• Guys Buy More Groceries

    Students of marketing know that the stereotype of the female of the household making most of the purchase decisions is absolutely true. But over the past decade fewer people have been getting married and and those that marry do so much later than in the past. This means that there are more single men living by themselves, together, in mixed households, or at home. As far as older men go, the baby boomers are a huge group of people and many men are divorced, widowed, or just plain single. Others have taken over the shopping duties for the traditional household as more women become the family breadwinners. In a recent study, 48% of males were considered "manfluencers". What does this all mean? Any way you slice it, more men are buying products traditionally targeted toward women, and so this social shift calls for a change in marketing strategy.

    Men like dark labels so look for packaging that is dark blue, black, dark red, or some other manly shade. Men like long necked bottles (no jokes please), and not straws as puckering is a very unmanly facial expression. No, really. This is science! Will yogurt and hard cider products feature bulls, pickaxes, and images of gorrillas? They already do, and there will be more of it to come.

    Dude food has moved beyond the sophomoric, young adult-targeted Jack Links commercials (which are rather funny) and into a more mature vein. Marketers will have to communicate differently to men, so the creative content of the advertising will likely shift into a more one-size-fits-all approach as the audience broadens to include more men. Some ads will indeed be targeted toward men, like the Dr. Pepper 10 diet product. Women need not drink this beverage, according to the product's positioning strategy. Times change and marketers must change with them. Luckily these shifts are extremely slow to materialize, and brand managers have ample time to mak ethe right decisions if they are paying adequate attention to the marketing environment.

  • NFL's Female Fans

    A new report with the cumbersome and unfortunate academic title "I'm Part of the Shield Too:  Examining the NFL Game Day Experiences of Female Spectators and Their Influential Patterns" has emerged, shedding light on the behaviors and attitudes of this increasingly influential demographic. Among the findings is the notion that female fans want to see more variety when it comes to licensed merchandise and apparel. While licensed league merchandise has come a long way in the past few years, still almost 40% of respondants indicated that there was not sufficient variety at the sporting event. Twenty six percent want to see more female fitted t-shirts and 13% wanted to see more jewelry and accessories at the event. This is a game changer people.

    After a few generations of participating in a variety of sports at all levels, women have emerged as true NFL fans with genuine affinity (78% of respondants considered themselves "a valued participant" and only 8% were "just with friends"), and these true fans buy things. One-third report that they purchase NFL products three or more times a year, and fitted t-shirts are the most favored item followed by hats/visors, women's accessories, and t-shirts for men. The league and all of its assorted franchises should take heed. Make better stuff and they will buy. And there is also a lesson here for other sport properties in other leagues. Make better stuff and they will buy.

  • Samsung Must Work Harder

    Recently, Samsung came out of nowhere to overtake Apple as the world's number one purveyor of mobile phones, and the company has enjoyed nothing but good times ever since. Samsung even beat Apple to the punch by introducing its own "watch" product first and has advertised it brilliantly (the TV commercial with the family dressed as Return of the Jedi characters immediately comes to mind). It happened quickly, and now there is much speculation as to what Apple's future holds if the company cannot maintain its storied new product development pace. But Samsung will not rest on its laurels. It must continue to innovate.

    We have learned through decades of marketing technology products that cool new devices quickly become commoditized in the marketplace. Personal computers, cell phones, TV's, and now smartphones have, over time, become cheap to make and therefore are now much more affordable for most consumers. Competitors within each category are more similar to one another than they are different, and so it becomes difficult to maintain market leadership unless you can offer more than just the device.

    Samsung itself said it best, "Great consumer experiences require not just great devices but a seamless integration of both hardware and software." Well said! This is precisely what has given Apple its main competitive advantage for so long. It has a "roach motel" approach (a reference to a popular commercial from long ago) where consumers can check in but they can't check out. That is, a seamless integration of software and hardware that the consumer relies on for all mobile technology needs. Once you've bought one Apple product, you are in for the full product line. So Samsung must emulate the grand masters by providing this bundle of services soon. Samsung-specific apps are only part of the picture, as the company must also develop proprietary features found only at Samsung. Current products like the S Pen Stylus and the ChatON messaging app have failed to impress. Samsung must do better. And soon.

