Darrin C. Duber-Smith
Darrin C. Duber-Smith, MS, MBA, is president of Green Marketing, Inc., and senior lecturer at the Metropolitan State University of Denver’s College of Business. He has almost 30 years of specialized expertise in the marketing and management profession including extensive experience in working with natural, organic, and green/sustainable products and services. He was a co-founder of the Lifestyles of Health and Sustainability (LOHAS, c. 1999) market/industry model and was leader of the first U.S. industry task force that helped frame the Natural Products Association’s definition of natural (c. 2005). He has published over 80 articles in trade publications and has presented at over 50 executive-level events during the past 15 years. A frequent media contributor and recipient of The Wall Street Journal’s In-Education Distinguished Professor Award in 2009 and WSJ’s Top 125 Professors Award in 2014, Mr. Duber-Smith is author of Cengage Learning’s “KnowNow! Marketing” blog at http://community.cengage.com/GECResource2/info/b/marketing/. He can be reached at DuberSmith@GreenMarketing.net or firstname.lastname@example.org.
What do Elvis Presley in the 50's, the Beatles in the 60's, the Backstreet Boys in the 90's, and Justin Beiber today all have in common? They were all musical acts that had an uncanny knack for making young girls (and occasionally their mothers) swoon and inexplicably throw articles of clothing onto the stage. Luckily, today we have behavioral scientists who study these types of things in order to provide marketers with insights as to what this magical formula, if any, might be. Why are teens, and girls in particular, so susceptible to this sort of infatuation?
It turns out that during the teen years, certain neural pathways are being formed (while others are being discarded), and this leads our musical tastes, among other things, becoming a permanent part of our internal wiring. This explains why older people prefer the music of our teenage years despite how awful it might be, and why marketers have been able to exploit this in advertising campaigns using nostalgia as a creative appeal. Boys develop these tastes as well, but adolescent girls are far more likely to become infatuated with pop stars because they are "awakening to romantic and sexual feelings that are both intoxicating and scary". Boys are more likely to idolize athletes partly because they want to emulate them, but also as a way to form a personal identity.
And it helps that social media has brought celebrities even closer to fans, adding to the fantasy of the young girl having a real relationship with the pop star. Kind of creepy if you ask me. Obviously all of this is important to marketers who target this age demographic, but it also raises questions as to how vulnerable these young people might be to ethically questionable marketing tactics. They are still children after all, despite the fact that their somewhat prematurely overdeveloped bodies make them look very much like adults. These scientific findings shed more light on why marketing to children may need a bit of regulation, rather than the "guidelines" that are currently in place. In the face of increasing scrutiny fueled by the junk food "scare", regulation is just what we may get.
These famous words spoken over a decade ago by then-governor Bill Owens succinctly and emotionally described what was, up until now, the worst fire season in the state's history. Currently, Colorado is facing a potentially horrendous season, as there are several large fires burning out of control at the time of this writing. The problem with the very public statement Governor Owens made is that most people took it literally. And businesses that rely on tourism suffered for it.
In much the same way that retailers and many finished goods manufacturers depend on the lucrative shopping weeks between Thanksgiving and Christmas, one lost day of business during summer months can have a significant impact on revenue due to heavy dependence on visitors and visitor spending. In towns such as Manitou Springs, Colorado, 80-90 percent of the town's income is dependent on summer tourism, which can take a big hit when everything is on fire. The state has even banned all fireworks shows with the exception of a few stadiums in Denver. Wow.
So while the fires make national news, vacationers make other plans. Perception is reality, despite the fact that winds blow smoke in all kinds of directions. A fire could be five miles away, and you wouldn't know it was happening if the winds are right. It is important to remember that the natural environment can be a huge factor for businesses in every industry. Mother Nature can disrupt supply chains, cancel events, and cause people to stay away all together. And the worst part for marketers is that it's all uncontrollable, but this doesn't mean that they can't plan for the worst. This is what strategic marketing planning is all about. In the meantime, pray for rain.
