• The Business Of Blowouts

    Both participation and spectator sports are on the decline, as the market for entertainment turns to a host of other choices to meet needs and wants. One of the threats to spectator sports in particular is the fact that these days just about everything is televised and almost anything can be viewed outside of the stadium. This has put pressure on marketers, specifically in the NCAA, to come up with creative ways to attract fans, and many stadiums are even resuming alcohol sales to the delight of many.

    So what can a marketer do when the match-up is less than enticing, as is the case with the many marquis Division 1 programs that front load the initial part of their schedules with patsy teams? And who wants to pay a bunch of money to burn a whole weekend day and endure a 70-14 blowout? Without beer? Tough sell.One way to do it is for the powerful home team to choose a much weaker regional rival to play against which tends to draw alumni of the institution who either live locally or come in for the game. Sponsors want butts in the seats and offering a reasonable price point can do a lot to ensure that bored locals will head over to the stadium. It takes a lot to compete with a 50 inch television, a couch, beer, and access to a clean restroom, and it's getting increasingly difficult for football programs to generate interest in coming to the stadium, Add crowds, fights, expensive/indigestible concessions, parking, traffic, etc., and it's hard to see why anyone goes to the game at all, let alone sit through a non-conference blow-out.

    But these travelling underdogs get between $300,000 and $1 million to play a successful major program so the inevitable thumping can be well worth it. Both schools can really benefit if the game is televised nationally, from the obvious exposure and from revenue generated by the broadcast, but with the upcoming playoff structure (which takes strength of schedule into account), we may be seeing fewer of these match-ups in the future. Fans and marketers who want to see more competitive contests can bank on that.

  • Distrust In NFL Already Strong

    The NFL has taken its share of licks lately, from the concussion issue to a rasher of felonies among players in the league, and it seems like America's favorite spectator sport might take a bit of a hit in the image department. This is clearly true, but the interesting thing is that consumer perception of the league has already been skewing negative for quite some time, especially among Millennials.

    A survey of 3,000 Americans (not necessarily just football fans) conducted earlier this year and reported in the Sports Business Journal found some news that should be disturbing to the PR professionals employed by the league. Among them:

    48% of respondents see the NFL as "sleazy", 61% of Millennials agreed

    54% of the general population don't trust NFL players, 67% of Millennials agreed

    74% believe players stake illegal steroids, 78% of Millennials agreed

    54% believe the league is anti-gay

    This is surely not good for the NFL, and there isn't a company out there that wouldn't be mortified by this sort of public perception. Among the findings were data that revealed women were 13% less trusting of the league than men, and that Millennials trusted the NFL less than all other major professional leagues. And this was before the Ray Rice, et al., incident! This study is yet another revealing indicator that these are indeed troubled times in the entire football kingdom, but particularly in the realm ruled by NFL Commissioner Goodell. Nothing short of his resignation can hope to alter consumer perception in the short term, and in the long run we must see improvement. What attitudes might a survey fielded right now reveal? This multi-billion dollar juggernaut cannot afford to ignore the image problem, and the high-profile hiring of a female executive combined with gratuitous donations to relevant not-for-profits isn't a very sound long-term plan to address the myriad issues the league faces. History has taught us that no organization is too big to fail.

  • Nashville Rising

    Nashville has redefined cool. The rough-around-the-edges, yet undisputed headquarters for country music has recently begun to attract musicians in all genres, and many are picking up and leaving the saturated, tired California scene and moving south of the Mason-Dixon line to make their play. Country music can't be defined as a niche market, since the target market is rather large and rather deftly served by a bevvy of musical acts, but it certainly doesn't appeal to everyone. I know many more folks who hate the music than like it, and at least in Denver there aren't really very many country music radio stations. Yet, Toby Keith's "I Like Women Who Drink Beer" made $65 million last year, more than any other song by any other musician.

    Equally unappealing to some is the show "Nashville", a night time soap opera that is drawing fans from all over the world to visit the places seen in the TV show. This is good news for Nashville in almost every way. The standard of living has risen for many residents, visitors reached 12.2 million last year, and the city is beginning to attract new companies interested in tapping into a fresh workforce. The horrendous summer weather will never change, but the fortunes of this town have changed for the better. We will be hearing more soon. As for the TV show, it will eventually be canceled and some of  the PR effects will wane, but the publicity the show has generated and will generate in the near future among a growing international audience is tough to ignore. So, Yankees in the northern and western states can scoff all they want. Nashville is rising.

