• iPad, uPad, We all Pad

    So the not-so-new class of electronic gadget is the tablet.  If we go back in time ten or so years ago, Amazon.com was an online bookseller and Apple was a computer and MP3 company.  How things have changed.  The iPad was announced on January 27, 2010, by Steve Jobs at an Apple press conference in San Francisco.  Apple began taking pre-orders for the iPad from U.S. customers on March 12, 2010.  The device was initially popular with 300,000 iPads being sold on their first day of availability.  By May 3, 2010, Apple had sold a million iPads, this was in half the time it took Apple to sell the same number of original iPhones.  During the October 18, 2010, Financial Conference Call, Steve Jobs announced that Apple had sold more iPads than Macs for the Fiscal Quarter.  In total, Apple sold more than 15 million first generation iPads prior to the launch of the iPad 2.

    What could possibly compete with the huge success of the iPad and now the iPad2?  According to a May 2011 article , with more than 80 percent of the market, there is no doubt the Apple iPad dominates the tablet market.  And for good reason.  The iPad was the first real consumer tablet to catch on.  Plus, Apple has done a brilliant job of leveraging the iTunes ecosystems and the App Store to deliver a seamless and enjoyable tablet experience.  For more than a year, no tablet could touch the iPad, but that's finally changing. RIM, with its BlackBerry PlayBook, and Google along with hardware partners like Samsung, Motorola, LG, and others, are all offering legitimate iPad alternatives.  Some are good, some are bad, and yes, a few are just plain ugly, but at least now we have some choices.

    According to a recent article in The Wall Street Journal, however, the Amazon Kindle Fire tablet may be the first true competitor to the iPad dynasty.  The Kindle Fire is the newest and most advance Kindle product.  It is the first Kindle product with a color screen.  Up to 5 million of them could be sold by the end of January which would establish this new device as second place in the product class with only the iPad in front.  For the first time, the Kindle Fire offers a single device that runs from the Android operating system, where in the past consumers were confused at all the different Android devices.  That makes the Kindle Fire a viable competitor to the tightly integrated Apple technology that is included in the iPad.

     

  • The Restoration of Pier 1

    For a several years now, many retail analysts have predicted that Pier 1 Imports, a well-recognized home furnishings retailer, would ultimately go the way of former competitors Linens 'n Things and Bombay Company--out of business. Yet despite the awful economy, stagnant incomes for consumers, high unemployment and another projected flat holiday season for retail sales, it appears that the established but struggling brand is now facing calmer waters.

    What happened? In an effort to compete with the likes of Target, the 50-year-old company shifted strategy several years ago and began offering an entirely different mix of products, adopting the tagline "from Hippie to Hip." Instead of carrying the usual eclectic mix of unique household items the store had been known for, marketers decided to shift to more muted pallettes and an "urban loft" motif. But the industry apparently didn't need another retailer offering "me-too" products, as the company lost customers and revenue over a period of several years. Such a dramatic shift in product mix is always a huge risk and should only be considered as a last resort, since customers, especially the loyal kind, come to expect certain things from certain brands. This is what "branding" is all about. Obviously the company wasn't performing well prior to the strategic shift, so it felt that it had to change, and change it did!

    But cooler heads have prevailed, and Pier 1 has returned to stocking and merchandising an eclectic mix of colorful, decorative items. Profits are up dramatically and sales continue to climb. Though the company still has a ways to go, this sort of news is encouraging for retailers navigating these troubled waters. It turns out that offering the proper mix of products to the proper target market is good marketing practice. Go figure!

    DDS

  • Ghosts (Toys) of Christmases Past

     

    The new video game systems Microsoft Kinect and PlayStation Move will almost certainly be huge sellers — the toys most likely to cause a panic among eager shoppers over the next month.  Then again, the media darling this Christmas could just as easily be a bizarre-looking ball of fur that spouts insults in a made-up language.  That’s the fun of hot holiday toys. No one knows that a Furby doll or a Tickle Me Elmo will cause otherwise rational shoppers to trample their fellow man until the free market decides for itself.  Here are a dozen of the most popular, groundbreaking and notorious holiday toys from the past 80 years.  We looked beyond the most famous toys of all time, choosing items that peaked in popularity just before the holiday season, experienced shortages around Christmas and in many cases quickly fell out of favor after the hype was over.  Which explains why Teddy Ruxpin made this list, while Barbie dolls and hula hoops didn’t.  Also included is the original retail price was included for each toy, and what collectors are asking for the toy on eBay.  As you’ll see, it’s much better to have a “Star Wars” action figure in its original packaging than a Zhu Zhu Pet.

    Shirley Temple doll (1934):  Who can we blame for the holiday toy madness that makes children and parents insane around the holidays? Shirley Temple.  The first celebrity-driven doll was manufactured by The Ideal Toy and Novelty Company when Temple was 6 years old, in the third year of her movie career.  The demand became huge after the child actor’s breakout film, “Bright Eyes,” was released three days before Christmas.  Ideal sold a reported $45 million worth of Shirley Temple dolls in seven years.  The price in 1934 was $2.89 to $5.79.  A recent eBay price was $1,545.50.  Bet you didn’t know that while the actress was the model for the doll, Ideal didn’t think to put Temple’s name on the package until after the first generation.  Where are they now? Sales continued until 1941, with several re-releases during the past 70 years.

    Chatty Cathy (1960):  In a move that charmed a generation of young girls — and a few future horror film directors — the Mattel Corporation put a phonograph in an otherwise unremarkable doll, allowing her to say 11 different lines when a ring was pulled.  The two neediest lines were “Do you love me?” and “Please brush my hair!”  Cathy was the inspiration for the Talking Tina doll (“I’m Talking Tina and I’m going to kill you”) in a memorable 1963 episode of “The Twilight Zone.”  The price in 1960 was $19.90.  A recent eBay price was $195.00.  Bet you didn’t know that a 1969 reissue used the voice of Maureen McCormick from “The Brady Bunch. ” Voice actress June Foray provided the voices of both Chatty Cathy and Talking Tina.  Where are they now?  Sales continued until 1965, with updates in the 1970s and 1980s.  Most surviving Chatty Cathys are mute; several of the vital mechanisms weren’t built to last.

     G.I. Joe (1964):  After watching the Barbie line of toys become a market force, Hasbro came up with G.I. Joe, a foot-tall military action figure (don’t call it a doll!) with a name inspired by the 1945 movie “The Story of G.I. Joe.”  The figures came with names like “Ace” and “Rocky,” and didn’t have much variety — developing scuba diving, astronaut and other themes in subsequent years.  The figures were in huge demand out of the gate, making a then-impressive $16.9 million in sales in 1964.  The price in 1964 was $4.  A recent eBay price was $210.  Bet you didn’t know that the makers of G.I. Joe owe a lot to “Star Wars” for their longevity.  The much derided 3 3/4-inch G.I. Joe figures released in 1982 were a huge hit, no doubt from kids used to collecting similarly sized “Star Wars” figures.  Where are they now?  The G.I. Joe franchise does well in times of peace and poorly in times of war. Sales suffered during the Vietnam War, but the doll made a comeback in the 1980s — and again after the release of the live action “G.I. Joe” movie and it will likely become very popular again as the second G.I. Joe movie is in production for release in 2012.

    “Star Wars” action figures (1977):  Whatever you think about his movies, George Lucas was a marketing genius.  Since toymaker Kenner didn’t have time to manufacture more than a few coloring books and board games after the surprise success of “Star Wars,” Lucas still made millions selling vouchers for 3 3/4-inch tall action figures.  Bright-eyed children on Christmas morning unwrapped something called an “Early Bird Certificate Package,” with information about the figures they would receive in a few months, but no actual toy.  Original figures ranged from the obvious (Darth Vader) to the obscure (Death Star Commander).  The price in 1977 was $2.79.  A recent eBay price was $1,200.  Bet you didn’t know that more than three decades later, two of the most valuable action figures are manufacturing screw-ups: a Luke Skywalker with brown hair and a Han Solo whose head is too small.  Where are they now?  “Star Wars” is arguably bigger than ever, with help from “The Clone Wars” cartoon series.  Most of the 12 original figures have been re-released in a “Star Wars” classics line.

    Cabbage Patch Kid
    Cabbage Patch Kids (1983):  Up until this point, there had been fad toys, but people had mostly acted like members of a civilized society in their quest for them.  That all ended in 1983, when Coleco’s Cabbage Patch Kids became a huge media-fueled hit, causing a mad scramble for the few million of pudgy-cheeked dolls that were produced before Christmas.  Demand from children who wanted to “adopt” a doll led to adult fistfights and price gouging, with some Cabbage Patch Kids selling on the black market for 10 times their retail price.  The fad got even bigger the next year; 18 million Cabbage Patch Kids were sold in 1984.  The price in 1982 was $25.  A recent eBay price was $499.  Bet you didn’t know that one subsequent high-profile failure for the franchise was the Talking Cabbage Patch Kids, which used new technology that allowed more than one doll to converse with one another.  Where are they now?  Coleco went bankrupt in 1988, mostly because of failed video game and computer ventures.  Cabbage Patch Kids are still sold by Play Around.  
      
