• The Perils of International Expansion

     

    As companies attempt to expand internationally so that they may address investors' insatiable appetite for growth, many marketers have turned their attention on the billions of consumers in China. Caesars Entertainment Corp., the giant casino operator, is one such company.

    Five years ago, Caesars paid $578 million for a golf course in Macau, the Chinese gambling enclave near Hong Kong, hoping to use the land to build a casino complex in the industry's biggest growth market. But China has decided, in the spirit of protectionism or perhaps just spite, to deny any further casino licenses to U.S. operators. Bummer for Caesars. And bummer for any U.S. firms that had their eyes on China.

    The company is now trying to sell a money-losing golf course, and its plans for world gaming domination will have to be tempered, at least for the time being. This example illustrates that despite the opportunities abroad for market expansion, a host of political factors can stymie the efforts of any organization. It also reminds us that China is a communist country, and we probably shouldn't be surprised when controlled economies fail to embrace free market principles.

    DDS

  • Burger King Strategy Working?

    We all remember the creative advertising campaign featuring the "creepy king", who appeared in strange places and did very strange things. The trouble with this several-years-long strategy was that the commercials really had very little to do with food. It seemed that whatever message it was that Burger King was trying to convey was utterly lost in the weirdness of the ads. After lackluster results, the agency was canned, and a new agency hired to employ a new strategic direction.

    The move away from appealing to young men, who are frequent fast food consumers as a group, has resulted in a broader market appeal. New menu items such as wraps, salads, and smoothies have made the company look more like McDonald's, which is probably a good thing.

    Will the changes be enough to reclaim the crown Burger King recently lost to number two player Wendy's? In addition to the new creative strategy and new menu items, it will also help matters that the company is converting many of its stores from corporate-owned and operated stores to independently-owned franchises. Independent owners tend to care more about their businesses than corporate managers because they own the stores, and so the overall product should improve. Sales are up, so the king is off to a good start.

    DDS

  • The London Jaguars

    The NFL has made an unprecedented move, granting the Jacksonville Jaguars the rights to market across the Pond. The team, under new ownership that's committed to keeping the Jags in Jacksonville, will play games in London over four successive years in hopes to establish a fan base overseas. As a result, the team can sign sponsors that do not compete with the NFL's current international backers. And they can also sell lots of merchandise.

    The question is whether or not the league will be forced, out of fairness to other franchises, to accommodate the teams that also play overseas. Favoritism may not go over well among the powerful ownership group. The Vikings may make a play and might garner a similar agreement. Then the floodgates are open.

    Surely the league hopes to expand overseas. The ill-fated World Football League, which folded after about 15 years, failed to gain a fan base, perhaps due in part to the low-quality action. But, leveraging the brand equity the NFL has built over the past 40 years may pay off. The Jaguars have agreed to be a part of the experiment.

    DDS

  • For Profit Higher Education Struggles

    Beset by increasing government scrutiny, tighter loan restrictions, and allegations of failure to deliver the jobs they promise, for-profit colleges are taking a heck of a beating. University of Phoenix (Apollo Group), Devry, Kaplan, and others boasted double digit gains in admissions only a few years ago as legions of unemployed people and former military personnel enrolled. Between government loans, private loans, and the GI Bill, the money rolled in, and many students didn't give much of a thought as to how much they were borrowing or whether or not degrees from these schools would be taken seriously in the marketplace.

    Fast forward a few low growth years, and we see that default rates have skyrocketed while the unemployment rate remains at 8%. Is it possible these for-profit institutions are guilty of overpromising and underdelivering? Well, the marketplace thinks so. University of Phoenix recently announced it would close nearly half of all of its brick-and-mortar locations nationwide to cope with the lagging demand for its services.

    Possible regulations remain a pending threat to these schools as judges will consider whether or not these institutions should have access to the federal student aid that supplies most of their revenue. It looks like the party is over for many of these schools, but perhaps a bit of repositioning is in order for the survivors. Since there are millions of unfilled skilled vocational jobs open, which the current labor force are unable to perform, perhaps these schools can get back to teaching hrad vocational skills, rather than the same stuff the private and public non-profit institutions do. It's worth a shot.

