• Viva La Fraganzia?

     

    Clorox, one of the largest players in the consumer personal care and household products segment, is rolling out a new line of aromatizing products targeted toward Hispanics, Clorox Fraganzia. Students of marketing are certainly familiar with segmentation and targeting, and targeting specific ethnicities has become known as "multi-cultural  marketing". Clorox has the idea that Hispanics, as a group, actually clean products differently from other ethnic groups. Is ths stereotyping? You bet! And marketers get away with it all the time. We put people into groups (segments) based on like characteristics (demographics, psychographics, and geographics) and target the segments that afford the most opportunity for success.

    Thus, market segmentation and targeting is essentially an exercise in stereotyping. Men do this. Young people do that. Wealthy people think this. Uneducated people believe that. Recognizing that members of a certain ethnicity or subculture all behave in a certain way can be a slippery slope towards racism, but marketers do it all the time. Why? Because it usually works. It turns out that people aren't all that different from one another and that group affiliation causes folks to emulate one another and give the impression everyone within a particular market segment will act more or less in concert with one another.

    Clorox believes that Hispanics, in general, approach cleaning differently from other people, preferring to clean, disinfect, and aromatize...in that order. We can assume that the giant company has done its market research and has identified this behavior scientifically. By adding the aromatizing product to its already existing mix of cleaning and disinfecting products and branding it "Fraganzia", Clorox believes it has addressed a need in the marketplace among a particular ethnic group.

    In the "multi-cultural marketing" tradition, we can all expect ads to feature Hispanic-looking actors, lots of family members, latin music, and other common devices used to target Hispanics in America. Spanish-language advertising will target recent immigrants in Spanish-language media outlets. This certainly doesn't say much for respecting everyone's individuality, but it may say quite a bit for the potential success of these types of products and for Clorox shareholders. The international potential of this line is obviously huge. Let's see if the company got it right!

    DDS

  • The Center For Figuring Out Really Obvious Things

    With regards to The Onion, America's Finest News Source and mouthpiece for the aformentioned "Center", some things aren't really all that obvious. However, the debate in Asheville, North Carolina, over whether or not "weird is too weird" might be pretty obvious. Asheville is known for a vibrant artistic community, a haven for spiritual retreats, and of course a "welcoming culture". This approach has certainly given the town of 85,000 a brand reputation and has resulted in some positive economic activity. And "Keep Asheville Weird" has become a bumper sticker, proudly displayed by locals and visitors alike.

    But, as many cities have learned with regard to vagrancy and "camping", tolerance only goes so far. Eccentricity, improperly managed, can become a bit too much, and families are ultimately turned off by things they cannot explain to their children. On the heels of the "Go Topless Day" event where two dozen women went topless and (legally) went parading around the town, Asheville has mixed feelings. And it's not necessarily a big deal to those of us who are not parents, and to many it's simply self-expression. While the town council has been tolerant in years past, this year they disavowed the event, saying it has no positive impact on the community (and of course its' image). Like the "420 Rally", an annual event recently smashed by University of Colorado-Boulder officials for brand reputation purposes, this event has worn out its' welcome due to the overall negative impact it has had on the brand reputation of the town.

    A former county GOP chairman said that Asheville underestimated the impact of simply letting people do what they want.  Despite the sometimes delightful eccentricity of the events in the town, most people might want to visit somewhere a bit more predictable in an increasingly unpredictable world. A town that wants to attract families and the dollars they represent must pay attention to this "family dynamic" and balance the interests of everyone involved. Weird can sometimes be too weird.

    DDS

    DDS

  • Lance Loses Big

     

    It's no secret that athletes and other celebrities make quite a bit of dough endorsing products, Some of the partnerships are cool and some of them rather ridiculous. Endorsers are paid based partly on ratings systems such as the Q Score, which ranks endorsers based on their recognizability and likeability. But that's not all that goes into the decision that a marketer makes as to who should represent his/her product, brand, and more importantly in many ways the consumer. Therefore, success, attractiveness, credibility, trust, and many other variables are also considered.

    Enter cancer survivor Lance Armstrong, who not only stands to lose millions in potential endorsement deals, but also possibly quite a bit of money that may not be donated to his foundation due to the very recent actions against him taken by the cycling world. He was stripped of his seven Tour de France titles and banned from future elite sports. So, basically beat it dude. You are now retired. Rather than continue to fight doping charges, which have plagued him for years, he decided to end his fight without admitting guilt.

