebook pages. Perhaps Facebook should start charging a fee for companies who maintain pages. The revenue must come from somewhere!

-DDS

Posted by Darrin Duber-Smith

Avenging the Death of John Carter

05-10-2012 3:03 PM with no comments

Don't count Disney out yet! Sure, some high level executives have lost their jobs due to a few high budget flops, not the least of which is the recently panned John Carter. That one lost well over $100 million. But Disney has rebounded with the highest grossing opening weekend of all time, the Avengers, eclipsing Harry Potter's Dealthly Hallows (Part 2) movie at $200 million to $169 million. Sure, it's may be just another re-hashed comic book franchise film, but breaking the record by such a large margin is no small potatoes.

Why all the excitement? I'm sure it's a reasonably entertaining film, but the real reason may have something to do with the lousy last couple of years the film industry has had. Previous columns have analyzed this phenomenon, so I won't belabor the point. The Hunger Games reached $152 million, quite a bit for such a strange, dark , not really all that appropriate for the whole family film, but that's two top-grossing films in one year! Perhaps pent up demand for a good movie has been simmering for a long time, and it was the Hunger Games and then shortly thereafter the Avengers, that happened to fill this need in the marketplace. Let's see how history judges the Avengers (as well as the Hunger Games), and maybe in a few years we can determine whether there is any truth to this opinion if the movies are viewed by history as "average". In the meantime, I'll wait to see it on pay-per-view if I see it at all.

DDS

Posted by Darrin Duber-Smith

Wanted: Students Who Will Work For Free

05-08-2012 12:19 PM with no comments

In a previous column, I lamented about the proliferation of unpaid, not-for-credit internships as well as the relatively new practice of "hiring" brand ambassadors to promote goods and services to peers on campus. My primary problem with these practices is that the failure to pay someone for work in the name of "experience" is rather exploitative in nature. Unless they are willfully volunteering their time for a cause or receiving college credit, students should be paid, even modestly, for services rendered. The latest craze involves the practice of companies using MBA students as unpaid consultants, advising on marketing strategies, acquisitions, and other matters that have previously been left to highly paid and experienced professionals. In an age where there is serious talk about paying NCAA athletes, who get a free education to play games, for their work, this is rather interesting.

Yet it isn't the exploitation issue that bothers me here. What bugs me is that somehow many companies have come to feel that the work performed by students is somehow at par with the work of true professionals in the marketplace, or at least "good enough". While such experience is invaluable for the student of business, these practices devalue what executives do in the "real world". In other words, if the company can get the work for free, why pay professionals to do it? If a student's work is good enough, what does that say about the quality of professional work? This has obvious implications for students once they are in their careers. Let's hope this is just a fad.

DDS

Posted by Darrin Duber-Smith

Chevy's Heavy Levy

05-08-2012 10:54 AM with no comments

Ah, the electric hybrid automobile! The eighth wonder of the world. Let's take the Chevy Volt as an example. Quiet, fuel efficient, expensive... But is it good for the environment? Not really. Although it doesn't generate much in the way of emissions from the tailpipe, the car runs on electricity, which is generated primarily by coal, and  also gasoline, when the electric engine runs out of juice. If you want to help the environment, take the bus. I do. But that's not the point of this article. And never mind that the car battery, which costs thousands of dollars, is not likely to last the life of the car and often has to be replaced. In addition, the price tag is around $40,000, which is well above the average for an automobile; and the mean income of a typical buyer is $170,000. It is sometimes true that only the well-to-do can afford to be "green", but note that the Toyota Prius is now only $20,000, which is well below the average and very affordable for most people. It too has the characteristics described above.

So, what's the story with the Volt aside from the fact that it looks like a terrible value? Simply put, despite a $7,500 tax credit to individual purchasers offered by Uncle Sam (which means you and me), GM has sold only 7,600 of these vehicles, short of its modest goal of 10,000. So, it is obvious that the price tag is too high for most people despite what most people say about their desire to help the environment, but it is also interesting in that someone making $170,000 per year is in need of a tax credit. In addition, states such as Colorado offer additional tax credits as high as $6,000. And still, few people have bought the Volt.

