Darrin C. Duber-Smith
Darrin C. Duber-Smith, MS, MBA, is president of Green Marketing, Inc., and senior lecturer at the Metropolitan State University of Denver’s College of Business. He has almost 30 years of specialized expertise in the marketing and management profession including extensive experience in working with natural, organic, and green/sustainable products and services. He was a co-founder of the Lifestyles of Health and Sustainability (LOHAS, c. 1999) market/industry model and was leader of the first U.S. industry task force that helped frame the Natural Products Association’s definition of natural (c. 2005). He has published over 80 articles in trade publications and has presented at over 50 executive-level events during the past 15 years. A frequent media contributor and recipient of The Wall Street Journal’s In-Education Distinguished Professor Award in 2009 and WSJ’s Top 125 Professors Award in 2014, Mr. Duber-Smith is author of Cengage Learning’s “KnowNow! Marketing” blog at http://community.cengage.com/GECResource2/info/b/marketing/. He can be reached at DuberSmith@GreenMarketing.net or firstname.lastname@example.org.
Despite this year's advent of the much-awaited, four-team playoff system in top-tier collegiate football, it appears that the practice of playing lots of essentially meaningless "extra football" will live on. Seemingly random bowl games will, alas, remain ubiquitous. And despite the fact that there are very few spectators at many of the low end bowl games, it looks like there are plenty of idle Americans watching the stuff on TV (the least watched of which attract about 1.1 million on average) to generate plenty of income for everyone. In other words, if consumers are gonna watch the stuff, sponsors and advertisers are going to fund it, and producers, specifically ESPN, are gonna deliver it.
There will be a record 38 bowl games played at season's end, up from 34 last year, and only 18 in the mid-1990's. Whew. And the revenue party isn't going to end with at least a million people tuning into each event. Where else are you going to get that size of non-DVR-using, high income crowd in one place for such an extended period of time? Sponsors and advertisers rejoice at such opportunities to stand out in an increasingly cluttered marketplace and engage a relatively large spectator sport-consuming audience.
Bowl has become so lucrative that ESPN now essentially controls the whole shebang. All but one of the 39 post season contests will be broadcast by ESPN, ABC or other Disney-owned entities, and ESPN itself now owns and operates 11 games. Bowls paid out $310 million to participating schools last year, so the institutions aren't going to complain about something called a "Beef O'Brady's Bowl". TV is big business and has become increasingly important to the success of an event; and with the rule for post-season participation necessitating a .500 record and the field of NCAA Division 1 teams soon to increase to above 125, there is actually room for even more bowl games in the future. Some of these programs have such easy non-conference schedules that it isn't tough to carve out a few conference wins at home and become revenue, er I mean bowl eligible.
It is clear that venues will continue to get smaller as attendance expectations fall, and match-ups will increasingly involve teams that are geographically near or with fan bases that "travel well" rather than traditional conference versus conference match-ups. Another thing is for certain. Bowls sponsored by the likes of Cars.com, GoDaddy.com, and the Bahamas may change in name and level of financial commitment, but they won't change in number until fans stop watching.
It is an understatement to say that retailers experience a flurry of consumer-oriented activity during the holiday season, roughly defined as November and December. Many retailers can generate 30% or more of their annual revenue during this time, although the recent proliferation of holiday sales promotions have really put a damper on profit margins, making selling yet more stuff all the more important. Higher volume can compensate for lower profit margins as fixed costs are spread over more units. But the busy season doesn't really end at Christmas. For gift returns, it is still in full swing.
More than 20% of total annual returns happen during the holiday season and shortly thereafter, about $60 billion in merchandise according to logistics provider, Optoro. And the Postal Service alone reported that it handled 3.2 million returns in the two weeks that followed last Christmas. Some high end apparel retailers report up to 50% of all online items are returned. Although good for the bottom line of shipping companies, the practice is very costly for retailers, 45% of whom offer free returns.
