• Flixing Away the Criticism

    In a remarkable turnaround, Netflix has recovered almost all of the customers the company had lost as a result of its change in product and pricing strategy. To recap, Netflix decided to charge seperately for its mail service and its streaming internet service, rather than the one-size-fits-all strategy it has employed since its inception. Customers fled and after a partial retraction, many have returned.

    What else can we attribute to this rise in customer acquisiton? The easy answer is that the market is simply growing... fast. Revenues at movie theatres are down dramatically over the past few years, and this is is no small part due to the substitute that a DVD and a 50 inch HD TV with a surround sound system can offer. So, as the masses migrate away from the big screen and towards the more intimate and convenient smaller screen (without the screaming babies and crowded theatres), it should also be apparent that there are, as of yet, few viable alternatives to Netflix. The company still dominates the market, but it may not last for long.

    Both Hulu and Amazon are now offering online streaming services similar to those offered by Netflix, and Amazon is expected to offer a cheaper alternative. In addition, if Netfilx lets the licensing agreement with Starz expire at the end of February, it will lose access to such greats as Toy Story 3, in addition to those lost when it severed its ties to Sony Entertainment in June. CEO Reed Hastings is not worried, however, since overseas diversification can offset challenges at home.

    The authors of this coulmn are intrigued by the recovery, but skeptical about a prolonged market domination. We shall see.

    DDS

     

  • A Penny For Their Thoughts

    In an economically-depressed retail environment that many observers optimistically describe as "challenging", some good news has emerged from a very old brand; and the strategic move made by this company may be a bellweather for the future of other retailers. J.C. Penney, founded in a small Wyoming mining town around the turn of the 19th century, could be the retailer of the future if new CEO and former Apple executive, Ron Johnson, gets his way. The new CEO is dumping the company's over-reliance on sales promotions (590 separate "sales" last year alone), and shifting its strategy toward an Every Day Low Price (EDLP) model. Add a complete revamp of the store's format and product mix as well as a new brand identity, and we may have the comeback story of the century.

    Inspired yet? The new logo is a bit strange, I admit, but readers of this column are well aware of the authors' feelings toward an over-reliance on discounting. Quite simply, while it can be a good tool to get new customers, most people become numb to the effects of over-promotion and continue to shop around for the best deal, rather than engage in the type of brand loyalty marketers strive to achieve. This is not the best use of sales promotion as a marketing tool, and it appears that Mr. Johnson, a former Apple retail strategy hot shot, understands this.

    He also understands that the movement towards developing and maintaining stores of ever-increasing size (think Super Wal-mart or Ikea, both of which you can see from space) has finally peaked, and the momentum is now shifting towards smaller stores with easier-to-locate departments. Mr. Johnson believes that the Internet, where you can get exactly what you want with an easy search and the click of a mouse, is an important driver of this trend.

    Watch this company closely. Look for Penny to develop a new image, streamline its products, and adopt an easier-to-navigate store format. Considering the overwhelming importance of this initiative to the future of the company and its shareholder value, I wonder if the Superbowl might not be a good time to re-introduce this brand. I'm not sure if that is in the cards.

    DDS

  • Brand Value and Corporate Culture

    A general description of a corporate culture is that it is a balanced blend of human psychology, attitudes, actions, and beliefs that combined create either pleasure or pain, serious momentum or miserable stagnation.  A strong corporate culture flourishes with a clear set of values and norms that actively guide the way a company operates.  Employees are actively and passionately engaged in the business, operating from a sense of confidence and empowerment rather than navigating their days through miserably extensive procedures and mind-numbing bureaucracy.  Performance-oriented cultures possess statistically better financial growth, with high employee involvement, strong internal communication, and an acceptance of a healthy level of risk-taking in order to achieve new levels of innovation.  Get on a Southwest flight to anywhere, buy shoes from Zappos.com, pants from Nordstrom, groceries from Whole Foods, anything from Costco, a Starbucks espresso, or a Double-Double from In N' Out, and you'll get a taste of these brands’ vibrant cultures. 

    Culture, like brand, is misunderstood and often discounted as a touchy-feely component of business that belongs to human resources.  It's not intangible or fluffy, it's not a vibe or the office décor.  It's one of the most important drivers that has to be set or adjusted to push long-term, sustainable success.  It's not good enough just to have an amazing product and a healthy bank balance.  Long-term success is dependent on a culture that is nurtured and alive.  Culture is the environment in which your strategy and your brand thrives or dies a slow death.  Think about it like a nurturing habitat for success.  Culture cannot be manufactured. It has to be genuinely nurtured by everyone from the CEO down. Ignoring the health of your culture is like letting aquarium water get dirty.  If there's any doubt about the value of investing time in culture, there are significant benefits that come from a vibrant and alive culture.

    • Focus: Aligns the entire company towards achieving its vision, mission, and goals. 
    • Motivation: Builds higher employee motivation and loyalty. 
    • Connection: Builds team cohesiveness among the company’s various departments and divisions. 
    • Cohesion: Builds consistency and encourages coordination and control within the company. 
    • Spirit: Shapes employee behavior at work, enabling the organization to be more efficient and alive.

    Do you run into your culture every day?  Does it inspire you, or smack you in the face and get in your way, slowing and wearing you down?  Is it overpowering or does it inspire you to overcome challenges?  It's important to understand what is driving your culture.  Is it power and ego that people react to, and try to gain power, or a culture of encouragement and empowerment?  Is it driven from top-down directives, or cross-department collaboration?  To get a taste of your culture, all you have to do is sit in an executive meeting, the cafe or the lunch room, listen to the conversations, look at the way decisions are made and the way departments cooperate.  Take time out and get a good read on the health of your culture.