  • Mexico Combats Obesity

    As part of an ambitious effort to fight and hopefully reverse the epidemic that has made it the most obese country in the world, Mexico will enact a special tax (seen as one of the broadest of its kind) on packaged food that meets its starndard for "junk food". The state will charge a 5% tax on foods that contain 275 calories or more per 100 grams, saying that such high calorie foods often contain unhealthful levels of sugar and salt and few if any nutrients. Ambitious indeed!

    This tax comes on top of another planned levy, also intended to offset the "social costs" of obesity and discourage overall consumption, which will tax sugary sodas an additional 8 cents per liter. It may not sound like much, but these taxes do add up, and evidence from studying the tobacco industry suggests that higher prices do in fact discourage consumption of even highly addictive products like nicotine. Fewer than 20% of Americans now smoke,and recent studeis indicate the junk food may have some physically addicting qualities.

    This regulatory phenomenon will not be limited to Mexico, a country that just passed the U.S. as most girthful, since the potential revenues derived from such taxes in the name of public health will be simply too tempting for cash-strapped governments at all levels to ignore. On an industry level, more regulation results in the reformulation of more products resulting in healthier choices, or so the rationale goes. Major food and beverage manufacturers and retailers are none to pleased with these developments, as you might suspect. And ultimately, if health care costs are to be absorbed by all of society (as is the current legislative trajectory), you can be sure that there will be more intervention at every level to reverse this rather expensive and pervasive social ill.

    -DDS

  • Will The Shack Come Back?

    When I used to think of Radio Shack, I would think of wires, adaptors, GPS devices, and other useful and assorted tech accessories. Now when I think of Radio Shack, I wonder how the heck the store remains in business. Just the brand name itself invokes images of the Fifties and Sixties when radio was the dominant broadcast medium. A quick look inside its stores reveals the expected hodgepodge of tech items as well as a relatively new focus on smartphones. Alas, the repositioning of the chain as a purveyor of all things "smarty" has failed to resonate with consumers, and the store loses more and more money every quarter as a result.

    Repositioning is often the last resort in a marketing strategy. If the current positioning (the place in the mind of the consumer your product holds relative to the competition), is no longer working and numerous tweaks have already been made, then changing the position may be necessary. Since the new position hasn't worked either, what should Radio Shack marketers do at this point? Punt?

    Radio Shack has always been great with customer service, and retailers like Nordstrum have proven that a retail model based on "full service" can work very well in the marketplace. By targeting the not-so-tech-savvy, the retailer can position itself on knowledgable staff offering a wide range of goods, including smartphones. "If we don't have it, we will ship it" should also be a mantra so that the small stores can act as "showrooms" for a full catalog of tech-related goods. The smaller format locations in destination shopping malls can be an advantage. A brand name change may also be in order. The bottom line is that no one can compete with Amazon on price at this juncture, and so retailers must strive to be different. Nothing has worked thus far, so it will be interesting to see what may be the venerable, cash-strapped chain's final major move.

  • Starbucks' New Strategy

    After pioneering the specialty coffee category and growing to the point where there was seemingly a store on every corner, Starbucks has finally settled into middle age. The specialty coffee category has flattened, the company has shuttered underperforming stores, and marketers have been busy figuring out which products to sell in their stores.

    We all know that a for-profit business must continue to grow, and once a company has become huge, it gets increasingly more difficult to achieve the growth rate that investors expect. Starbucks can no longer grow much by expanding their market since there are already too many stores and everyone willing to spend four bucks on a cup of coffee is already doing so. And the company has already introduced several products in grocery stores to get the "at-home" specialty coffee drinker. And it has already expanded internationally. So how can Starbucks grow revenue?

