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 email@example.com.
It is an open secret in the online advertising industry that some of the ad space that marketers buy and sell doesn't necessarily appear on user screens, but rather on parts of web pages that people never see. The reasons for this are unclear, but has to do with the conversion of differences in screen size, and it stands to reason that advertisers should only pay for what users actually see. So Facebook, a leader in generating advertising revenue on the web, says that unlike competitors it only charges for ads that are "viewable" and that it has been doing this for almost a year.
Granted Facebook, as well as the industry as a whole still has some work to do on the viewability scale, but this move by an industry leader does in fact signal a major shift in the online advertising industry. The genie is out of the bottle, And more transparency will result in more perceived value for advertisers which, in turn, should result in more revenue per ad down the road. Historically, significant advertising revenue generation on the web has been frustratingly elusive for most, resulting in poor ROI for shareholders and lower quality services for consumers. Perhaps this announcement by Facebook will help speed things along.
That mobile apps and other calorie tracking gadgets have eaten their way into the market once dominated by companies such as Weight Watchers is yet another example of how influential technology has become to marketing strategy. And as Kodak, Blockbuster and most recently Radio Shack illustrate, failure to adapt to changing environmental conditions may result in the destruction of even the most established brands. No brand is immune to this principle.
As far as Weight Watchers is concerned, the company reports that it is shedding members like a winter coat in springtime (writer's embellishment), and it appears that there is no end in sight as the company has focused efforts on cutting costs rather than acquiring customers. The latter of which can be an expensive proposition, especially when one fails to deliver the proper product and has experienced a 10% revenue drop in the past year. However, marketers at Weight Watchers aren't staying on the couch and have added more personalized services as well as having teamed up with some insurance providers to subsidize memberships. The brand already offers a home delivery meal plan a la Nutrisystem, but they were somewhat tardy in this effort. Smart moves all, but they may not be enough. Indeed, substitutes (products that meet the same need but are in a different product category) often can be more dangerous that competitors. These upstarts often arise when market conditions, such as major technological advancements resulting in profound shifts in how people use goods and services, shift. Is it too late for Weight Watchers? Would developing apps and generating revenue through advertising be part of a brand recovery effort? Are there other ways to profitably deliver the information people need to make nutritional decisions? Are there other products (although the company has quite a few already) that could be introduced under the brand? This stuff ain't easy.
The brand certainly has equity built into it, so the company can certainly benefit from leveraging some of that, but will it be enough? And how long will that equity last in a consumer market increasingly using technology that makes calorie counting and meal planning easier and much less expensive. And remember that in addition to substitutes, Weight Watchers also has lots of competition, especially in the category of calorie-controlled meals. Clearly, re-positioning or a more drastic change in the business model is in order. Let's see what happens.
It's official! What I've observed for years in the classroom has finally been confirmed in a study conducted by Baron called "Words Onscreen: The Fate Of Reading In The Digital World". College students, by a vast majority, prefer print to digital formats for textbook reading purposes. Indeed the survey found that 87% of books purchased by students during Fall 2014 were in print formats, half new and half used, despite the widespread availability of e-books. Students spent $320 on average for 5.3 textbooks. What happened to the e-book revolution?
Well, not every student has an expensive tablet or is willing to haul around a laptop, so the lack of an adequate reading device has something to do with these astonishing findings. But it's much more than that. Online "readers" tend to skim on screens, distraction is frequent and thus comprehension suffers. Which means that studying from a print textbook versus a digital format will likely improve the knowledge gained from any given course as well as the final grade received. And many students prefer to highlight and write in the margins of physical books, but digital texts make this difficult if not impossible. Nevertheless, textbook companies have been falling all over themselves trying to address a perceived demand for online textbooks and have largely failed to deliver anything on a meaningful scale. Perhaps this shift is unnecessary. This study, and others like it, may change how these struggling publishers approach the future.