As much as 70% of the returned items is suitable for resale, and there is a thriving secondary market for these goods, which are often sold for dimes on the dollar and sometimes via auction in tractor trailers to bidders, sight unseen. Sort of like "Storage Wars". Many of these goods are resold at pawn shops, flea markets, online liquidation stores, and "dollar" formats, so not much of it gets donated to charity or dumped for less that cost in third world countries.
So why do so many retailers offer such generous return policies if they are so expensive? When you consider that 82% of consumers say that they are more likely to complete purchases if free returns are allowed, it isn't tough to guess why this is important and won't reverse itself anytime soon. One solution to the problem is for the retailer to offer incentives for the consumer to return the goods into a brick-and-mortar store so that additional sales can be made, but this isn't always feasible. Like any other sales promotion, these risk reducing programs cut into profits, but have become a necessary part of getting that sale. And all of this is ultimately is good for the consumer.
Manufacturing jobs are returning to the U.S. I repeat. Manufacturing jobs are returning to the U.S. Many of you have probably noticed this trend develop over the past several years as hundreds of new facilities, particularly in the mostly non-union southern U.S., have started making things that until recently were made overseas. From car and airplane plants to parts suppliers of all kinds, it seems that there are factories opening up all over the place. Although China is still the global manufacturing leader at 22% share, the U.S. has almost 18% share, and the trend is looking good for the U.S. which has shed 6 million manufacturing jobs over the past 15 years, but not so much for the Chinese whose economy has finally slowed over the past few years and will likely fall further due to the global slowdown. As a result, jobs are essentially being "reshored" back to the U.S. It's happening slowly but surely. Why is this happening?
There are several reasons, but the largest is probably the rapid rise of the Chinese consumer fed by rapidly rising wages. High wages, while a boon for consumers, also mean that manufacturing in China is no longer as cheap as it once was, and so many jobs involving cheap goods are moving south to Asian nations like Vietnam and Bangladesh. At the same time, stagnant wages here in the U.S., combined with doing business in lower wage, non-union areas of the country, mean that employers don't have to worry as much about labor costs and so can maximize efficiency in many, many ways by making things here instead of elsewhere. And manufacturers increasingly want their suppliers close by as labor concerns lose favor. Companies can also exploit the Made In America trend that even Wal-Mart (once the outsourcing villain in this epic tale) has embraced through its highly-publicized commitment to reduce its reliance on imports. The result? Jobs, and more money for consumers to spend which in turn lead to more jobs, thus completing the circle of modern life.
The long-term trend seems to favor the perspective that in the future the products intended for Asian consumers will be largely made overseas, and the most of the products intended for the North American market, as well as products requiring an American influence, will largely be made here. Eventually, manufacturers will run out of stable countries that have low wage labor forces, as the affluence created by free market forces spreads to those countries that wish to embrace it. Economic downturns do have their benefits, and effect that lower wages have on job creation is difficult to ignore.
Depending on which philosophy of public relations you subscribe to, you either believe that the response to a potential PR problem is to ignore or deny that a problem exists or address the issue head on in a public manner. Toyota, when it had the infamous acceleration problem that killed and injured several drivers, chose the former, first ignoring the problem and then and blaming the software supplier instead of taking responsibility. Investigations eventually exonerated the supplier and Toyota was left looking rather bad, the brand taking an immediate hit as a result. Keurig, on the other hand, has chosen a higher road. and has voluntarily recalled 7 million of their Mini-Plus pod-feeding, single-service, hot beverage dispenser units after 200 reports of water overheating and scalding hot liquid spraying onto users. About half of these incidents involved burn-related injuries, so before the Consumer Product Safety Commission could act, the company decided to preempt the inevitable. It is an especially important decision since Keurig has announced the next generation version of their flagship product, called the Keurig 2.0. and has invested heavily in marketing the new product, saying that the new version addresses any previous design flaws. The company will likely compensate victims and avoid litigation, which can last a long time and also be a bane to the brand's reputation. An evaluation of its product development testing process should also be on the to-do list.