    A vibrant culture provides a cooperative and collaborative environment for a brand to thrive in.  Your brand is the single most important asset to differentiate you consistently over time, and it needs to be nurtured, evolved, and invigorated by the people entrusted to keep it true and alive.  Without a functional and relevant culture, the money invested in research and development, product differentiation, marketing, and human resources is never maximized and often wasted because it's not fueled by a sustaining and functional culture.  Look at Zappos, one of the fastest companies to reach $1 billion in recent years, fueled by an electric and eclectic culture, one that's inclusionary, encouraging, and empowering. It's well-documented, celebrated, and shared willingly with anyone who wants to learn from it.  Compare that to American Apparel, the controversial and prolific fashion retailer with a well-documented and highly dysfunctional culture.  Zappos is thriving and on its way to $2 billion, while American Apparel is mired in bankruptcy and controversy.  Both companies are living out their missions--one is to create happiness, and the other is based on self-centered perversity.  Authenticity and values always win.  GB

    Read more here.

  • Bring Out the Big Guns for Super Bowl

    In the beginning, the Super Bowl was hardly the larger-than-life cultural extravaganza that we now enjoy as a virtual national holiday.  In fact, in the beginning, the Super Bowl wasn't even the Super Bowl. It was merely the AFL-NFL World Championship Game, a hastily organized affair played before a half-full stadium in Los Angeles in January 1967. 

    Over the years, the Super Bowl has become much more than a football game.  "Super Sunday"—the term itself is trademarked property of the National Football League—now encompasses a football game, an overproduced halftime show, many hours' worth of pregame entertainment and analysis, dozens of highly anticipated commercials, and millions of Americans drinking beer and eating junk food on family-room couches from sea to shining sea.  The Super Bowl has become a kind of unofficial national holiday, a midwinter Fourth of July.



    In certain sectors of the economy, the Super Bowl now rivals Christmas as a make-or-break day on the annual retail calendar.  In 2007, the Super Bowl provided the impetus for more than $2.2 billion in sales of flat-screen HDTVs. (That means that approximately one out of every six HDTVs sold in America that year was bought specifically to show the Super Bowl.) More food is consumed in America on Super Sunday than on any other day of the year save Thanksgiving; the big game sends sales of beer, soda, chips and salsa through the roof. Frito-Lay, the nation's largest producer of potato and tortilla chips, increases its production by 10 million pounds in the buildup to the Super Bowl; tortilla chip sales typically run 30% above normal during game week.  Domino's Pizza delivers more pies on Super Sunday than any other day of the year.  Meanwhile, restaurant sales plummet as millions of potential diners stay home, watching the game on their new HDTVs.



    The Super Bowl's outsized economic impact is matched by its deep cultural resonance.  There is no other regularly scheduled event in American life seen by so many people; watched by almost everyone, the Super Bowl provides a rare moment of nearly universal shared cultural experience for the 300 million very different people who populate this vast nation. Sportswriter Frank Deford captured the Super Bowl's almost unique impact on American culture.  "In a society that is becoming more and more fragmented," he wrote, "...the Super Bowl gives us a moment when we all do come together for a good reason.  Not to watch something political, not to watch a tragedy.  But just to come together on this level of friendship, and share something and enjoy it.  Even if an American does not watch it for the football game itself, it has become a cultural thing to watch the ads on which companies have spent millions of dollars in production and purchasing air time.  GB

    For a preview of one of the ads for the upcoming Super Bowl, go here.

  • Don't Forget Traditional Media

    The death of traditional media (TV, newspapers, magazines, and radio) is foretold by any number of pundits with every new release of data on social media and digital devices. (Facebook's 500 million members would make it the third-largest country in the world!  Ashton Kutcher has more than 7 million Twitter followers!  IPad-mania sweeps through coffee shops around the world!)  Of course, there is no denying the rapidly growing and truly disruptive impact of new devices and social media.  But at the same time, there is also no denying that traditional outlets are thriving in the lives of consumers today, and that they form the core of how most consumers interact with media.  This is true for the general population, and may be even more true among affluent Americans, even though they have the discretionary income to indulge in an array of devices, as well as the digital literacy to get the most out of them.

    One research project used the Mendelsohn Affluent Barometer throughout 2011to track new and traditional media use among affluent Americans.  This monthly survey consists of more than 1,000 online interviews with respondents making at least $100,000 in annual household income -  in other words, the 20% of Americans who account for about 60% of U.S. income and approximately 70% of U.S. net worth.  The survey was conducted between March and May 2011.  When asked how they read magazines, 93% said they read hard-copy print versions; in contrast, less than a third read them on computers, and no other format garnered more than 10%.  The same pattern appears for newspapers, which 86% read in print, compared to the 39% who read them on computers, and 14% who read them via smartphone.  TV shows are watched on TVs by 94%, followed by 23% who watch them on computers.  Websites are viewed on computers by 94%, followed by 32% viewing them on smartphones. The pattern is clear across all media.  The vast majority consume content through traditional media: magazines and newspapers in print, websites on computers, video content through TVs and so on.