    DDS

  • The Working Title

    One of the interesting things about both television shows and movies is the concept of the "working title". More than half of the movies released in 2012 were franchise movies (Madagascar 3 for example), book films or adaptations, so coming up with a catchy name isn't necessary. But in the case of the more original films, which are becoming few and far between, getting the title right is a difficult proposition. Films begin with working titles, which may or may not be the one producers decide to put on the marquis, and marketers often conduct market research to see which names will stick. In other cases, it is simply the personal preference of a movie executive and has little to do with marketing and much more to do with artistic integrity.

    "The Sessions" opens tomorrow, which was originally called Six Sessions, but the latter name was scrapped because a lead actor thought it was hard to say. Pretty Woman was originally called "$3,000" (the dollar amount Richard Gere's character offered Julia Roberts for her services). "The Shawshank Redemption" is a shortened name for "Rita Hayworth and the Shawshank Redemption", the Stephen King novella on which it was based. Woody Allen's Oscar-winning "Annie Hall" was originally called "Anhedonia", the psychiatric disorder featured in the film. Casablanca was based on an unpublished play called "Everybody Comes To Rick's". "GI Jane" was called "In Pursuit of Honor". "Honey I Shrunk the Kids", one of the lamest titles I've ever seen for such a successful movie franchise, was originally called "Tenny Weenies". I'm not making this stuff up.

    The best titles are usually short and memorable, but many of the good ones have already been taken over the past 100 years of movie-making, which presents a challenge for marketers to be original. And sometimes it takes marketers a little while to develop a good strategy, so working titles are used until such time as a final title can be decided upon. Alas, much of marketing is still trial and error as we try to learn from the mistakes of others and avoid making the fatal ones ourselves.

    DDS

  • Microsoft's Revival

    It seems like it's been a long time since people have been talking about Microsoft, which by the way is still a major player in the technology sector. Perhaps Mocrosoft has been plotting and planning, lying in wait to introduce some huge breakthrough product or technology platform. Well, the company has embarked on a new strategy as Windows 8, its latest operating software, hits the market in hopes of reviving the flagging Microsoft brand. The company, in a strategic partnership with supply chain partner Intel, will also introduce new products such as phones, tablets and convertible work stations. Microsoft will also open several branded "pop-up" stores in malls around the country just in time for the holiday season. All of this sounds like very good marketing strategy.

    In addition, both organizations have spent million of dollars and countless hours training hundreds of thousands of retail employees for this major introduction seeking to influence, and in many cases dictate, the way that retailers demonstrate and sell the product. This could be a revival of sorts for Microsoft, as brands such as Apple and Google have stolen much of the limelight from the former innovator. Can the brand regain its prominence and relevance in the marketplace? Let's see what happens.

  • Olympic Ads Missing Female Target?

    Almost everyone notices when it's time for the Olympics. Endorsers, both known and obscure, promote products and leverage their athletic prowess to make some money both before and after the events. And it makes sense that there is an increase in female endorsements these days since more and more women are watching the Olympics, and women did win 58 medals this past summer, setting several records.

    Despite this, I found it interesting to learn that the Got Milk ads, featuring 40-something Olympian Dara Torres, did not resonate well with female consumers. Why? It appears that her impressive appearance in a bikini, albeit an awesome feat for a woman in her mid-forties, actually turned female viewers off. Perhaps women did not relate to the Olympian in her full "olympic-ness" for an important reason.  Researchers have shown that ads with blatant sex appeal produce heightened negative attribution among women, especially when women compared themselves to the spokesperson. So, while women may appreciate Dara's accomplishments and incredible look, they know they cannot measure up and thus have a negative perception.

    Perhaps marketers should show these incredibly talented women in everyday situations so that the target market (the average female) is able to relate. In contrast, males aren't generally put off by appearance, but research shows that females are. Marketers had better take heed. Men and women are different after all!

    -DDS

  • Does America Need More Football?

    Many fans may say "yes", but a closer look reveals that most concepts in the past have failed. Notwithstanding the Arena Football League, which is a very different kind of football with a short field, walls instead of sidelines, and nets in the endzones, leagues have come and gone. The USFL petered out after a few years in the early 80's, the XFL lasted a year around the turn of the century, and the World Football League closed its doors after fifteen years around that time as well. Aside from producing a poor quality football product week after week, these three leagues all had one thing in common--an assumption that we actually want more football beyond what we already have.