The Academy Awards show, which runs about four hours and features some of the most expensive advertising on television, has struggled to find viewership growth over the past several years. Indeed this past Sunday's effort hosted by Neil Patrick Harris was down a full 16% from last year with 36.6 million people watching the live event. That's still a large audience for advertisers, but since advertising rates are largely based upon the number of eyeballs, a smaller audience is not good news for ABC.
Last year's show, hosted by Ellen DeGeneres, attracted 43.7 million viewers, but not to worry because the 2009 Oscars show also boasted very low viewership. That viewership improved over the years after 2009 until now. What does this all mean? It's hard to tell, but it's too early to say the the Oscars are on the decline. It does appear that who the host is tends to matter, and perhaps Neil wasn't the draw that producers wanted him to be. He did a fairly decent job, but most of his jokes fell flat, and the highlight for many viewers, aside from the intro musical number with Jack Black, was Neil appearing in his underwear. Producers will have to better next year, and perhaps should spend a bit more time thinking about who should emcee the event. Advertisers are counting on it!
For many, America's Past Time has become too slow, with only a dozen or so minutes of actual action in an average game that in 2014 a record high of just over three hours per nine innings. And don't get me started on "extra" innings. League officials are rightly reticent to make changes to the rules of a game since these rules represent the foundation of what many sport marketers call "the core product", that is the action on the field of play. Everything else that the consumer experiences in a spectator sport environment can thus be considered "the peripheral product", much of which is under the marketer's control. But the contest itself and the players' performance on any given day comprises the remainder of the core product and these variables are completely uncontrollable. Rules can be changed, and should be changed only when such changes will result in an improved customer experience. So what changes will Major League Baseball introduce in the name of speeding up the pace of the game?
Hitters will be required to keep one foot in the batter's box and will be limited as to when they can leave the box in between pitches. Managers will no longer have to leave the dugout (and physically confront) managers when contesting calls. Pitching changes will be more time-limited as will warm-ups. And there will be greater efforts to better time the end of commercial breaks with the beginning of the inning. It is unclear the degree to which these core product changes will increase the pace of a game that has become way too slow. But perhaps this is only the beginning. Limiting the time it takes pitchers to throw in between pitches might be on the horizon.
Indeed the best way to speed up the action doesn't involve the core product at all and was revealed in a recent study that showed a reduction of the average game time by over 30 minutes through eliminating just one TV commercial per break. It's not hard to imagine that offering one fewer advertising spot per break will result in a higher value for the remaining ad spots during the break. perhaps taking back some of the power from the TV networks might be a long overdue change as well. Whatever happens, change is in the wind, and it appears that the league might be starting small, so to speak. Major changes are usually harder for stakeholders to swallow, but might eventually be necessary in an age of waning demand for the sport. A faster game might improve baseball's prognosis.
When a marketer gives the impression that a product (or an entire organization for that matter) is more environmentally responsible than it really is, ethical (and sometimes legal) issues arise. The practice has for decades been know as "green washing", and it has become so prevalent that the Federal Trade Commission recently updated its "green guidelines" and promises to address any behavior that transcends "puffery", a relatively harmless, legal form of exaggeration (such as making the claim "world's best hamburger"). Green washing is a no-no.
This brings me to the electric car, one of my pet peeves for just about all of the 25 years I have spent in the natural/organic/green products industries. Claims of superiority in environmental-friendliness have been well-documented, with consumers paying premium prices for environmental benefits. Alas, the plug-in electric car is one of the worst offenders. Not only is the battery a highly toxic (and very inefficient) feature of this type of vehicle, but the electricity itself is the real environmental culprit. You see, these cars are not emission-free, and so a Tesla plug in electric, for example, instead of eliminating emissions, merely shifts tail pipe pollution to the power company's smokestacks. And since 70% of our electric power is fossil fuel based, it is difficult to see the net environmental benefits here. Who wants a car that costs $75,000, has a limited battery range, and isn't necessarily better for the environment than cheaper alternatives? Who's in on that? Perhaps this explains Tesla's lack of product velocity and profitability thus far, although government subsidies and taxpayer rebates are still keeping the company afloat at the present time.