    It looks like his current arrangements, notably Anheiser-Busch InBev, Nike, and Oakley, are going to stick with him for the time being. I would expect only Nike to renew his contract (albeit at a much lower rate of pay) because the company has a history of sticking by athletes such as Tiger Woods and Michael Phelps. You will recall Mr. Phleps' DUI, driving without a license charge, and of course the "bong hit seen around the world", and note that only Wheaties dropped him. He has since obtained numerous additional deals largely due to the fact that the man simply wins, and we kind of like that. Not so for Mr. Woods, who promptly lost the majority of his income and was dropped by every company but Nike. He has yet to recover much in the way of endorsements or tournament wins for that matter.

    Brands must be careful when choosing a representative for their product, and must be very cautious when engaging in damage control. With all due respect for his amazing feats, it is nevertheless unlikely that Mr. Armstrong will make much more money in cycling or represent many more products or causes in the future. Perhaps he should turn to acting. He did do a heck of a cameo in that scene from the movie Dodgeball. Remember at the end when Vince was in the airport and he ran into Lance in the bar....?

    DDS

  • Ab Circle Thin On Truth

    We've all seen the ads. Work on this machine for three minutes a day and lose inches and pounds off your ever-expanding frame. It sounds good, but few people these days are apt to believe this sort of claim, and yet enough of them do, and this is exactly why the Federal Trade Commission (FTC) exists. Unfortunately the agency, like many other government regulatory bodies, doesn't have much in the way of resources, and so it can pursue only the most extreme offenders.

    Enter the "Ab Circle", a product that claimed in countless commercials to do just what I mentioned above. Since the firm had no research to back the rather aggressive weight loss claim, and seeing that the company insisted on being the most frequent infomercial in 2009 and 2010, the FTC had little choice but to use the product as an example in the agency's stepped up efforts against deceptive health and fitness advertising claims. The FTC has settled several multi-million dollar caes of late, including Skechers USA which had to pay $50 million to resolve claims that wearing Skecher shoes each day would somehow abate the excessive "junk in your trunk".

    Well, Ab Circle agreed to a $25 million dollar "refund" for consumers, so if you have one of these abdominal machines you can probably get your money back. Perhaps you should be a bit more discerning in the future as a consumer. Weight loss is hard work for you and represents billions in revenue for brands. Unsubstantiated claims by ethically challenged marketers coupled with consumer negligence will welcome government action in many cases. It makes more sense just to tell the truth in the first place.

    DDS

  • IKEA Innovates Incessantly

    Ikea, the Swedish furniture giant famous for its immense stores and Swedish meatballs, has figured out a clever way to save money. Traditionally, the company has spent well over half of its marketing budget putting together furniture sets to photograph for the company's catalog and website. And photography, before the advent of the digital era, used to be a highly specialized and expensive endeavor. I remember spending thousands of dollars in the 90's to photograph a few bottles for use in brochures.

    We all know that the costs of photography have become rather negligible, and leave it to IKEA to figure out a way to save even more money. Instead of spending vast resources to build a new set every time the company needs a photo, graphic designers do all the work. The photos in IKEA's 323-page catalog as well as the website are now mostly digital representations. And they look pretty darn real too. This flexibility not only saves time and money, but also allows for endless combinations of products and easy customization of photos for different markets. Anything can be mixed and matched in the digital world. It's harder to do with real furniture.

    What will IKEA do with all the extra money? Reward shareholders, divert marketing dollars to more productive uses, and lower prices to generate more revenue. Good for them!  Good for the consumer.

    DDS

  • The Marketing of Universities

    In addition to tuition that insists on rising at a pace much faster than inflation, there is another major trend at American universities-- marketing. Certainly, institutions of higher learning have always had "campus communications" departments, but the trend is now moving toward hiring highly paid marketing directors (or even Chief Marketing Officers) who oversee a department of marketing minions.

    Weak job placement numbers for graduates and highly-publicized increasing student debt loads and default rates have forced schools to move beyond the simple communications functions to encompass all four P's. In addition, even schools that fill up every year, such as the one at which I teach, now have large marketing departments and the budgets that go along with them. Marketing is no longer seen as a simple communications function, and universities are making changes.

