• WNBA Goes LGBT

    It is a mouthful of acronyms indeed, but nevertheless the groundbreaking decision by the decades-old professional women's basketball league to "officially" target the LGBT community is now on the books. The league has always attracted this community, has finally publically recognized it, and is now acting in the true tradition of target marketing. It is also using PR to talk about it publicly, and it's about time.

    Target marketing is nothing new. And targeting the LGBT market is also nothing new. But for a professional sports league it's rather groundbreaking; and on the heels of the much larger social acceptance of alternative lifestyles in the U.S., it makes sense for the WNBA to make this strategic marketing move.

    It is no secret that the league has been struggling with fan interest, as reflected by both attendance numbers as well as sponsorship agreements and TV rights. Perhaps having teams participate at local Pride Festivals and Parades, as well as a nationally-televised Pride Game to take place between the Tulsa Shock and Chicago Sky on June 22, will help the brand. And why not? The league is still unprofitable after two decades despite a great deal of private investment. Perhaps a bit of target marketing with some endorsements by prolific members of the LGBT community and some major brand backing might help matters. Let's see what happens.

  • Go Go Godzilla!

    Yes, there have been literally dozens of these movies produced since the aftermath of WW2. And, yes, most of them have been fairly poorly-made from a cinematic perspective. But, now there can be no denying the cross-generational and globalizing power of the most prolific and iconic of all mutant monsters, Godzilla.

    Young adults love it! But what most people don't realize is that there is a behind the scenes situation going on. The rights to this beast are owned by Legendary Pictures whose breakup with parent Warner Bros. has been well documented, and the two entities have now severed ties, except that Godzilla now survives as the partnership's last joint venture. And some joint venture it is turning out to be. Legendary Pictures actually produced the movie, and Warner is handling distribution duties, the synergy of which was probably the original intention of the merger. But although the partnership is almost over, it seems that the "swan song" will be very profitable indeed.

    So far, the former partners have made $93.2 million on the movie in the first weekend. It will certainly hit $200 million when all is said and done, and will be a big hit all the way around, despite the forgettable failure of the previous 1998 revival. Memories are notoriously short, however, and the new movie has nevertheless resonated with major audiences in Mexico, the U.K. and Russia in addition to great results in the U.S. proving that Godzilla is indeed an enduring global phenomenon. But what about Japan, the birthplace of this post-nuclear creature?

    Warner can't release the film in Japan due to a standing distribution rights agreement between Toho (the 1950's -era monster's official licensing owner) and newly-independent Legendary. Toho will therefore assume the distribution duties therein, so let's see how it does on its home island. Apparently, it's no Spiderman, which now has garnered over $175 million at the box office, but clearly the perpetual "Reptilian Reprise" has some residual staying power, and maybe the movie can bypass the perennial arachnid. But, regardless of who's on first, you can be sure that there will be more Godzillas to come.

  • Questionable Characters

    McDonald's has been busy lately revising its children's menu with the objective of increasing the number of healthy options, a strategy as much in response to the relentless pressure of health activists over the years than it is to changing market conditions. But healthy eating is here to stay, so why waste a marketing opportunity? Why not create a new, fun character to deliver the marketing message?

    Introducing "Happy", Ronald's new sidekick whose schtick seems to be making healthy eating more fun. It is rather strange-looking, kind of a box with arms and legs and the iconic golden arches for eyebrows. Pretty good branding, but It is a rather robotic, caffeinated, overly-globalized character, and reminds me a bit of the strange mascots they had at the London Olympic games. I guess, like the Olympic mascots, Happy is meant to appeal to a global community, but they probably could have done better.

    Marketing fast food to children, however healthy some of the menu items may be, will always be under fire. Offering toys as incentives, using cartoon characters, and partnering with kid's movies are all tactics of a very questionable nature to many experts. Happy, however benign his message, is still representing a fast food company with largely unhealthy products. A growing number see this sort of thing as a weak attempt to try to appease the health crowd and divert attention away from the real issue of the nutritional content of its products. Lots of folks even think that marketing to children, already becoming an ethical quagmire, should be much more highly regulated. What do you think?

  • Board Games Bring Excitement

    Remember when video game makers said that board games would be a thing of the past? Of course you don't. That was over 30 years ago, and we all have to admit that video games have become big business. But what has happened to board games? Have they been creatively destroyed as predicted?