Which brings us back to green washing. It is important when analyzing any product on matters involving sustainability that one look at the whole process from A-Z. Where do the raw materials come from? What environmental impact does it have during its use? Where does it go after its useful life is over? All of this matters in what is known as a product's (or organization's) "carbon footprint". In this sense many fuel efficient internal combustion vehicles (non-electric or hybrid) can make similar environmental claims as long as most of our electricity is derived from non-renewable fossil fuel sources. And it looks like hydrogen-powered vehicles may eventually be the cleanest of all if costs come down. But should a car whose power (electricity) is 35% derived from coal make environmental claims? Shouldn't the FTC be watching for claims of superiority based on environmental friendliness? No car is emissions free (even hydrogen has to come from somewhere), and for now, such "green" vehicles are tax subsidy (rather than consumer demand) driven. Environmentally-inclined folks want everyone to drive an electric car (if they must drive at all). Without claims of green superiority, however, it is difficult to imagine a world dominated by fossil-fuel burning electric cars any time soon.
Yoga has been around for thousands of years, but when the 60's "consciousness revolution" captivated the nation (in all of its libertine splendor), yoga came with it. But it didn't come all at once. For decades, the activity was limited to areas like LA and New York, and even in those areas instructors catered to a fringe, niche market. But those days have long been through.
Almost 25 million adults in the U.S. participated in yoga in 2013 up from 18 million in 2008, a 37% climb in six years. That's a lot of yoga mats, And a lot of sweaty bodies. Interestingly, over 35% of yoga consumers have incomes below $50,000 per year, with 15% below $25,000 per year. That puts to rest any idea that the activity is reserved for the rich. This stuff is mainstream.
With success comes additional challenges, however, and overcrowding seems to be one of the emerging issues. While having more consumers is a good thing, it appears that the industry has not kept pace with the growth of the market. Overcrowding is a sign of inadequate capacity. After all, much of yoga is centered on controlled breathing and mastering anxiety-relieving poses, which are all difficult to maintain in an environment with too many bodies packed into too little space. Yoga providers will have to overcome the inclination to make more money per customer, as overcrowding erodes overall customer satisfaction and might ultimately drive people to videos and other product substitutes. A healthy industry, however, should adapt to this problem, and limiting class size will be a big step towards this aim. In the long run, there is clearly an opportunity for new entries into the industry, which should drive down prices and further expand the market. There appears to be ample room for more competition in this robust sector. Health and wellness can be very profitable indeed. Namaste!
That a massively under-served pro football market like Los Angeles desperately needs an NFL franchise is a foregone conclusion. Relocating a struggling franchise within the nation's most popular league to one of the most lucrative markets in the U.S. is obvious marketing strategy, but moving a team in the big leagues is more complicated than many fans think. Not only must major issues such as stadium construction and funding be resolved, but the league owners must approve the move. All of that aside, it does appear that the St. Louis Rams, Oakland Raiders, and San Diego Chargers are all interested in moving their teams, hampered by struggling attendance, aging facilities, and lousy on-the-field performance.
In previous posts I have explored the possibilities and likelihoods of all three teams moving, but one scenario that escaped me was the prospect of the Chargers and Raiders building a shared facility and both moving to the vastly populated region. The market is certainly large enough for both teams, and most current Charger fans will still follow the LA team (only 2-3 hours away), or perhaps some might choose the Raiders out of spite or just watch the Padres. That last one was a joke. At any rate, a shared facility (a la New York Giants and Jets) would be located just outside of LA in Carson, home of the MLS LA Galaxy and an above-average crime rate. Carson is just a rifle shot from Inglewood, an area that has in recent decades experienced a notable degree of gentrification, where a proposed stadium would be built by LA Rams owner Stan Kroenke and his group. Both neighborhoods aren't the greatest, but they are centrally located within the LA basin and are both closer to the airport and ocean than downtown LA, (also a lousy area) where another facility has been proposed. Any new facility project would also likely involve a voter ballot initiative of some sort in the particular municipality proposed for each stadium. These are all hurdles.