    Is this expense justified? Do universities really need high level marketing people with fully staffed departments, or is this simply another example of non-profit bureaucracy run amok? Certainly the need to reach multiple audiences with multiple messages necessitates more than a simple "communications" approach, and those schools that charge prestige prices must justify them through slick marketing campaigns. But, what about the over-crowded state schools that have to turn students away. Is a major marketing budget justified there? You decide.

    DDS

  • Will Work For Shoes

    The athletic shoe market was rocked by the recent report that Nike will introduce its new Lebron James sneakers for the ambitious price of $315 per pair. Well, that was a gross exaggeration. Shoe prices have been rising for years and it's no secret that if anyone can charge over $300 bucks for a pair of sneakers, Nike can. And after all, don't many women routinely pay outrageous prices for shoes, or is that just a stereotype?

    The fact of the matter is, a group of younger consumers has been paying these luxury prices for years and with Lebron James' marquis name (just like with Michael Jordan 20 years ago) attached to the brand, the company may yet reach its objectives. But, companies don't always charge premium prices just because they think they can. Costs are always a huge component in marketing decisions, and material and labor costs for the athletic shoe industry have increased over the past few years. Nike has raised prices across the board, even with regard to its lower end Converse Chuck Taylor All-Star sneaker now priced at $50 versus $45 just a short time ago. Competitor Adidas has also increased prices, citing rising costs as the primary driver of this decision.

    The big question is, will the target market, consisting of younger, lower income males who have been hardest hit by the recession, buy enough of these shoes? Young people do manage to come up with large amounts of money to fund digital media habits and extended vacations to Thailand and Costa Rica, so why not shoes that can digitally measure how high you jump? This prestige branding strategy has worked for Nike for many decades, but are market conditions different now? If so, what conditions have changed to threaten the success of this strategy? If not, what strengths and opportunities can Nike bring to the table to make this a successful launch? It will also be interesting to see how social media affects the performance of this line. Bad news travels fast, and if the market balks at this price, it will be bad news for Nike.

    DDS

  • Paying the Price

    In previous columns, I have covered JC Penney's recent rebranding and radical move towards every day low pricing, rather than heavy discounting, as they had done for so many years. So how is this move being received in the marketplace? Not well. the company's value has fallen by almost half since the beginning of the year. There weren't too many detractors out there when Penney made this move and investors were thrilled that the venerable firm was at least doing something to refresh its stale image. But, the change in pricing strategy, eliminating coupons and odd prices (like $9.99) to simplify things for consumers and for the retailer itself, has not gone as planned. All of this despite research that shows consumers actually prefer this type of pricing. At least that's what they say they think.

    The reality is that in all market research there is a gulf, sometimes wide sometimes narrow, between what people think they want and how they act (not to mention the gap between what people think and actually say). The company continues to underperform, and other brands such as Coach have quickly done away with "no math" pricing structures. General Motors has recently offered a "no haggle" structure and has seen sales dip. It appears that consumers don't appreciate simplicity after all.

    Always take market research with a grain of salt. It is important to look for studies that are extensive, long-term, and easy to duplicate. Sometimes marketers use multiple methodologies to achieve the same objectives in understanding consumer behavior even though this costs time and money. The world of market research is imperfect, to be sure, but without data marketers are always flying blind.

    DDS

  • Beer Is Boring

     

    B

    Back before the age of Prohibition, hard cider made from apples was the drink of choice. Afterward, it largely disappeared. Driven by the "malternatives" trend that spawned Mike's Hard Lemonade, Jack Daniels' Cocktails, and many others, cider is destined to make a comeback.

    Although less than 1% of beer volume in the U.S., the category is growing by double-digit growth rates annually, and might sport a 50% increase this year. This means opportunity for marketers. Recently, Anheiser Busch InBev and Boston Beer both launched hard cider products nationally, resulting in an immediate expansion of the category. Unlike beer drinkers, who are roughly 80% male, hard cider drinkers are split between genders, which means that the growth opportunities are limitless, especially among the 30 and under crowd who prefer sweet libations.

    Traditionally cider was considered safer to drink than well water back in The Day and enjoyed wide acceptance until Prohibition rubbed it out. Alas, it appears that the American preference for sweet and saucy may yet result in another trend. Production facilities are expanding and distribution channels will follow, so the pie is getting bigger. Until now, few major breweries have joined the fray. Wait a year and see what happens.