    Transformers (1984):  This cartoon about warring factions of anthropomorphic robots from outer space was hugely popular, aided by a barrage of commercials containing one of the most insidious earworms in history (“Transformers! More than meets the eeeeeeye …”).  Hasbro created a full line of toys, but demand quickly exceeded supply during the holiday season.  After honing their retail-fu skills during the Cabbage Patch Kid craze, parents fought like Autobots and Decepticons for the remaining toys.  Hasbro watched its shares rise from $23 to $60 in 1984.  Hasbro shipped an estimated $80 million worth of Transformers for the year.  The price in 1984 was $2.99 to $27.99.  A recent eBay price was $1,495.  Bet you didn’t know that among the voice-over artists in the early cartoons and movies: Scatman Crothers and Marlon Brando.  Where are they now?  The toys never went away, but didn’t reach the A-list again until Michael Bay’s 2007 live action “Transformers” movie scored big.
    Teddy Ruxpin bear, w. built-in microchip

    Teddy Ruxpin (1985):  If you couldn’t make a single friend in elementary school, your parents could buy you a Teddy Ruxpin. The brainchild on a Disney Imagineer named Ken Forsse, the talking bear and his friends were home versions of the animatronic puppets kids saw at theme parks and pizza parlors. Worlds of Wonder sold 800,000 Teddy Ruxpin dolls in 1985 — which were fetching double or triple their already steep price because of shortages around the holidays.  The price in 1985 was $68.  A recent eBay price was $71.  Bet you didn’t know that many of the first generation Teddy Ruxpins arrived with a glitch, speaking in a disturbing gibberish.  Teddy Ruxpin was recalled the following year, with more than 12,000 returned as defective.  Where are they now?  Worlds of Wonder went bankrupt in 1988.  Hong Kong-based Backpack Toys manufactures a relatively small number of Teddy Ruxpin accessories through 2010.

    Tyco's Tickle Me Elmo doll, popular toy

    Tickle Me Elmo (1996):  Elmo had long since ousted Grover as the Alpha Male of “Sesame Street,” and was a steady merchandise boon for Tyco Toys and Children’s Television Workshop.  But no one predicted the runaway success of Tickle Me Elmo, which is a close second to the Cabbage Patch Kids in the history of holiday hype.  The injuries were plentiful (one store worker broke a rib during a stampede) and reports of 600 percent markups or more weren’t unusual.  Faith in humanity was occasionally restored, too, with many reports of Tickle Me Elmos getting auctioned off for good causes.  The price in 1996 was $27.99.  A recent eBay price was $9.60.  Bet you didn’t know that one later generation Tickle Me Elmo doll worked like a Willy Wonka golden ticket, programmed to tell the owner that they won a $200,000 prize.  Where are they now? Mattel bought out Tyco and has kept the brand alive, most notably with the 2006 release Tickle Me Elmo Extreme, which moves so convincingly that it appeared to be possessed. 

      Little Five Year Old Adam Kalina 

    Beanie Babies (1996):  If you were the parent of a small child in 1996, and had a hard time saying no to your kid, chances are good you spent hours going from store to store looking for Bongo the Monkey or Tusk the Walrus.  Developed earlier in the 1990s, Beanie Babies were doing fine as a business — but became a huge phenomenon after salesman H. Ty Warner got the brilliant idea to “retire” some of his already successful babies, making them valuable on the collectible market.  With consumers combing stores looking for the rare ones (and often settling for more common new Beanie Babies) during the holidays, the company ended 1996 with $250 million in sales.  The price in 1964 was $4.95.  A recent eBay price was $4.99 (the rarest Beanie Babies go for as high as $5,000).  Bet you didn’t know that among the Beanie Baby tribute dolls were a Jerry Garcia tie-dyed bear, and a Diana tribute bear that was released after the Princess of Wales’ 1997 death.  Where are they now?  Beanie Babies have come and gone over the years, occasionally showing up in fast food kid meals or to promote a brand such as SpongeBob Squarepants.  

    Furby (1998):  The Furby was like having a cross between a Teddy Ruxpin and a foreign exchange student in your home.  The owl/hamster hybrid, which came in different shapes and colors, came out of the box speaking an unidentifiable language (“wee tee kah wah tee” = “sing me a song”) and slowly learned English.  They were an early holiday phenomenon, hyped constantly on television newscasts.  Tiger Electronics could only produce about 2 million — far fewer Furbys than children wanted — but came back to sell 14 million in 1999.  The price in 1998 was $35.  A recent eBay price was $11.51 .  Bet you didn’t know that the second-most searched Furby site on Google is www.phobe.com/furby, which shows the result of a customer’s autopsy he conducted on his “dead” toy.  Where are they now?  The original Furby was discontinued in 2000.  An upgraded Furby that could carry on a conversation was produced from 2005-2007. 

     

    Nintendo Wii (2006):  The Nintendo Wii had a cool new motion-sensing wand, but its graphics and family-friendly games looked quaint compared to the high-powered Xbox 360 (already one year old) and PlayStation 3.  The U.S. media initially hyped the PS3, but by Christmas the Wii was a much harder system to find.  Wii-hungry gamers waited in long lines at retail stores that were receiving only a few units each, and shortages continued throughout the following year.  Nintendo sold about 3 million units worldwide by Christmas 2006, and another 17 million in 2007.  The price in 2006 was $249.  A recent eBay price was $120.  Bet you didn’t know that shortly after the console was released, Wii players started complaining about a variation of tennis elbow.  Wii-itis has been written about both in the New England Journal of Medicine and WebMD.  Where are they now?  The Wii claims to hold a worldwide lead in sales over the Xbox 360 and PlayStation 3, but will face a new challenge this year as both systems release their own motion-sensing game controller updates. 

     Zhu Zhu Pet toy

    Zhu Zhu Pets (2009):  The Zhu Zhu pets didn’t reach Cabbage Patch Kid or Tickle Me Elmo levels of consumer mayhem.  Unlike many holiday toy makers of the past, Cepia LLC of China was able to ship millions of Zhu Zhu pets a few days before Christmas, no doubt averting several riots at Wal-Marts  throughout the country.  Cepia estimated $70 million in sales in 2009, according to the St. Louis Post-Dispatch.  Hopefully toy makers are starting to see a pattern here: while it’s impossible to predict the most-hyped toy of the season, it’s always good to invent something that will look cute when consumer reporters and anchors play with it on the morning TV news.  The price in 2009 was $10.  A recent eBay price was $12.  Bet you didn’t know that a consumer group suggested that one of the pets, Mr. Squiggles, had a dangerously high level of the metal antimony.  Cepia rejected the claim and sales of the Zhu Zhu Pets did not flag.  Where are they now?  Probably stuck under your couch. (Zhu Zhu pets and related accessories are still being manufactured.  GB

    Read the entire article here.

  • The Forgotten Holiday

     

    Today is the day of the forgotten holiday.  Yes, most of us have a large eating event planned.  Yes, many of us are with extended family.  Yes, many of us are taking advantage of the four- or five-day weekend to do some traveling.  But what is today, Thanksgiving, really for?  Thanksgiving Day is a holiday celebrated primarily in the United States and Canada.  Thanksgiving is celebrated each year on the second Monday of October in Canada and on the fourth Thursday of November in the United States. In Canada, Thanksgiving falls on the same day as Columbus Day in the United States. Because of the longstanding traditions of the holiday, the celebration often extends to the weekend that falls closest to the day it is celebrated. 

     

    In the United States, the modern Thanksgiving holiday tradition traces its origins to a 1621 celebration at Plymouth in present-day Massachusetts.  There is also evidence for an earlier celebration on the continent by Spanish explorers in Texas at San Elizario in 1598, as well as thanksgiving feasts in the Virginia Colony.  The initial thanksgiving observance at Virginia in 1619 was prompted by the colonists' leaders on the anniversary of the settlement.  The 1621 Plymouth feast and thanksgiving was prompted by a good harvest.  In later years, the tradition was continued by civil leaders such as Governor Bradford who planned a thanksgiving celebration and fast in 1623.   While initially, the Plymouth colony did not have enough food to feed half of the 102 colonists, the Wampanoaq Native Americans helped the Pilgrims by providing seeds and teaching them to fish.  The practice of holding an annual harvest festival like this did not become a regular affair in New England until the late 1660s.  According to historian Jeremy Bangs, the Pilgrims may have been influenced by watching the annual services of Thanksgiving for the relief of the siege of Leiden in 1574, while they were staying in Leiden.

     

    Thanksgiving in the United States was observed on various dates throughout history.  The dates of Thanksgiving in the era of the Founding Fathers until the time of Lincoln had been decided by each state on various dates.  The first Thanksgiving celebrated on the same date by all states was in 1863 by presidential proclamation.  The final Thursday in November had become the customary date of Thanksgiving in most U.S. states by the beginning of the 19th century.  And so, in an effort by President Abraham Lincoln to foster a sense of American unity between the Northern and Southern states, it was proclaimed that the date of the official Thanksgiving holiday was to be the final Thursday in November.  It was not until December 26, 1941, that the unified date changed to the fourth Thursday (and not always final) in November—this time by federal legislation.  President Franklin D. Roosevelt, after two years earlier offering his own proclamation to move the date earlier, with the reason of giving the country an economic boost, agreed to sign a bill into law with Congress, making Thanksgiving a national holiday on the fourth Thursday in November.