  • Have Apparel Endorsement Deals Peaked?

    Nike has a full roster of endorsers, and what an impressively sized roster it has been over the years! Marketers hire endorsers to contractually represent their brands all of the time, and many endorsers represent multiple products, but Nike is one of the few to have an entire stable of athletes across multiple sports despite the inherent risks in and high costs of using celebrity endorsers. But these deals have made it possible for Nike to broaden its market appeal across participants and fans of virtually every sport over the decades, but there are signs that Nike and others may have finally decided it is paying too much.

    Among the recently dropped athletes are Lance Armstrong, Oscar Pistorious, Adrian Peterson, and Ray Rice, but it's obvious that the market appeal of these troubled athletes has fallen dramatically and it is difficult to see how having an unlikable endorser helps a brand. In addition to these decisions, it is even more interesting that Nike recently allowed upstart competitor Under Armour to outbid it on a multi year deal for NBA star Kevin Durant worth $350 million. Indeed investors have recently questioned the necessity of so much marketing money spent on so many endorsers at companies like Adidas, so perhaps this is an emerging trend. Using endorsers is expensive and risky due to their often unpredictable behavior, an perhaps investors at Nike might also begin to question the return on investment of such arrangements. Are there more effective ways for Nike to spend its copious marketing dollars?

  • Food Merger Scrutinized

    Not all planned mergers and acquisitions end up happening, as regulatory agencies here in the U.S.are tasked with making sure that the proposed marriage will not harm the consumer. Companies merge for many reasons, but the underlying assumption is that the companies, usually two direct competitors, will be much better off together than they would be apart from one another. The problem? When an industry consolidates, there are fewer competitors and theoretically this often results in less choice, lower quality, and higher prices. Of course this is always an high profile issue when it occurs on the retail-to-consumer end of the supply chain, but what about mergers further upstream such as those among product distributors?

    The Federal Trade Commission is currently studying whtheer ot not to allow a merger of two food distribution giants, Sysco Corp. and U.S. Foods, that together comprise 25% of the market. One quarter of total industry sales may not sound like much, but consider that the next largest competitor will be only one-fifth the size of the merged firm. This means that the remainder of the industry would be very fragmented consisting of mostly regional and specialty distributors. The combined company would therefore have far too much influence in the industry. What is likely to happen?

    If the merger is to be allowed, the combined company would have to sell off some of its assets to competitors and in essence make them more powerful players. The FTC would decide the terms of the deal, and it would be up to the suitors to decide if they want to go ahead with it or scrap the idea and continue head-to-head competition. It will certainly be interesting to see what happens here over the next few months, and sometimes these things can be delayed for several years, and such uncertainty is never a good thing for the merger participants.

  • Lion Finally King

    It took a couple of decades but Broadway show "The Lion King" has finally become the top ticket of all time. The long-running show, now at $6.2 billion, replaces "The Phantom Of The Opera", which has earned $6 billion to date. This is better than every movie, including Titanic, Star Wars, and any Harry Potter, but is this a fair comparison? Indeed this is apples and oranges, although the media has yet to make such a distinction. Movies are shown in theaters for a couple of months at best, and then enjoy residual sales from DVD's, Netflix, etc. Broadway shows, on the other hand, run for many years, sometimes decades, drawing live audiences from around the world over a long period of time. The residual sales from movies, however, aren't counted in the "box office" numbers, so the much longer-running live shows are at a statistical advantage.

    This observation is not intended to detract from The King's remarkable accomplishment, but comparing movies to live performances isn't really fair unless one wants to include residual sales after the theater for movies in the equation. One must be careful when it comes to statistics. There are many questions to be asked when one is trying to draw conclusions from such data. In this case it really doesn't make sense to compare The Lion King to Star Wars or The Titanic. Twenty years of performances will eventually overtake a couple of months of movie theater showings for a flick however awesome it may be, so it's a much bigger deal that the production bypassed former leader Phantom Of The Opera. Out of good taste, I will refrain from making a cheesy Lion King reference here. You can use your imagination.

  • iPhone's Grey Areas

    So, if Samsung has 85% of the share in the smartphone market, what is the story with the long lines and record-breaking sales associated with the introduction of Apple's new iPhone 6 products? It is no surprise that, although wildly profitable, Apple has struggled with product introductions since the iPad launched several years ago. So is the iPhone 6 such an awesome product that Apple can start to turn its fortunes around? CEO Tim Cook thinks so, calling the enlarged screen on one iPhone 6 model "the Mother of all Upgrades". Really? More like the Mother of all Hyperbole.