Mobile marketing has finally arrived! And it's not about beaming messages (and hopefully coupons) to your phone as a result of responding to some email or text message. Nope. It's all about YOU communicating with THEM as a response to an advertisement!
2D codes (more commonly known as QR Codes) are sweeping the nation after a rather encouraging "test market" in Asia. OK. It wasn't really a test market since there are many more consumers over there, but, hey, it can work here too. And that's just what it's doing.
The crossword puzzle-esque bar code at the bottom of the ad is actually an invitation to visit the domain of the marketer...willingly! That's the beauty of this medium. In an age of concern for consumer privacy and a proliferation of ever-invasive advertising, encouraging people to come to you is the Holy Grail and QR Codes are the new deal. It could be the perfect gap between offline and online worlds.
And the bean counters love it because everything is measurable by the number of scans, so ROI is easier to calculate. What could be better than consumers asking for more information about the product or company? Not much.
As a Denver-area resident, I was proud to discover that Denver International Airport (you know, the one in the middle of the plains that looks like a Romanian circus tent) is preparing to roll out the largest digital ad program in the United States. At first, I thought the displays would be the world's largest, but then I remembered that places like Dubai and China will never let America build the largest of anything ever again. I'm not sure if the U.S. has "the world's largest" of anything, with the notable exception of our average body mass.
But, I digress. It appears that the airport (DIA for short) has signed a 10-year digital advertising contract with Clear Channel Airports that will place almost 120 LCD advertising screens throughout the airport. This package includes four 26-foot high definition LED video towers formed around the Great Hall elevators, according to the Denver Post. The airport expects to generate almost $100 million in revenue as a result of the deal. This is great for the advertising industry, as well, as the old "billboard" medium is undergoing a huge transformation to digital. I have seen many of these in action in airports around the world, and some are even motion sensitive.
I expect that national advertisers will be lining up to participate in the program at DIA, one of the nation's busiest and most centrally-located airports. In addition to incredibly high traffic, the place is notorious for connecting flights that sometimes take days to actually connect, especially during winter and summer storms. Now, that's what I call a captive audience.
Good news for those consumers of college football who have been clamoring for a playoff system to decide a national champion each year. It appears that the decision on the final structure will come shortly, but it is highly likely that there will be a four team playoff to decide the NCAA Division 1 champion. Opponents of this format consist largely of university presidents, most of whom love the income the bowl system provides on an annual basis. Well over half of the teams in Division 1 participate in bowl games, as the general rule of thumb is that a team goes to a bowl if they have a .500 record. Not exactly an inspiring feat, and it makes for some lightly attended and lightly viewed contests. Cars.com Bowl anyone? Anyone? It's Rutgers versus Southern Illinois. No?
Critics of the bowl system say that there are far too many bowls involving far too many teams and that there is no way to actually determine a national champion, which is not the case in every other college sport, including college football at the Division 1-AA (it has a nonsensical new name that escapes me at present), Division 2, and Division 3 levels. It appears that this four team playoff has been a long time coming, and the vast majority of fans agree.
So a compromise has been reached. There will still be too many bowl games, and mediocre schools will still generate income from these post-season games as long as consumers still watch them. Rather than enacting a playoff process that takes several weeks to complete, it is highly likely that, at the end of the regular season, a committee will decide on the participants of two bowl games, such as the Rose Bowl and Orange Bowl for example. The winners of these games will play an additional game for the national championship at a predetermined site (like the Super Bowl), and the bowls involved would rotate each year (among a few current major bowls) in order to spread the wealth, so to speak.
Thrilled? I am. Let's wait and see what the final model looks like.
Most internet-savvy people have grown accustomed to con artists attempting to infiltrate their personal information and access bank accounts in an effort to defraud people. From persecuted Nigerian royal family members seeking "business partnerships" to bank account security breach notifications, these scams have become relatively easy for most of us to discover. Enter Cyberscam 2.0: Social Media Exploitation.