But getting approval to move two teams is probably going to be twice as difficult as getting approval to move one team all other factors held equal, so my money is still on the Rams coming to a home they had occupied for 50 years. Ironically, all three teams formerly played in LA and would be in essence "returning home". No one knows what's going to happen, but it is certain that all three franchises would benefit from a move. Ultimately, the owners will decide who goes where and if, in fact, anyone goes anywhere at all.
Beyonce is making money. Taylor Swift is making money. Garth Brooks? Still making plenty of money. Quite a few artists seem to be cashing in these days, but music in the digital era has been largely unprofitable, as the industry has fragmented to the point where it seems that just about anyone can get into the act. CD's, largely controlled by music production companies and selling for $16 a pop, have given way to 99 cent tunes sold through an intermediary. The old model with musicians, producers, record companies, record stores and radio stations all getting a piece of the action has been severely disrupted by technological advancements, and profits have become elusive. If you don't believe me, then perhaps you might consider the recent words uttered by the editor of Digital Music News, "Nobody's making any money in digital music--from songwriters and performers, to music services that hoped to ease the transition from physical to digital with a thriving music economy." Wow!
Let's consider some facts:
*Pandora, the undisputed market leader in streaming music, has found that high royalty fees make it difficult for an intermediary that is dependent upon advertising for revenue to turn a profit. The popular "free" music streaming site loses about $100 million per year despite 81.5 million listeners. Clearly the ads aren't generating nearly enough revenue here. Will producers lower their fees? Will consumers pay for basic service? Remember Napster? Can Pandora attract more ads based on the listener base? It is certain that something must give here.
*What about digital music sales, which were supposed to have replaced CD's? These appeared to have reached their peak, as unit sales fell 12.5% in 2014. If CD sales aren't up, then this probably means that overall consumption of music is falling.
*What about paid music? Spotify leads the pack with 15 million subscribers, but it lost $80 million in 2013. Hmmm.
What happened to all of the money? Perhaps the era of fragmented music must once again consolidate in order to find its way in the new digital era. Apple recently bought Beats Music for $3 billion and will retire the brand this year, making way for its own streaming music service. Google is already engaged using YouTube as a platform. But in the long run, someone has to pay for the content we all enjoy, whether it be advertisers or users, and it it surprising that it has taken so long for the industry to figure it out. Perhaps with a few dominant players making some new rules, the supply chain can once again be made whole. But if overall music consumption is indeed dropping, then the industry has a whole different set of issues with which to contend.
Science fiction writer Ray Bradbury, in his classic work Fahrenheit 451, relates a truly "dystopian" account of a society where books are banned. Consumers want them, but the government won't let the people read. Knowledge is power after all...Decades later, technology experts enthusiastically predicted the death of print books as we know them in favor of digital formats. However, after a rapid and brief proliferation of e-books spurred on by the introduction of the Kindle e-reader (followed by myriad others), market growth has slowed. In 2013 e-books made up only 20% of total units sold and only 13% of total book revenues. Not only do these number suggest that print books are far more profitable than e-books, but also that print books are nowhere near extinction.
The real lesson here is a bit more compelling. There have been cases wherein a new technology has entered an industry and creatively destroyed it, with one form of technology largely replacing another. But rarely does the old technology vanish completely, and indeed in many cases the formats eventually co-exist side by side. With regard to the book industry, there is evidence that the most voracious of readers already possess e-readers and now enjoy both digital and print book formats to meet their needs, suggesting strongly that e-book growth will probably slow further. Certainly the age of the big box bookstore, a la Barnes and Noble, is gone, but books remain a major part of the fabric of American culture.