     Trump hourly chart

    Media usage among all Affluents. Source: Mendelsohn Affluent Barometer

    When asked how affluents followed Osama bin Laden's death, network TV topped the list, cited by 70%, and an additional 40% cited printed newspapers.  Similarly, when asked how they followed the earthquake, tsunami and nuclear crisis in Japan, network TV again topped the list, cited by 76%, with an additional 49% citing printed newspapers.

    It has been well-documented that younger consumers differ in their media-consumption patterns from their older counterparts, and certainly they have been earlier adopters and heavier users of some emerging and alternative platforms.  But even today's younger generation shows the characteristic pattern of tending to consume media through its most traditional outlet, even as they show more cross-platform "experimentation."  For example, among those aged 18-34, the following was found.  For magazines, 88% read magazines in print, followed by 35% who read them online.  Newspapers show the greatest amount of experimentation - 70% read newspapers in print, followed relatively closely by 54% who read them online.  For TV, 94% view video content on TV, followed by 35% who do so on computers.  For computers, 93% read websites on computers, followed by 38% who do so on smarthphones. 

    Of course, the widespread use and tremendous impact of "new" media is still very important.  It is vitally important in the lives of consumers, particularly the wealthy, and is becoming more so.  Moreover, any business that suddenly finds 20-30% of its best customers "experimenting" with less profitable options (from "analog dollars to digital dimes") will face serious challenges.  Reports of the death of traditional media are extremely premature, and it looks like traditional media is going to stay with us for many years to come.  GB

    Trump hourly chart
    Media usage among Affluents ages 18-34. Source: Mendelsohn Affluent Barometer
  • Consumer Trust in a Tough Economy

     

    We often consider someone who has a disposition to trust a gullible person, and from my observation, there are fewer and fewer gullible people.  It seems the American consumer has lost the naivete of being able to trust and part of the reason for this new caution, even among those consumers who were once very trusting (gullible?), is this long-term bad economy we are experiencing.  A recent article agrees with this assessment.

    One of the main reasons customers defect from one company or brand to another is that they do not trust the company.  It's something that makes a serious difference when it comes to establishing, building and maintaining strong customer relationships.  While everyone will have their own list of factors they consider important, there's one that's very significant - crucial, even.  What is the glue that holds a relationship together, without which it would fall apart completely? The answer is: Trust.  But for some companies it might be all about having a customer focus - seeing things from their perspective, understanding their particular needs, and working in partnership with them.  Others may think it's a matter of communicating effectively with clients, with a focus on practical skills such as listening, asking questions, summarising, and building rapport.  Simon Woodroffe, founder of the Yo! sushi restaurants that serve food on conveyor belts, says, "You can't create a masterpiece concept anymore and say, 'that's it, now we'll roll it out'. The 21st century concepts that succeed will be those that continually re-invent themselves." For him, flexibility and vision are important ingredients in giving customers what they want and achieving results that attract the target market.

    Shaun Smith and Joe Wheeler go deeper still in their book Managing The Customer Experience.  They say, "You must re-think who your customers are; what they deeply value; and how your organisation can deliver a customer experience that is consistent, intentional, differentiated, and valuable."  Even Tesco's CEO, Terry Leahy, has been quoted as saying, "Our business strategy and our brand strategy are almost inseparable because one so closely defines the other.  A brand is a promise, and in the end you have to keep your promises."  But while there's no denying the importance of the many factors that contribute towards successful customer relationships, Smith & Wheeler and Leahy are the ones who got closest to the deeper issue that lies at the heart of successful relationships: the issue of trust.  If you don't have trust, you don't really have a relationship.  That's equally true in business as in your personal life.  Those looking to build lasting customer relationships must keep the old saying 'Trust is hard won and easily lost' constantly in their minds.

    Trust is only won by behaving in a trustworthy and reliable way in everything you do.  If you're an individual in a customer-facing role you'll need to fine-tune your rapport skills and aim to understand what's important to your customers.  The more familiar you are with their perspective and world view the easier this will be to achieve. Building trust is about being real, human and congruent.  To achieve trust you must be trustworthy.  Trustworthiness is based on both your character and your competence. Some of the most important character traits required to create trustworthiness are integrity.  If you're in a leadership role it means making sure everyone "lives the brand".  This means they understand and buy into the companies brand values.  It's worth examining processes too.  Many companies fail to focus on how their processes live up to the promises they offer customers and then wonder why they look elsewhere.  If you've ever been on the receiving end of one of those call centres that endlessly ask you to select from a list of options and then experience the phone go dead when you think you've finally made it through to speak with a human being, you will know how a customer might come to think of the service offered as at best unreliable and at worst downright infuriating.

    If you want to avoid losing the trust of your customers there are some simple rules to follow: a) never let them down, b) consider things from their perspective, c) always justify their faith in you, and d) go the extra mile to exceed their expectations.  GB

  • B2B Marketing Woes

    In a struggling economy, organizations often feel pressure to accelerate sales pipelines and close deals that are currently in their systems.  The chart below represents respondents’ indications of average deal sizes in 2010 and 2011. The key finding from this chart is that average deal sizes have declined.

    View Chart Online

    In 2010, 19% of organizations indicated average deal sizes of $1,000 - $10,000, and in 2011, this increased to nearly a third of all respondents.  The percentage of organizations indicating an average deal size of less than $1,000 doubled from 2010 to 2011.  The decline of response levels indicating any deal size category over $10,000 further supports the key finding.  In a struggling economy, organizations feel the pressure to accelerate sales pipelines and close the deals that are in the system now.  Organizations commonly use promotions to support these initiatives, and the effects of this tactic are present in the above chart. If organizations compete on price instead of value, they will continue to experience declining average deal sizes.