Because of the sheer volume of personal information provided by people these days, it has become much easier for scammers to develop personal profiles, sometimes with the most intimate details. Most internet users over the years have not been the least bit concerned about privacy preferring oversharing that has descended into exhibitionism and narcissism to privacy. The privacy concerns you hear about today are actually relatively recent, as most folks have finally discovered the extent to which their personal data is being collected and used. There will be many regulations to follow in the coming years, you can be certain of that, but what about the increasing problem of outright fraud?
Simple schemes include using a template from a genuine Facebook email to ask millions of people to update their security questions. It only takes a few suckers to make a scam such as this worth the effort. The most vulnerable individuals are those who accept all friend invitations and have few or no security settings on their accounts. Also particularly vulnerable are the usual suspects...the elderly. "Grandparent scams" gather information about the target person and then appeal to elderly parents and grandparents through a muffled hone call asking for money to get their loved one out of a tight situation such as jail or a foreign country. It works more often than you'd think and the elderly are often targets of scams of all kinds. And because of the sheer number of people entering retirement these days, we can expect the scams to become more numerous and increasingly sophisticated. be careful with your information. Too much sharing has become...well...too much sharing.
It's been said that history doesn't repeat itself, but it often rhymes. Either way you look at it, there are important lessons to be learned from historical events as indicators of what the future may hold. This is why history is such an important factor in marketing planning and forecasting. So if this is true, why then do so many people and institutions fail to learn from the folks who made mistakes before them?
Let's take Asia's major airlines as a very recent example, an industry that has been squeezed by slowing growth, rising costs, and hyper-competition. The latest craze across the Pacific is the practice of premium Asian airlines creating discount units to bring in new customers and control expenses. Sound familiar? It should. Airlines in the U.S. and Europe did the very same thing over the last decade, and the results have been anything but pretty. Do you remember Song, Ted (part of United), and Snowflake? Gone. It appears that discount offshoots of premier airlines have not performed well, cannibalizing the sales of the premium parent brands and resulting in consumer confusion as to just what they are getting with each offering. In summary, it was and still is a terrible idea.
So why haven't Asian airlines learned from the mistakes of their Western counterparts? A very good question. As it is, these airlines have very good reputations for customer service, among the best in the world. Cutting service would obviously adversely affect the premium brands, and so airlines would rather create new brands so as to avoid diluting the equity the premium brands have built over the decades. But, since the brand name is new, there is no equity built in the new name. Operationally speaking, such a move might make sense as fixed costs can be spread over more units, but as for marketing? Such a strategy leaves much to be desired, and I suppose that the Asians will just have to find out for themselves. Perhaps there is a bit of ethnocentrism at play here, meaning that a culture that sees itself as superior (as most do!), tends to institutionalize the idea of "exceptionalism". A corollary of this principle is "Rules are for other people to follow. Not me." Perhaps the East can successfully do what the West could not.
Either way it shakes out, the lesson is that historic outcomes are almost always very good predictors of the future, and if the Asian airlines fail to learn from the mistakes of the West, these new offerings are likely to fail to meet expectations as well and will be relegated to the growing scrap heap of bad product ideas.
Is China the world's leading economic power? This question was recently posed by the Pew Research Center in order to discover global perceptions of U.S. economic strength relative to China. The results were not at all surprising and serve to remind us that perception is indeed reality. You see, marketers shouldn't live in the biased reality of their own perceptions, but must dwell in the reality of the consumer world. This is why we conduct exhaustive market research simply to confirm what we think we already know. The fact is, much of knowledge is counter-intuitive, meaning that it is not obvious to the average observer, which makes consumer research even more important.
The results? The majority of respondents of the 21-nation poll felt that China was the world economic leader (41 percent) versus 40 percent for the United States.To compound this, 58% of people in Britain saw China as the leader versus just 28% for the U.S. demonstrating either ignorance, anti-American bias, or a healthy combination of the two. Only majorities in Mexico and Turkey were correct in identifying the U.S. as the economic leader, which is very strange to me. In addition, a 2008 study revealed 45% for the U.S. and only 22% for China. What a difference a prolonged recession makes in terms of perception!