    While mildly exciting, this product will not change much at the headquarters in Cupertino, CA. True innovation involves more that what we call a "continuous" improvement, which is most certainly what this introduction amounts to. And there is growing evidence that the long lines we still see in San Francisco and some foreign countries these days, is more a function of the company's product roll out strategy than anything else. Last Friday, the iPhone6 was introduced in only 10 nations with another 20 expected to be added this week. What happened? Many shoppers bought multiple phones so that they could be quickly resold on what we call the "grey market". Not quite a "black market", which is illegal, a grey market involves secondary sales for a profit. It seems that some Apple "fanboys" around the world simply cannot wait a few weeks for Apple's latest offering, and so enterprising folks in the initial 10 nations do the legwork and make a hefty profit from those in other nations and also from domestic consumers unwilling to wait in line.

    Apple appeals to high-end consumers, and the company can certainly enjoy a great future addressing these consumers. But much of this technology has now become ubiquitous, and there are only so many folks willing to pay a premium price for products that can be found more cheaply elsewhere. And staying hip across multiple generations of consumers has proven to be almost impossible for all but the most unique of brands (think Nike). The grey market won't prop things up forever and neither will past successes or over-exuberant middle-aged users, so marketers at Apple are now under some serious pressure to innovate. Will the smart watch the company will introduce next year be the next ground breaker? If the sales of similar products already on the market are any indication (and they should be), don't bet on it. But do bet on more hype.

  • Oracle's Future

    One of the last great tech pioneers has finally left the helm of his company, as Larry Ellison steps down after 37 years at Oracle. The man, now 70, built a global database powerhouse and had a near monopoly for almost all of that time, but conditions in the technological environment have changed. Emerging technologies in big data as well as the advent of "the cloud" has dramatically changed things, and has left room for younger, more nimble players to provide less expensive, more accessible products.

    Competitors like SalesForce.com and Workday operate online and are therefore able to provide more customizable products that operate on open source platforms. This isn't how Oracle built an empire, but it is the way things are now, and Oracle must now refocus efforts on more lucrative opportunities. Many experts believe that this future is in big data and software as a service (rather than a good), areas wherein Oracle is only moderately engaged. In addition, Oracle's old-school, hard selling tactics might work well in a low-compeition/low substitute environment, but might be a liability in a world populated by many more choices.

    So far Oracle has been very slow to adapt, opting instead to rest on its laurels and operate in an enviroment of cost-cutting and profit maximization. But if it wants to introduce a product with high growth potential, it had better get moving quickly, as the industry and its competitors pass it by. Perhaps new leadership will help speed things along.

  • Maximum Burger?

    Traditional fast food chains, especially those that sell the American hamburger, are losing market share to newcomers at a rather alarming rate. Flat and falling levels of revenue are leading to large-scale store closures across the board, and players like McDonald's, Wendy's, Burger King, KFC, and Taco Bell have been busy selling corporate-run stores to independent franchise owners in order to raise cash and satisfy impatient shareholders. These companies have also been looking to international markets instead of domestic markets for much-needed growth which is a sign of market saturation here in the U.S.. But this sort of thing can only go on for so long, and eventually these companies are going to have to face the future. It is becoming increasingly clear that American tastes are shifting.

    Years ago, the proliferating demand for healthier foods ushered in a new type of fast food chain, and in many ways was the primary reason behind the growth of brands such as Chik-Fil-A, Noodles, Subway and Chipotle. In response, major chains tried to adapt by introducing healthier menu options, but have since come to realize that people who go to places that sell burgers generally want a burger and not a salad or a chicken sandwich. And the traditional brands, with the constant pressure to keep prices down, have skimped on quality, so these brands are fast becoming go-to for low income people. In addition service has suffered as larger numbers of menu items have made the system less efficient. In short, this is not at all where these brands want to be.