    The larger the deal size, the more complex the buying process will be.  Organizations with larger deal sizes, longer sales cycles, and more parties to convince, may have a greater need to establish processes for lead generation, qualification, scoring and nurturing.  Speaking of those processes, organizations in the Strategic phase of lead generation maturity – or those routinely following a formal process supported by thorough guidelines -- are the most likely to have average deal sizes greater than $50,000.  By comparison, those in the Trial phase are most likely to have deal sizes under $1,000.  GB

    Read more here.

  • Smokeless Smoking: What's the Point?

    I stare at the person sitting at a neighboring table in a restaurant that is supposed to be smoke-free.  There is smoke coming out of his mouth, a flame at the end of his cigarette, or, more accurately, vapor that’s designed to look like smoke, a red LED light that’s designed to look like a flame, a long metal tube with a cell phone-style battery inside that’s designed to look like a cigarette.  I have to decide if this guy looks cool or is an idiot.  Other people nearly as "cool" as him are smoking these e-cigs too: Britney Spears, Jeremy Piven, Leonardo DiCaprio, Kate Moss, Paris Hilton, and Catherine Zeta-Jones. Katherine Heigl puffed on one while watching The Book of Mormon on Broadway.  Charlie Sheen plans to start his own brand of e-cigs, the NicoSheen. According to the U.S. Centers for Disease Control and Prevention, the number of Americans who have smoked an e-cig more than quadrupled, from 0.6 percent of the population in 2009 to 2.7 percent in 2010.  That’s more than 8 million people.

    There are now hundreds of companies selling e-cigs—although they’re buying parts from just four factories in China, where the technology was first patented by pharmacist Hon Lik in 2003.  He formed the company Ruyan (which means “like smoke”) and started selling e-cigs in China the following year before getting an international patent in 2007.  Since then the technology has gotten even better and the marketing more sophisticated.  Some e-cigs, marketed toward women, are thinner and come in leather cases with a mirror.  Some have social networking capabilities that help you find other e-cig smokers.  And some come in such flavors as peppermint, Swedish fish, and bacon.

    “I can remember a year ago at a restaurant having an electronic cigarette after a meal, and having a waitress say, ‘You can’t smoke here,’ and me having to explain it to her. Now the more common situation is you walk into a restaurant or a bar and smoke an electronic cigarette, and the bartender says, ‘Oh, you’re fine.’  They know,” says Jay Meistrell, co-owner of V2 Cigs .  His e-cigs were sold at the Wired Store, a holiday pop-up store in New York that displays new gadgets the tech magazine considers cool.  V2 Cigs says its gross revenue grew 20 percent each month last year, including one day when it sold more than $300,000 worth of products.  This month, Jeffrey Hill, a former Procter & Gamble (PG) executive, sunk $7 million of his own money into Spire Electronic Cigarette, an e-cig company whose products are sold in New York bars and clubs such as Webster Hall and promoted by “brand ambassadors,” some of whom are Iraq veterans.  Hill hopes to market his brand to the military.

    Because e-cigs don’t create secondhand smoke, you can smoke them anywhere.  “They’ve taken off because the restrictions on regular cigarettes have gotten a little ridiculous.  It’s not the land of the free.  It’s more like the land of the oppressed,” says Ray Story, an e-cig company owner who is also chief executive officer of the e-cig trade organization, the Tobacco Vapor Electronic Cigarette Assn. “Electronic cigarettes are like the Sony Walkman.  People used to walk around with these huge boom boxes, and everybody was subjected to the crap they were listening to.  Then they came up with a way that you can enjoy the music, but no one has to hear your crap,” he says.  GB

    Read more here.

  • Industrial Espionage: Really?

    Industrial espionage is a form of espionage conducted for commercial purposes instead of for national security purposes.  It occurs between companies or corporations.  Competitive intelligence describes the legal and ethical activity of systematically gathering, analyzing and managing information on industrial competitors.  It may include activities such as examining newspaper articles, corporate publications, websites, patent filings, specialised databases, information at trade shows and the like to determine information on a corporation.  The compilation of these crucial elements is sometimes termed CIS or CRS, a Competitive Intelligence Solution or Competitive Response Solution. With its roots in marketing research 'competitive intelligence has been described as the application of principles and practices from military and national intelligence to the domain of global business it is the business equivalent of open-source intelligence.

    Industrial espionage takes place in two main forms.  In short, the purpose of espionage is to gather knowledge about (an) organization(s).  It may include the acquisition of intellectual property, such as information on industrial manufacturing processes, ideas, techniques, processes, recipes and formulas, brand names, etc.  Or it could include sequestration of proprietary or operational information, such as that on customer datasets, pricing, sales, marketing, research and development, policies, prospective bids, planning or marketing strategies or the changing compositions and locations of production.  It may describe activities such as theft of trade secrets, bribery, blackmail and technological surveillance.  In addition to orchestrating espionage on commercial organizations, governments can also be targets.  For example, to determine the terms of a tender for a government contract so that another tenderer can underbid.  Industrial espionage is most commonly associated with technology-heavy industries, including computer software and hardware, biotechnology, aerospace, telecommunications, transportation and engine technology, automobiles, machine tools, energy, materials and coatings, etc.  Silicon Valley is known to be one of the world's most targeted areas for espionage, though any industry with information of use to competitors may be a target.  