    Acquisitions. The company has quietly acquired several brands over the last few years, and the company expects that existing customers will continue to purchase products other than coffee. This is really nothing new, since the company has always offered more than coffee, but the results were always underwhelming. The difference now is that these brands are now wholly owned and operated by Starbucks and will be co-branded with Starbucks (a more profitable proposition). These include Evolution juices/granola bars/fruit snacks and La Boulange pastry products, which have replaced brands such as Naked, Kind, and Peeled.

    This is probably a good move. Gaining and exercising control over the supply chain is what big companies are supposed to do, and co-branding often works well. For Starbucks, growth must come from somewhere, so this strategic move seems necessary.

  • Sodas Continue to Fizzle

    It looks like the bubble has finally burst for carbonated sugary beverages, a product category that has dominated the "soft drink" landscape for decades. Overall category sales have been down each year for the last nine years, and Pepsi has recently announced a 4% decrease in sales for the third quarter. The year end data might be astounding if this continues. The good news is that Pepsi has already shifted its strategy in favor of its snacks and non-carbonated beverages, essentially ceding the flagship sugary/carbonated soda sector to Coca Cola. Pepsi Cola is probably entering the decline stage of the product life cycle after decades of maturity. And both of these companies are now much more than their original products, owning dozens of branded products across a number of categories.

    What is driving this shift?

    1. Social trends. Concern about obesity is driving consumers to make healthier choices.

    2. Industry trends. The proliferation of flavored waters, ready-to-drink teas, sports drinks, energy drinks, and other beverages has eaten into the market share previously enjoyed by sugary, carbonated products.

    3. Competitive trends. There are simply too many different types of sodas and other beverages available, and too many brands.

    4. Legal trends. Junk food taxes are imminent and are already in place in many localities, and the access of those under 18 to these products in K-12 schools has been restricted.

     

    It is very rare that only one variable has an overwhelming effect on products in the world of marketing. Often it is a combination of factors that makes things happen, and it is the marketer's task to sort it all out. Sound fun? That's what we do...

  • Target Serious About Product Safety

    Taking the lead from Wal-Mart, a company that long ago initiated a large-scale sustainability plan to force its suppliers to become more environmentally and socially responsible, competitor Target has instituted its own strategy. But instead of focusing on emissions, waste, water usage, workplace conditions, and other areas as Wal-Mart did, Target decided to focus on the ingredients within the products themselves. Enter the Target Sustainable Product Standard.

    Here's the skinny. Target has decided to focus on the lightly-regulated personal care industry and many of the harmful ingredients commonly found in these products. I've spent 20 years in this industry and I know that there is some nasty stuff in much of what we put on our bodies and into our home environments. Consumer concern about the environmental and health effects is partly what has been driving the natural and organic personal care segment. So why is Target making this move now?

    Obviously there are PR benefits inherent in any sort of environmental or social sustainability positioning. These types of companies have been doing well for years. And many chemicals that are still allowed in U.S. products have already been banned by the EU and several countries outside the EU, so it is clear that global pressures are present. Indeed it is only a matter of time before the FDA, taking the lead from the EU, also bans many or all of these harmful ingredients (a practice known as "Green Chemistry"). In the near future Target will be assessing more than 7,500 personal care products and household cleaners, and as a result, there will be much reformulation in the industry.

    How important is this in the bigger picture? Very. Target is large and influential enough to set the pace in the rest of the retail world. It isn't all about Wal-Mart. Products that are eventually reformulated for Target will also be sold everywhere else, so the standard will affect the entire industry. Why would a manufacturer want to make and market two different products after spending all of the time and money to reformulate? So branded product marketers will have to decide to reformulate or face sanctions imposed by Target including removal of the product from the store planogram. This story hasn't received much attention, but the effect that Target could have on an entire category of goods will likely be huge.