    After a few decades in the dolldrums, it appears that board games are on the comeback trail. Sales of board games in the U.S. are up 15-20% in each of the last three years. This is not Monopoly money, nor is it a short-term phenomenon if Kickstarter has anything to say about it. It turns out that crowdfunding for boardgame start-ups raised $52.1 million in 2012 versus $51.3 million for video games. How's that for the power of data? If I hadn't seen it in print, I wouldn't have believed it. Let's see what kinds of new games emerge from this investment, in what ways the video game segment will be affected, and what market segments will be targeted by which products. But, there is one thing we do know for certain. The demise of board games was temporary, and the marketplace might respond favorably to some new, exciting concepts. Investors believe that they will! 

  • More Green Chemistry

    It looks like the movement to remove questionable ingredients from consumer products, known loosely as "green chemistry", is gaining some more steam. Increasingly, big companies are succumbing to stakeholder pressure (consumer groups, media, government, activist shareholders, etc.), and are reconsidering their formulations.

    Consider Coca-Cola's recent announcement that it will remove "brominated vegetable oil" from all of lines. The ingredient has been the target of petitions by a Mississippi teenager, on the website Change.org, who wanted it out of Powerade and Gatorade. Banned in the EU and Japan, the ingredient has been patented as a flame retardant, and has fallen out of favor partly as a result.

    It is probably not a harmful ingredient in any real sense since there have been no adverse health reports and the FDA has not become concerned, but at the same time there are probably better alternatives for a beverage. In fact Coke already has two in mind, sucrose acetate isobutyrate and glycerol ester of rosin. Hmmm. Hopefully that will satisfy the masses. Well, chemistry is not my best subject. What this does demonstrate is the enormous power that stakeholder groups can have over large companies, and the presence of dozens of ingredients in all kinds of products is now under scrutiny on many fronts. As a result, expect more green chemistry in the future.

     

  • Minor Leagues, Major Merchandise

    There are 160 minor league baseball teams that are affiliated with MLB franchises, and do they ever sell merchandise! Many small markets, although encompassing many fans of major league teams, are located too far away to attend games or are priced out of the market. This is where the minor leagues come in. When it comes to talent and ticket prices, the level of competition matters. AAA teams, AA teams and several levels of single-A teams exist in the hierarchy that feeds major league baseball teams, and the quality of play increases noticeably at each level. But when it comes to merchandise, all teams are created somewhat equal.

    The combined MILB teams netted over $55 million dollars in revenue in 2013 in merchandise, and it looks like the industry is poised to rise even further. New teams such as the Hillsboro Hops, a short-season single-A club, sell lots of gear, as do teams that change their logos or their team names, such as the Reading Fightin' Phils. Hats and shirts sell for what they sell for when it comes right down to it whether its the major leagues or minor leagues, so merchandise can be a great source of revenue for these small market teams.

    But as is the case in all industries, it is staying power that matters, and certain teams have consistently made the top 25 in terms of merchandise revenue. The Durham Bulls (AAA), Lansing Lugnuts (A), Portland Sea Dogs (AA), Carolina Mudcats (High A), Lake Elsinore Storm (High A), Wisconsin Timber Rattlers (A), and Trenton Thunder (AA) have all made the top 25 for 16 or more years. Indeed, small market fans are still hungry for live baseball, and the areas that have the most merchandise sales seem to be the healthiest of these regardless of the league These clubs move around all of the time in the minors, however, as fans are fickle and facilities need updating, so marketers must be on their toes. But when merchandise sales are humming it is a good indication that brand management strategy is moving in the right direction.

  • Tough Talk About Tablets

    The product life cycle can be long, or the product life cycle can be short. Much depends on so many variables, but the most important of which is the interaction of the technological environment and consumer behavior. It seems that indeed one feeds into the other in an endless of dance resulting in what famed economist Joseph Schumpeter called "creative destruction". Nowhere is this more evident than in the world of technologically-advanced communications gadgets.

    Take tablets, a 4-year old category, as an example. Almost three years ago in these very pages, the very existence of such a device was questioned. Who needs a device that is neither large enough to act enough like a laptop computer, especially for the "rich media" consuming crowd, nor has the capabilities and advantages of the smartphone? Well, for a while plenty of folks did, as Apple has already sold over 200 million iPads, but it appears that the party is beginning to draw to a close.

    Sales growth among tablet computers has apparently peaked. Apple, Microsoft and Amazon are all struggling for growth in an apparently saturated market. The priciest tablets may not survive, so marketers will have to find ways to deliver value at far lower price points than they have become accustomed to. Global sales have risen almost 20% but that's nowhere near the over 80% growth achieved last year, so this is not a local phenomenon. The decline of this category will likely occur very quickly.

    Let's face it. Smartphones are going to continue to get bigger and do more stuff, and there will always be a need for larger-screen format such as has been provided by makers of PC's and laptops over the decades (although these latter two categories have been in decline for years). These devices, large and small, will "borrow" all of the great things that the tablet has to offer, and the tablet as we know it today will morph into several other products, allowing for even more productivity, more consumer choice, and hopefully some positive societal advancements. I think that this is what Mr. Schumpeter had in mind.