Despite the fact that Keurig has successfully served millions of happy customers, 200 is too many. And admitting to a problem, fixing it, and making restitution goes a long way with the American public, so Keurig wants there to be no question as to where they stand on the quality and performance of their products and the integrity of the brand promise. This really seems to be the only effective, way to deal with such a crisis, so it's surprising that so many companies choose such difficult pathways to resolution. Consumers have pretty short memories, so dealing with an issue quickly and decisively allows people to move onto more pressing matters such as whether or not Justin Beiber should be deported. Forgive and forget as it were.
For a while, it was tough in the world of not-for-profit marketing as the nation reeled from a very deep recession. Giving dropped a full 10% across the board, but since the recession ended in 2009 cause-related giving has recovered rapidly, up 22%. And contrary to what some may think, individuals represent the vast majority of donations with 72% of the share while corporations engaged in cause-related marketing and corporate philanthropy represent only 5%. This is surprising. And we know that when consumers have more disposable income, either through income growth (which has been rather elusive during the economic recovery) or through lower gas prices (which we are enjoying right now), they tend to give just a little more. Good old-fashioned survey-based market research can answer even more pressing questions and provide much-needed insight for marketing planning.
A recent study reported in the Wall Street Journal also offered some useful insight into what motivates these "consumers" to give. About three-quarters of survey respondents indicated that belief their gifts can make a difference as well as personal satisfaction are drivers for their behavior, which provides marketers with ideas for how to position messages. Sixty-six percent give to the same causes annually, which confirms that donor retention must be of paramount concern among cause marketers, and 62% volunteer for the organization, indicating that many are willing to become actively engaged in the cause. Not only that but those who volunteer tend to give almost twice as much as those who don't. Almost thirty percent indicated that they will give when asked, which says a lot for the personal selling function that is so important in getting donations and driving revenue for the not-for profit organization. The sort of market intelligence not only makes for excellent fuel in the marketing planning process, but also provides interesting insight into our culture as a whole. So give till just before it hurts!
Retailers that target teens are struggling with changing consumer tastes, and it seems that the very youngest of the Millennial generation (in their early to late teens), are foregoing traditional brands like Abercrombie & Fitch, Delia's, and Aeropostale for a hipper brands with a different approach to their product mix. It's tough to stay relevant in the fickle fashion market, and brands that were cool for parents when they were young aren't often viewed as cool by their children. Tastes change and retailers must change with them. Many are failing, but a few retailers are getting it right. Take Brandy Melville for an example.
The company now has 45 stores in the U.S. and Canada after a 2009 North american roll out, it does almost zero traditional advertising, and it boasts 2.2 million followers on Instagram, 65,000 followers on Twitter, and 218,000 likes on Facebook. Not too shabby! But being adept at social media isn't all that Brandy (who doesn't appear to be a real person at all) is good at. Marketers recognized a consumer shift away from logos and pre-arranged looks, which had dominated for 30 years, toward a more "custom" approach to apparel. Kids want to create their own looks, and Brandy offers products that help them do just that. Indeed sometimes it's that simple. The two primary questions going forward involve how quickly other retailers will catch on as well as how long this new trend will last.
It's hard to believe that this brand was actually the pioneer of the smartphone. Many folks erroneously attribute that groundbreaking invention to Apple, but Apple really just made an existing product seem better through its branding magic and technological features. What happened to Blackberry would be the subject of a long analysis and discussion, but suffice it to say that, through a series of marketing missteps it went from market leader to having only 2% of the market in just a few short years. And some might be surprised to hear the company is still battling it out in the smartphone industry with new product introductions.