  • Coming Soon. Smaller Seats

    Just what our overweight culture needs. Smaller seats on the airplane. You would think that with Americans' posteriors growing larger each year, the airline industry would have a vested interest in making passengers feel more comfortable by installing larger seats. But, alas, logic will not prevail in the hunt to get as many passengers as possible on each aircraft. But isn't this bad for customer satisfaction? Won't customers complain and revolt?

    Maybe, but if every airline does the same thing, such as when everyone except Southwest began charging for bags. With the notable excpetion of that superior airline, the new buffet-style way to fly has resulted in much more profitable businesses, but unhappy customers. So, if every airline installs smaller seats to make each flight that much more profitable, what are you going to do as a consumer? If you don't like it you can go Greyhound an dleave the driving to them (not recommended), take Amtrak and spend much more than a flight, or simply drive yourself. Simply put, we don't have much of a choice.

    It is highly unlikely that consumers will be able to do much to get the airlines to think more about their comfort since most of us have little choice but to fly, but the federal government may eventually step in with heavier regulation if prices continue to rise and quality continues to fall. Airlines certainly don't want that to happen ,and the new seating arrangement won't help overall perception of the industry. Oh and by the way, the seats will also feature less padding and aisles will be slightly narrower. Isn't that delightful? As someone who flies more than a dozen times a year, I will be much more discerning with my choice of airlines in the future and wiol look for an airline that understands the "marketing concept". Surely some outfit will want to differentiate itself from the pack and prove that they really do care about customers. Southwest anyone?

  • Pasta Hit Hard By Obesity Epidemic

    When a person is trying to lose weight, a feat that gets harder wth age, pasta is often the first thing to go. Carbs. Lots of carbs. Pasta is merely a delivery system for other foods like meat and vegetables. It's high calorie filler. 

    I'll bet you think I'm talking about American attitudes here, but no such luck. Not surprisingly, we are actually increasing our intake of the controversial noodle. But what about Italy, a historically pasta-centric culture? It appears that citizens of some other nations are taking the obesity epidemic a bit more seriously, and have consequently decreased their collective intake dramatically over the past few years. ten years ago the average Italian family consumed 88 pounds per year of pasta. That number has decreased to 70 pounds today, and the average American family now consumes as much pasta as the average Italian family.

    This is noteworthy, as Italian devotion to pasta dates back thousands of years and has become as much a part of the nation's cultural identity as anything. And this really sin't as much about obesity as it is about substitutes. Tastes in Italy are shifting, as evidenced by the increasing popularity of Indian and Chinese food and the appearance of sushi bars in the more hip enclaves. Globalization has taken hold in the culinary world, and Millennials love to try new things. Just look at KFC's wild popularity in China! Times change and marketers must change with them.

  • IKEA Serious about R&D

    As marketers, we know that research and development should be focused on addressing consumer needs. Coming up with a new technology that people don't want or need is a huge waste of company resources, and so marketing and R&D must work together to insure that what comes out is marketable. It sounds remedial, but many companies still fail to understand "the marketing concept". It takes a car company three years to develop an auto, and some drug companies spend decades in the R&D process. IKEA is somewhere in the middle, as it takes an average of five years to develop an IKEA kitchen. That seems like an awfully long time to make furniture, but IKEA has turned this painstaking process into a science.

    IKEA prides itself on finding new ways to offer products for lower price points, and quite frankly, that takes a lot of work. Cost must be engineered out of the system without sacrificing functionality, and this balance can and does take time. Although the company is know for its simplicity and "easy-to-assemble" kits, there is a great deal of complexity in some of its products, most notably kitchens. The Metod (Method) model features 1,100 different components. Think of the training needed to keep staff up on each nuance of each product! The business model seems impossible, but IKEA makes it all work through originality, tight supply chain relationships, an eye for detail, and patience. Good for them!

  • What Happened to the Nano?