    What can they do? Not much at this point. Every product, brand and industry has a life cycle and it is clear that many of these brands are entering the decline stage of the cycle. Repositioning can be difficult to do effectively, as Radio Shack has discovered, once your brand has reached a high level of awareness, so this is probably not a viable option for these giants. The best move for these aging companies would be to diversify towards other areas, creating new brands and entering into different product categories, as Coke and Pepsi have done. Remember that a brand can stay in the decline stage of quite some time before profits become negative and a marketer decides to delete the product. And McDonald's can spend billions on advertising, but consumer perception of the venerable brand is unlikely to change. The difficulty inherent in repositioning once the product is in decline is certainly the primary downside of brand equity. It will be interesting to see what happens across the board.

  • Older Viewers Getting Shaft

    It is no secret that younger viewers are eschewing the rather expensive pay television format of entertainment for the more reasonably priced (free?) content that is readily available online. It is also no secret that many of these younger viewers lack both the ability and the desire to buy the pay TV product, so one might logically think that television producers would attempt to tap into the massive over 40 audience, a group of relatively affluent folks who prefer television as a form of entertainment and can afford it. Well, one might logically think so, anyway.

    Instead, networks have opted for the tired old strategy of tapping into the hipper, younger demographic. In light of what we know about the struggles Millennials have been experiencing, is this demographic going to adopt television in the way that the previous three generations did? Fat chance of that. Rather it is more likely that this generation will ultimately permanently change the manner in which video entertainment is delivered and consumed. So why cancel Pay TV shows that do quite well with older viewers, such as Harry's Law and Longmire, but don't do well with that coveted 18-34 age group? But what about people in their late thirties to early sixties? Don't marketers want to reach those who actually have the means to buy their products?

     

    The marketer's fascintation with the young and the restless is not a new development in the world of consumer goods despite the fact that young people display very little brand loyalty, but conditions for young people in the external business environment may have changed. The differences between generations used to be rather stark. People matured rapidly before World War II, and they quickly adopted radically new behaviors as they travelled through each stage of their family life cycles. Older parents didn't go to loud rock concerts, for example, or whatever the equivalent was back then. In this new age of arrested consumer development, it is sometimes hard to tell the difference between a Baby Boomer (over 50) who refuses to age, a generation X'er (35-49) who doesn't want to become a boring grown up, and an older Millennial (25-35) who doesn't want to leave the family safety net and become independent at all. Behaviorally and attitudinally, generations have never been more similar. So, with this in mind, doesn't it make sense that older consumers would be more important to a larger number of marketers? Does it all have to be prescription drugs and supplemental life insurance? It's high time for marketers, and advertisers in particular, to recognize that what used to work in the past might not work in the future. people still watch a remarkable oamount of TV, and as such, maybe it's time to stop giving the older TV-viewing public the shaft. Over the next 20 years or so, they might end up being a marketer's best customers.

  • General Mills' Move Into Natural

    The past 15 years have been a time of consolidation for companies in the $300 billion plus natural and organic products industry. In this environment attractive companies get snapped up when they are deemed large enough. Rather than develop their own natural products, many large food companies have decided to outsource the work, in a sense, by buying successful existing brands. Few people know that Ben and Jerry's, that icon of community activism and hippie love in every carton, was purchased by a very large foreign conglomerate back in the 1990's. Smart parent companies let their new purchases continue to do what they have always done so the success of the acquisition can be maximized. Why change what's working?

    So in the case of General Mills announcing that it is buying Annie's Homegrown for almost a billion dollars, the company is making a major bet on the continued consumer shift towards natural products and away from less healthy offerings. Kellogg, Campbell Soup, Hillshire, and many other players have already made such acquisitions, so General Mills at least is in good company.

  • Pop Tart's Off the Chart

    This fifty-year-old pastry just won't go away. As a matter of fact, in a sector that has been packed with declines as consumers shift to healthier foods, somehow the Pop Tart is still filled with prospects for growth. What's driving this? Kids between the ages of 12 and 17 (and perhaps even older now that so many young adults live at home) are the primary target market for this unhealthy, quick, tasty, grab-and-go food. Thirty percent of the pastry is pure sugar and the product is packed with artificial flavors, colors, and preservatives, but you can heat it or just eat it and it tastes just as good. The product's sustained rise to fame came when many women entered the workforce in the 70's and 80's. Strapped for time, busy moms chose all kinds of packaged foods as substitutes for the traditional home-cooked meal. Growth slowed during the next 20 years as imitators like Toaster Strudel as well as store-brand private label products offered alternatives, but alas the popular Tart was not to be kept down for long.