After a very poorly planned and executed launch involving its first touch-screen phone just last year, it appeared that the brand was headed for the scrapheap, but Blackberry has somehow survived and has now taken us back to the future by unveiling a new device called the Classic. The product is pretty much a resurrection of the old push-button model, which many people preferred, and perhaps one of the lessons in this ongoing saga is that Blackberry should never have discontinued the old model, but rather upgraded it. Maybe it's better for a marketer to make sure that existing customers will accept major product changes that affect how a product is used (a new touch screen versus the old push buttons and track pad). It appeared at the time, and still does, that the world was making the switch to the touchscreen format, but perhaps there are still enough people to comprise a market for devices of the old style despite the smaller screen size. The Classic, along with the recently introduced Passport (a touchscreen model) is expected to help the company account for half of its revenue by selling hardware with the remainder coming from the software area. Is this even possible? Let's see what happens.
McDonald's has again illustrated the frustration the fast food industry has experienced over the last several years. In an attempt to better connect with Millennials, whom I assume they have heard represent the majority of their consumer base, McMarketers have reached out to several ad agencies and other media companies for ideas on which type of charitable organization might be suitable to connect with said Millennials. As if food that has become progressively tasteless and poor service weren't enough to drive away customers in the face of fierce competition!
The company recently finished dead last in a burger category blind taste test. It should be a crime what has happened!
If this plea for public goodwill seems desperate, it might just be so. Giving back to the community is a good thing and usually an effective cause-related marketing strategy, but will it be enough for this struggling giant? The company says it needs a "big idea" to engage Millennials by supporting a not-for-profit, but don't they already have the Ronald McDonald Foundation? Isn't that pretty much Ronald's entire gig these days since he, Grimace, the Hamburgler and others have been excommunicated from marketing junk food directly to the junk food-eating public? Hmmm.
It seems that McMarketers are barking up the wrong tree, and perhaps the recent reformulation intentions recently announced by YUM Brands might be somewhat inspirational. McDonald's has much to lose if they don't make some well-advised marketing moves.
It's been building for quite some time now. Food providers have been reformulating largely as a result of the increasing scrutiny of questionable ingredients and their effect on the collective health of the consumer. But this isn't really a new thing. The natural/organic products industry, after 30 years of growth, now generates hundreds of billions in annual revenue in the U.S. alone and still manages to maintain a growth rate of around 8% per year. This is remarkable indeed and highlights the growing demand for healthier fare in a rather big way.
McDonald's recently announced some changes with regard to efficiency and the service environment, but other players are going further. YUM Brands, purveyors of Taco Bell, KFC and other big brands, may be the first major concern to truly understand the shift in consumer behavior that has been happening for years. Fresh, natural, organic--these are concepts that consumers, especially the younger Millennial generation, have been embracing for a while now. Just look at the meteoric growth of Chipotle. Apparently, it's just taken a while for the fast food chains to catch on.
And so Yum's CEO has publicly recognized this shift and has announced that the company will "transcend" the industry by showing that its food is fresh. Further, it will begin to "clean up" its menu labels (ingredients) to reflect the shift towards a healthier, simpler product. Expect everyone else in the industry to do very much the same to some degree, since this is the only way to elevate the fast food industry out of the doldrums. And it's high time the industry reacts to this new market reality,
They never really went away entirely. Long an important tool of the disc spinning DJ, the vinyl LP, which was rapidly replaced by the CD during the early 90's, appears to be making a comeback. Driven by hipsters and music afficianados who swear that the sound quality is superior to that of any other medium, the industry has surged 49% from just last year to 8 million LP's sold. This is nothing when you consider that records dominated the music industry for 50 years or so, but an increase that large within only one year could signal a major shift in consumer behavior.
But manufacturing equipment has become very old and increasingly hard to come by, so this is a major barrier to industry growth and an indication that private equity investment has yet to happen. Vinyl records remain non-portable, cumbersome, and easy to damage, and so aren't ever going to replace digital formats, but a niche market among music lovers could be nurtured by a relatively small group of companies. It also appears that the performers themselves are driving this fad as well, and production cannot keep pace with the number of orders coming in from big stars. Is any of this sustainable?
It just might be. The sound quality of a record is in fact superior, but only a relatively small group of people truly care enough about that particular benefit. Portability and song storage capacity are far more important factors for the vast majority of people, so if this fad is to become a long-term trend, vinyl will remain a very small (but profitable) percentage of total sales (currently at 2%). And someone had better start making more record players. If this catches on, making the records themselves won't be the industry's only problem.