    How many professional sports leagues can one country support? Well, in America we have quite a few, but that fact doesn't stop investors from trying out new ones. More recently in the failed football realm, the three-year-old UFL looks like it will become another casualty, as games have drawn audiences of only a few thousand people, television has been unsuccessful, and the league has failed to strike a minor league agreement with the NFL. It is now out of cash and cannot pay its players. Such hope and change is not a good foundation for a business model.

    So if this is all true, then why is the United States Football League, after a 25 year absence, giving it another shot? Granted the games will be played in the spring (NFL and NCAA offseason), but the league will compete with the well-established indoor arena format described above. And did anyone bother to ask consumers if this is what they want? Is "football fatigue" actually possible in a football-crazy nation? It is true that consumers frequently mislead marketers even if adequate research is conducted, so maybe all of this is solid strategy. or perhaps the fledgling league can become a developmental league for the NFL if such a thing is needed.

    For it to succeed the product must be high quality, the prices family friendly, and the stadiums small and intimate located in smaller cities or suburbs. It has worked for minor league baseball. Still it seems like a pretty risky proposition. Pretty, pretty, pretty risky. Let's see what happens.

    DDS

     

  • Newsweek Fades Into The Internet

    Another one bites the dust. U.S. News and World Report long ago went "digital" and ceased publishing the print edition, favoring a low-cost Internet-based model. Now Newsweek, which has struggled to make ends meet, is abandoning the expensive print model. What is behind this development? Is this the long-predicted death of print media?

    Bah. Both of these publications have struggled because the reporting became shoddy, and the stories became more sensationalistic and less substantive over the years. Thus the product deteriorated. Print media is alive and well, and publications that force readers to switch to a digital format (a tall order indeed for many over 40) are pretty much desperate to control costs due to poor revenue. Although Newsweek has lowered the online subscription price to compensate for the radical shift, Newsweek will likely struggle to generate ad revenue, as most online publishers have in the past and present. It doesn't help that online ads are tradtionally much cheaper than print ads.

    Yes. This is the decline of another publication, but many more will take its place. The weekly news format may be dying, since news is immediate and increasingly vacuous, but in-depth analysis (The Economist) as well as lifestyle targeting (Yoga Journal) will insure that the medium will be healthy for years to come. Magazines that stink, however, will go online and eventually peter out.

    DDS

  • Lance Is Out Of Chances

    Despite what one may feel about Mr. Armstrong himself and his myriad accomplishments, it is undeniable that his value as a product endorser has plummeted. Anheuser-Busch, Nike, and others have dropped the cycling icon due to the ongoing saga culminating in a new doping report. And it doesn't help that all of your ex-teammates are outing you as well. He never failed a doping test, but his titles have been stripped, he has been banned from the sport, he has stepped down from the chairmanship of his own foundation, and his product partners have bailed on him as well.

    The obvious lesson here is embodied in the steroids scandal in baseball, as many have admitted to use of illegal substances. Some have not. Just admit your mistakes, apologize, and move on. We will forgive you. America loves a comeback story as well as an underdog. It also loves a contrite person who admits to a mistake. If he didn't dope, then it's a tragedy indeed. But nevertheless Mr. Armstrong's future revenue stream has been destroyed. His endorsement value is low and his earning potential as an athlete is negligible.

    This is a sad tale, and it also exposes the risks that marketers take when they use celebrities as endorsers. These folks represent the brand, but they are human. Is it worth the effort? You decide.

    DDS

  • Avon Lady Exaggerates

     

    It takes a lot for the Food and Drug Administration to warn a company against illegal label claims, since the agency has quite a bit on its plate as it is. But Avon has wandered upon the FDA's radar and has been warned against making illegal claims on its anti-wrinkle serums and cremes on the heels of similar warnings against. L'Oreal's Lancome brand. The agency apparently means business in the anti-aging arena.

    Specifically, the agency has targeted Avon's Anew skin brand which claims to correct wrinkles, reverse and renew, face lift, as well as a product that says it's a liquid bra toning gel. The FDA has made it clear that products claiming to enhance the stimulation of cells and/or reactivate the skin's repair process go beyond the acceptable "reduces the appearance of wrinkles" claim. Apparently these two appraoches are quite different, and thus, the proverbial heat.