There is another lesson here aside from price. Generally speaking, consumers will only sacrifice so much in terms of their environmentally-benign behavior. I learned this after working for over 20 years in the natural and organic products industry, not from some article. Price, attractiveness, convenience, quality, performance, etc., are all very important factors to most consumers, and despite the good intentions toward the natural environment most people have, most won't give these things up for the sake of "being greener".

Posted by Darrin Duber-Smith

CNN Slipping

05-08-2012 10:21 AM with no comments

Recent Nielsen ratings emerged and exposed something of which I was not at all aware. Prime time television news viewership among the coveted 25-54 demographic favors Fox News by a large margin and CNN is actually in third place, behind MSNBC. In fact, the Fox News viewership is almost double that of CNN, and MSNBC only recently eclipsed CNN leading by only a few tens of thousands of people. This is fascinating, and I believe it represents the polarized nature of the political environment In America. Fox News is very conservative, MSNBC is its nemesis on the liberal side of the spectrum, and CNN, although much more liberal than Fox News, is kind of stuck in the middle. Since there seems to be less and less middle ground in contemporary politics among the general population, so these numbers are not surprising.

But all is not lost for CNN. The network still does very well with major news events, which demonstrates that many trust that it will report what is happening more effectively than MSNBC. Yet CNN continues to struggle with its identity in part by exploiting a revolving door of "talent". Who the heck is Erin Burnett and why is her perspective so important all of a sudden? It seems that the producers just manufacture talent out of thin air. And some of the anchors, especially during the day, leave much to be desired in terms of broadcasting accumen. I have to admit, I find Fox News more entertaining in general, but will tune into CNN if something is amiss in the world. I find MSNBC mildly amusing if not juvenile, and I'm still not sure what HLN and its nightly rants by Nancy Grace and Jane Velez-Mitchell are all about.

Be certain of this. Regardless of the well-documented imperfections in the Nielsen Ratings process, it is still the best system we have for estimating viewership, and since ad revenue is largely based on ratings, this stuff is important and big changes might be in store for CNN.

DDS

Posted by Darrin Duber-Smith

Easter Comes Early

05-07-2012 11:52 AM with no comments

Not many things anger a marketer who is charged with forecasting future sales more than the unpredictability of Mother Nature. Just when you think that you have everything perfectly estimated, that supply and demand will meet in harmony, nature slaps you down with a hurricane, or a huge snowstorm, or a heat wave. Sure these "acts of God" are very difficult to plan for, but most organizations do have "worst-case" scenario plans in place. What do we do if a huge storm shuts down a key shipping port for six months or when a nuclear meltdown disrupts our supply chain? We must plan for such possibilities as part of one of the many external factors that affect our 4 P strategy, along with competition, laws, social trends and many others. A thorough analysis of these types of possibilities is part of marketing planning. There should be no surprises.

So what's the deal with Easter? Well, due to the unseasonably warm weather in March, a product of the "natural environment" in marketing planning, many large U.S. retailers delivered less than stellar results in April after posting strong gains in March. Warm weather brings people outside, and when this happens lots of folks tend to shop. The problem? Under economic conditions such as these, earlier sales steal or "cannibalize" sales from later periods, so when certain months are better than expected, it is very possible that those early sales will affect sales later in the period. Simply put, we are not anywhere near the end of the economic downturn by any stretch of the imagination, despite election year rhetoric to the contrary. Flat incomes, unemployment at over 8%, and a dropping GDP are not good signs despite what we all may want to believe.

All of this means that marketers must avoid letting the political hype affect sound, economics-based, marketing decision-making when it comes to forecasting demand. Healthy skepticism is necessary, as blind optimism will only result in making too much of what ever it is the company makes, which as we well know is not good for business.

DDS

Posted by Darrin Duber-Smith

Facebook Ad Model in Doubt

05-03-2012 4:49 PM with no comments

No company wants to read a huge article in the Wall Street Journal questioning its business model, especially if the company is going public in a few weeks, but this is exactly what happened this week. Readers of this column are aware of some of the problems with Facebook, the most significant of which being the practice of behavioral targeting (tracking consumer web habits and tailoring ads to individual tastes), a practice that is under fire by privacy advocates and the federal government. Without the ability to target market based on people's preferences, the ads on Facebook aren't as effective regardless of the number of people reached (just under 1 billion). In addition, most people report that they are bothered by the ads and shun them. Click through data confirms that people aren't clicking as often as advertisers would like for them to. And since Facebook's business model revolves around providing advertising revenue-generated content, people must click on the ads or at least view them without becoming annoyed or advertisers will seek other mediums. Things are not working as well for Facebook as one might think, and now the WSJ has caught on.