Yet the largest threat might not be limited to just the print variety but rather to the entire book category, as there is no doubt that bookstores of all kinds have been struggling to stay afloat. Clearly the market must be shrinking. If future generations follow the Millennials (those born in the 80's and 90's) with regard to their current reading habits the scenario described in the aforementioned classic might be a tiny bit predictive. Except that there won't be many books because few people want to take the time to read them. Too many of my students are even proud of the fact that they don't read much (electronic or otherwise), and I am hopeful that this technology-obsessed generation will change their habits as they age. It might very well be true that the slowdown of e-book adoption has everything to do with the under-35 crowd. Soon, an older Millennial, gripped by middle age, might even begin to frequent museums or the symphony (or baseball games) as previous generations have done. But it is indeed possible that these events lack the requisite amount of stimulation, and so the behaviors and attitudes of this massive generation might change things for good. We do know that books, while they will never disappear entirely, will only endure on a large scale if there are enough readers. And as for publishers, right now consumer behavior is trending in the wrong direction.
Around the time that hybrid vehicles became widely available, there was already much talk in the "alternative transportation" industry about making vehicles powered by fuel sources other than gas and electricity. And the technology dominating the conversation involved the prospects of hydrogen fuel cell-powered cars. In fact, car manufacturers themselves have spent more than any other group in efforts to harness the hydrogen atom in a manner that is both efficient and safe.
Indeed the car has already been available since 2007 at the very reasonable price of $350,000, down from an original estimate of $1 million, and the price has since fallen further (Toyota has announced that it will introduce something called the Mirai, which is still in the prototype phase of new product development). But the same additional barriers that exist for electric-powered and natural gas vehicles also exist for hydrogen, namely storage (although hydrogen vehicles have well more than twice the capacity as electric ones) and of course fuel distribution. It is clear that all of the government subsidies and incentives in the world aren't going to make these products marketable. Technological breakthroughs are a must, and these should probably be driven by research and development rather than through tax breaks to individual companies. Targeted, competitive grants to research universities or perhaps large incentives for private equity firms to invest in the R&D function might be preferable to the current state of affairs.
There is little doubt that consumers (as well as the natural environment) will benefit from more choice at the pump. But prices will not drop (and battery capacity will not increase) by way of incremental product innovations. Major leaps in technology are required before consumers have any truly viable alternative to the gas-powered internal combustion engine. Hydrogen does have a future, if you ask Tesla founder Elon Musk who welcomes any cleaner alternative to the status quo but unfortunately also has a dependency on government subsidies, but without significant ROI-driven investment in R&D, that future might yet be a ways off.
Excuses, excuses. Once again, despite many billions in government subsidies as well as a remarkable amount of ongoing hype, Tesla has once again failed to deliver on expectations. The media loves the company and its billionaire founder Elon Musk. The stock market loves them too in a bet on whatever the future might hold. And many in our government simply love the idea of electric vehicles. But consumers? Well actually, the company delivered less than 10,000 vehicles last quarter, missing estimates, and built even fewer during the three month period, all the while taking a loss of $108 million. Thus far, it appears the hype has been just that. What's wrong?
Electric cars and the more common hybrid vehicles have been around for quite some time. And at this point, Tesla pretty much makes electric cars for the wealthy, so the current market for these super cool-looking luxury vehicles is limited, and the cars cost so much to manufacture, it seems unlikely that the price will come down any time soon. But price isn't really the biggest barrier to widespread adoption of electric vehicles, as even low-end models such as the Chevy Volt have failed to gain traction. The main issue is that the battery life of electric vehicles is too low for them to be of any use when consumers are far from home. Barring a major breakthrough in battery technology, which is probably going to happen eventually, the storage problem will continue to be a major barrier to consumption in addition to price.
An even larger issue is one that also plagues natural gas and hydrogen-powered alternatives as well as electric ones, and that concerns the lack of fueling stations. Battery power wouldn't be nearly as important as it is now if only there were more alternatives to the traditional petrol station. In all fairness, natural gas has made inroads in California over the past two decades as fueling stations have popped up all over the map, and the cleaner burning vehicles have become favorites of fleet owners, like shuttles and taxi cab companies. And natural gas is becoming more prevalent on a national basis, providing a cleaner alternative to oil, wood, and coal. But how far off are conveniently-located charging and natural gas refueling stations? Shouldn't the industry have invested in its fuel distribution infrastructure before mass marketing the product? The industry as it sits now cannot stand on its own without the help of taxpayers. Are billions in government subsidies as well as thousands of dollars in tax breaks for consumers who buy the vehicles enough to keep this struggling industry afloat? Given that much electricity is still derived from coal and oil (which means that electric cars aren't really all that green after all), are there any emerging alternatives to the electric vehicle? The next post will explore one of these.