     

    So, now we know a brief history of Thanksgiving, but it is still the mostly forgotten holiday.  Right after Halloween, some stores will devote small spaces for Thanksgiving items to be displayed, but the majority of retail space is dedicated to Christmas displays.  Does anyone really think about the heritage surrounding Thanksgiving in the United States?  We know it is a day off work; we know there is the Macy's Thanksgiving Day Parade; we know there are NFL football games, one featuring the Dallas Cowboys and another featuring the Detroit Lions; we know there will be a huge meal and many of us look forward to the leftovers; but how do we really treat Thanksgiving in our minds?  Many people know that after Thanksgiving, there are only a few weeks left before the really large break surrounding the end of year/beginning of year holidays.  Many people spend part of their Thanksgiving Day research on where the best deals are for Black Friday.  So it appears that in the United States, Thanksgiving has almost become a day to get ready for Christmas and the other holidays that will soon follow and the true meaning of Thanksgiving has been lost, as perhaps the true meaning of Christmas and the other holidays have gone by the consumer wayside also.  GB

  • 'Tis the Season for Product Shortages

     

    What happens when a person addicted to drugs or alcohol is told there are no more of those products?  The addict gets upset, gets panicky, then goes through days of withdrawal.  It may be good for him or her in the long run, but it is very unpleasant for that person for awhile.  What would happen if a husband was sent to the store to get a particular brand of cranberry sauce for Thanksgiving dinner and he claimed the store was out of that brand to justify his buying another brand that he likes better?  If the wife finds out, she would likely be quite upset.  What would happen if your good friend tells you there are no more seats left on the airplane, so you shouldn't even bother trying to go on the trip with him, but there are still plenty of seats?  If you find out about it, you will likely be quite upset and the relationship between you and that friend will be damaged.  What happens when a company tells its loyal customers there is a shortage of a product, even though there is not a shortage, and a big reason for the false shortage is to be able to sell the product for a higher price?  If the loyal consumer finds out that is was a false shortage that caused him or her to pay a higher price, how do you think that person feels?

     

    False product shortages seem to be popular and the practice might have started years ago when it became popular for toy manufacturers to introduce a new version of a toy around Black Friday, the beginning of the holiday shopping season.  Who could have anticipated that a ball of fluff known as Furby or a Sesame Street character called Elmo could cause otherwise rational shoppers to trample their fellow consumers to get to the limited supply.  Nowadays, many product shortages are for more sophisticated electronic products and these shortages are not limited to the holiday season only.  If these shortages are really false, these companies may risk creating doubts in brand loyal consumers' minds and their sense of loyalty may start to erode. 

     

    A false product shortage is a form of artificial scarcity induced by a supplier, often with the intent to elevate consumer demand above levels that may otherwise be achieved in the absence of such scarcity.  Companies may induce a false shortage to give rise to a common perception of the rarity or uniqueness of a product or service, when they are, in reality, neither precious, nor difficult to produce.  Suppliers often stand to gain from a false shortage, because it can help increase consumer demand without a corresponding decrease in price, and hence an entity's perceived value. This results in an increase in short-term profit.

     

    Are the new products for which consumers are willing to stand in long lines for hours and sometimes days really in short supply, or are these shortages false in many cases.  Here is a recent case by a company that has been a constant user of this product "shortage" strategy.  Apple decided a long time ago to go with LG Display located in South Korea to manufacture the IPS-based Retina display. Apple knew full well that production capacity in this South Korean plant was only a fraction of the 4 million units they need produced per month. In fact, the South Korean company told Apple that they will need to build out production lines and that wouldn't happen until late summer and perhaps even as late as December of 2010.  So calculating that this South Korea company is not up to essential capacity so far, why would Apple elect to release the iPhone simultaneously in the Japan, UK, US, France, and Germany? Why not slowly bring it to market country by country over several months?  The explanation is that Apple sought to cause an artificial shortage to leverage the selling hype over the new iPhone 4. Jay Leno said it best, "Give a man a fish and he'll eat for a day, teach a man to fish and he'll eat for a lifetime, teach a man to create an artificial shortage and he'll eat steak."  However here is where things become truly foolish.  Apple has worn out this same tactic over and over again and even for the iPhone 3 last year. Therefore consumers are wise to the whole false shortage fad.  But more than that, Apple does not have market domination like they had a year ago.

     

    So, the question remains whether creating false shortages that drive up prices the first-buy consumers (innovators) pay for products is a good strategy.  Will brand loyalty begin to erode when these ultra-loyal consumers, such as many Apple consumers, realize what is going on?  So far, these consumers are remaining loyal, so who knows?

  • Magazine Ad Sales Fall

    Surprise, surprise! Another negative report has surfaced in the past few days about the reduction of ad spending in print media. Instead of newspapers, this time the bad news surrounds magazines where the number of ad pages, a common measurement of  industry health, has fallen 6.8% in the past couple of months. The Wall Street Journal reports that this reduction is due to a number of factors including a reduction in marketing spending among finished goods manufacturers, the sluggish economy, and the inevitable migration of consumers and ad dollars to digital media.

    Since the contraction of print media is not new information to most observers as ad dollars have been steadily migrating online for many years, there is still something revealing to note. Remember that these reports about newspapers and magazines almost never refer to the digital versions of their publications. The only numbers reported concern the fading print versions of these publications, so the picture looks grim. So it begs the question, "Is it accurate to sound the death knell for the publishing industry when the fact is that eyeballs and ad dollars are simply shifting to the online formats of these publications, and not necessarily from the publications themselves?" Another question is, "When will the research reports begin to consider both the digital AND print versions together to paint a more accuarte picture of the viability of these publications?"

    The advent of new e-reader formats and technologies will surely accelerate the shift from print to digital, but don't expect magazines and newspapers to disappear. Consumers still have a healthy demand news and lifestyle-specific content. Newspapers and magazines aren't disappearing; they are migrating more accessible digital formats, which should be good news for publications wishing to broaden their reach. It would be nice if researchers and media would migrate with them in the way that they report on the industry.

    DDS

  • What is Included in the Holiday Season?

     

    In the United States the holiday season is generally considered to begin with Thanksgiving and end after New Year's Day. The season in the United States encompasses at least Christmas and New Year's Day, and also includes Saint Nicholas Day (December 6 or 19, depending on orthodoxy). The U.S. Fire Administration (USFA) defines the "Winter Holiday Season" as the period from December 1 to January 7.  The USFA  is a division of the Federal Emergency Management Agency, which in turn is managed by the Department of Homeland Security.  The USFA was organized in 1974 as a result of a publication called America Burning.  The report stated that a federal agency be organized to help combat the growing problem fatal fire happening throughout the country.  The USFA manages many of the federal programs related to firefighting, including systematic collection of statistics relating to fire incidents, public fire education campaign materials, and information on grants and funding. It also provides a directory of approved, fire-safe hotels, and information on home fire safety.  Thus, the way it defines the holiday season is most likely related to the period of time consumers most likely have increased their fire risk by putting up holiday lights and decorating Christmas trees.

     

    In China, the holiday season is generally considered to begin with the winter solstice and end after the Lantern Festival.  The dates of these two events vary and are based on the Lunar Calendar. Some stores and shopping malls in the U.S. advertise their Christmas merchandise beginning immediately after Halloween or even in late October, alongside Halloween items.  In the UK and Ireland, Christmas food generally appears on supermarket shelves as early as September, while the Christmas shopping season itself starts from mid November when many city Christmas light displays are switched on.

     

    The precise definition of feasts and festival days that are encompassed by the Christmas and holiday season has become controversial in the U.S. over recent decades.  While in other countries, the only holidays included in the "season" are Christmas, Christmas Day, St. Stephen's Day/Boxing Day, New Years Eve, New Year's Day and Epiphany, in recent times, this definition in the U.S. has begun to expand to include Yule, Hanukkah, Kwanzaa, and Thanksgiving.  Due to the informal inclusion of Thanksgiving, the Christmas and holiday season has begun to extend earlier into the year.  This phenomenon is known as Christmas creep.

    Yule or Yuletide is a winter festival that was initially celebrated by the Germanic people as a pagan religious festival, though it was later absorbed into, and equated with, the  Christian festival of Christmas. The festival was originally celebrated from late December to early January on a date determined by the the lunar Germanic calendar.  The festival was placed on December 25 when the Christian Calendar (Julian Calendar) was adopted. Scholars have connected the celebration to the Wild Hunt.  Terms with an etymological equivalent to "Yule" are used in the Nordic countries for the Christian Christmas (with its religious rites), but also for other holidays of the season.  Yule is also used to a lesser extent in English-speaking countries to refer to Christmas.  Customs such as the Yule log, Yule goat, Yule boar, Yule singing, and others stem from Yule.  The fact that Yule is not originally tied to Christianity means Yule in the Nordic countries is also celebrated by many non-Christians and even by the non-religious. The non-religious treat Yule as an entirely secular tradition.  A number of Neopagans have introduced their own rites.