    Until the Wall Street Journal published its in-depth piece "Why the World's Cheapest Car Flopped" in today's paper, I had forgotten that the thing even existed. The much-hyped Tata Nano, a $2,000 minicar developed by the Indian automaker that also owns former British concerns Jaguar and Land Rover, quite simply failed to generate much interest despite a great deal of cooperation from the media. Introduced back in 2009, this car was supposed to change the way Indians think about automobiles, driving, and transportation in general. Not so much, with sales down 40% from last year.

    It turns out that in India, much like here in the States, folks joining the middle class want cheap cars, but they don't want their cars to look and feel cheap. The Nano looks like a cross between a futuristic bubble craft and a glorified go-cart. Back in the 80's, there was a similarly positioned and much hyped car called the Yugo. Unlike with regard to the Tata, however, the press treated the Yugo rather brutally, and a social stigma was born. It didn't help that the Yugo performed poorly across almost every measure of quality and customer satisfaction.

    The stigma developing around the Nano seems to be a more organic phenomenon, and the company has begun making changes to make the car a bit more upscale. The "people's car" must be remade into the "cool person's car", but this may be a tall order. One would think that in a down economy (India's is not very good either), a cheap alternative to the traditional auto would be a big seller. But logic doesn't always prevail when it comes to fickle consumers.

     

  • Rise Of The Machines

    The world of online advertising is becoming more and more automated by the day. A new study by Magna Global, a major  research and ad-buying firm, revealed that automated ad buying, wherein marketers use computerized systems to identify and target users based on segmentation data such as browsing history, is expected to rise 56% to $7.4 billion in the U.S., which is a heck of a jump. And that's not all. The industry itself is only $14 billion which means that automation, or "programmatic buying",  is now the dominant method to purchase online advertising.

    Why has this happened? Simply put, things have become so complicated and convoluted that humans struggle to stay afloat in a sea of data. Enter the algorithm, a set of software instructions that does all the work. Traditional ad buying has always relied on relationships between buyers and sellers, ones that are human, and so this is a major departure from the way business has been conducted since before the days of Mad Men.

    Automated buying began rather humbly, as a means to get rid of excess (cheap) ad inventory, but it turns out that the new systems are so efficient that marketers are flocking to the medium. You can't stop the technology juggernaut, so it's always best to learn the new way of doing things if you are a marketing professional. I watched advertising "creative" shift from art boards to digital software in the early/mid 90's, and it had dramatic consequences for professionals that did not learn the software. Many retired. Others struggled and changed careers. But the commoditization of digital media is good news for the established marketer since standardization means that there are many third-party service options for outsourcing the ad buying function. And so the marketing director needs only to manage the agency function. Isn't that nice?

  • New Brand for Hershey

    It doesn't sound like much of a big deal since hundreds of new confection products are introduced each year, but when a company as established as Hershey decides to launch a new brand, a big deal is exactly what it is. The general rule of brand management is to leverage the equity you have built in your brand over time by introducing "brand extensions". Thus, a new Hershey product would sport the Hershey logo unless of course the product is outside of what the company usually offers. In that case, the general rule is to avoid "brand dilution" and come up with a new brand name. For whatever reason, Hershey decided not to leverage its highly recognizable name, and it has shown that it is not afraid as it already owns popular non-Hershey brand names such as Kit Kat and Twizzlers.

    Introducing the new "Lancaster Soft Caramel" line of candies, Hershey's first new brand in over 30 years. This creme filled line of products will be introduced simlutaneously in the U.S. and China, so it looks like the brand is really intended for the Chinese market, where Hershey doesn't have much brand equity. Despite the lack of brand leveraging opportunities, Hershey will still be able to leverage distribution in the U.S. since candy products are all pretty much sold in the same retail outlets. And China is experiencing a huge boom in consumer demand for U.S. brands and in particular sweets, so the international strategy makes sense as well.