Another function that used to be accomplished by people is slowly becoming automated. This time the affected sector is ad buying, and with ESPN's recent announcement that it will test web-auction ad sales, it looks like another signal that the personal selling component in media buying will continue its slow fade. Instead of taking orders over the phone, sellers of programmatic advertising spots will give way to a giant video screen during its flagship "SportsCenter" show. Buyers will bid in real time and place them on the fly. is this truly the future of advertising?
Well, it certainly works with internet ad buying, but for the most part the $70 billion TV ad industry has resisted the practice, preferring instead to build personal relationships and buy spots well before a show airs. But in the digital age is this method still preferable? Is it efficient? Although it can be challenging on the production side of things, ESPN is going to try it for only certain spots during the show and see how things work out. The Tv ad industry has been very flat of late as marketing dollars have migrated online, so a radial shift might be in order. If successful, expect other Disney properties as well as competitors to follow suit. This test could be a very big deal.
It's not your imagination. Bourbon, also known as American Whiskey, has really taken off. Sales of Kentucky-made Bourbon (which to some is the only "real" bourbon) have increased 36% over the past five years and are now at $1.5 billion annually. And the demand is not just here in the U.S., as exports are up 56% during roughly the same time period. What gives?
Who knows? My wife and I toured Maker's Mark in Kentucky this past summer, and we now drink more bourbon as a result, but not everyone gets to go to Kentucky. JP Wiser's, a Canadian brand, has even entered the already cluttered U.S. bourbon industry because marketers believe that a rapidly growing market means that there is still room for more players. And the company has invested heavily in national advertising and "free fills" for bars. Bourbon is just hot right now, which is bad news for the cash-strapped drinker as prices have increased dramatically as a result of the sustained demand. The price of a bottle of premium bourbon such as Blanton's has risen from $45 to $60 as an example.
Demand science tells us that as prices rise there should be less consumption, but perhaps bourbon isn't such an elastic good after all. More likely it is elastic, and consumers will begin trading down to lower priced options or exit the category altogether. This happens in almost every consumer goods segment so there isn't really much reason to think that bourbon is any different. This means that producers, although perhaps faced with shortages, need to be careful about increasing prices too much. They might lose customers permanently as they grow accustomed to different brands, and only the most premium of brands should consider a mega-price scarcity strategy. For most brands it is probably far better to run out of the stuff and make more for future years than it is to price themselves out of the market.
It's tough writing a post that doesn't involve an app of some sort since these mobile tools are becoming difficult to live without. We don't even spend as much time on the Internet as we used to since all those little icons on your phone don't really lead to the Internet. They take you to what would better be called "walled gardens" controlled by marketers. But that is another story. This one involves apps that restaurants are beginning to use so that consumers are able to pre-order, thereby saving them time and alleviating store crowding and long service waits.
Starbucks is one such marketer, and its proprietary app allows folks to order up beverages, providing them with a pick up time. If all works out as planned, their beverages will be waiting for them when they arrive. Meanwhile, third-party apps are busy signing up smaller restaurants who haven't developed their own, and they generate revenue by making a commission on each purchase, typically 3-10%. And large chains like McDonald's, Taco Bell, Pizza Hut, and Subway are experimenting with apps of their own.
The to-go order is nothing new to food service providers so this development shouldn't require a great deal of adaptation, and hopefully this new technology will alleviate in-store crowding, save customers time, and become a major revenue generator for everyone. The age of the app is indeed upon us!
Predictions about the death of cash as a means for consumers to make financial transactions, like most extreme predictions, have not yet come to fruition. Many experts have forecast the extinction of cash, as an increasing number of consumers move toward paying by debit card or mobile device, with some big financial players like Morgan Stanley's CEO even predicting that checkbooks and coins would soon be in museums. Not so fast.