    Information can make the difference between success and failure; if a trade secret is stolen, the competitive playing field is leveled or even tipped in favor of a competitor.  Although a lot of information-gathering is accomplished legally through competitive intelligence, at times corporations feel the best way to get information is to take it.  Economic or industrial espionage is a threat to any business whose livelihood depends on information.  In recent years, economic or industrial espionage has taken on an expanded definition.  For instance, attempts to sabotage a corporation may be considered industrial espionage; in this sense, the term takes on the wider connotations of its parent word.  That espionage and sabotage (corporate or otherwise) have become more clearly associated with each other is also demonstrated by a number of profiling studies, some government, some corporate. The US Government currently has a polygraph examination entitled the "Test of Espionage and Sabotage" (TES, contributing to the increasingly popular, though not consensus, notion, by those studying espionage and sabotage countermeasures, of the interrelationship between the two. In practice, particularly by 'trusted insiders,' they are generally considered functionally identical for the purpose of informing countermeasures.  

    Economic or industrial espionage commonly occurs in one of two ways. Firstly, a dissatisfied employee appropriates information to advance their own interests or to damage the company or, secondly, a competitor or foreign government seeks information to advance its own technological or financial interest.  Moles or trusted insiders are generally considered the best sources for economic or industrial espionage.  Historically known as a 'patsy,' an insider can be induced, willingly or under duress to provide information. A 'Patsy' may be initially asked to hand over inconsequential information and once compromised by committing a crime, bribed into handing over material which is more sensitive.  Individuals may leave one company to take up employment with another and take sensitive information with them.  Such apparent behavior has been the focus of numerous industrial espionage cases that have resulted in legal battles.  Some countries hire individuals to do spying rather than make use of their own intelligence agencies.  Academics, business delegates and students are often thought to be utilized by governments in gathering information.  Some countries, such as Japan, have been reported to expect students be debriefed on returning home.  A spy may follow a guided tour of a factory then get 'lost'.  A spy could be an engineer, a maintenance man, a cleaner, a insurance salesman or an inspector - basically anyone who has legitimate access to the premises.

    A spy may break into the premises to steal data. They may search through waste paper and refuse, known as "dumpster diving".  Information may be compromised via unsolicited requests for information, marketing surveys or use of technical support, research or software facilities. Outsourced industrial producers may ask for information outside of the agreed-upon contract.  Computers have facilitated the process of collecting information, due to the ease of access to large amounts of information, through physical contact or via the internet.  GB

    Read more here.

  • Intellectual Property Protection and Marketing

     PIPA and SOPA aren't just tools to protect property rights. They're meant to tame the Internet itself.

    You may have noticed that yesterday, the Internet was an intersting place as several popular sites either blocked access or displayed symbols of disapproval on their landing pages.  These actions were in response to the controversial Stop Online Piracy Act (SOPA) and Protect Intellectual Property Act (PIPA), which in recent months have attracted the attention of the general Internet community, politicians and tech giants, such as Google.  It sounds harmless enough and Google and other sites are back to normal today.  Afterall, who would be against something that blatantly speaks out against stealing intellectual property?  But the issue here is not one debating whether thieving is right or wrong.  Rather, the question is whether the right tool is being used to protect intellectual property online. 

    As initially drafted, SOPA takes a broad stroke approach in thwarting illegal content sharing from foreign sites. 

    1.  Order internet service providers to alter their DNS servers from resolving the domain names of websites in foreign countries that host illegal copies of videos, songs, and photos.

    2.  Order search engines like Google to modify search results to exclude foreign websites that host illegally copied material.

    3.  Order payment providers like PayPal to shut down the payment accounts of foreign websites that host illegally copied material.

    4.  Order ad services like Google's AdSense to refuse any ads or payment from foreign sites that host illegally copied content.

    To summarize, passing strict policies like SOPA and PIPA would give copyright holders the ability to remove from the Internet any foreign sites (excluding sites under U.S. jurisdiction) accused of hosting illegal content.  Furthermore, such sites would essentially be blacklisted and removed from search engines like Google and lose funding sources.  Worst of all, no due process is required for such punishment to be doled out to the accused.  But opponents of the bill say such an imposition to the structure of the Internet would result in the destruction of the free and open Net as we know it.  “Both of them essentially use the bunker-buster bomb when what you need is a laser beam.” Sen. ron Wyden (D-Oregon) said on CSPAN earlier this year in describing SOPA and sister bill PIPA.  That sentiment is shared by groups like Google and Wikipedia, who described the proposed bill as harmful and an infringement on freedom of speech online. “We feel SOPA is overbroad, dangerous to the technical operation of the Internet, and will ultimately cost us more in compliance costs than it might save by ‘protecting’ our work,” said Nilay Patel on behalf of TheVerge.com and Vox Media. “It’s a bad law, and we think it needs to be stopped.” 

    Putting it in perspective, consider sites like YouTube or Wikipedia which have come to flourish and become something of a cultural revolution in sharing information online.  If policies like SOPA and PIPA were in place at the time when these companies were starting up, they would have been banned from the Internet and unavailable.  Facing such criticism, the SOPA creator Rep. Lamar Smith (R-Texas) announced his plans to remove the provision that, “requires Internet Service Providers to block access to certain foreign websites.”  The issue is currently in the stages of being shaped and most recently, Smith has said the issue will be addressed again as early as February.