So, despite the fact that the results do not at all reflect reality (the U.S. is well ahead of other nations, our "bump in the road" notwithstanding), it is a reminder that:
a. the majority of people/consumers aren't all that well-informed, so don't assume they know things
b. constant research is an important part of marketing strategy
c. perception is reality
The on-line purchasing juggernaut that has claimed so many retailers in so many industries over the past decade (think Circuit City and Borders), will claim yet more victims before the carnage subsides. And it seems that there is little that many of these retailers can do about it, especially the big box stores.
Up until recently, bigger was indeed better as consumers wandered through acres of products, soaking up the selection and the low prices that larger stores are able to offer. Some retail formats have become so large that several "stores-within-stores" sprung up,with larger stores encompassing Starbucks, banks, fast food restaurants, and more. All things have a life cycle--products, industries, people, and also consumer trends. When tastes shift many companies that are not equipped to deal with this change are left to wander aimlessly, promising changes to their product mix, pricing structure, and in the case of JC Penney, the entire brand identity, but seldom succeeding. It's very challenging to change a business model to meet a complete shift in the business environment.
It appears that the internet has made it so easy for consumers to buy products at the lowest possible prices, that disadvantaged big box retailers such as Best Buy, who just lost its CEO, have been relegated to becoming the tools of mere browsers and assorted "tire kickers" who will visit Best Buy and others, but will purchase the same product cheaper on-line from Amazon. Why doesn't Best Buy simply ramp up on-line e-commerce efforts to meet this threat, you ask? They have, but Amazon spent almost a decade sacrificing profitability for market share and now enjoys market leadership.
This paradigm shift most likely means that there will be another vetting of weaker retailers, especially if the economy continues to sputter and Europe falls into a recession. Perhaps retailers can learn from the fall of venerable Woolworth Corp., one of the first general purpose stores, who somehow managed to salvage its shoe business after closing all of its stores. The surviving shoe business was renamed Footlocker, a fact apparently lost to history. Nevertheless, the strong shall survive, and as long as the environment is competitive and quality is high while prices remain low, consumers are the primary beneficiaries.
The Wall Street Journal published a fascinating article last week, breaking down a hypothetical US Airways flight of 100 people who paid the average round trip flight of $292 to discover how many customers on average it takes to break even on a flight. For the last few decades, it seems that customer service and its' bi-products, brand loyalty and customer satisfaction, are not priorities for most airlines since service levels have declined over the years. Interestingly, this report reveals that one of the primary reasons for this lapse in marketing judgment is the fact that it is very difficult for airlines to make any money, so an organization must cut costs to do provide return on investment for shareholders. Service is often a bi-product of people, and people are very expensive, so labor must be tightly controlled to maintain competitive pricing in the marketplace.
So, out of 100 seats, how does an average flight break down in terms of what it takes to cover costs?
Fuel: 29 seats
Salaries: 20 seats
Ownership, costs (buying/leasing planes, insurance): 16 seats
Federal taxes paid by passengers (FAA, security fees): 14 seats
Total maintenance costs: 11 seats
Other (meals, drinks, compensation for bumping and lost luggage)
Profit: 1 seat (ouch!)
The lack of profit potential in this industry explains quite a bit. In addition, the 9 percent of seats allocated to "extras" and service lapses demonstrates how important it is for these companies to reign in the costs of free extras (and most already have tried, since they charge extra for just about everything). It also shows that the airlines can cut costs by reducing mistakes and improving service, a fact that is somehow escaping most of them at this time. Hopefully, academic researchers will be encouraged by this report and perform studies that support this assertion, resulting in media attention and industry action. The winner is always the consumer when service improves, but when airlines are satisfied with industry-wide mediocrity (at best) we all lose.