     

    Hanukkah, also romanized as Chanukah or Chanuka, also known as the Festival of Lights, is an eight-day Jewish holiday commemorating the rededication of the Holy Temple (the Second Temple) in Jerusalem at the time of the Maccabean Revolt of the 2nd Century BC.  Hanukkah is observed for eight nights and days, starting on the 25th day of Kisley, according to the Hebrew Calendar, which may occur at any time from late November to late December in our calendar.  The festival is observed by the kindling of the lights of a unique candelabrum, the nine-branched Menorah, one additional light on each night of the holiday, progressing to eight on the final night. The typical Menorah consists of eight branches with an additional raised branch. The extra light is called a shamash and is given a distinct location, usually above or below the rest.  Hanukkah is celebrated by a series of rituals that are performed every day throughout the eight-day holiday, some are family-based and others are communal. There are special additions to the daily prayer service, and a section is added to the blessing after meals.  Hanukkah is not a Sabbath-like holiday, and there is no obligation to refrain from activities that are forbidden on the Sabbath.  Adherents go to work as usual, but may leave early in order to be home to kindle the lights at nightfall.  There is no religious reason for schools to be closed, although, in Israel, schools close from the second day for the whole week of Hanukkah.  Many families exchange gifts each night, and fried foods are eaten.

     

    Kwanzaa is a week long celebration held in the United States honoring universal African-American heritage and culture, observed from December 26 to January 1 each year.  It features activities, such as lighting a candle holder with seven candles and culminates in a feast and gift giving.  It was created by Maulana Karenga and was first celebrated in 1966–1967.  Maulana Karenga (born Ronald McKinley Everett on July 14, 1941) was an African-American professor of Africana Studies, scholar/activist, author and best known as the creator of the pan-African and African-American holiday of Kwanzaa.  Karenga was a major figure in the Black Power movement of the 1960s and 1970s.  He created Kwanzaa in 1966 as the first specifically African American holiday.  Karenga said his goal was to "give Blacks an alternative to the existing holiday and give Blacks an opportunity to celebrate themselves and history, rather than simply imitate the practice of the dominant society."  The name Kwanzaa derives from a Swahili phrase meaning first fruits of the harvest.  The choice of Swahili, an East African language, reflects its status as a symbol of Pan-Africanism, especially in the 1960s.  Kwanzaa is a celebration that has its roots in the black nationalist movement of the 1960s, and was established as a means to help African Americans reconnect with their African cultural and historical heritage by uniting in meditation and study of African traditions.  During the early years of Kwanzaa, Karenga said that it was meant to be an alternative to Christmas, that Jesus was psychotic, and that Christianity was a white religion that black people should shun.  However, as Kwanzaa gained mainstream adherents, Karenga altered his position so that practicing Christians would not be alienated, then stating in the 1997 Kwanzaa: A Celebration of Family, Community, and Culture, "Kwanzaa was not created to give people an alternative to their own religion or religious holiday."  Many Christian African Americans who celebrate Kwanzaa do so in addition to observing Christmas.

     

    The fact that these different heritages and cultures are celebrated during the same time frame makes it necessary to be sensitive to different beliefs, backgrounds, religions, etc.  It also gives marketers even more opportunities to take advantage of the Holiday Season by considering these different holidays and providing products for consumers of all backgrounds the products they want during this time of year. GB

  • Black Friday was First; Cyber Monday was Second; Now There's Small-Business Saturday

     

    Black Friday started around 1966 and is the day following Thanksgiving Day, traditionally the beginning of the Christmas shopping season. On this day, many retailers open very early, often at 4 a.m., or earlier, and offer promotional sales to kick off the shopping season. Black Friday is not actually a holiday, but many employers give their employees the day off, increasing the number of potential shoppers. It has routinely been the busiest shopping day of the year since 2005, although news reports, which at that time were inaccurate, have described it as the busiest shopping day of the year for a much longer period of time.

     

    Cyber Monday is a marketing term for the Monday immediately following Black Friday, the Friday following Thanksgiving Day, created by companies to persuade people to shop online. The term made its debut on November 28, 2005 in a Shop.org press release.  According to the Shop.org/BizRate Research, 77 percent of online retailers said that their sales increased substantially last year on the Monday after Thanksgiving, a trend that is driving serious online discounts and promotions on Cyber Monday every year since its debut.

     

    Small Business Saturday is an American shopping holiday created by American Express, held on the Saturday after Thanksgiving during one of the busiest shopping periods of the year. First celebrated on November 27, 2010, it is a counterpart to Black Friday and Cyber Monday, which feature big box retail and e-commerce stores. By contrast, Small Business Saturday encourages holiday shoppers to patronize brick and mortar businesses that are small and local.  In 2010 the holiday was promoted by American Express via a nationwide radio and television advertising campaign. That year, Amex bought advertising space on Facebook, which it in turn gave to its small merchant account holders, and also gave rebates to new customers to promote the event.  American Express publicized the initiative using social media, advertising and public relations.  Local politicians and 30,000 tweets on Twitter.  Cinda Baxter, founder of the 3/50 Project, was a national spokesperson for Small Business Saturday. The 3/50 Project encourages consumers to commit to spending $50 of their current monthly budgets with independently-owned small businesses they care about.

     

    Though all these shopping holidays began as promotional events created and sponsored by businesses, the result is that they give individual consumers many opportunities to take advantage of the great holiday deals.  One of the best ways to turn our economy around is to spend, but not go into excess debt while doing so.  Let's all get out there and shop 'til we drop.  GB

  • Holidays are Forever

    It's a good thing for consumers if they can survive the holiday season without increasing their debt by too much.  Because they have to save money for buying gifts for Valentine's Day.  Don't forget about Easter. And Mother's Day.  And Father's Day.  Then there are the flowers for Memorial Day, the fireworks and food for Fourth of July.  Oh, and the last minute summer trip for Labor Day weekend. Whew, it's finally all over.  Oh wait!  There's Halloween, then Thanksgiving, then the cycle starts all over again.  And don't forget; everyone has a birthday.  It's a good thing we have a few small breaks in between holidays.  Or do we?  As soon as the end-of-the-year holidays and New Year's Day are over, it's time to start thinking about Valentine's Day.  As soon as the retail shelves clear of Valentine's Day products, they fill with Mother's Day products.  Then they fill with Father's Day and Fourth of July products, immediately followed by the beginnings of Christmas products.  Yes, Christmas begins in July now.  Halloween is also a big time for retailers, and so is Thanksgiving.  Consumers do not get a break.

    With Black Friday, Cyber Monday and the rest of the holiday season looming for consumers, have they recovered from the previous holidays?  Valentine's Day is a big deal for most; it's the day that we shower our significant others with random gifts: teddy bears, chocolates, jewelry, and even engagement rings have been notoriously known to be presented. It's also a huge day for retailers since it generates $14 billion in revenue, including $2.2 billion in jewelry sales. There's something out there for everyone, and even geeks have special valentine's day gifts up their sleeves.  During this last Easter, US retail sales grew strongly in as discount promotions and the Easter holiday persuaded consumers to spend more than expected, in spite of rising inflation and a weak labor market.  Sales were up 8.7 per cent from a year ago at stores open at least 12 months, equalling the largest monthly gain in the past 11 years.  Mother’s Day is the second largest U.S. consumer spending holiday. The average person will shelled out $126.90 on Mother’s Day gifts, compared to $123.89 last year. Total spending is expected to reach $14.6 billion. As one of the biggest holidays of the year, these billions will be spent at restaurants or on clothing, jewelry and flowers.  In a recent year, Americans spent an average of $90.89 on gifts for dad. Total spending was $9.4 billion.  Consumers spent the most ($1.9 billion) on a special outing such as a dinner or even a sporting event.  Clothing still ranks high among gift givers who spent $1.3 billion on new socks, slacks and ties.  Others treated dad to a gift card ($1.2 billion), electronics ($1.0 billion), books or CDs ($548 million), home improvement items ($522 million) and sporting goods ($502 million).  Lots of Americans showed off their Fourth of July spirit in the form of flags, decorations and clothes: 79% of Americans already own some form of patriotic merchandise, and 16% will bought more for this year's holiday, according to the survey.  Consumers also spent over $600 million on fireworks.  Americans spent nearly $7 billion this year on Halloween, making it one of the largest holidays.

    And that brings us up to the Holidays.  Americans forecast they will spend an average of $712 on Christmas gifts this year, nearly identical to the $715 they estimated they would spend on Christmas at this time last year, according to data released by Gallup in October 2011. More specifically, Gallup data shows about one-quarter of Americans plan to spend at least $1,000 on gifts, another quarter say they will spend between $500 and $999, and about one-third will spend between $100 and $499.  In addition, very few consumers plan to spend less than $100 while 14% are unsure.  The poll, conducted Oct. 6-9, 2011, also shows little change compared with October 2010 in Americans’ estimates of whether they will spend more or less on Christmas gifts than the year before. Roughly twice as many Americans say they will spend less rather than more on gifts this year (29% compared to 15%), while 54% say they will spend about the same.