    While cereal sales have fallen by 5%, Pop Tarts have grown by almost 4% in the past year. And while most manufacturers have opted to formulate healthier options for younger kids and adults, Post has stuck to its niche, and it has paid off. Sometimes, smart marketers can buck the social trends and carve out a nice defensible market to serve. This is a great example of that principle in action. By the way, strawberry is by far the best untoasted tart.

  • NFL Blackout Rule To Be Scrapped

    NFL fans in cities where teams routinely sell out their stadiums may be unaware of a 40-year-old rule that forbids broadcasting the game within the local market. The logic back then was, hey we only have a handful of games so if you don't want to pony up the cash to come see the game, you don't get to watch it on TV. The rule as it currently stands requires stadiums to be at 85% of capacity or higher or the game won't be shown. The fans in San Diego and Buffalo were he only victims last December But does this rule make sense in 2014?

    Not at all. Not only is there a bunch of revenue to be gained through broadcasting the game these days, but the practice is unfair to both fans and the broadcasters. And why should the FCC, the agency that regulates the airwaves and will vote soon on the matter, be complicit in protecting the NFL? Of course in an age of declining attendance for most spectator sports, the NFL opposes any rule change as do the AFL-CIO and National Urban League, two entities that purchase discounted blocks of tickets in stadiums where a blackout looks likely. Opponents argue that discarding the rule will only further enable the migration away from free TV and on to Pay TV platforms, and as such will ultimately be bad for consumers. An interesting argument, but the rule will nevertheless be scrapped.

  • Manning's New Deal

    Peyton Manning is one of the highest, if not the highest, rated product endorser in history. As such, he has had quite a few endorsement deals over his career, and it is very likely that he will still be highly effective long after his retirement. His latest deal involves Nationwide Insurance, a highly recognizable financial services company with a very catchy jingle.

    The deal is for five years, so expect that Manning will appear in a lot of different commercials for the company, the first of which aired this past weekend. The company did a great job of tying in the "Nationwide is on your side" jingle, but the initial effort was rather weak by professional standards. It wasn't quite funny enough for a typical Manning commercial, but it did show Manning at his best, as a sort of "every man" going through daily activities just like a regular guy. Over the years these "slice of life" scenes sprinkled with humor and have been the most effective way to leverage Mr. Manning's very natural, easygoing demeanor. His appeal and thus his effectiveness as an endorser is sheer magic, so much so that the company is using the campaign to introduce a new logo. And that is a big deal.

    The question is whether or not Nationwide will be able to get the most out of this endorsement arrangement. Manning already represents (and has previously represented) a host of products and does run the risk of oversaturating the market with his image; but it looks like Nationwide, in need of a spokesperson, is in for the long haul. Will the ads be funny enough? Will the desired positive association between the audience's "like" for Manning and its perception of the Nationwide brand be achieved? Or will it ultimately be an expensively uunsuccessful experiment for Nationwide? From what I've seen over the years, the brand itself seems to have a bit of a quirky personality, and so does Manning. It just might be a good fit!

  • Understanding Green Marketing: Part Four, Green Best Practices

    Best Green Practices
    Much of marketing is exaggeration, a common practice sometimes known as “puffery”. This and the utter proliferation of marketing messages over the past several decades have taken its toll on the consumer. We are bombarded with thousands of messages each day, and our filters are becoming rather effective at message selection. This is why so many people are still skeptical about industry’s commitment to greener business practices, and still too many downplay the efforts of the most angelic of companies. Still more are unaware of the company’s efforts in the first place. Others are left to sift through the marketing clutter to assess which organizations are the real deal, and which ones are engaging in the odious practice of “greenwashing”.

     
    In the name of complete transparency, the best way for a company to employ a green marketing strategy is for a sustainability audit and plan to be available on a company’s website and updated annually with measurable objectives for improvement in the following areas:
     
    •The Nature of Raw Materials and Composition of Products Offered
    •The Nature, Consumption and Recapture of Energy
    •The Use of Water
    •Impact on Land and Biodiversity
    •Reduction and Recovery of Emissions, Effluents, and Waste
    •Distribution Issues such as Packaging and Transportation
    •Cause Related Involvement
    •Human Resources and Vendor Partner Policies
     
    Commitments to any of these areas can be easily incorporated into a product’s brand identity and crafted into a message that embodies a concern for people and the natural environment. These days there are numerous models to follow as well as a variety of experts one can employ to ensure objectivity, thoroughness, and an adequate level of expertise. Conducting an audit across the factors listed above, setting measurable objectives for continuous environmental and social improvement, and monitoring the results is the best way to build a foundation for communicating authenticity. The most influential global model for sustainability planning is probably the Global Reporting Initiative (GRI). In 1997, the GRI was launched by Boston-based CERES, an international network of investors, environmental groups, and other public interest organizations formed to address sustainability challenges. The program produces the world’s most widely used reporting framework to maximize comprehensiveness and transparency. As such, GRI has become the de-facto international standard used by well over 1,000 companies for corporate reporting on environmental, social and economic performance.