    DDS

  • Wal-Mart's Window Into The Future

    Analysts are always looking for economic indicators that provide insight into what and how much consumers will buy. High unemployment and slow GDP growth are not good news for most marketers, as sales forcasts must always consider both micro and macro economic factors when making 4 P decisions. During the recession and thereafter, many consumers "traded down" from higher priced brands to lower priced brands. This effect was good news for brands like Gain as folks traded down, but bad news for brands like Tide and Cheer (especially Cheer).

    As consumers continue to adjust their collective behavior, Wal-mart continues to do an outstanding job of attracting new customers and retaining current ones. What's interesting is that the company usually keeps their information on consumers and product velocities close to the vest. The reports we see in the news on retail sales, one of the benchmarks of a nation's overall economic health, do not include data from Wal-Mart, and in my opinion, this results in an underreporting of good news.  Any information from the company at this point (including very good earnings) will have a ripple effect and perhaps make things a little better for us all, at least psychologically.

    The successful retailer is not only expanding global operations, but has also invested quite heavily in the Neighborhood Market Grocery Store format (in order to address underserved urban areas) along with Wal-Mart Express (essentially a 15,000 square foot mini-Wal-Mart). If you want to predict the future of mass merchandise retail, look no further than Wal-Mart. Say what you will, but this retailer is very adept at delivering value to customers where, when and how they want it.

    DDS

  • Soda Taxes In Vogue

    As has been illustrated by NYC Mayor Bloomberg's high-profile proposal to regulate the sizes of sugary sodas in the city, municipalities and states are rather busily taxing carbonated sugary beverages. To date, 30 states now have some sort of higher sales tax on purchasing sweetened drinks. This trend has been discussed in previous columns, and the latest move by the California cities of Richmond and El Monte supports the notion that this practice will not disappear anytime soon. The regulations are intended to discourage obesity (a practice known as Social Marketing which has been rather effective at reducing cigarette use) and also to generate tax revenue at local and state levels. If sugary drinks are more expensive, according to a concept called Demand Elasticity, usage will fall.

    Nationally, usage of carbonated sugary beverages has fallen just under 20% over the past decade, but consumption of noncarbonated sugary beverages has doubled. Sugar is sugar, so it makes little sense to single out the ones that have bubbles as some governments have done. And what makes the situation in the California cities interesting is that the tax is on the stores, not the consumer, and so the stores decide how much, if any, of the tax to pass on to the consumer. In a hyper-competitive environment, the retailer might not be able to pass this cost on and still remain price competitive with stores that can offer lower prices through higher volumes. In this case, the consumer may not feel any pinch and the Social Marketing goal of reducing obesity through decreased consumption is tossed out the window. The activity then becomes a mere revenue generator for cash-strapped governments. So much for social responsibility.

    As expected, not-for-profit industry trade associations have attempted to block these measures at all levels, since these proposed taxes aren't good news for purveyors of sugary beverages. Companies use the combined power of a trade association to get things done at many levels of government and can be highly influential, but it doesn't help these companies that a recent study hasconfirmed that food laws can be effective in reducing obesity. The good news for the consumer is that these measures almost always come to a vote of the people. November should be interesting indeed.

    DDS

  • The Cape Without the Cod

    Overfishing. It's not just for hippie environmentalists anymore. The impact is very real, and it affects both product and pricing since marketers cannot sell what is no longer available. Readers of this column may or may not know that I have spent the past 20 plus years of my executive tenure in the area of sustainability and social responsibility, developing and advocating business and marketing models that consider the impact businesses have on people and the natural environment while they are busy growing the economy. This is an ethical issue to be sure, but is the message getting through?

    The short answer is yes. Most companies have implemented sustainability initiatives, or engage in some form of cause related marketing at the very least. But there are a number of industries that have yet to adapt, and fishing is most certainly one of them. A quick Google search and perusal of a few articles will enlighten you as to the crisis the world's fisheries currently face. The culprit? Overfishing. There are too many anglers and not enough fish, and those of you who can perform basic math functions know that this is unsustainable. Eventually the supply will run out, but in the meantime, shortages result in higher prices due to the principle of "scarcity". And running out of supply eventually results in the extinction of species, or the product if you will.