    Read more:  http://www.marketingcharts.com/direct/holiday-spending-forecasts-chilly-19430/

     

  • The Marketing Environment: The Political/Legal Environment

      
    In the fifth and final blog about the Marketing Environment, it is time to consider the Political/Legal Environment.  Remember that this is one of the partially-controllable variables and the most common way for an organization or industry to influence this environment is through the use of lobbyists.  Though what lobbyists do may sometimes be viewed as unethical and even illegal in some cases, lobbying itself is legal and can be an effective means of impacting the political process.  A recent example is when a large urban state college (nearly 25,000 students), Metropolitian State College of Denver, recently tried to change its name to Denver State University.  This college is the largest undergraduate institution in the State of Colorado and also has begun offering masters degrees, so the name change from college to university makes perfect sense and the fact that it is located in downtown Denver and educates mostly students from the Denver Metropoitan area suggests the proposed name of Denver State University.  However, when the bill to change the name went before the Colorado State Legislature in the Spring of 2011, a much smaller private school (11,000 students) in the area, University of Denver, hired powerful lobbyists to block the name change.  The name change was successfully blocked by a much smaller and private university and the much larger state college is now considering other names that will be much less attractive and descriptive of the school.  Though the ethics of this action, and the corresponding decisions by the state legislature, must come into question, none of the lobbying actions have been deemed illegal.

    At the national level, there are many federal agencies that may have an impact on marketing, depending on the nature of the product being marketed.  Some of these agencies are as follows.  The Federal Trade Commission (FTC) has a mission of promoting consumer protection and the elimination and prevention of what regulators perceive to be harmfully anti-competitive business practices, such as coercive monopolistic practices. The Federal Communications Commission (FCC) works toward several goals in the areas of broadband, competition, the spectrum, the media, public safety, and homeland security.  The Environmental Protection Agency (EPA) is an agency charged with protecting human health and the environment, by writing and enforcing regulations based on laws passed by Congress.  The Securities and Exchange Commission (SEC) holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges, and other electronic securities markets in the United States.  The Food and Drug Administration (FDA) is responsible for protecting and promoting public health through the regulation and supervision of food safety, tobacco products, dietary supplements, prescription and other over-the-counter pharmaceutical drugs, vaccines, biopharmaceuticals, blood transfusions, medical devices, electomagnetic radiation emitting devices, veterinary products, and cosmetics.  The Federal Aviation Administration (FAA) has authority to regulate and oversee all aspects of civil aviation in the U.S. and has become much more visible since the terrorist attacks of 9/11/2001.  These are just a few of the federal agencies that have an impact on marketing. One must also remember that state, county, and local laws exist.  When marketing in other countries, the agencies impacting marketing may be totally different or altogether non-existent.

     

    Some specific national laws that have been passed that directly impact marketing are as follows.  A series of anti-monopoly laws have been passed, starting in 1890 and going through the latest law passed around 1990.  These laws prohibit anti-competitive behavior and unfair business practices.  Antitrust laws are intended to encourage competition in the marketplace.  These competition laws make illegal certain practices deemed to hurt businesses or consumers or both, or generally to violate standards of ethical behavior.  Food and drug misrepresentation laws were mostly passed in the early 1900s to assure that consumers are being protected from false claims about the effects of certain foods and medications.  Related to the anti-monopoly laws is legislation prohibiting price discrimination.  The Children's Television Act was enacted in 1990 to enhance television's potential to teach the nation's children valuable information and skills. The Act requires each full-service television station that offers children's television programming in the U.S. to serve the educational and informational needs of children through its overall television programming.  This Act also reduces the time that can be used for advertising during children's programming.  These are just a few of the federal-level laws that have a direct impact on marketing.  In addtion, there are state, county and local laws a marketer must keep in mind.

     

    In addition to politics and legislation, a nation's legal system must be kept in mind.  Legal systems have been broadly classified into four categories, and many actual systems appear to be a combination of two or more these categories.  Perhaps the most straightforward system is Islamic Law.  This system does not attempt to separate religion and government.  On the contrary, it embraces religion and acknowledges the Koran as both a religious text and a legal one.  Another legal system is Socialist Law which is based on the notion that the central government needs to own, or at least control, everything.  Common Law is the third system and is the system that is utilized, for the most part, in the U.S.  It is a system based on past precedents and court decisions.  The final system is known as Code Law and is a system normally found only in countries that have not changed their political or legal systems for a long time.  The notion behind this system is that everything is codified.  All crimes are coded and have a specific punishment; thus, a court system decides only on what crime has been committed.  Once that has been decided, the code for that crime can be looked up and the specified punishment applied.

  • The Marketing Environment: The Social/Cultural Environment

     

    Continuing the series of blogs about the Marketing Environment, we now come to the Social/Cultural Environment.  Remember the nature of the Marketing Environment is that it is not totally uncontrollable, but we have referred to it as being partially-controllable.  The Social/Cultural Environment, however, is the most difficult to have an influence upon.  Changing a society's culture takes a long time and single companies may have an impact, but probably only over the long period of time.  For example, Microsoft and Apple have changed the small part of our culture that is connected to the computer.  Before these two companies developed operating systems that were windows-driven, computer users had to utilize some other program and type in each command, rather than merely clicking on windows.  Also, Southwest Airlines changed the small part of our culture that is related to air travel.  Before Southwest Airlines, seating was by rows.  A range of rows were announced for boarding, starting from the rear of the aircraft and working forward.  People actually stayed in their seats in the terminal until their row on the aircraft was called.  Now, partially because of Southwest Arilines' boarding procedures, as soon as boarding begins, many passengers leave their terminal seats and crowd the gateway, sometimes making it difficult for those whose rows have been called to access the gate.

    When one considers the many elements of culture, it is no wonder that things are difficult to influence.  Some cultural elements include the following: language, customs, traditions, religions, values, beliefs, attitudes, aesthetics (the visual and performing arts), personal space, etc.  Within the United States, there are also many subcultures that are based on values, religion (Utah), languages (South Texas and Southern California, Hawaii), etc.  Marketing in this type of environment within the same country is sometimes known as multicultural marketing.  The cultural differences are even greater as a marketer does business in other countries.

    If we just look at language, for example, we can understand some of the difficulties companies face.  When designing advertisements, sales presentations, or other promotional material, a marketer must keep language issues in mind.  If a person speaks English, Spanish, German, and many other similar languages, we normally are used to reading material staring at the upper left-hand corner of a page and then moving across the page to the right and down as we read.  Arabic readers begin at the upper right-hand corner and read to the left, working their way down.  People who speak many of the Asian languages, especially those related to Chinese, traditionally begin in the upper right-hand corner and read downwards, working their way across the page to the left.  People speaking these languages tend to process information in the same order as they read.  Thus, when designing a print advertisement, for example, an advertiser may have to arrange the elements of the ad completely opposite from what they would for an American or Spanish audience. 

    In addition to this information processing difference, there is also a difference in how much a culture attends to non-verbal vs. verbal language.  A culture that pays more attention to non-verbal language is called a high-context culture, while a culture attending more to the spoken or written word (verbal language) is known as a low-context culture.  High-context cultures include much of Asia, the Middle East, Africa, Latin America and Southern Europe.  The rest of the world, including the United States, Canada, Nothern Europe, Australia, etc., are low-context cultures.  That means we are not very good at reading and using non-verbal language and are at a disadvantage when we go into high-context cultures to do business.  Also, when developing advertisements for high-context cultures, advertisers should pay more attention to the non-verbal cues included, such as pictures, colors, lines, background sounds, etc.

    When a marketer considers not only language, but other complex cultural elements, such as religion, beliefs, values, etc., he or she may quickly feel overwhelmed and discouraged.  However, some effort in learning important differences can go a long way toward being successful in these other cultures.  Major marketing mistakes could have been avoided with even a small amount of research beforehand.  For example, when Procter & Gamble decided to market  Tide Laundry Detergent in the Middle East for the first time, they developed a cartoon-style print advertisement that consisted of 4-5 pictures depicting putting dirty clothes in a washing machine, adding Tide and then the clothes coming out clean.  They first placed this ad with the first picture on the left and the last picture on the right, not bothering to realize that Arabic speakers are going to process information in the opposite direction than do Americans.  This mistake, though not fatal, cost the company some money, time, and reputation, and yet, it would have been a very simple thing to check with an Arabic speaker before running the ad.  In another example, when one of the major U.S. airlines first decided to enter the Asian market, it threw a big party and handed out white carnations for everyone to pin on their clothing.  The company did no research to discover that white is the color of death in many Asian cultures.  Again, a simple check would have solved this problem before it became a problem.  GB

  • Don't Like Black Friday? Try Cyber Monday

     

    Everyone knows what Black Friday is, but do consumers know about Cyber Monday?  This shopping phenomenon has been around for a much shorter time than has Black Friday.  Cyber Monday is a marketing term for the Monday immediately following Black Friday, the Friday following Thanksgiving Day in the United States, created by companies to persuade people to shop online. The term made its debut on November 28, 2005, in a Shop.org press release entitled "'Cyber Monday' Quickly Becoming One of the Biggest Online Shopping Days of the Year". According to the Shop.org/BizRate Research 2005 eHoliday Mood Study, "77 percent of online retailers said that their sales increased substantially last year on the Monday after Thanksgiving, a trend that is driving serious online discounts and promotions on Cyber Monday this year (2005)." In 2006, Shop.org announced that it launched the CyberMonday.com portal, a one-stop shop for Cyber Monday deals. In 2010, comScore reported that consumers spent $1.028 billion online on Cyber Monday (excluding travel, 2009: $887M), the highest spending day of 2010. Cyber Monday has become an international marketing term used by online retailers in Canada, the United Kingdom, Portugal, Germany and New Zealand.