     
    For the “uber green” crowd (and especially if the company involves a global brand), it may be a good idea to obtain global certification. Those in manufacturing may be familiar with the ISO (International Standards Organization) 9000 series of global certification for quality management may also recognize ISO-14000. This series exists to help organizations minimize how their operations negatively affect the environment—i.e., compliance with applicable laws, regulations and other environmentally-oriented requirements, as well as continually improve across these areas. ISO-14000 is similar to ISO-9000 in hat they both pertain to the process of how a product is produced. Obviously, adding a natural or certified organic element to the product is par for the course.
  • Understanding Green Marketing: Part Three, the LOHAS Segmentation

    Most marketers embrace “the marketing concept”, that is a marketer assesses a consumer need FIRST, and then makes a product to meet that need. Even the most amazing of innovations meets a basic need, from the smart phone meeting a need for non face-to-face communication to the motor vehicle continuing to meet the need for non-human powered transportation. Many product failures result in creating an innovation and THEN finding a need in the marketplace. This was a common practice in a much simpler time, before there were some 600 different kinds of toothpaste on the market.
    The needs met by food, supplement, personal care, household, and other products are obvious and the fact that they may be better for people and the environment is not only a bonus, but also increasingly a driver. As there are many marketing research companies that study the natural and organic product industry’s trends, there are a number that specialize in tracking consumer demographic (describing consumers in terms of size and structure), geographic location, psychographic (behaviors and attitudes) trends. One of the most prolific of such studies is the LOHAS Segmentation (as described below). This study is developed and fielded at least annually by the Natural Marketing Institute (NMI) and now has over 12 years of history in identifying and tracking consumer preferences and characteristics through market segmentation studies.
    The first such study was conducted by Natural Business Communications, a producer of industry news and conferences, in 1999 and spawned an annual convention, quarterly, publication, website, as well as the important study mentioned above. The pioneering work (yours truly was on the development team) was institutionalized by NMI while the new version of Natural Business Communications, Conscious Media, now operates the event, publication and website. It is important that research continue year-to-year so that outlying data and fads can be separated from the statistically important information, so this study is the one the author has chosen. LOHAS stands for Lifestyles of Health and Sustainability, and the study is commissioned primarily to identify appropriate target markets for natural, organic and environmentally friendly goods and services. Natural personal care represents one of the fastest growing segments of this marketplace.  Natural Marketing Institute considers a natural personal care user to be one that has purchased at least one product during the previous six months. In 2007, according to NMI 38% of general population consumers have classified themselves this way. This number has surely grown since then. The original LOHAS segmentation divided the U.S. general population into five market segment categories based on demographic, geographic and psychographic characteristics reflecting attitudes and behaviors with regard to natural product:
    The primary target for most natural products in the original study is the aptly named LOHAS segment, consisting of about one-fifth of the general population. Consumers in this segment tend to live health as a lifestyle and will go out of their way to purchase natural and organic products. They are early adopters, opinion leaders, and avid users of green products. They aren’t necessarily high income and tend to be higher educated. While concentrated more heavily on the coasts, they are actually located throughout the U.S. Naturalites, another attractive market segment, representing about another one-fifth of the general consumer population, are more interested in health than they are in the environment; and they are primary users of natural and organic personal care. They are higher income and tend to be better educated than the general population. Drifters, the largest market segment at about a quarter of the general population, tend to be much younger and have yet to develop their own values structures and ingrained purchase patterns. They are motivated by the latest trends and shift on commitments to many issues, but it is probable because of current attitudes and behavior that the majority of these drifters will “drift” LOHAS or Naturalites categories as they get older. The other two segments, Conventionals (lower income folks motivated by price and practicality) and Unconcerned (the nomenclature reflects the general attitude) are not primary targets for greener personal care or household products unless they can save them money, but the ongoing proliferation of natural/organic cosmetic product availability across multiple channels of distribution, coupled with the growing health and wellness market, might change this. These segments are ignored in the targeting process for now, but must still be monitored as the growing popularity and availability of natural products will surely bring some of these consumers from these two segments into one of the other three segments. The bottom line is that well over half of adults are in the primary target for natural and organic personal care products through the LOHAS segmentation model.
     