While the technology is enticing and improves each year, it takes a while for consumers to change. For instance, despite the fact that pennies cost more than one cent each to manufacture and have lost much of their utility as a monetary denomination, we still make and use them. Credit cards, which have been around for generations, have their obvious drawbacks including consumer debt, minimums for purchasing, higher retail prices, etc. And debit cards? Apparently they are not protected in the way that credit cards are, and your bank account can be easily cleaned out by nefarious crooks. Many security experts actually recommend not using debit cards or even carrying them around with you. Mobile device payment systems, with a recent push by Apple, are still in their infancy and, of course, have their own security concerns.
Indeed the death of cash, if it is imminent at all, seems to be quite far off. Paper bills and coins remain the top choice for payments and are still used in 40% of all monetary transactions. Debit cards, despite their risk, have largely replaced checks for in-person payments and represent 25% of all transactions, while credit cards garner only 17% of the share despite their ubiquity. Checks (which for many people are considered preferable to automatic online withdrawals) and all other electronic payment techniques round out the remainder. And this breakdown doesn't even consider the non-cash (barter, value in kind) transactions that still occur on every level and are widely considered to be about a quarter of total transactions. It does indeed appear that consumer behavior is trending towards digital transactions and away from more analog methods, but don't hold your breath waiting for a revolution to occur. These major shifts in behavior tend to take time, but it would probably be a progressive move if we finally stopped making and using pennies as other nations have done. And perhaps nickels can go as well. i wonder how long that will take?
In an era where even Toys-R-Us is struggling to compete with online pure plays like Amazon, it's not hard to believe that independent toy stores and small chains are also struggling. Indeed the number of small toy stores has dropped by 40% over the past 10 years or so and now numbers only about 1,500 across the U.S. So if the little guy can't compete on price, how can he compete?
Services, perks, and product mix are the go-to answers for small operators that succeed in retail environments dominated by larger players. Independent operators can offer high-touch services that larger stores and online outlets often struggle with. It's just a matter of scale. The same thing that helps the larger retailers (economies of scale) hurts them in the area of customer service. Toy buyers aren't the most educated of shoppers since most have no idea what a five year-old might want, but the savvy clerk can provide crucial guidance in this area and get loyal customers. Establishing this one-to-one communication can allow for real relationships to be maintained, and since toy buying is a several-times-a-year occasion for so many people with little ones in their lives, these relationships are crucial to the success and ultimately the survival of many smaller stores. Once relationships are developed, loyalty programs and other perks are easier to implement, and retailers can get a better idea of what types of products to stock by talking with customers.
Survival has never been easy for small companies, and this is probably a major reason that they tend to get larger over time. Self preservation. But every industry has consolidated, and with a few notable exceptions, independent operators and small chains survive and thrive through differentiation efforts. Smarter toy operators will persist, the weak will close, and new entrepreneurs will enter the industry if a successful business model emerges from the rubble. And one often does. Let's see what happens with the toy industry.
McDonald's hasn't been doing very well of late with sales growth and profits falling. Perceptions of lower food quality coupled with a dramatic reduction in quality of service have threatened the fast-food leader's future leadership position. The food quality issue is one thing, and it will be tough to improve that without raising food costs and thus prices, something the company is probably not very excited about doing. But the service quality issue with regard to the vastly increased wait times, caused mainly by a too-large product mix, can and should certainly be addressed.
Competitors like Burger King and Starbucks (yes, Starbucks can be considered fast-food) have also had their recent problems with perceptions of service quality. Burger King, recognizing that following the lead of McDonald's (which it was quite used to doing) wasn't the way to go this time around and, finding that its service time had suffered, begun slowing product introductions and offering more limited time deals instead. Starbucks, on the other hand, has bulked up to 255 menu items (many of them grab and go packaged goods) and has yet to admit that their service has suffered despite the assertions of many analysts and customers. It too will eventually have to find ways to streamline efforts.