    Similar to consumer expectations about Black Friday, consumers can expect great online deals on Cyber Monday.  Cyber Monday 2011 will be on November 28. Black Friday is the official kick off of the holiday shopping season, featuring "doorbuster" deals at early morning hours. Cyber Monday is a term that was coined for the day when all the holiday shoppers have gone back to work after Thanksgiving weekend and are doing their holiday shopping online from their desks. Its thought that everyone is shopping for the great deals that they weren't lucky enough to get when shopping on Black Friday. Usually, Cyber Monday coupon and deal spreads are leaked so Cyber Monday shoppers can plan their shopping strategies. Shopping experts give their predictions on what the best Cyber Monday shopping deals will be. Shoppers can even do a little investigation themselves to help them better plan their shopping strategies for Cyber Monday 2011.

    Read more:  http://www.squidoo.com/how-to-shop-cyber-monday

    So, where online should a consumer shop on Cyber Monday? According to deals offered in the past few years, and rumors of deals that will be available this year, here are the top five retailers to try for Cyber Monday.

    Amazon offers some of the hottest Cyber Monday Deals on the Internet! Every year the sale gets bigger and bigger and features such hot items as TVs, Computers, GPS Systems, Movies, Music and much more!
    Walmart offers great Cyber Monday deals each season. They offered a $318 laptop last year along with a Garmin Nuvi 295W for $89, the deals should get better in 2011!
    Best Buy has a huge Movie and Music sale last year along with great deals on TVs, Electronics, Computers and more! We will be covering the Best Buy Cyber Monday sale this year!
    Target offered Cyber Monday deals in September but have no fear the best deals will be on the real Cyber Monday! Expect Electronics, Clothes, TVs and Video Games to come down in price This November 28th!
    Last year Kohls offered 15% Off your entire purchase and made it a sweeter deal by taking a extra 20% off plus free shipping if you spent over $200! Plus a lot of their items had huge discounts on top of that! This year’s sale should be no different!
    In summary, the best deals online are saved for Cyber Monday. So if you choose to avoid the hectic and stressful Christmas Rush on Black Friday, kick back and relax and wait for Monday to find your bargains from the comfort of your home and computer. GB

  • The Marketing Environment: The Technological Environment

    Continuing with the posts about the Marketing Environment, remember that these are the man-made elements that are external to the individual organization that have an impact on how marketing is done.  The five sub-environments - the competitive environment, the economic environment, the technological environment, the social/cultural environment, and the political/legal environment - are also known as the partially-controllable variables.  This is the case because an organization is able to influence these variables in some ways, but do not have direct control over them.

    The Technological Environment is increasingly more important.  Just 20 years ago, if a company was not a high-tech company, the technological environment may have had little impact on it.  On the other hand, Companies such as Microsoft, Apple, IBM, Intel, etc., have always been heavily influenced by this environment, and in turn, have often been able to exert substantial influence back on the environment.  However, if a company was low-tech, this environment had minimal impact.  Nowadays, however, the technological environment should be important to every company.  For example, a business as simple and seemingly low-tech as a pawn shop is now doing more business online than it is in it physical stores.  In fact, most retailers, especially the national and international ones, not only have a brick-and-mortar (physical store) option, where customers physically go to the stores to buy products, but they also have a click option where customers can order online and never have to leave the comforts of their own homes.  In fact, many large retailers actually offer more products online than they do in their physical stores.  For example, did  you know you can buy caskets from Wal-Mart?  You can online.  These combination retail operations are known as click-and-mortar operations. This trend toward online retaling began with purely online companies, such as eBay, Amazon.com, SierraTradingPost.com, etc.  But it has rapidly expanded and become such an integral part of most retail operations that without it, the chances of not being able to compete are exponentially multiplied.

    Beyond the retail-level applications of technology, this environment is also becoming more and more important. Where salespeople once had to spend hours in the evenings writing reports, etc., they now are eqipped with hand-held computers to enter information on accounts and orders immediately following an appointment with a customer.  Where once advertising agencies were desperately seeking artists who could draw and paint, they are now seeking digital graphics professionals.  Where once pricing decisions might be as simple as looking at what your local competitors are doing with their prices, now much wider national and international research can be performed very quickly via the Internet, and software is available to help develop pricing strategies.  Where once marketing research data was laboriously kept by hand and analysis of the data was so tedious that it was often neglected, now software programs exist to allow constant evaluation of current data for use in marketing research.

    Another important piece, and the most recent development, is the venturing of companies into social media.  The social media sites are ecstatic about it because they can make tons of money from these businesses.  The businesses themselves are benefitting greatly from using social media in their marketing plans.  Many are now hiring social media marketing experts to be sure they keep up to speed with the constantly shifting Technological Environment.

    Yes, the age of technology is here and has become relevant for all organizations and in every function in marketing (4Ps).  For companies who are slow to react or adapt to new technological trends, the admonition is to beware because failure is just around the corner.

     

  • The Marketing Environment: The Economic Environment

    As discussed in a previous post, the marketing environment consists of five sub-environments.  In relationship to the marketing environment, it was mentioned that these sub-environments are man-made and partially controllable.  The partially-controllable aspect may be most difficult to envision with the economic environment.  How can a single organization have an impact on the economy, thus making this sub-environment partially-controllable?  The economic environment is something marketers are constantly considering when they design and implement promotional messages, design products, design distribution channels, and form pricing strategies.

    In response to the ecomomic conditions here in the U.S. and worldwide, manufacturers of large pickup trucks have actually started using fuel economy in their promotional messages.  "Best in class fuel economy" seems to be the mantra.  It seems like somewhat of a joke and a terrible strategy in this product class.  When people buy large pickup trucks, do they really consider fuel economy?  It seems like sometime they do these days.

    Many of us have heard of the Industrial Revolution and common knowledge tells us that it began in the 1700s in England and the Father of the Industrial Revolution was Adam Smith, etc.  However, there have actually been three industrial revolutions.  The First was the 1700s one of which Adam Smith was the Father.  The Second one occurred around the turn of the last century with the advent of the assembly line introduced by the automobile industry, notably Henry Ford.  The Third Industrial Revolution began in the 1970s and continues today.  It is the Computer Age.  The advance of the Computer Age has been curtailed by the bad world economy.  Arrested development has occurred in such industries as defense, space exploration, advances in new fuels and power sources, etc.

     

    Can a single organization have an impact on an economy.  It is easy to see that a single company can have an impact on at least a local economy?  Even a company as simple as a car dealership can have an impact on a local economy.   One major car dealership closing down can impact the following aspects of a small town. The employees of the dealership itself will feel the burden first with loss of employment.  The dealership was most likely a contributor to charities, school fundraisers, local events, and other community activities. All of these places will be forced to make cutbacks and look for other means of funding when the business closes.  Local restaurants the employees frequented on lunch breaks will lose customers and sales.  Local banks that hold loans for the employees of the car dealership may suffer when people can no longer make payments on time.   People who can no longer pay their rent will move, therefore cutting into the profits of apartment and housing communities.  Employees will move to other states for jobs, which will mean local gas stations lose customers and money because not as many people live in the town.  The unemployment rate will sky rocket, making it harder for everyone in the town to find jobs.  The unemployed will still need medical attention. People will have to go to free clinics and the health department. This will put a strain on the resources of those establishments.  Families forced to move out of the community will cause problems for local schools and stores. Some schools get funds for having a certain number of children enrolled. The more children, the more funds the school gets to run things. Local stores will feel the crunch when those same children are not buying school clothes and supplies, and their parents aren't shopping for groceries and other items.  As you can see, a major closing of a business in a small town has significant implications for the community.

    We have also seen how the actions of large companies can impact and entire national, or even international economy.  About a decade ago, the actions of companies like Enron and WorldCom combined with the terrorist attacks to jerk the U.S. economy into a downturn from which we have been unable to recover.  Back then, I was working at a university in Texas and a donor had just donated $18.8 million dollars of his company's stock to our university in order to build a College of Business building.  Unfortunately, the company whose stock was donated owned a lot of Enron stock.  When Enron's problems occurred, the donated stock went from a value of $18.8 million to around $3 million nearly overnight.  The dreams of a College of Business building were put on hold for a decade.  Finally, through other donations and State of Texas money, the building was realized. GB

  • The Chinese are Coming! The Chinese are Coming!

    This year, 2011, is the Year of the Rabbit, according to the Chinese Zodiac.  People born this year are going to be timid, but attractive.  They will be compassionate and protective, but where romance is concerned, their sentimentality may lead them to idealize relationships. These sweet, sensitive people often end up giving more of themselves to a partner than is realistic or even healthy.  There are eleven more signs in the Chinese Zodiac, each corresponding to a year, rather than a month like the Western Zodiac. I was personally born in the Year of the Pig, which explains a lot about myself.  Reading the descriptions of each of these Zodiacal signs leads one to believe that the Chinese are not so different from ourselves.  As Chinese consumer buying power continues to expand, Western companies are going to find that many of the market segmentation strategies that work in their own cultures will work in China.  We are likely to see more cultural differences on display with Chinese producers than we do with Chinese consumers.  Not only is China opening up rapidly for the entrance of Western companies, but Chinese companies are hungry to find markets for their products also.