On the heels of our discussions involving the obesity epidemic and the regulation of junk food, yet another story has emerged, and this time Disney is the main character. Under guidance from the University of Colorado Center for Human Nutrition at Anschutz, Walt Disney Co. has announced that it will ban junk food ads on its TV channels, radio stations, and websites aimed at children by 2015. This is an unprecedented move by a large, for-profit corporation especially when you consider that there are really very few government regulations concerning marketing to children...only "guidelines". In yesterday's post, I mentioned that public policy will have to be enacted to define what "junk food" actually is. But why wait? Disney already has the ball rolling, and the company's nutritional guidelines (per serving) are as follows:
Cereal: 130 calories, 10 grams of sugar, and 200 milligrams of sodium
Snacks (1 ounce): 150 calories, 6.25 grams of sugar per 100 calories, 220 milligrams of sodium
Juices (8 ounces): 140 calories, no added sugar, no added sodium
Complete Meal: 600 calories, 2.5 grams of sugar per 100 calories, 740 milligrams of sodium
This situation is different than the one happening in New York City with regard to banning sodas over 16 ounces. In this instance, we are talking about marketing products to children, a controversial issue whether the products are deemed healthy or unhealthy. Small children do not understand the selling content of commercials, the difference between content and marketing, the purpose of marketing, the value of money, where money comes from, and the exchange process, among a great many other things. Thus they are not "informed consumers", and therefore many believe it is unethical to market to them.
The major issue here is not ethics, but that Disney could set the tone for a variety of industries including but not limited to snack food, beverage and confection since category leaders tend to influence market followers to mimic their behavior. Government can move at a geologic pace and, in the absence of costly and cumbersome government regulations, Industry can do a pretty darn good job of "self-regulation". Competitors, consumers, non-government organizations, legal pressure and other factors come into play when government fails to regulate encouraging companies to make their own rules for competitive advantage.
In my senior marketing seminar class, we have been discussing the regulation of "junk food" for about seven years in anticipation of the current state of affairs. Driven by the obesity epidemic and the vast social costs associated with it, governments around the nation are considering regulations of one sort or another in an attempt to improve public health and alleviate those social costs. At least that's one end of the argument. The marketer of so-called "junk food" may have a different perspective. To most of them, the government oversteps its bounds and becomes a "nanny state", dictating what citizens should and shouldn't be able to consume. It's certainly a mess, but a reckoning has been a long time coming.
The hot button issue this week? New York City mayor Michael Bloomberg, the uber wealthy business man and self-described progressive, has decided to take an unprecedented step in banning the sale of sugary carbonated beverages over 16 ounces in size at a public venue (restaurant). Yes. You read that correctly. This doesn't include convenience stores where you can buy a 72 oz. Super Ultra Big Gulp or the grocery store where you can buy anything you want. It only pertains to restaurants and sodas in particular...I think. Is Mayor Bloomberg going a bit too far? Consider that most pending regulations concern changes to labeling requirements and/or an excise or "sin" tax on certain product categories similar to those imposed on other unhealthy products such as alcohol and tobacco.
There are at least two issues to consider here besides whether or not government is overstepping its bounds. First of all, no one has made an attempt to define just what "junk food" is, so someone will have to come up with threshold ratios of fat, sugar, salt and other ingredients so marketers know what the options are for product development and product life cycle management. That might take a while. Second, the "I guess we gotta start somewhere", seemingly arbitrary singling out of sodas over 16 ounces is very difficult to justify. What about other foods, and products in general for that matter, deemed unhealthy? Here is a short list of unhealthy products that Mr. Bloomberg should consider banning:
Cigarettes, alcohol, cell phone use in public, egg yolks, artificial flavors and colors, synthetic preservatives, oil, coal, cheesecake, the Cheesecake Factory, coffee, energy drinks, non-Kosher hot dogs, liverwurst, mayonnaise, Jolly Ranchers, nuclear energy, vegetarians, meat eaters, pit bulls (might already be banned), the Mets, the Jets, the Islanders, the Nets (already banned and moved to Brooklyn which is not really New York), the subway, Subway's "turkey-based" mystery meat, red slime (might already be banned), Spike Lee, Donald Trump, et al.
The list goes on. It will be interesting to see if this 16 ounce soda proposal is actually enacted and if so, I think we can safely anticipate that other municipalities and states will consider similar regulations as well.