    GB

    Read more:  http://www.pcworld.com/article/248401/were_sopapipa_protests_a_success_the_results_are_in.html

  • Male Consumer Spending Impacted by Female Population

    A study conducted at the University of Minnesota's Carlson School of Management  found that the perception that women are scarce in a particular geographic area leads men to become impulsive, save less, and increase borrowing.  “What we see in other animals is that when females are scarce, males become more competitive.  They compete more for access to mates,” says Vladas Griskevicius, an assistant professor of marketing at the Carlson School and lead author of the study.  “How do humans compete for access to mates? What you find across cultures is that men often do it through money, through status and through products.”

    To test this theory that the sex ratio affects economic decisions, the researchers had participants read news articles that described their local population as having more men or more women.  They were then asked to indicate how much money they would save each month from a paycheck, as well as how much they would borrow with credit cards for immediate expenditures.  When led to believe women were scarce, the savings rates for men decreased by 42 percent.  Men were also willing to borrow 84 percent more money each month.

    In another study, participants saw photo arrays of men and women that had more men, more women, or were neutral.  After looking at the photographs, participants were asked to choose between receiving some money tomorrow or a larger amount in a month.  When women were scarce in the photos, men were much more likely to take an immediate $20 rather than wait for $30 in a month.  According to Griskevicius, participants were unaware that sex ratios were having any effect on their behavior.  Merely seeing more men than women automatically led men to simply be more impulsive and want to save less while borrowing more to spend on immediate purchases.  “Economics tells us that humans make decisions by carefully thinking through our choices; that we’re not like animals,” he says.  “It turns out we have a lot in common with other animals.  Some of our behaviors are much more reflexive and subconscious.  We see that there are more men than women in our environment and it automatically changes our desires, our behaviors, and our entire psychology.” 

    Sex ratios also impact women.  While sex ratios do not influence the financial choices women make, they do shape women’s expectations of how men should spend their money when courting.  After reading a news article informing women that there are more men than women, women expected men to spend more on dinner dates, Valentine’s gifts, and engagement rings.  “When there’s a scarcity of women, women felt men should go out of their way to court them,” adds Griskevicius.  In a male-biased environment, men also expected they would need to spend more in their mating efforts.

    In addition to conducting laboratory experiments, the researchers reviewed archival data and calculated the sex ratios of more than 120 U.S. cities.  Consistent with their hypothesis, communities with an abundance of single men showed greater ownership of credit cards and had higher debt levels.  One striking example was found in two communities located less than 100 miles apart. In Columbus, Ga., where there are 1.18 single men for every single woman, the average consumer debt was $3,479 higher than it was in Macon, Ga., where there were 0.78 single men for every woman.

    Whereas previous research has found that merely seeing an attractive woman in advertising would make a man more aggressive or make a man more interested in conspicuously consuming, this study suggests it may not be that simple.  According to the findings, whether a woman is alone or surrounded by many or few men can have a great impact on the reaction it elicits.  Griskevicius says the effects of sex ratios go beyond marketing and influence all sorts of behavior.  He cites other studies showing the strong correlation between male-biased sex ratios and aggressive behavior.  “We’re just scratching the tip of the iceberg when it comes to financial behavior,” says Griskevicius.  “One of the troubling implications of sex ratios for the world in general is that it’s about more than just money.  It’s about violence and survival.”

     GB

  • A Final Word on 2011 Holiday Sales

     

    One of the things the U.S. retail industry does best is to measure, compare, and predict itself.  There is no other time that the industry is more obsessed with its own reports, data, statistics, numbers, results and year-over-year comparisons than the Christmas holiday shopping season.  This was certainly true in the 2011 Christmas holiday shopping season when every possible milestone and aspect of the 2010 Christmas holiday season was turned into some sort of fact, figure, or statistic.  According to a recent article, this is a summary of the 2011 Christmas shopping holiday season statistics.