    Alas. Avon will likely have to relabel its products and will be subject to future scrutiny, but will not be subject to fines at this time. Yet, the industry is watching and most will heed the warning. Unacceptable product claims are, well, unacceptable.

    DDS

  • Nick Jr. Stumbles

    I had to do a double-take when I read about the interesting change in programming offered by Nick Jr., a TV channel intended for very young children. In an effort to appeal to the "late night crowd", in particular the moms who have to sit through the programming during the day, Viacom has recently introduced a block of rather racy adult programming called Nick Mom.

    The idea may have seemed like a good one at the time. There are moms watching Nick Jr. all day with their kids, so they are indeed part of the target market. Why not tap into this market at a time when the kiddies are asleep, with risque comedy and content that younger adult females might find funny. After all, the programming runs from 10pm to 2am EST, and Viacom conducted surveys that revealed a desire for this kind of programming. The bottom line is that consumers mislead the company, as they often do in surveys and focus groups, and the new programming doesn't fit with the brand identity and the image of the channel, despite the fact that it seems they really have little reason to have any programming whatsoever at that time of night.

    The problem? The whole thing has sparked an outcry, as 10pm on the east coast is 7pm out west and the company is making no attempt at delaying the programming. So, I guess NickMom is just for east coast females, eh? Parents are lambasting the network on social media sites and ratings for that time period are down by 75%. That is a significant problem, as the flagship channel, Nickelodeon, is also down by almost 25% overall from last year.

    This demonstrates how desperate some tactics can seem when the organization on the whole is underperforming. Marketers are always under pressure to grow the market and drive revenue, so if a questionable idea makes it to the implementation stage, it is the marketplace that flushes these out ill-conceived concepts. Let's see how long this particular idea lasts.

    -DDS

  • Beauty and the Beaker

    With so much science surrounding shampoo positioning these days, hair care provider "Living proof" has decided to combine MIT science with Jennifer Aniston's celebrity appeal to penetrate the increasingly crowded hair care market. And Ms. Aniston doesn't take endorsements lightly. Aside from appearances for SmartWater, she hasn't been involved much in the world of sponsorship. This is interesting indeed.

    What is really interesting is that she believes in the product to such an extent that she is an equity stakeholder, not a mere endorser or licensor. Such a relationship will insure that she stays with the product throughout its life cycle. To make things even more interesting, marketers have employed a technique of blending a rational/scientific appeal with an emotional/celebrity appeal to create a potentially effective creative combination. If the marketer can't engage you one way, perhaps the other will work.

    Will it work? Ms. Aniston hopes so. It will be interesting to see what marketing tactics follow this marketing strategy.

    -DDS

  • Wendy's Rebranding

    The stores will eventually feature fireplaces, lounge seating, flat-screen TV's, Wi-Fi, and digital menu boards. The new logo is completely different. The products? So far, they are the same, which means that this recent re-branding effort by the perennial market follower in the burger wars may be in vain. Is the act of changing the store and the logo enough to give the 60-year-old Wendy's brand the lift it needs?

    Well, the change to the store format seems to be an upgrade that really can't go wrong, notwithstanding the fact that it will be an expensive endeavor. The new logo no longer features the "Old Fashioned Hamburger" statement, in an effort to catch up with the expanded product mix, and Wendy's already offers--salads, chicken and other non-burger menu items which also happen to be offered by its competitors.

    The logo is quite a bit different than the previous logo, and the new one now features an older looking, "more modern" little pig-tailed girl as well as a new script for the company name. Both images are "floating", that is they are not anchored by a border to provide cohesion. Needless to say, I am not a fan of floating heads, and the new font seems amateurish. Consumers responded negatively during concept testing when the images strayed too far from the equity the brand has built over the decades, so change wasn't necessarily desirable. Certainly many months and countless dollars were spent on this logo change, and I'm not certain that it really reflects a more upscale, modern image (which was undoubtedly the intention). You decide.

    Nevertheless, the company's attempt at re-branding to a more upscale image should be accompanied by a commensurate change in product mix (more upscale) and perhaps pricing as well. A "half-way" approach may not serve Wendy's well in the long run. We know your burgers are fresh and now your restaurants will be nicer. That may not be enough. What else you got?