    The Chinese have always been known as excellent reverse-engineers.  In other words, they can get a product from another country and copy it.  They have been been known for this for many years.  Some of their most notable copies have been in military equipment, automobiles, and high-tech products.  Because China is still a developing nation, just emerging from a tightly-controlled socialist environment, quality control is lax, if not non-existent.  For example, Chinese manufacturers are beginning to make cheap copies of Apple products, such as IPods, IPads, and IPhones.  However, even though some of these products have some compatibility with real Apple products, they do not perform as well, and many come with no warranties.  The Chinese are also know for using lead-based paint and other unhealthy materials in many of the products they manufacture.  For example, it is estimated that as many as 100,000 homes across the U.S., built between 2004 and 2008, could have defective and potentially dangerous Chinese drywall.  The bad wallboard has excessively high levels of sulfur. Homeowners complain the fumes given off make them sick and corrode the copper in home wiring, fixtures and appliances, including computers, televisions and air conditioners. Of the 152 products recalled by the U.S Consumer Products Safetey Commission in the last few months, 104 of them were manufactured in China.  This is the time that Western consumers should be very careful about buying Chinese products. 

    Will Chinese products get better?  When I was growing up, the cheap, low-tech products, such as plastic toys, were all made in Japan.  A couple of decades later, they were all made in Korea.  Now, that type of production has shifted from these countries to developing countries, such as China.  If China is able to follow the development models of Japan and Korea, it will not be long before itsproducts will be serious contenders for U.S. consumer dollars.  In fact, this is already happening.  Chinese electric carmaker BYD Co. opened its North American headquarters on Monday, a move that officials said could bring hundreds of jobs and provide a U.S. hub for sales and research.  The opening will be "a catalyst that ushers in good jobs, global investment and a more sustainable future," Los Angeles Mayor Antonio Villaraigosa said.

    Read more: http://www.huffingtonpost.com/2011/10/24/byd-co-in-los-angeles-chi_n_1028994.html

    A country with more than 1.3 billion people has got to be taken seriously.  China is continuing to grow economically, its consumers are gaining more buying power, and slowly, but surely, its manufacturers will continue to improve their quality and use fewer harmful ingredients in their products.  It's time to not ignore the Chinese any longer, but consider them to be very much into the game.  The World Bank now classifies China, not as a communist or centrally-planned economy, but as a lower-middle income economy, placing it well ahead of other population giants, such as India. GB

    Read more:  http://data.worldbank.org/about/country-classifications

  • The Marketing Environment: The Competitive Environment

     Marketing Environment: The Marketing Environment | Flat World Knowledge

    The marketing  environment consists of five sub-environments, each of which have an impact on how an organization markets its product.  This marketing environment is also sometimes referred to as the man-made environment.  It is also sometimes referred to as uncontrollable variables.  However, since a single organization can have some impact on these sub-environments, referring to the marketing environment as partially-controllable variables seems more appropriate.

     

    The competitive environment, one of the sub-environments, has a great impact on how a organization markets products.  Often a company chooses to go into a price war and go head to head with its primary competitors on price.  We often see this type of response to the competitive environment in such industries as the airline industry, the hotel and restaurant industries, the entertainment industry, etc.  In some industries, it is more common to compete in terms of product features, rather than price.  We often see this in the electronics industry, the apparel and accessories industries, the cosmetics industry, the athletics shoe industry, etc.  Some companies prefer to deal with competition by  cooperating with potential competitors through strategic alliances.  Strategic alliances can be short-term agreements where both companies in the agreement retain autonomy and only cooperate on that small part of their business.  They can also be full-scale mergers and acquisitions like we have seen in many industries.  One industry that has experienced much of this merger and acquisition action is the automobile industry.

     

    I once heard a story about Toyota and Chevrolet wanting to go into a strategic alliance on developing, building, and marketing a one-seat electric car.  The proposed name of this new car was to be the "Toy-let."  Of course, no such deal has ever been in the works, but if it did happen, it would be a strategic alliance.  Though the "Toy-let" agreement is  fictional, in reality, Toyota and General Motors have been in partnerships in the past.  I once had a friend who owned a Geo Prizm, and another friend who owned a Toyota Corolla.  Having had the chance to ride in both vehicles, the interiors were identical and it was clear that some type of alliance was in force.  In fact, the Prizm was a U.S.-market entry-level compact car produced for the 1989 through 2002 model years. The Prizm was a rebranded version of the Toyota Corolla. All Prizms were built at the New United Motor Manufacturing Facility, a joint venture company between Toyota and General Motors in Fremont, CA.

     

    There are two main categories of competition - macro-competition and micro-competition.  Macro-competition is competition at a national or industry level.  When someone is talking about something like the U.S. automobile industry being competitive with the Japanese and German automobile industries, they are discussing competition at the macro level.  Micro-competition, on the other hand, is competition at the company, product, and brand levels.  Thus, when someone is talking about the Cola Wars between Coca-Cola and Pepsi-Cola, they are discussing competition at the micro level.  When an airline charging for checked bags is compared to an airline that does not charge for checked bags, it is micro-competition.  When McDonald's food is compared to Burger Kings' food, it is micro-competition.

     

    Micro-competition can further be categorized into three sub-categories.  The first of these sub-categories is direct competition.  Direct competition occurs when the products are essentially the same and using the products will produce the same results.  For example, when a person has already decided to go out to eat Mexican food, all the Mexican food restaurants in the area are competing for that person's business.  In that example, the product, Mexican food, is essentially the same, and the results (getting full, getting nutrition, getting to eat Mexican food, etc.) are essentially the same.  The second sub-category in micro-competition is substitite competition.  This type of competition is described by using different products to get the same results.  Again, using restaurants for an example, If a person decides to go out to eat, but they have not yet decided which type of food they want, all restaurants in the area are competing for that person's business.  Thus, the products are different (different types of food), but the results of getting full, getting to go out to eat, etc., are the same.  The third sub-category of micro-competition is purchasing-power competition.  This type of competition is described as different products used to get different results.  Suppose that when a student graduates from college, he or she is given $10,000 as a graduation gift.  What could that student do with the money?  In this case, products normally not considered to be competing with one another become competitors.  The new graduate could choose to spend the money on paying back student loans, investing the money, buying a new car, making a down-payment on a house, taking a big vacation, etc.  Purchasing-power competition does not always need a large amount of money to come into play.  I remember a commercial several years ago that showed a couple of college-aged men going through check-out in a grocery store.  They only had two products to purchase - toilet paper and beer.  When the cashier totaled the charges, the customers discovered they did not have enough money to pay for both toilet paper and beer.  Being typical college-aged men, they chose the beer over the toilet paper.  When asked if they wanted the beer to be bagged in plastic or paper, they immediately said paper and they were also glad to receive the paper receipt for their purchase.  GB

  • The "MIddle Kingdom" Back in the Middle of Things

    中国

    Have you ever wondered what the Chinese characters for "China" really mean?  Probably not.  But we should start paying attention.  The first character means "middle" and the second character means "kingdom." The full connotation of the meaning of Middle Kingdom is that it is the kingdom in the middle of everything.  Everything is influenced by and revolves around the Middle Kingdom.  For years, the Western world perhaps thought of China as sort of an outpost.  The Cultural Revolution was a socio-political movement that took place in the People's Republic of China from 1966 through 1976. Set into motion by Mao Tsedong, Chairman of the Communist Party of China, its stated goal was to enforce socialism in the country by removing capitalist, traditional, and cultural elements from Chinese society and to impose communism. The movement paralyzed the country politically and significantly impacted the country economically and socially. The Revolution was launched in May 1966. Millions of people were persecuted in the violence that erupted across the country, and suffered a wide range of abuses including torture, rape, imprisonment, sustained harassment, and seizure of property. A large segment of the population was forcibly displaced, most notably the transfer of urban youth to rural regions. Historical relics and artifacts were destroyed. Cultural and religious sites were ransacked. Mao officially declared the Cultural Revolution to have ended in 1969, but its active phase actually lasted until 1971. The political instability between 1971 and the arrest of the Gang of Four in 1976 is now also widely regarded as part of the Revolution. After Mao's death in 1976, reformers, led by Deng Xiaoping, gained prominence. Most of the Maoist reforms associated with the Cultural Revolution were abandoned by 1978. However, the Cultural Revolution has been treated officially as a negative phenomenon ever since.

    Slowly, but surely the Middle Kingdom has been emerging from the Cultural Revolution and is regaining it prominence, or centrality, that it once enjoyed, at least in ancient Asian society. China is no longer considered a controlled socialist market.  What kind of consumers is China producing? After decades of deprivation and conformism, Chinese consumers regard expensive consumer goods as trophies of success. In public, they show off. In private, they pinch pennies. The owner of a gleaming new BMW will drive around for half an hour to avoid a 50 cent parking fee. And she will hesitate to spend much on interior decoration, because only her family sees the inside of her flat. By some forecasts China will be the second-largest consumer market in the world by 2015, not far behind America. Chinese people already buy more cars than people in any other country: 13.5m last year to Americans’ 11.6m. China is on its way to becoming the biggest luxury-goods market. The central government made an increase in domestic consumption one of the priorities of its latest five-year plan.