    • Between November 1, 2011 and December 26, 2011, Consumers spent $35.3 billion online, according to market research organization ComScore. This is 15% more than consumers spent online in the same time period in 2010.
    • There were nine days in 2011 in which online sales were more than $1 billion, according to ComScore.
    • Clothing chain discounts were an average of 7% higher than they were during the 2010 Christmas shopping season, according to an analyst at BMO Capital Markets.
    • According to an ICSC-Goldman Sachs survey, 18% of gift purchases were gift cards, which is 3.4% higher than 2010.
    • Between December 1st and December 24th, consumer retail spending rose 4.7% over the same time period in 2010, according to ShopperTrak research.
    • Consumer Confidence rose to 64.5 in December 2011, which is 10 points higher than November's consumer confidence level according to the Conference Board.
    • In November spending rose 4.1%, according to the research organization, ShopperTrak
    • December 26th sales were $7.1 billion, a 25.5% increase over the day after Christmas 2010.
    • 70% of all consumers shopped at brick-and-mortar stores between December 20 and December 26th, according to the NPD Group Inc.
    • 11.3% of day after Christmas sales were from mobile devices in 2011, compared to the 4.3% of sales from mobile devices on December 26, 2010
    • According to IBM Coremetrics Benchmark 6% of all December 26 traffic came from iPads, 5.8% came from iPhones, and 4.6% came from Androids
    • Shoppers are expected to return 9.9% of their Christmas purchases, which would be the highest return rate since the recession.
    • $46 billion of merchandise is predicted to be returned, which would be a 4% increase when compared to holiday gift returns in 2010. About 33% of shoppers said they return gifts in the NRF 2011 Holiday Returns Survey.
    • 65% of holiday shoppers said they didn't return a single gift after Christmas 2010.
    • Retail companies absorb as much as 12% of clothing returned and as much as 50% of the cost of returned consumer electronic merchandise.
    • 60% of retailers reported to the NRF that they have been the victim of "wardrobing," which is the use of high-end clothing and electronics which are then returned for full price after they are used for a short period of time.
    • It is extimated that the U.S. retail industry will lose $3.48 billion due to return fraud in the 2011 holiday season, which is less than the $3.73 billion lost to return fraud in 2010.
    • Online shopping sales for the week ending December 25, 2011 were $2.8 billion, compared to $2.45 billion during the same time period in 2010, according to ComScore.
    • In the week before Christmas, same store sales were up 4.5% compared to the same week in 2010, according to the International Coucil of shopping Centers-Goldman Sachs Weekly Chain Store Sales Index, which estimates sales at 24 major chain stores.
    • Sales revenue for the week ending December 24th was $44 billion, 14.8% higher than the same time period in 2010, according to ShopperTrak.
    • Based on the e-mail activity of 100 retail companies, retailers sent 34% more promotional e-mails between December 18th to December 22nd, compared to the same time period last year, according to Responsys.
    • 18.3% of all Christmas Day shopping came from mobile devices, which was 8.4% higher than 2010, according to an IBM Coremetrics Benchmark study.
    • Sales from mobile devices on Christmas Day accounted for 14.4% of total sales, which is 5.3% higher than it was on Christmas Day in 2010. iPads led the way for mobile devices, with 7% of Christmas Day sales coming from iPads. iPhone users were responsible for 6.4% of Christmas Day sales, and 5% of the day's sales were initiated on an Android phone, according to IBM Coremetrics.
    • More than 20% of purchases on Christmas Day were for digital content and subscriptions. Consumers with new electronic devices purchased apps and digital downloads in record numbers in 2011, according to comScore.
    • Online sales were 1.07 billion on Free Shipping Day in 2011 (December 16th), which was a 14% increase over Free Shipping Day in 2010. Free Shipping Day is a fabricated one-day event when online retailers supposedly offer special one-day-only free shipping deals. 
    • Online sales were $1.13 billion on Green Monday in 2011 (December 12), which was 19% more than was spent online in 2010 on Green Monday. "Green Monday" is a term that is attributed to eBay which used it to describe the online auction site's largest sales day of the year. Although Green Monday is thought to be the 2nd Monday in December, research group ComScore defines it specifically as the Monday that is at least 10 days before Christmas.
    • Sales on Cyber Monday 2011 were $1.25 billion, the highest online sales for a single day in history. This was a 22% increase over Cyber Monday 2010 sales.
    • Overall spending over Thanksgiving weekend was reported to be $52.4 billion.
    • Online sales on the Saturday and Sunday after Thanksgiving in 2011 were $1.03 billion, compared to $886 billion for the same two-day period in 2010.
    • Black Friday sales were $11.4 billion, which is 6.6% higher than Black Friday, 2010, according to ShopperTrak.
    • Online Black Friday Sales were $816 million, which was 26% higher than the online sales on Black Friday 2010.
    • $479 million was spent online on Thanksgiving Day in 2011, which is 18% more than was spent online on Thanksgiving Day 2010.
    • 24% of Black Friday Shoppers were at stores by midnight, according to the National Retail Federation (NRF).
    • Macy's reported 10,000 people were waiting for its Midnight Black Friday openings.

    GB

     

  • Dish Loses The "Network"

    Re-branding. It's what some mature companies like to do. With Dish Network, you can get broadband and video services for just $80 per month. And it's not just you. The primary target? Rural households who have been limited in options as far as high-speed internet goes. Is this targeting necessary? Is this market underserved? Regardless of that, the nation' s second largest satellite-TV provider also released a 2,000 hour DVR system that should have DirectTV marketers concerned.  And with these product enhancements, comes a change in name from "Dish Network" to "Dish." Will it make a difference?

    Who knows? The proper delivery of service versus the price consumers pay will ultimately tall the tale. We can talk about the perils and advantages of re-branding forever, but this change in nomenclature is not that significant. The product offerings are indeed enticing, so perhaps the company can steal market share and address an underserved market, but the name change should have little impact. As a matter of fact, it might be a disadvantage since the word "network" actually suggests what the service provides. What's the "Dish" without the" Network?" We shall see.

    DDS 

  • The Changing Face of Pharma Sales

    My how quickly things change. I remember, a few years back, talking with a graduating senior who was planning on getting into pharmaceutical sales. These reps are often young and attractive (many are actually recruited from collegiate cheerleading squads) and their primary purpose is to "sell "doctors (who are largely male) on the wisdom of prescribing their particular brand of drug over other alternatives. After all, without personal selling how else would these fine physicians know about the myriad wonders and applications of various drugs? It's not like there are television commercials or other forms of ads about these products...Oh, right. There are. Nevertheless, armies of reps aggressively saturate the market and sometimes multiple reps from the same company will call on a single doctor. This model has worked for many years and the industry is now over $300 billion. But times have changed.

    Physicians are under increasing pressure to curb health costs and are increasingly insulating themselves from time-consuming and redundant sales pitches. In addition, the government has been cracking down on these sales practices and, at the same time, drug companies have been forced to tighten belts. The result? The number of sales reps in the industry has fallen from a high of 105,000 in 2005 to 72,000 today, and not great news for those who, for whatever reason, have their hearts set on pharma sales. In addition, the industry's approach to selling has become much less aggressive, more consultative in nature, and increasingly reps are compensated based on the quality of service rather than the number of prescriptions written.