    -DDS

  • Soda Makers Play D

     

    Obesity is a social trend that just won't go away. In fact, we are 20 pounds heavier as a nation on average than we were 20 years ago and we get fatter every day. As a result, governments at every level are beginning to address this problem with guidelines and regulations. More rules (and taxes) make it harder for makers of fat-enhancing products to do business, but many people believe that it is government's role to step in when a product category becomes a danger to consumers. I tend to agree with this statement, although outright bans (such as the recent one in New York City) take things a bit too far.

    In the absence of regulation, companies will often change the way they do things in anticipation of future regulation. Simply put, it's easier and cheaper to make major changes proactively rather than wait for the government to force those changes. Many companies have voluntarily removed trans fats from their products in anticipation of federal legislation, for example.

    More recently, Coca Cola, Pepsi and Dr. Pepper/Snapple have all voluntarily agreed to post calories on vending machines throughout the U.S. This sort of disclosure will be industry standard in 10 years or so as disclosure is a huge trend, but right now it's not a requirement. And when market leaders do things, market followers often do what they do best...follow. This way the government won't have to expend sparse resources regulating an area that becomes, in essence "self regulated". This is the embodiment of playing good defense, and marketers need to know when to do it. The move by these companies demonstrates marketing savvy and illustrates the importance of scanning the marketing environment to make marketing decisions.

    DDS

  • Free Facebook Fading

     

    Facebook is about to get a lot less free, and I've been waiting for this to happen for quite some time. The pressures of being a publicly-traded company are many, but none is more pressing than having to hit earnings estimates--every quarter! This means that the company can no longer afford to make mistakes when it comes to generating revenue and providing optimal return on investment. It's no secret that its ads haven't been generating the needed return, so Facebook must find another revenue stream to satisfy impatient shareholders since revenue often leads to profits.

    As a result, Facebook is now testing a service that allows the user to pay $7 per post to make it more likely that their friends see their posts amidst the sea of news streams everyone now navigates. The test is limited to people with fewer than 5,000 "friends" and subscribers, so the company can accurately assess the impact this program might have on the average user. The question is how this will sit with users. It will still be free to sign up for Facebook, but it increasingly seems that there will be more "pay to play" functions for users wanting "premium" services.

    The stock is underperforming and so the pressure is on, and Mr. Zuckerberg will have to work some magic if he is to keep his job in the long term. Internet companies have always struggled to subsist on ad revenue alone, and not much in life is really "free", so look for more creative solutions from Facebook in the near future.

    DDS

  • Red Bull Does PR

    A very daring 52-year old Austrian plans to break a 50-year-old record for the highest skydive today, and Red Bull is sponsoring the whole thing. The jump will begin at 120,000 feet (20,000 feet higher than the previous1960 record) and will hopefully end with a safe landing near Roswell, New Mexico. The cost of this record-breaking attempt has not been disclosed, but we do know that Red Bull, the original energy drink maker, paid for the whole thing.

    Lots of brands eschew traditional advertising in favor of more guerrilla-like tactics, which often fall under the Public Relations element of promotion. Sponsoring this event is one of those activities. Red Bull has been one of the few energy drink brands that like to engage in television advertising, but the company also does its share of PR and associated non-traditional strategies and tactics. Red Bull likes to associate itself with pushing the limits of human capability as part of its creative strategy because it believes that such an association will lead to more market share in an increasingly competitive category. Red Bull Gives You Wings, after all, but in this case it is parachute. The concept is the same, and if marketers meet objectives, I would expect that Red Bull marketers will be involved more of these types of events..

    DDS

  • Watch Your Web Postings

     

    According to a recent survey conducted by Kaplan Test Prep has revealed something that most admissions officers and human resources professionals already know. What you post to the Internet may come back to haunt you. About 25% of admissions officers at the nation's top 500 universities use websites such as Google and Facebook to perform background checks on applicants. The same trend has been identified by human resources professionals, and the percentage increases every year. Apparently, what you post says a lot about what kind of a student or employee you will be.