But when you have a product like the McWrap, which some franchise owners lament is a "show stopper" in terms of what it does to the kitchen, it is clear that more thought must go into new product introduction. In any food service environment, the prepared item must either be assimilated into the existing service delivery construct or said construct must be adjusted to allow for increased complexities involved with the new item. A McWrap and one of McDonald's fried products require entirely different ingredients as well as preparation methods. One would expect something so different would create new challenges. That these challenges were not anticipated and have yet to be addressed by McDonald's is yet another indication that it is struggling.
Where have all the editors gone? In an age where it seems that everyone (this author included) fancies himself a journalist, one of the areas that has suffered (aside from the overall quality of writing) is spelling and grammar. The biggest culprit, it seems, is the rolling TV ticker tape at the bottom of so many news programs. These have become rife with word usage problems, typos, incorrect grammar, and outright misspellings. Even my beloved Wall Street Journal is riddled with errors. It's all very distracting if you ask me, and it affects the public's perception of the quality of the information being presented. Would you trust a doctor's office the misspells the word "physician"? Lately, this pervasive problem has encroached upon the sports world in the form of some rather embarrassing sales promotion mistakes, although history is replete with examples.
Major League Baseball marketers for example, must fill seats for 81 home games, and one of the ways that they do this is by offering sponsor-funded sales promotions as fans enter the stadiums. Bobble heads are still the most common promotion, but sponsors take advantage of the opportunity to put their logos on all kinds of game day swag. It's part of what makes a sport sponsorship effective. And it may be funny for a little while when these sorts of mistakes happen, but when the names of players and paying sponsors are misspelled and the result appears on thousands of sponsored t-shirts, hats, etc., across an entire league, it's clearly not an isolated problem.
High profile examples include a Miguel Cabrera figurine that incorrectly identified him as the National League MVP (Detroit plays in the American league), a Troy Tulowitzki jersey that was missing the second T, and Prince Fielder bobble heads that misspelled the Ranger's sponsor name Medical Center of Arlington. Not only is this sort of thing embarrassing for the teams, but it tends to really upset sponsors that pay hundreds of thousands and often millions for access to the sport property. For certain the teams "make good" on these mistakes, but the trust that can erode from the acts of careless or under qualified young employees can have long term effects in any sponsorship deal. It's time for these organizations to tighten things up. Little things matter, and leaving the important stuff to interns and low level staff without oversight from skilled business professionals is no longer cutting the muster in this new multi-billion dollar world of spectator sports. Sponsors expect better.
The Black Friday results are in, and they were just about what most of us expected. The day itself no longer has the importance it once held, and the holiday weekend on the whole has suffered from a helping of "holiday creep", sales promotions that appear earlier and earlier each year. Since we know that Black Friday isn't really a good predictor of overall holiday sales despite what some may believe, we have no idea whether or not the National Retail Federation's optimistic prediction of a 4.1% sales increase over the holidays will come to fruition. It is interesting that one of the factors that somehow still vexing some retailers is the continued migration of sales onto the web, which increased by 15.6% over last year this past Cyber Monday. Why, in this day and age, is anyone still surprised by this online shift, let alone major retailers who have ample resources to respond?
Retailers still complain about being unable to compete with Amazon on (an online "pure play" company that doesn't have to shoulder the cost of operating brick and mortar locations) on price, but it's important to remember that Amazon is barely profitable, and even it has been experimenting with physical stores. So how can retailers compete? One way is to become more vertically integrated and act as both wholesaler and retailer. This way goods can be drop-shipped from the distribution warehouse at a much reduced price for the consumer, which is essentially Amazon's model. Retailers must get used to the idea that whether a product is purchased online or in their stores, a sale is still a sale. Major players like Wal-Mart, Best Buy, and Kohl's have been rather slow to adapt to these permanent changes, and many still view the Internet as this mysterious threat to their business models. But in fact, there is no reason why Target or Wal-Mart cannot beat Amazon at its own game. Meanwhile revenue continues to shift toward more efficient online formats, so they had better get started.