    Finance is a profession. Sales is a profession. Marketing is a profession. Sports is an industry, Health care is an industry. Pharma is an industry. You may change industries many times in your career, but most people stay in the same profession, since this is what you are trained for in school and early employment situations. That is, sales skills are applicable across multiple industries, but you may not be able to easily switch from sales to human resources, for example, within the same industry.

    My advice to the student? The pharma thing may not work out. Concentrate on the profession rather than the industry. Learn how to be a great salesperson and you can sell across multiple industries throughout your career.

    DDS

  • 2012 Predictions: Part Three

    A very interesting piece in the Wall Street Journal summarized various predictions ad agency executives have made for 2012. Here are a few that I think might actually fly:

    *Ads with profanity. There's nothing like a "colorful metaphor" to get your point across amid increasing advertising clutter. Of course, these willl be "bleeped" as per FCC regulations but the power of the words will be there nonetheless, as most of us possess rudimentary skills in lip reading, especially when combined with the context of the ad. We get it, and cursing may be appropriate to reach a younger audience.

    *Facebook fatigue will set in. You are on it, your friends are on it, your potential employers are on it, your parents are on it, and even grandma is on it. Privacy issues compound an infiltration of ads. Yuck. This may be a peak for the social networking platform.

    *Sports marketing becomes an even more dominant medium. Yes, it's true that the most watched events are sports-related, mostly football-related, and that mass market advertisers pay a pretty penny to do this sort of advertising around these events. But athlete endorsements, stadium naming rights, and licensing are also an integral part of sports marketing. Look for companies to exploit these opportunities further.

    DDS

     

  • McCormick Spices Up Its Rack

    One of the world's largest spice dealers, McCormick & Co., has seasoned the economic slowdown rather nicely, so to speak. Revenue is at $920 million, up from $795 million last year, and profits have remained steady at around $100 million. The company retrenched a bit during the recession as many consumers traded down from higher end spices to more austere offerings such as spaghetti and taco seasoning mixes. Not high end, but still proftable. McCormick is now poised to take advantage of improved consumer confidence as amateur chefs begin to experiment more at home. Would you rather have a soggy barbequed chicken or a succulent rosemary chicken? McCormick can help you decide.

    Although commodity prices have been increasing, eroding profit margins a bit, McCormick seems to have its finger on the pulse of the American consumer with increasing sales, and also reaps 60% of its total revenue from international sources. Their message is clear. Cook at home and choose from hundreds of products to improve your culinary experience. The sales of Certifed Organic and gourmet products are improving, adding flavor and variety to an already full line of spices. There are a lot of ways to fail in marketing, and it's nice to have an example of a brand that is doing things right!

    -DDS

  • Super Bowl Ads Still Super

    NBC need not fear a slowdown in ad spending because the Super Bowl is still the Gold Standard in advertising. Nowhere else can you reach the mass market all in one place, watching one thing. Never mind the fact that 90% of all veiwers say that they will be watching "with others," a phenomenon we know as "noise" which impedes the delivery of any message. This year, a thirty second spot will fetch a record $3.5 million, up from $3 million last year and $2.2 million in 2001. Indeed this is still where the big dogs want to advertise.

    This year, Pepsi and Coke will go at it, and Anheiser Busch will purchase four and a half minutes. A hefty price to pay for an "all-American" beverage. The usual cast of car companies including GM, Hyundai, Kia and Volkswagen (which captured many "best of" awards last year) will appear, and Dannon Yogurt will buy a spot. The 70 or so in-game ads sold out around Thanksgiving versus October last year. Yeah, it always sells out, although we do remember a "Cash for Gold" ad a few years back that couldn't possibly have fetched market price.

    Big exposure means big money, and the top brands will pay this ransom to gain mass market appeal, which is difficult in an age of fragmented media. Many viewers say they tune in primarily to watch the ads, which is doubly enticing to many marketers. More on this later.

    DDS

  • 2012 Predictions Part Two

    Fear not consumers! Discounts in 2012 will be steeper and even more frequent than they were in 2011. Consumer income is still flat, economic growth will be inadequate to have any meaningful effect on unemployment and, since most consumers can no longer borrow on their ever-expanding home equity lines of credit, most folks won't open their wallets unless there is some form of sales promotion. Add an election year and a global slowdown to the mix and things won't be pretty for those who fail to discount.

    Obviously this is terrible news for all members of the supply chain, as companies will find it harder to find growing markets both domestically and internationally in order to satisfy shareholders and Wall Street growth estimates. The retail sector is still overcrowded and cluttered with a lot of stores offering essentially the same goods. These stores may be able to entice people to come through the doors, but they will find it very difficult to keep existing customers in this "daily deal" culture we have created.

    So, sales promotions such as 50% off, two for one, customer rewards programs, refer-a-friend programs, in-store promotions, online deals, et al., will be employed at maximum thrust. Weaker retailers will die on the vine, as we have previously mentioned, and manufacturers will have to be very careful with new product introductions as well as strategic moves with existing products. Inventories will be tight, so the most popular items will sell out very quickly and the least popular will be sold at just above cost.

    This will be a great year for consumers with discretionary income. The trouble is that there are fewer and fewer of these folks every year, and until incomes begin to grow again, unemployment falls to a more palatable level and election uncertainty is alleviated for job-creating businesses, we will continue to experience what has been described as "a prolonged downturn".

    DDS