While marketers in the business of travel, concerts, and live events of all kinds have perfected the art of the online sale (the majority of tickets are now sold there), cinemas have been rather slow to move into this consumer-friendly, labor saving, and profit-enhancing tool. Although introduced 15 years ago, online ticketing at the movies represents only 13% of total sales. Why is this a problem?
Cinemas have struggled with flat ticket sales over the past several years as consumer tastes have shifted. Selling tickets online not only increases the price per ticket by $1.00-1.50 (service charges), but also helps studios better track consumer preferences and estimate demand through direct online interaction. Fandango has dominated online ticket sales for several years, but now theaters such as AMC are moving toward running their own sites. In fact, AMC now does 35% of its business online, which sure helps the bottom line. And now Regal Entertainment is in talks with Fandango's biggest competitor, Movietickets.com, to form a partnership to directly compete with AMC, Fandango, and others. It's certainly heating up.
All of this is unlikely to result in lower prices at the box office for consumers, however, as cinemas have been in bad shape for years and need the windfall. But profits are usually good for consumers as well as shareholders since more extra cash can mean upgrades and ultimately an improved customer experience. Let's see how quickly this new online revolution catches on.
Over the years I've heard it from so many successful marketers. It's all about the brand. Tell a story. Even a sub par product can enjoy success with the right marketing mix. Just look at PBR. But McDonald's, which has always been about the brand (as well as a relatively low price point), has had its struggles with food quality (it ranked dead last on a 20-burger taste test) and long waits for service (almost four minutes per customer). As a result, the company used the Super Bowl to launch a refreshed version of its "I'm Lovin' It" campaign and has aired many variations of the traditional 30-second spot.
Using Barry Bostwick as a voice-over is always a great idea. He is a real pro and has tremendous appeal stemming from his days as Mr. Peterman on Seinfeld. And with the exception of the Super Bowl commercial and a few others I've seen, the focus is on the food. And the food looks pretty appealing too. But will this be enough to alter consumer perception of product quality without making changes to the actual food itself? Is the strange "You get to pay with lovin'" public relations effort going to backfire? That's the one where cashiers pressure random "winners" to do things like "ask a stranger to dance" to pay for the meal. Count me out on that one, especially since I go to the one on Colfax and Osage in Denver. Is Mickey D's trying too hard to be hip (a la Chipotle)? Should the company, instead of spending hundreds of millions of dollars on adding more love to the brand, instead be focused on improving the product? In all fairness, the company is in the process of completely revamping itself from top to bottom, but one wouldn't know if from the ads.
Perhaps this campaign (absent the ridiculous pay with lovin' gimmick) is good enough for now. But soon, the embattled burger chain's creative output will have to reflect more substantive changes that have been long overdue at McDonald's. Let's see how long it takes for this to happen.
The flights get fuller. The seats get smaller. The perks of flying for those of us relegated to "coach" have disappeared over the years, leaving consumers to reach for their wallets if they want anything extra. Anything at all.This "a la carte" model is largely the reason why airlines are wildly profitable these days. At the same time, consumer satisfaction in the airline market is at an all-time low, while airlines are enjoying profits not seen in decades. But how can this be so? Isn't a free market that ensures ample competition supposed to protect consumers from just this sort of thing? And where are federal regulators in these dark times for average air travelers?