    In a time of increasing concern about obesity and scrutiny of the products that enable it, the confection category is not exactly experiencing spectacular growth. Perhaps a spanking new brand is just the shot in the arm that Hershey needs, and it is a brand that looks much different than the Hershey image we all know. The Lancaster monkier, by the way, stems from the name of founder Milton Hershey's first candy company, an obscure but relevant branding nod to the family history. Maybe now it is time to focus on updating the aging Hershey brand image. It could use a nip and a tuck...

  • Made in the USA?

    Few people remember back to the days when Wal-Mart, operated by its iconic founder Sam Walton, actually prided itself on selling goods made in here in the United States. And I'm not one of those folks who remember. It's hard to believe that was ever true isn't it? Since then, the company has in essence led the effort of moving jobs overseas so that goods could be sold more cheaply and be made available to more customers. While this shift may have hurt American jobs, it made goods of all kinds available to people who previously could never have afforded them in the past. A bit of tit for tat. Fewer jobs but more stuff to make life easier. But could Wal-Mart still offer low-priced household goods if they were once again Made in America?

    Interestingly, the company has made a public pledge to do just that, saying that manufacturing in the U.S. means "good middle-class jobs, and that's exactly what our country needs." I can just hear the snickering coming from readers, but think about what would happen if the company could actually make major strides in this area. Wages in China are rising rapidly and manufacturing is beginning to shift to increasingly high risk parts of the world and transportation costs continue to rise. Is it time for "onshoring" of jobs to occur? Can Wal-Mart lead the effort?

    Who knows? But it certainly would help the company's brand image as well as U.S. Gross Domestic Product. So far, Wal-Mart has announced that it will offer U.S. made socks, candles, towels, and light bulbs among other sundries, efforts that will create 1,200 jobs. Is this a good start or just a PR ploy by a company fishing for brownie points. In case you are very skeptical, consider that Wal-Mart's environmental and labor initiatives for manufacturers overseas have had a huge impact on the rapid growth and gentrification of places like China as well as the recent environmental policies enacted there. So why can't it shift its considerable girth over this way?

  • Facial Profiling

    There is a great debate forming among observers of consumer behavior, as we are witnessing what may be an iconic shift affecting shaving product marketers everywhere. Just what is behind the dramatic increase in facial hair young men are sporting these days? Is it the laid back "hipster" consumer segment and its iconic figures in Major League Baseball driving this trend? Or is it something more nefarious like pervasive unemployment among young men which leads to less spending money for consumer goods as well as a lower propensity to maintain grooming habits? Marketers want to know these things, and this is why we conduct market research.

    Indeed, since 2005 13% of men aged 18 to 24 have stopped shaving weekly and at the same time full employment among the same group dropped 17%. Do you believe in coincidence? Smart marketers shouldn't. This apparent correlation warrants further study by the highly lucrative, multi-billion dollar facial care industry, since shaving manufacturers have traditionally targeted this demographic rather heavily in the past. Most young men even receive their first razors free in the mail, an expensive way for marketers to get customers. If this facial relationship is true, it illustrates again how the economic environment can affect consumer behavior. But not all areas are negatively affected by a poor economy. I wonder if the tattoo industry has experienced a massive increase as a result of the idle young male demographic. I expect that it has.

    Hopefully the sustained unemployment will eventually abate, but will the Wookies? The bottom line is that beards (and fads like large tattoos) come and go with fashion. While there may indeed be a correlation between facial hair and high unemployment, people grow tired of the status quo and so the next trend is likely to swing the proverbial pendulum the opposite way. Let's see what happens.

     

  • Mmmm...Yogurt

    Yogurt is huge. And growing consumer interest in healthy, portable, and convenient foods has played a key role in the prolific growth of this sector, but the demographics aren't very evenly distributed across the U.S. general population. Here's the skinny. According to recent data reported in NPD's National Eating Trends study, 52% of females consume yogurt versus 25% for males. But the most skewed group for highest consumption is children under 6, suggesting that parents are making healthier decisions for their kids. And yet teenagers are the least likely group to consumer yogurt, which suggests that once kids are able to make their own purchase decisions (when they are away from mom and dad), they make different choices. The removal of "junk food" in K-12 public schools, scheduled to take effect next school year, will almost certainly increase consumption among the teenage crowd, since their choices will be rather limited while they are at school.