    Again, this is only one example of many studies dedicated to providing market research in this area, and the study has changed quite a bit since its inception 15 years ago.
  • Understanding Green Marketing: Part Two, The Green Imperative

    Indeed, there is some evidence that the efforts of many businesses, at least in the realm of communications, have gone unheeded. Research published in the January/February 2011 edition of Nutraceuticals World sheds light on the failure of organizations to effectively communicate sustainability initiatives. According to the Hartman Group, even though 15% more consumers are aware of the term “sustainability “versus three years ago (a total of 69% are now aware of the term), only 21% percent can readily identify a sustainable product and an even more disturbing 12% can name companies that are sustainable. Obviously what we have here is a failure to communicate, which begs the question as to why organizations would engage in sustainability initiatives if they do not plan on communicating them effectively? First we will address the drivers behind sustainability initiatives and move to how such a program can be initiated. Sustainability plans are developed and implemented for the following reasons, developed by Duber-Smith and named the “Green Imperative”:

     

    1.      Target Marketing:  A sustainable marketing strategy, with products that are properly positioned, will address the growing target market for goods that are green in some way, whether natural, certified organic, recyclable, made from recycled materials, dematerialized, etc. Numerous market segmentation studies have identified a growing market for greener goods and services among the majority of Americans.

    2.      Sustainability of Resources:  Insuring the availability of resources to continue to make and sell goods is another imperative that suppliers, manufacturers, and retailers must embrace. Cutting down all of the trees does not help the shareholders of paper companies, let alone everyone else.

    3.      Lowered Costs/Increased Efficiency:  There are countless ways to save money and increase efficiency so that marketers can enhance the bottom line and stave off the narrowing of margins that occurs in every industry as it reaches the maturity stage of the life cycle.

    4.      Product Differentiation and Competitive Advantage:  Every marketer knows that in this hyper-competitive business environment it is crucial to maintain demonstrable advantages over competitive and substitute offerings. Green products are often a “tie-breaker” when consumers are faced with a “greener” product offering the same benefits as a product perceived to be less green.

    5.      Competitive and Supply Chain Pressures:  When competitive organizations and their products adopt sustainable business models and green positioning, it often pressures other companies to follow suit, especially in the case of market leaders. Wal-Mart and its recent environmental and social initiatives illustrate how powerful supply chain members can force companies around the world to adopt more favorable social and environmental policies.

    6.      Regulation and Risk:  Regulations at all levels of government are on the rapid rise, so organizations need to not only remain in compliance but also proactive with regard to impending legislation. This practice reduces shareholder risk.

    7.      Other Stakeholder Demands: Activist shareholders, NGO’s, the financial sector, and the media all work independently and sometimes in concert to ensure that companies are cognizant of their impact on people an d the environment

    8.      Brand Reputation:  Any marketer worth his/her salt knows that a brand’s reputation is of paramount importance, and being sustainable enhances that reputation among the majority of stakeholders.

    9.      Global Market Forces:  Global concerns about climate change, looming energy problems, and a recent growing backlash against globalization among many others factors all point toward the necessity in addressing sustainability issues.

    10.  Customer Loyalty:  A brand’s attitude toward sustainability is just one of the many variables that factor into the decision-making processes of the majority of consumers.

    11.  Employee Morale:  A wide body of research points to the fact that adopting a more sustainable business model actually enhances employee morale.

    12.  The Ethical Imperative:  This concept is simple. It is not ethical to degrade the environment and the people in it in the name of commerce. Embracing sustainability is simply the right thing to do, and stakeholders are sensitive to this.


    An examination of the above reasons for building a sustainability model into a business and marketing strategy reveals that these efforts should lead to the magic words, "Return on Investment". So all of this is really just good business, isn't it?

     
  • Understanding Green Marketing: Part One

    This product is Natural! This company is Socially Responsible! Their product isn’t Environmentally-Friendly! But our business efforts embrace Sustainability! We are Greener than thou! Even the casual observer is no stranger to the fact that these concepts have become integral parts of organizational operations and marketing strategies. Sustainability, the most current and all-encompassing term, has been defined by these authors as an organization’s effort to meet corporate objectives and consumer needs in a way that demonstrates continuous improvement toward minimizing negative impact on people and the natural environment.