In the 35-plus years after the 1978 Airline Deregulation Act, which transferred considerable powers from the government to the air carriers, it seems that we have experienced a steady decline in the quality of the product, while prices, well, we all know about prices. It appears that the industry consolidation we have seen since deregulation is the most influential factor here, since there are now only four major carriers left among many smaller players. That's not a lot of competition, so it shouldn't be much of a surprise to see consumers getting the shaft. After all, there isn't much of an incentive for marketers to improve in a business environment that lacks an adequate amount of competition. Sure, it's nice to be loved by consumers, but when they don't have much choice in an industry and are bound by using whatever carriers fly out of their airports, being loved isn't necessarily mission critical. At least Southwest appears to try, but they rank in the middle of the pack as far as customer service goes, so the company clearly needs to try harder. Lost and mangled luggage, which has become too much the norm for Southwest, is starting to take its toll on its reputation despite the excellent TV commercials and generally friendly staff. What to do?
It is up to federal regulators to protect consumers from this sort of behavior, but there doesn't seem to be much movement to raise quality standards, and the few airline choices we have left probably won't voluntarily raise standards (and thus costs) anytime soon. I think American Airlines CEO Doug Parker put the whole thing into perspective for me when, during an earnings call last month, analysts asked him if he planned on passing some of the savings from falling fuel prices onto his customers or if they should just be happy with passenger improvements (as if there would be many of those...). He said, "We are not asking our customers to be happy about anything." Indeed Mr. Parker. That fact has become painfully obvious to those of us stuck in the middle seat.
Make no mistake that American consumers have fallen in love with smoothies, a product of the1970's health-food craze with humble beginnings as a value-added service in small natural foods stores and also available in only a handful of stand-alone store formats. Now it looks like the steady category growth over the years has actually accelerated since the recession. Even McDonald's has gotten into the act, but store-bought smoothies can be pricey. As a result, blender sales are up 103% during this period, hitting more than $1 billion in the U.S. in 2014. Since fresh fruit can be hard to come by at certain times of year, and prohibitively expensive for some, the idea of substituting frozen fruit for the fresh variety has accelerated in dramatic fashion, while frozen vegetables have languished.
Dole is the market leader in the frozen fruit category, which like blenders, also represents just over $1 billion in total sales (up 67% since 2010), and the company estimates that 60% of all frozen fruit purchased goes into smoothies. Remember a few years back when frozen fruit was sold in flimsy white bags? This is no longer the case, as packaging now features colorful photos of fruit as well as recipes and other good stuff. What is interesting here is not the growth of the category itself, but the fact that consumers have actually driven such improvement in the product category so rapidly. And three cheers for Dole, a very established market leader that instead of resting on its laurels and allowing competitors to swoop in like so many big lazy companies often do, it decided to react quickly to changes in consumer behavior and invested in the quality of their overall offering by improving its freezing technology in order to preserve a fresher taste in addition to the overall look of the product. Yet as the market grows, look for new competitors to swoop in anyway and old competitors to refresh their marketing efforts. And look for frozen vegetables to continue to vie for their rightful spot in America's push for healthier lifestyles. Indeed there will be room in this growing market for more players, so perhaps there is room in the blender for more ingredients. We shall see.
By now just about everyone knows about the highly successful scrapbooking site, Pinterest. It has become so popular that a full 42% of all internet-using U.S. women visit the site, second only to Facebook among this well-heeled demographic. But apparently only 13% of online men visit the site, and men comprise only 29% of all visitors. But is this really a problem for the company?
It seems that there should be nothing wrong with having a product that appeals largely to women, as we are all familiar with the psychographic differences between genders. Quite simply what appeals to women doesn't necessarily appeal to men, and dare I say that scrapbooking is a largely female endeavor? Nevertheless, marketers at Pinterest are undaunted in their search for the "other half of the market" and are constantly upgrading what could be referred to as a "men's department", despite the fact that about a third of its visitors are already of the male persuasion.
A men's department of sorts seems harmless enough, but marketers have also indicated that they are "making the site more gender neutral". Hmmm...The whole site? If Pinterest is indeed successful in this effort, could a more androgynous website alienate the current base of consumers? Changes aren't always embraced by customers, especially if the changes are made to attract a new market (in this case men). Is this a good idea in light of the fact that a cool new competitor could arise at any time as Facebook did at the expense of My Space? Should Pinterest make these changes or would marketers do better to start a new site target to men? Ironically the current site, you know the successful one with all of the appeal, was designed by three men, who apparently posses an advanced knowledge of what women want. But trying to fix what isn't broken most often has predictable negative results. Let's see what happens.