    A quick Google search on just about anyone who has done anything in public can reveal much, and Facebook and other social promotion sites often contain information many people still believe is "personal". Here's some news for these folks. Everything you do on the Internet is potentially there forever. So information and perspectives that someone considers  "personal" probably shouldn't be published across such an "impersonal" medium.

    The bottom line is that you either directly (in the case of enrollment or employment) or indirectly (in the case of group affiliation) represent the institutions and organizations with which you are associated, and therefore you are a part of their respective brands. You are a reflection on the institution, and you are judged by the company you keep. Therefore, people who demonstrate that they make poor choices, are overly self-absorbed, lack impulse control, or suffer from other lapses in judgment and personality flaws can be easily exposed using the world wide web. TMI is just that. Too much information. If it's personal, keep it personal; and watch the exhibitionism and narcissism that social media seems to thrive on, or you may end up overexposed and underemployed.

    DDS

  • Beer Is Back!

     

    Good news! Beer is back at a 2% growth rate overall. For the first time in five years, the beer industry is growing, and this is largely due to the growth in the "craft beer" segment, which is now 6% of the total U.S. beer market. There are now 2,000 breweries in the U.S. and another 1,300 are in the planning stages. Wow! This is a revolution in consumer taste.

    Despite the continued unemployment of younger males, a key beer-guzzling demographic, craft beer sales rose 12% in volume in the last year, and it seems that there is no end in sight to new labels being introduced on a local basis. The problem is distribution. "Place" is the most difficult of all of the P's to implement, since it's tough to get shelf/tap space in an increasingly competitive environment. New labels may proliferate, but it is unclear how they will all get the opportunity to expose themselves to the craft beer-swilling public.

    It is clear that "domestics" are being relegated to the cheaper bunch of U.S.-produced beers, and many "imports" such as Corona and Red Stripe are actually now made in the U.S. The lines are getting blurry.

    DDS

  • FTC to Shed Light on Marketing to Children

    Later in the year, the Federal Trade Commission plans to release a report that will shed light on the marketing practices of dozens of companies that target kids. As we know the FTC's primary purpose is to monitor advertising/communication practices, but few know that the agency really has very little clout, a reality that stemmed from an attempt to regulate ads on children's television in the 1970's. Congresse banned the commission from making broad rules in this area and the result has been a marketplace relatively free of regulation..

    The FTC again attempted to provide clear rules when it joined three other agencies last year in proposing "voluntary guidelines" (not regulations) wherein companies would market only healthier food to children. There was no way that was happening. The snackfood industry is very powerful, and the agency itself admitted that the guidelines were entirely too harsh. The final guidelines were never published. So without the power of law behind the FTC, encouraging industry and organizational self-regulation is the only course of action, and this report could  amount to a PR problem for companies seen as taking advantage of kids and enabling the obesity epidemic.  The media will eat this one up, and it looks like this is what the FTC has in mind. Let's see what happens.

    -DDS

  • Lessons from the NFL

    There is no question that the NFL referee lockout, which mercifully ended late last week, had a profound impact on the NFL product as a whole. Critics have been so vocal about the poor quality of the "replacement refs" that even non-fans were aware of the issue. Simply put, the refs wanted more than the owners were willing to give, and no business owner wants to be told what to do by his/her employees. But let's forget about who was right and who was wrong for a minute and look at what happened to the product during the first three weeks of the season.

    Despite the reality of the situation (it wasn't as bad as most people think), the predominant consumer perception was that poor officiating by inexperienced referees was adversely affecting the enjoyment and outcome of games. Some observers even went so far as to demand that these first three games not be counted. Right or wrong, the marketing lesson is that consumer perception of product quality matters more than the reality of product quality, and the savvy marketer dwells in the perceptual world of his/her target market. It is clear that officials are not peripheral to the product (like cheerleaders) and are an integral part of the core product, that is the action on the field of play. The officials in essence "add value" to the sport product by ensuring a level playing field, so to speak. Their absence was felt by everyone and the result was a perceived deterioration of the product across the board.

    Value is in the eye of the beholder, and it is this consumer perception of value that forms lasting attitudes about the product. The lockout thankfully didn't last very long. Had it lasted the whole season, the result could have done irreparable damage to the NFL's brand equity, affecting attendance, sponsorships, and various other revenue streams. Let's be glad that didn't happen.

    DDS