    So we know who is eating the stuff, but why are they eating it? Adults over the age of 65 are the group most likely to eat yogurt as part of an in-home meal, and ages 35-54 carry yogurt away from home, often as a meal replacement. In totality, 63% of yogurt is consumed as an in-home meal replacement, 22% is consumed as an in-home snack, and 15% is eaten as a grab and go meal or snack. With concern about obesity a factor in all product development, clearly there is plenty of room for marketers to grow the "meal replacement" market segment, but yogurt is probably too high in calories to serve as a low-calorie snack, so I don't see much opportunity here. A creative campaign aimed at teenagers positioning the product as both health and cool could do much to improve consumption that segment. Since Greek-style yogurt is lower in both sugar and calories, I would expect more middle-aged and older consumers to shift to that category over the next few years.

    Lots going on in the world of yogurt, and I expect there will be even more interesting activity in the future.

  • De-Energizing Drinks

    Sometimes it seems tlike America is full of people who take drugs to wake up, take drugs to stay energized during the day, and take drugs to go to sleep at night. Clearly we are out of touch with our natural cycles, and there are many well documented reasons for this. Coffee, tea, sodas, energy drinks, and other tasty caffeine delivery systems have been the products of choice among "normal" people; and there are many amphetamine-based drugs, like Ridalin, taken by those diagnosed with certain mild mental disorders like ADHD. Simply put, for whatever reason, we are a nation that loves to get jacked up. But what about coming down in the evening? Long the domain of drug manufacturers, is this a new growth opportunity for beverage manufacturers?

    There is a clearly identified need for the product, so that is always a good start in product development. Proper execution of what we call the "marketing concept" is all about assessing needs first, and then delivering the proper marketing mix to meet those needs (and hopefully even exceed expectations). So if there is a need, where are all the new products? Celestial Seasonings introduced Sleepytime tea (based on the herb Chamomile) over 30 years ago, and it sure does seem like there hasn't been much innovation in this area since. Perhaps Americans would rather take OTC medications and prescription drugs to help them sleep, but these products are replete with side effects and kill thousands of people each year. A high price to pay for a good night's sleep.

    Necessity is the mother of invention, as they say, and so an entirely new category of products has emerged to address this need. Products with brand names like Marley's Mellow Mood, Just Chill, and Neuro Sleep have invaded the retail aisles to address our overmedicated culture's need for sleep. Expect this category to skyrocket rapidly, but also expect the FDA and FTC to begin scrutinizing the claims that are made on labels and in advertising. Making claims about sleep can be construed as "health claims" which are not allowed on most food and beverage products and are mostly reserved for approved drug products. There is an intermediate category called "nutritional supplements" (created by an act of congress in 1994) where some types of claims are allowed, and this is the category where most of these new sleep products will end up. Such products can make mild claims about the herb or vitamin's action on the body, but these claims have to be backed up by multiple clinical studies. Such products will feature a "supplement facts" panel instead of a "nutritional facts" or "drug facts" panel. It is a complicated issue, and as such we will address this further down the road in future columns.

     

  • A Pinteresting Situation

    Quiz time! Which website has the most advertising potential...Facebook, Twitter, Google, or Pinterest? From the title of this piece you would probably guess Pinterest, and you may be right! Pinterest, for those of you not yet in the know, is the social networking equivalent of window shopping. While Google results are great for people who already know what they are going to buy, Pinterest serves the needs of the "shopper". So how is it that Pinterest can be a better play than Facebook? RichRelevance, a technology company that does online tracking for retailers exposed an interesting fact. Among customers who were referred by social networks, those coming from Pinterest spent an average of $160 per order versus $80 for those coming from facebook and $60 for those coming from Twitter. That's no small spread.