  • Michael Kors Invades Europe

    Move over Gucci and Louis Vuitton. Michael Kors is no longer satisfied with conquering the fashion landscape of North America, and has officially begun his conquest of the Old World. The fast-growing and recently-iconic brand, propelled by the success of fashion reality show "Project Runway", has found its niche as a less-expensive luxury brand with the personality of a higher-end name, what is known in the industry as an "accessible". Just how accessible is Kors in Europe?

    Sales roughly doubled from 2012 to 2013 to over $200 million indicating that the products are very much appealing to cash-strapped Euros who don't want to pay upper-prestige prices to get the style they still crave. The interesting thing is that most high end European competitors have decided to close underperforming stores, raise prices, and limit selection in the hopes that an "exclusivity" strategy might help them weather the economic storm. This scheme has largely worked, but such a strategy is not good for expanding market share, and so Michael Kors has raced in to fill the gap.

    What should the likes of Gucci do? They can sit and watch from the sidelines for now, as hastily lowering prices might dilute hard-earned brand equity and confuse the consumer base. These are storied brands, Michael Kors is a relative newcomer, and the fashion industry is a notoriously fickle beast. Unintimidated, Kors plans on adding another 36 stores to its existing base of 76 in order to make the most of its popularity and get to as many European markets as possible in the fastest amount of time. Smart. But then again, Mr. Kors hasn't achieved such success in his many business endeavors by being feckless. marketers have a real person behind the brand, a huge advantage, so let's see how long Kors can keep the party going. Perhaps, after some time, it will exhibit staying power and will join the ranks of the iconic global brands. For now it must earn its stripes, and for long-established competitors it should be a wait and see proposition.

  • Go Bullets!

    This Washington "Wizards" thing simply hasn't worked, and it's time for the owners of this exciting NBA franchise to admit a mistake and fully restore the team to it's former glory. It has been 17 long years since the team changed its name from "Bullets" to "Wizards". At the time, the city was the murder capital of the nation and the irony was simply too much to bear, so the owner changed the name saying that it evoked gun violence. I didn't like it. He was much heralded for his decision at the time. But lots of fans still think of the team, which was originally located in Baltimore and played in an armory, as the "Bullets", and DC is a much safer place these days after all.

    In all seriousness, crime has decreased by 50% since 1995. And what's with the name "wizards" anyway? The name of the team makes no sense to most marketers because there are probably no actual wizards in Washington DC unless of course Harry Potter gets U.S. citizenship and moves to the city. A good brand name should represent something to its customers. Despite this handicap, team marketers finally acted by restoring the red, white and blue stripes that herald to the glory days of the ABA. Apparel is flying off the shelves. Fans are responding and so is the team, as they play the Pacers in the Eastern semi-finals right now. It's gotta be the uniforms!

    But don't get your hopes up. A powerful U.S. senator, Harry Reid, recently cited the decision to change the name as an example that the NFL's Washington Redskins should follow, which I don't think is quite the same thing. So with that kind of politics getting in the way, don't expect a name change any time soon! Hopefully at least the retro color scheme will stick. In the meantime. Go Wizards!

  • FiveFingered Fallacy

    Not only does overstating the benefits of a product usually result in customer dissatisfaction, but sometimes it results in a fine. Vibram, maker of the quirky FiveFingers brand of athletic shoes, was recently slapped with a $3.75 million judgment as a result of a class-action law suit filed for false advertising. The company, which was able to charge $100 a pair partly due to the overstatements, must now stop making unsubstantiated claims that the shoes strengthen muscles and help the wearer avoid injury.

    When you think about it, these are fairly outrageous claims to make about a product with absolutely no clinical research to back them up, so it is not surprising that a court would eventually become involved. One would wonder how much money the company has made over the life of the product line and whether or not it was all ultimately worth it. Now FiveFingers are merely strange looking shoes, and marketers must develop another positioning strategy. One should now wonder how long this brand will be around.

     

  • Whole Paycheck's Tired Strategy

    The "whole paycheck" nickname earned over the years by Austin-based natural foods retailer Whole Foods Markets used to be just a funny joke. At 35% margins, the highly successful purveyor of healthier products is much more profitable than other grocery chains and can afford to laugh, but there is growing evidence that the days of charging enormously high prices for specialty goods might be coming to an end.