For the first time, advertisers are questioning the return on investment they are receiving from these ads. This is amusing to me, as marketers have been questioning this since the beginning of time. Now, all of a sudden advertisers are waking up to the fact that the effectiveness of this medium might have been a tad oversold by the Web 2.0 crowd. The truth is that we never really know what is working and what isn't despite our efforts at control and evaluation in marketing planning. It's kind of like airport security, where the government makes every effort to convince us that we are safer, but the reality is that TSA misses most of what they should find. In marketing, we engage in a variety of promotional activities and attempt to set measurable objectives for these activities. Even if we can count "clicks" or "responses", for the most part it is very difficult to tell which activities lead to sales. This metric has been and will always be elusive. And not everything is measurable in the first place, so Facebook will have some tough questions to answer as the company endures the transition from a privately-held to publicly-traded entity.

The youthful CEO, Mr. Zuckerberg, will most certainly have to get used to being more transparent and truthful about what the company is doing, and a little less arrogant about the value of the site to advertisers. Privacy regulations are coming, and advertisers are waiting with bated breath to see how all of this will affect the reveune model for the internet as a whole.

DDS

Posted by Darrin Duber-Smith

Tennis Anyone? Anyone?

05-02-2012 11:18 PM with no comments

The news hit hard. Prince, maker of tennis rackets and assorted products, has filed for bankruptcy. How did a market leader fall? I have no idea. It seems that fewer and fewer people are playing tennis these days, if the vacancy rate at tennis courts is any indication, so perhaps that may have something to do with it. Poor Prince. What can be done?

Well, a solid brand is a solid brand. Prince means "tennis" to most people and this is a valuable property. Perhaps the company that purchased Prince in its beleaguered condition can infuse the capital and the energy necessary to make things happen. A company that started making automatic tennis ball machines in the 70's and moved into rackets, etc. to become the market leader over Spaulding, Head, and Wilson can surely weather the current storm. Yes? Well, maybe not.

If people are not playing tennis at the rate they used to, it means that the industry is contracting rather than expanding. What should Prince do? Not much. Unless there is a resurgence of interest in the sport itself, all brands can do is harvest their products until profits are nil. Perhaps the companies should get together and fund an effort to encourage young people to take up the sport in the way that the NBA invested in Europe. Perhaps a rising tide will raise all boats in this cluttered participation sport environment and a cooperative effort might prove to be beneficial. We shall see.

DDS

Posted by Darrin Duber-Smith

Dollar Stores Not What They Used To Be

05-01-2012 2:59 PM with no comments

Can you remember when dollar stores actually sold things for less than a dollar? I can't. That was the original idea for this sort of retailer, by the way, following in the footsteps of the venerable "five and dime" or "dime store" formats of a century ago where you could get most  things you need on the cheap. So, if it started out that way, what has happened? Chalk up another major change in the retail landscape to the recession. As consumers "traded down" on brands and retail outlets as they often do during economic downturns, more folks flocked to the so-called dollar stores. As these retailers realized that offering things for less than a dollar was a rather limiting business model, marketers slowly began expanding the merchandise mix and raising price points. To be sure, the prices are still lower than WalMart and other every day low price retailers, but the "dollar" description for the category is outdated and misleading.

Evidence of this trend away from things costing a dollar is found in studying market leader Dollar General's new strategy of adding fresh food options in addition to the relatively recent addition of frozen and shelf-stable goods. This is not the "dollar store" we have come to know over the past decade, but rather it is becoming more of a low-end "general store" concept. A mini-WalMart, if you will, or a more affordable WalGreen's with fresh food. It is interesting that the lines between retail channels continue to blur as more stores want to be more things to more people. This convergence of store formats spans across all industries and will continue to change how and where we buy our goods for many years to come.

DDS

Posted by Darrin Duber-Smith