The cost of a 30-second ad spot during the Super Bowl reached $4.5 billion this year, roughly double what it was back in 2003, and yet as the costs rise, the advertisers keep on coming. But for the price of one Super Bowl ad, a marketer could get 12 spots on a prime time program like "The Blacklist" and "Big Bang Theory" or she could just about own social media for a day. So is it worth the money?
Remember that there are 115 million viewers for the Big Game which is huge in today's fragmented media market, and for many viewers the ads seem to be at least of equal importance as the game itself. The event has no rival when it comes to people actually seeking out advertising, so advertisers have a highly attentive, involved audience. And almost no one tapes the game as many viewers of prime time tend to do, and when they do finally watch their taped shows, many of them like to zip through the commercials. So 20 million viewers for a prime time show becomes more like 12 million when one considers the use of DVR technology. Ads during live broadcasts are highly coveted. And of course the pre-game hype generated when advertisers preview ads online, hold contests, tweet, and use other direct response vehicles, added to the unparalleled post-game social and traditional media buzz, makes placing an ad during the game hard to resist. yet, the game is most often viewed in a social setting, which might get in the way of the audience receiving the message. This is a major downside.
Nevertheless, it looks like the Super Bowl wins out over prime time, but still I might be tempted to spend my money "owning" social media for a day in lieu of the game. Being dominant for a period of time on social media somehow seems more attractive than being one ad among dozens. But why choose? A savvy marketer would make sure that she has room in the budget for both activities so that they can reinforce one another. And marketers should never spend their entire budget on a single marketing activity, as it's always a good idea to integrate marketing communications among various marketing vehicles. The Super Bowl is for the big dogs, and not the pups on the porch. Just don't bum me out too much when delivering your message while I'm trying to have fun watching the game.
In the 10 years that I have been analyzing Super Bowl ads for local Denver media, which this year reached $4.5 million for 30-seconds, I have never been subjected to such a barrage of ads advocating this cause or that, and doing so in a way that turned out to be a real downer during this year's game. Sure, it seems necessary to try to stand out among the barrage of funny ads, but it seemed like every three or four ads used guilt, fear, and other negative emotive devices to elicit a response from the crowd. And if the intent was to be like the guest who tells you he has terminal cancer at a wedding, I say job well done!
Conspiracy theories, such as an NFL request for a more somber tone, aside, it is interesting that so many advertisers all at once chose to embrace causes instead of focusing on more "mission critical" factors such as product features and benefits. And wow did it come all at once! Nationwide, for one, was downright complicit in bumming out just about everyone during what is arguably the biggest, happiest party day of the year (and a damn good game, I might add). The dead kid play was a real winner, eh? Thanks for being "On Our Side". It wasn't about insurance after all, according to the company spokesperson, but about child safety awareness. But is this sort of thing the best use of marketing funds for a for-profit company's strategy? Lots of people besides me were unnerved by the amount of negative content and preaching overall, so I can't pick on Nationwide alone. But clearly, something strange has gotten into the creative teams representing major brands. Why not stick to the product? "It's great to see brands do something bigger with their Super Bowl ads", said a chief creative officer. Bigger than what? Marketing the actual product perhaps? This seems somewhat outside of what Cause-Related Marketing, an objective-driven part of a brand's integrated marketing communications and image management strategy, is supposed to do for a company.
So it does beg another question, is the Super Bowl an appropriate time to forward causes that might elicit negative emotions and cause controversy for diverse groups of people just trying to have fun? Is the Super Bowl an appropriate time for self-reflection? Does the use of guilt, fear, and other negative emotions help marketers in the effective delivery of their messages during a social event like the championship game, or are humor and other creative appeals more effective? And, if this sort of thing is OK, how much preaching is too much preaching? What bugged me the most wasn't the commercials, but the reaction of creative experts who largely applauded the messaging. I beg to differ with their perspective.