    I have been in the natural products industry for 25 years, and it has indeed been fun watching both the meteoric growth of the industry, and also the way the Whole Foods has transformed the retail landscape. But that's just the problem. The stuff that Whole Foods sells is now available at many other locations, often for much lower prices. This was an inevitability, as expanding distribution channels increase both overall product volumes and the level of competition, which as we know results in lower prices. Once enough natural products manufacturers got large enough to handle the large volumes demanded by large retailers, it was off to the races.

    It is clear that Whole Foods must lower its prices or find some way to enhance value for its customers. Large grocery chains, in addition to borrowing from the retailer's product mix strategy, have also borrowed much about the stores themselves. The look, layout, and overall design of today's grocery stores owe much to the influence of Whole Foods. But nothing lasts forever, and companies must adapt to changing conditions if they are to remain on top. The folks who run the place are pretty smart, so it will be fascinating to see what the company does.

  • Extra Ketchup? Pay Up!

    It looks like the a la carte trend we all have been subjected to in the airline industry is beginning to creep into other places. After all, if companies can increase profit margins by charging for add-ons rather than bundling services together as they have traditionally done, then why not do it? Why not? It may anger your customer, that's why not, and doing that isn't such a good idea. The airline industry is somewhat immune to this problem since each and every major carrier (with the notable exception of Southwest) rapidly adopted this approach leaving little option for the consumer but to suck it up. In other words, if you don't like it, you can take the freakin' bus!

    So where is this new, odious trend emerging? Fast food. Some restaurant chains who shall remain nameless are considering charging customers for extra condiments. Want more sweet and sour sauce for those McNuggets? That'll be an extra 25 cents. More ketchup? That'll be a 20 cent upcharge, sir. I can just see the collective happiness forming among an already cash-strapped base of lower income consumers.

    Here is the rub. A recent survey found that 80% of consumers would be unwilling to pay for extra ketchup, mayo, mustard or relish. And since these condiments are instrumental in being able to stomach most fast food, I think upcharges might be a deal breaker for many people. A few chains may start to do this, but will probably discontinue the practice if competitors immediately differentiate themselves as Southwest has done by not participating in the practice. But in the airline industry, everyone jumped on board immediately, and the a la carte practice quickly became the industry norm. Could this happen in the world of fast food? Perhaps. Food prices are up almost 10% this year and marketers will have to find ways to make money under increasing cost conditions. Let's see what happens.

  • Subway's Test

    Test marketing is important in the world of fast food. Most chains, prior to a national introduction, will engage in regional test marketing in order to gauge whether or not a huge nationwide rollout is likely to be successful. Many marketers eschew test marketing because it is expensive, time consuming, might not provide good information, and may tip off the compeition and negatively affect what we call "speed to market". Despite all of this, Subway is currently testing two concepts.

    The first involves thinner slices of deli meat, which on the whole look more appealing to customers and are in step with emerging eating trends in America. Thin is better. Eat thin to stay thin. I can see the creative strategy already. Good stuff, and even Tyson is getting into the act. That one will probably fly, and I'm not sure if I would even bother to test that no-brainer concept. But the second is a bit riskier, as Subway is testing hummus. That's right. Hummus soon may be a new topping at a Subway franchise near you. What is the rationale behind this decision?

    Many Subway customers already order vegetarian sandwiches, and the popular veggie spread (actually just a fancy word for mashed chickpeas) would give them yet another option. And hummus does fit in the with the brand's "healthier fast food" positioning. I have little doubt that this concept will work in some of the more "progressive" regions of the country such as the west coast and the northeast, but will it play in the midwest and south of the country? And if the topping is in fact successful in half of the nation, will Subway be willing to make the topping optional for franchise owners, or will disgruntled business owners in the middle of Mississippi be stuck with lots of leftover hummus every week? Will it be an all or nothing proposition for Subway? This one will be interesting.

  • Return of the Alpha

    Many business students are too young to remember when Fiat was selling its Alfa Romeo brand in the U.S., a strategy the company discontinued in the mid-1990's. But the sporty convertible, first popularized by Dustin Hoffman in the 1967 movie, "The Graduate", is making a comeback as Fiat adjusts its strategy to address the U.S. market once again.

    The current CEO, Sergio Marchionne, wants desperately to take market share away from Volkswagen's Audi brand, which has been a dominant player for quite some time. And after a long period of time during which folks essentially held back on major purchases, consumers are now faced with aging vehicles that must be replaced. Pent up demand, as this is called, might only last a short time, so carmakers are advised to address this demand, as temporary as it may be.

    Is this a good move for Fiat, or is the U.S. market already cluttered with too many choices? I would lean toward the latter, but a well-planned marketing strategy backed by a very effective advertising campaign can do wonders in the U.S. marketplace. Failing this, however, it will be an uphill climb. What do you think?