Fans of the sport product that is international soccer are all too familiar with its highly controversial global governing body, FIFA. The latest controversy surrounds the methods by which the sites for the next two tournaments were selected, and the situation is currently under investigation by FIFA officials themselves. It appears that there might have bee a bit of graft involved. Or quite a lot. Despite the truth (which may never be ultimately revealed), remember that in the world of marketing we should live in the mind of the consumer, and it is his/her perception that matters. While the World Cup isn't about to lose its fans any time soon, it is losing some of its major sponsors, and its current reputation might not be the only reason for this.
Sony is the second top-tier sponsor to end its sponsorship this November amid growing concerns about the transparency of the bidding process. Emirates Airline has also moved to cut ties with the association. While there will be many other companies lining up for an opportunity to attach themselves to the most popular sport property in the world, these moves could be an indication of the shape of things to come. This sponsorship stuff is getting expensive, and lots of marketers in every sport are questioning the ever-rising costs of sport sponsorships as well as the overall marketing effectiveness of such strategies. In an age of mobile marketing, are there better ways to reach consumers, or is marketing through spectator sports the best place to put your marketing millions?
Each sponsorship agreement is very different from the next, as are the results. Success depends on many factors, not the least of which is how well the brand "leverages" its sponsorship; that is, marketers must spend additional money on top of its sponsorship to 'activate" it, and at least one dollar should be spent on leveraging for every dollar spent on the sponsorship. So the rising costs of the sponsorships makes leveraging more expensive and so it goes. And the fact that the organization in question appears to be ethically challenged makes the decision made by the two former "official partners" much easier. to make. Other global brands will step up, but perhaps a bit more carefully than in the past. In the meantime, FIFA must improve its image or the value of the sponsorships it offers might eventually become compromised. It will be interesting to watch what develops here and see how it might affect other sponsorship agreements in other places.
Call it a hunch. Somehow I just a had a funny feeling that, despite how well kids (and adults) seem to love those cute, funny penguin characters from the Madagascar franchise, this movie was going to flop. "Really?" I said to myself, "How much can you squeeze from one good idea?" Quite a bit, apparently, as the DreamWorks movie franchise is only one example out of hundreds (thousands?) of sequels and spinoffs that have kept audiences coming back for more for generations. Of course, with the notable exception of Godfather II, Aliens, and a handful of others, the sequel is never as good as the original. But since audiences know what they are getting with these successive iterations of movies that are based on highly successful first efforts, these films tend to meet expectations.
But it appears that viewers may have had about enough of the Rico and the gang despite the fact that marketing research showed that previewing audiences gave the movie an A-. And the "fun four" didn't face much competition over the five-day holiday period, at least in terms of kids' movies. The product, which cost $132 million or so to make, only garnered $36 million in the U.S. and another $27 million internationally in the crucial early days ofter release. It will be hard for the company to say farewell to its most successful franchise since "Shrek", but if the performance of this latest franchise effort is any indication of where it is in the product life cycle, it may be time to do just that.
It took four years to come into effect, but the new federal requirement that food service chains with at least 20 locations display the calorie count of food items on their menus, is finally here with the FDA having issues final labeling rules. Now what is required of packaged goods is also required in restaurants, theaters, amusement parks, convenience stores, etc. Small businesses will not be affected by the costs of compliance at least for now, although eventually mom and pop might have to eventually comply as well. The changes are part of the highly controversial 2010 Affordable Care Act and must be enacted on a national level despite the years-long lobbying efforts of a very large industry. What does this mean?
The obesity epidemic, which after much effort has only abated to a very small degree, has spawned many cultural changes, and sometimes the zeitgeist moves government to make new rules. This is indeed one of those instances, and this sort of thing will probably result in a lot of costly product reformulation down the road. But will the knowledge of how many calories are actually in that large french fries you just bought affect your consumption? Health advocates think so, and unlike former NYC mayor Michael Bloomberg's widely-criticized attempts to ban larger sized sodas in the city, this law's purpose is merely transparency. Arm consumers with knowledge and they can make their own decisions. Sounds perfectly reasonable to me.