    Pinterest users don't just visit a site and leave it. They actually collect links and create a sort of "e-scrapbook" wherein they can maintain a tickler file of ideas for goods and services. And Pinterest users are generating their own content so they are more highly involved in the consumption process. The company has only begun experimenting with advertising, but we all know that without advertising to generate revenue, online marketers are stuck with charging usage fees for their sites. Consumers don't like paying fees, so it's advertising or nothing for most players. It is clear that in the near future more and more retailers will want to promote items that appeal to Pinterest users based on their previous behavior and attitudes (a practice called "behavioral targeting"), and this could make for a very lucrative revenue model. Let's keep an eye on this young tech upstart.

  • The Point of No Returns?

    When a marketer wants to reduce a consumer's perception of risk before she buys a product, one of the most effective ways to do this has historically been a "no questions asked" return policy. This is especially true for high end goods.  If consumers have confidence that they can return goods they have purchased in the event they experience cognitive dissonance or outright dissatisfaction in the post purchase stage of the consumer decision-making process, then they will be more likely to purchase those goods since risk has been reduced. And this logic has worked for years without much problem. Until now. It seems that too many people are cheating the system, and now change is in the air.

    Bloomingdale's is the first high end retailer of late to question the mantra "the customer is always right" when it comes to return policies, but electronics companies have long been used to people trying to game the system (eg., buying a TV for the Super Bowl and then returning it within a few days...slightly used). This obviously is not in the spirit of why a marketer would want to have a return policy in the first place. It's supposed to be a risk reducer, and not an opportunity for the criminally-inclined to "rent" products without paying for them.  So if this sort of thing happens in the electronics world, can it also happen with high end apparel? The answer is a resounding "Yes, it can and does happen."

    To combat this pervasive, unethical consumer practice, Bloomingdale's ( a division of Macy's) has installed a plastic tag for items priced at $150 or higher. The consumer can wear the garment at home, try it on, prance around, etc., but the tag theoretically must be removed before the person goes into public, since it is in a very visible place. The store will not accept returns of items that no longer have the tags. Sounds fair to me. The strategy appears to be a brilliant one, and you can be certain that other retailers are watching closely to see what happens. If it works out, you will see a lot more of this practice.

  • FDA Defines Gluten Free For Industry

    Just about every student and practitioner of marketing knows that the FDA is the federal agency that is responsible for most labeling rules and guidelines in the U.S. Every product category has its own rules on what a marketer can and cannot do, but there are a number of grey areas, and so savvy (if not ethically challenged) marketers endeavor to exploit the areas that lack clarity and certainty. For example, the term "natural" has never been adequately defined by government so, as one might imagine, marketers can pretty much do whatever they want on their labels with regard to using the term, unless of course there is some action from the judicial branch of government. In the absence of government regulation, activist organizations will often sue companies individually to get them to alter their practices.

    So, it is the FDA that must tell us the rules surrounding "low fat", "low carb", "low salt", and other descriptors commonly used on product labels. And now the latest term to be defined by this importsant agency is "gluten free". By now you are probably aware that many American consumers are concerned with the negative health effects of gluten, a bi-product of synthetic processing. Thus, "gluten free" has become a battle cry among new product developers, and the FDA decided that it wanted to clarify what that really means so that individuals with allergies and celiac disease can manage their diets accordingly. The new voluntary labeling guidelines must meet all the requirements of the definition, including that the food must contain less than 20 parts per million of the nasty substance. The agency also now requires foods with the claims "no gluten", "free of gluten", and "without gluten" to meet the same requirements as the "gluten free" moniker, so there will be no hanky panky with word usage.

    It never ceases to amaze me that some issues, like gluten free, are so easy for the FDA to deal with, but that the agency fails to address issues like the use of the term "green" or "natural", which are much more heavily abused. Perhaps the health issues that gluten has been correlated with have something to do with it. Who knows?