     

    A large number of businesses in every industry have, for a variety of reasons, employed strategies to address the growing concern for human health and the natural environment. But, the pioneers can all be found in the natural products industry. Partly a backlash against the “Better Living Through Chemistry” zeitgeist of the early and middle 1900’s, the healthy foods movement, which is now an industry in the hundreds of billions of dollars, was also a response to the environmental devastation that was perhaps best illustrated in Rachel Carson’s early 1960’s blockbuster Silent Spring. “Is what makes the Cuyahoga River catch fire also in our food and water supply?” The environmental problems that began to be addressed around this time raised social consciousness beyond that of simply focusing on the steamroller of economic development that occurred after World War II. Was it worth having all of these technological advancements at the cost of the ecosystem’s health? Apparently not.

     

    The term “Green Marketing” is a colloquial one. It may have been coined by Jacqueline Ottman, author of the book “Green Marketing” in the early 1980’s. The term also appeared in Dr. Philip Kotler’s famous Introduction to Marketing textbook around that time, so it is difficult to say to whom the term’s origination should be attributed. These terms quickly infiltrated both industry and academic circles, and it is difficult to assign derivation to such colloquial words. Nevertheless, the term adequately described a company’s efforts to address what is more scientifically termed, “Sustainability and Corporate Social Responsibility”, and unfortunately the word has been used liberally to describe all manners of commitment (or lack thereof) to sustainability efforts.

     

    With its start in small “hippie” health food stores and “pill shops”, the natural and organic products industry began to boom in the late 1980’s, driven by the growth of the nutritional supplement category and the beginnings of mass distribution. In the U.S., the Dietary Supplement Health and Education Act of 1994, insured that vitamins, herbs and all manners of supplements remained available to consumers over-the-counter, and also outlined a list regulatory requirements that remains in the process of development even as of this writing. Soon the functional foods area began to grow, as an increasing number of consumers began to prefer their supplements in food or beverage form rather than a pill, tincture or powder. The profound growth of natural and certified organic foods and beverages of all kinds followed, and most recently, the growth has been in the personal care and household products sector (finally slowing to 9% in 2010 according to Nutrition Business Journal, Nov/Dec. 2011 pg. 3) as positive attitudes toward health and the environment have become increasingly pervasive.

     

    The double-digit growth of the natural products industry over a period of many decades has influenced companies in many other categories of consumer and business goods to address this social trend with regard to other types of goods and services. From raw materials to the end user, sustainability is now part of the process. It is true that consumers are fickle, and that current social attitudes toward sustainability may take a back seat to concerns such as terrorism and the economy, as we have seen recently, but the practices that have been integrated into industries at all levels cannot be easily changed if efforts to be more sustainable have been made in good faith. And as we know, sometimes this "good faith" doesn't exist.

     
  • Losing the Logos

    Well, it took about 30 years, but it looks like the ubiquitous practice of wearing apparel dominated by the maker's logo is finally coming to an end. The trend, which I first noticed in middle school during the early 1980's, was once dominated by brands like Benneton and Fubu, and eventually gave way to Abercrombie & Fitch, Hollister, Pink, and many others. For thirty years young consumers have sported shirts, hoodies, and sweatpants emblazoned with large letters, and in this way were essentially walking billboards for the brand. Marketing genius! But things are changing.

    Abercrombie, which has built a large empire offering medium quality clothing at premium prices, has decided to dispense with the large logos in the North American market. Teens once sought overtly-displayed brand names, but recently have shifted to less expensive, more customizable offerings. It turns out that teens are still interested in smaller logos, like the polo guy and Vineyard Vines, but the big stuff for the most part is out. Now Abercrombie is stuck with some extra inventory.

    And Abercrombie is not exactly on the cutting edge of this emerging trend either. More nimble brands like Coach, Michael Kors, Louis Vitton, and other high end brands have already pared down their logo offerings, so it seems that the trend is not just limited to teens. Marketers must take heed because these types of environmental shifts can take quite a bit of time to work themselves out, but for now a surprised Abercrombie must discount its way out of its current situation. The good news for some consumers is that  the brand will be quite a bit more affordable for the holiday season.