    One of the biggest geographic areas hit by the effects of overfishing is off the coast of the northeastern U.S., where the ever-popular and tasty codfish is quickly disappearing. In the short run, some marketers can make more money since scarcity drives up prices, but now the government has stepped in and has limited the catch by over 20% over the past two years. This has affected the communities that rely on cod fishing to such an extent that they have banded together to ask for federal economic disaster relief.

    The lesson? There are many, but the main thing to take away from this is that conservation of resources is instrumental to the survival of a business. A paper company must plant trees or it will run out of raw materials. Fisherfolk must insure that there are enough fish to successfully breed and replenish the supply. In light of this, do you think it is appropriate for the communities (think of them as companies) that have failed to do this to apply for federal tax dollars? Should they be bailed out, or should the government send an environmental message about sustainability of resources? How do you feel about this as a consumer? As a taxpayer? The article below should get you started.

     http://www.savingseafood.org/state-capitals/massachusetts-and-feds-on-collision-course-over-fishin-2.html

    DDS

  • Marketing or Taking Advantage of Kids?

    Despite the Children's Online Privacy Protection Act of 1998, which was supposed to protect the online footprint of the nation's children, marketers have still found ways around it and continue to track children without the knowledge or consent of parents. As a result, the Federal Trade Commission has announced new rules to close the loopholes and protect the privacy of those who are too young to know any better.

    Under current rules, websites have to get parental consent before gathering information, such as email addresses and names,from children under 13. But the original law has not been able to adapt to changes in technology and marketing. Some iPhone games, for example, include the option to join social networks without parental permission. Attaching software to browsers and mobile devices has become a common marketing practice, and these days even most adults want to know when and how they are being tracked. Facebook, a company that is starting to show signs of wear and tear, argues that its iconic "like" button should be exempt from this, for reasons that are still unclear.

    Without going into great detail on all of the changes, suffice it to say that third parties like Facebook will not be allowed to collect personal information without parental consent under any circumstances and will be liable for such activities. Marketing to kids is often viewed as unethical because children don't really understand the selling intent of messages. In most cases they think they are being taught or told what to do by authority figures and act accordingly. Kids don't really have budgetary control or make purchase decisions. They nag their parents for thiings they have seen on TV. Kids also don't understand money, the exchange process, how marketing works, or much else for that matter, as bright as we think so many of them seem. is this cool? is it ethical? It should be no shock that most people feel that kids must be protected from marketers, among many other types of opportunistic people in this big bad world.

    Privacy for both kids and adults will continue to be a hot button issue as technological advancements make it necessary to revise rules to keep up with what marketers are doing. This is the responsibility of the Federal Trade Commission. Let's see if that regulatory agency can stand up to the big data collectors of the world.

    DDS 

  • Warnings Deter Olympic Crowds

    The games are awesome, but it appears that business as usual has stopped cold in most parts of London. Officials expected gridlock for weeks as ordinary citizens go through their daily routines joined by 600,000 or so foreign tourists. A bloody mess as they would say across the pond. The truth of what really happens during these types of events is a bit different.

    Ordinary people have avoided parts of London like the plague, preferring to stay home and watch the games with family versus going shopping or engaging in other leisurely activities. I experienced this firsthand during the 1984 Los Angeles Olympics (where most locals fled the city if they could), and I experience it now every year during downtown Denver's Restaurant Week wherein hordes of couples take advantage of low prices and locals stay away.

    Cab drivers and retailers are specifically hurting in London during the events. Weekend buyers have been replaced by tourists who are mainly browsing. Ordinarily Britons from all over the islands would be visiting London on holiday this time of year. Not so with the Olympics going on. So while certain areas, such as the immediate area around the Olympic Village, may benefit from this short-term phenomenon, most business simply stalls. It's somewhat similar to the billions of dollars in productivity lost during March Madness here in the states, as people eschew work for watching tons of college hoops. 

    This reality dramatically weakens the marketing argument many organizers pitch to the regions they represent when they are trying to draw the Games. "It'll be good for the economy", when the reality is that it may be good for investment and tourism in the LONG RUN, as public relations tool. The results don't usually support the short run gain in tourism assertion and, if given the opportunity, I will vote against having the Winter Games in Colorado in the next decade, as has been suggested.

    DDS