    Small wonder that Western firms are piling into China. On July 4th Nestlé, the world’s largest food maker, confirmed that it is in talks with Hsu Fu Chi, one of China’s biggest makers of confectionery and baked goodies, with a view to buying the firm. If a deal is sealed, it would be one of the largest foreign takeovers yet seen in China: Hsu Fu Chi is valued at $2.6 billion on the Singapore stock exchange. China is currently Nestlé’s ninth-biggest market, with sales of SFr2.8 billion ($2.7 billion) last year. That is less than half what Nestlé sells in Brazil, although China has seven times Brazil’s population. Hence Nestlé’s hunger for Hsu Fu Chi’s distribution network, and for its knowledge of what tickles Chinese taste buds. “Understanding the consumer is the most important thing for us,” says Paul Bulcke, the boss of Nestlé. The food business is more local than almost any other—trying to sell cheese in China is like trying to sell stinky tofu in Switzerland. Nestlé has been sniffing around for takeover targets in China for the past two years. Hsu Fu Chi is not its first bite. In April it took a controlling stake in Yinlu Foods Group, a family-owned maker of peanut milk and canned rice porridge.

     

    Multinational firms trying to woo Chinese consumers have so far concentrated on the country’s thriving coastal regions. P&G, an American maker of shampoo, toothpaste and other sundries, has its Chinese headquarters in Guangzhou. Its Anglo-Dutch rival Unilever’s home is in Shanghai. Yet both firms are preparing for a “second consumer revolution” among the 665m Chinese who live in rural areas. The income gap between China’s coastal cities and rustic interior is still six-to-one, but rural incomes are rising and 665m heads could use a whole lot of shampoo.

    The Chinese government presents its own unique challenges. “Everything is political,” says James McGregor, a former head of the American Chamber of Commerce in China. “This is a government that lets foreign companies build market share when it needs them.” Its longer-term goal is to learn enough from foreigners so it can build its own national champions. To this end, it pushes foreign carmakers, among others, into unhappy partnerships with Chinese state-owned firms.  Almost all Western consumer-goods makers have felt Beijing’s heavy hand. Bernard Arnault, the boss of Moët Hennessy Louis Vuitton (LVMH), a luxury-goods firm, was summoned by the Chinese ambassador in Paris in 2008 for a high-decibel dressing down after Nicolas Sarkozy, France’s president, said he would meet the Dalai Lama. In the following weeks scores of women marched into Louis Vuitton shops in China with fake Louis Vuitton handbags and brazenly demanded their money back. Unilever got into trouble recently for hinting that the price of some of its products would rise. The Chinese government is terrified of inflation, which it fears might spark unrest. It accused Unilever of inciting shoppers to hoard its products, and slapped it with a hefty fine. Yet Harish Manwani, Unilever’s chief operating officer, is undeterred. He is planning to increase Unilever’s business in China four- or fivefold in the next few years.

    What is clear from these recent developments is that China is on the verge of achieving world domination on many fronts. Opportunities for consumer products producers are huge.  The Middle Kingdom is once again in the middle of strategic planning for many companies, and governments alike. GB

    Read more: http://www.economist.com/node/18928514

  • Food Fight

    Prices are rising! Prices are rising! Yes, the economy still looks bad, and now the wholesale cost of beef is up 18% from a year ago, pork is up 31%, and milk is up 29%. These are just three examples of a disturbing trend in increasing prices. This is especially bad news for restaurants, many of whom have thin profit margins and find it very challenging to absorb rising costs. They find it even harder to pass them onto increasingly price-conscious consumers. In particular, it's the mid-size, less expensive chains that are most vulnerable this time. Young people, a demographic these chains have traditionally relied upon for steady sales, are broke. Job prospects aren't good, too many are living at home, and even more are learning how to use stoves and ovens in their apartments. The folks who do continue to eat out are becoming pickier, so this leaves little room for multiple competitors to thrive. Eating out has always been a luxury for most, and this lack of a real "need" is a huge threat to the existence of weaker players.

    Several chains, such as Friendly's and Real Mex, are already in bankruptcy protection, meaning that they receive protection from creditors while they reorganize and try to become profitable again. If bankruptcy doesn't work, the next step is closing the stores and liquidating the company's assets at bargain prices. Shareholders often only get pennies on the dollar as a return on their investment in these cases, so it's obvously the worst thing that can happen to a firm. While Chipotle and Subway thrive, others such as Quiznos, are barely hanging on and closing stores to stop the bleeding. Chains with more marketing clout, economies of scale due to size, and smarter ways to respond to rising costs and sapping demand are eclipsing less equipped chains. Larger chains can lock in prices through longer term deals and higher volume buys, and this can help insulate them from extended downturns such as these. Smaller stores are closer to their customers, have lower overall costs, offer more specialty goods, and differentiate on aesthetics, service and the like so they are often able to insulate themselves to some degree as well. The ones in the middle get squeezed!

    Prolonged economic conditions have shifted consumer buying patterns, perhaps permanently. "Me-too" retailers offering similar goods and services as stronger competitors aren't likely to survive this most recent vetting of the un-fit. This is the way for-profit business works. May the best marketer win!

  • Banks Back Off

    Over the last year or so, many banks have begun charging debit card users monthly fees, ranging from $3-5, in response to new government regulations that banks claim have had a negative effect on profits. This loss may be in the billions for each bank, but don't expect debit card users to be very sympathetic. In fact, these consumers fought back, using the social media and other rapid forms of communication to foster discontent and threaten to switch financial institutions in asomewhat concerted effort to force the banks to change. I'm sure the Occupy Wall Street publicity hasn't helped much either. In th epast, most players in this industry have tended to downplay such negative publicity, but this time the banks actually changed!

     

     I have to admit that I did not expect such a reversal of strategy so rapidly, but it just demonstrates the overwhelming power groups of people can have using technology to enact change and influence marketing behavior. Although institutions such as Bank of America, JP Morgan, and Wells Fargo (which was test marketing the new fee in certain states) are highly profitable and can afford to lose a few customers, perhaps it is the industry itself that is finally concerning itself about its overall reputation.  And I think it's about time!

    The below link provides additional insight on the subject

    http://www.sun-sentinel.com/news/opinion/todaysbuzz/thursday/sfl-does-scrapping-bank-fees-show-protesters-have-power-20111103,0,4270374.story

  • Pepsi's Identity Crisis

     

    The food and beverage world raised a collective eyebrow a few years back when Pepsi announced its commitment to making and marketing healthier products in a rather obvious attempt to address to the long-standing health and wellness trend that has affected so many industries over the past few decades. The company even went so far as to skip the 2010 SuperBowl advertising blitz in favor of a public relations campaign called "Refresh America", which has a heavy social responsibility platform. This was a risky move for a company known mostly for marketing products that are tasty, but are perhaps a bit nutritionally-challenged. The marketing results have not been favorable thus far.

    The significant reduction of Pepsi's advertising budget to fund the Refresh America project resulted in a large reduction in total sales company-wide as well as a loss of market share. This illustrates the importance of maintaining adequate levels of advertising to defend your market share and achieve desirable sales levels. In addition, did the move toward a healthier brand positioning platform confuse consumers? Should Pepsi break into two organizations, one for the "fun for you" products and the other for the "good for you" products?

    Pepsi shareholders are now asking these questions, and as we know, the shareholders of publicly traded companies can often influence business strategy. If management has indeed taken its eyes off the core business in favor of a friendlier brand image, there will be repercussions. Breaking the organization in two is a rather radical move, but selling healthy and unhealthy products under the same umbrella is an equally risky endeavor. Crafting brand identity and developing brand image are not only difficult tasks, but also time consuming and expensive. This is not a decision to be taken lightly.

    DDS

  • My Vitamins Don't Work?

    One of the many problems marketers face when scanning the external business environment for opportunities and threats concerns clinical studies, the results of which may have trmendous effects on future marketing strategy. For example, when studies begin to single out individual ingredients (such as the case with trans fats) as contributors to poor health, product developers take notice and make changes. As a result, manufacturers have been removing trans fats from products for several years now.

    Other studies may affect entire product categories such as the ones published recently suggesting that multivitamins and many other dietary supplements often don't have the health benefits they advertise. In fact, the results demonstrated a slight increase in health problems among many supplement users. Does this mean big changes for the $28 billion U.S. nutritional supplement market? Will addtional studies be necessary to justify major changes in the industry? Can government ignore studies such as these and protect the consumer's interest at the same time? These are important questions, but they are impossible to answer.

    We do know that the supplement industry has been subject to increasing criticism ever since the Dietary Supplement Health and Education Act was passed in 1994, a law that granted unprecedented freedoms to manufacturers and marketers of these products. So, this research at worst represents another black mark among others, but it is also important to mention that there are many more studies out there that prove the efficacy and usefulness of many nutritional supplements. The amount of research is vast and contradictory. Whom do we believe? The answer is to take it all with a grain of salt. A marketer must look at the preponderance of research, not just one study or group of related studies, before making important 4P decisions. Studies can be lousy for any number of reasons; experimentor bias, population sample problems, unrelated factors such as exercise and diet, and the nature of the product used in the study (fresh versus dried, synthetic versus natural) are just a few of these. This is the beauty of science. researchers post their results, which are subsequently reviewed and critiqued by just about everyone (most notably other researchers), and more studies are done.

    The link below leads to an industry association response to the Wall St. Journal story published on 10/25/11.

    http://www.npainfo.org/index.php?src=news&srctype=detail&category=pressreleases2011&refno=352