• Squaring Off Over Doughnuts

    Two Indiana bakeries are battling over who can make four-sided doughnuts and who cannot, and unfortunately for one of the bakeries, the case looks fairly clear for the party that has the trademark. Or is it so clear?

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    These days, the presence of so many competitors offering so many similar products makes it very challenging for marketers to find points of differentiation, but one bakery hit pay dirt when it trademarked the name "Square Donuts", it's namesake, in 2013. Square Donuts has been making the four-sided delights since the 1960's, and now a newer marketer, Family Express, wants to call it's products "square doughnuts" too. In fact, it has been doing just that since 2005 despite a cease-and-desist letter sent by Square Donuts attorneys in 2006 Following all of this so far?

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    Oftentimes, marketers are asked to provide expert testimony in court over these types of things, so here are some of the pertinent issues. The question is rather complex, and it is most certainly one that should be decided in a court of law. First, it seems to me that the term "square donuts" is entirely too generic for a company to be able to trademark. The process of making the product or a combination of ingredients could in theory be patented, but a trademark must also be unique, so it is interesting that the mark was allowed in the first place. And there is also the issue of how to spell the word -- "doughnuts" or "donuts"? This might matter a great deal to the court. But the fact of the matter is that Square Donuts did predate Family Express by many decades, and the name in question is the name of the restaurant itself, and not merely one of it's many product offerings. And this name has been around for a very long time. This should matter to the judge as well. Is the average consumer confused by these two competing products that have co-existed for a decade? 

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    Since the consumer is often a major factor in these types of decisions, this is an important question to ask. It does seem that most residents of the great state of Indiana probably would confuse the two or perhaps a savvier consumer might believe that Family Express is offering licensed "Square Donuts" rather than a more generic "square donut" that it makes itself. But since Family Express has also been offering a square-shaped product for more than a decade and has approached Square Donuts to try to reach an agreement, things might not be so simple. And what should Family Express call a doughnut that is square if not a "square donut"? A "square-shaped donut"? That just might be the answer.

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    A few focus groups or surveys could provide some insight as to whether or not consumers are confused, but it's up to each side to present their respective cases. Who knows how all of this will work out, but one can be sure that if interstate commerce were involved, the situation would be even more complex. But this is precisely what courts are for, and marketers on both sides have much invested in Indiana's inevitable decision.

  • Sweets Struggle With E-Commerce Pricing

    For most companies, e-commerce sales are growing faster than brick-and-mortar sales (in part because in most cases the former is still so much smaller as a share of total sales); and branded-product manufacturers across all industry segments are trying to figure out how to exploit this huge opportunity. It's worth mentioning that a failure to effectively do so might result in the failure of the brand. But attracting and retaining online customers is only one challenge that marketers face. Another involves marketing highly perishable items and the costs involved with regard to shipping them from point A to point B, especially during the warmer months. Purveyors of specialty food items, such as Omaha Steaks for example, have dealt with this issue for years, but these are largely items that have limited in-store availability (scarcity), and so some consumers are willing to pay more to obtain them direct from the manufacturer. But what about the stuff one can easily get in stores but that also requires ice, bulkier packaging, more weight and ultimately more shipping expense? Will consumers pay more for these items?

    Well, they don't really have to. Since distributors (wholesalers) and retailers can take up to 65% of the retail price, the direct seller has quite a bit of margin with which to work. Therefore brands from Hershey's to Vosget-Haut Chocolate can offer lower price points to compensate for the extra shipping requirements, which can result in adding several pounds of weight per package. And with UPS and FedEx introducing new shipping rates that charge a premium for bulkier packages, profit margins aren't helped any by adding several pounds of cooling-agent. Although marketers are making efforts to reduce weight and size, shipping costs for highly perishable items will remain high.

    And so cutting out the intermediaries should provide plenty of room for product marketers to be able to absorb these extra shipping costs, but the major caveat here is to avoid "channel conflict". Retail partners, who generally have the most power in the supply chain due to their relative proximity to the consumer, tend to frown when the branded products they carry appear online for lower price points. And since these retailers have lots of channel power, it's best for brands not to anger these influential players. Sanctions can be heavy indeed. Yet marketers might be reticent to bundle the extra shipping costs needed for highly perishable items into the prices of their products for obvious competitive reasons, but since all competitors in the category face the exact same challenges, prices would likely rise across the entire category over time if a couple of market leaders led the way. Employing this strategy could certainly make in-store products look more enticing from a price standpoint, but remember how much margin intermediaries like retailers and wholesalers (who buy from manufacturers and sell to retailers) tend to absorb. Without having to cut them in on the action, the manufacturer has ample room to build shipping into the price and still remain slightly below the in-store price points favored by retailer partners.

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    Right now most chocolate marketers don't bundle in the shipping costs when pricing products, but a bundled-pricing structure (which would make the products appear more expensive at first blush) would appease the powerful retailing gods, avoiding a nasty channel battle that the manufacturer almost always loses. The extra margin room inherent in e-commerce should make it easier for branded product manufacturers to develop a competitive direct-to-consumer e-commerce pricing strategy. Eventually, industry leaders will figure this out and standardize a pricing model (possibly one that includes shipping) which followers would then be forced to employ and that retailers will ultimately accept. The present and future of retailing requires that marketers successfully manage multiple channels of distribution while at the same time avoiding channel conflict. Chocolatiers, and others, must learn this lesson very quickly indeed.

  • More Beginners, Fewer Players

    From a peak of 30 million players in 2005, golf participation has been in overall decline for the past decade, but it's certainly not for a lack of trying. It turns out that the number of people trying golf for the first time is increasing, yet participation is still falling, a contradiction that suggests that there is something wrong with the Marketing Mix or perhaps the consumer market the sport has been trying to address. The U.S. has about 15,000 courses with a larger number closing than opening, so if something isn't done soon, we might see a fairly significant reduction in the number of facilities. Or is this just temporary?

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    It is instructive to note that the game had less than 20 million players in the mid-1980's and today has only four million more than that, but remember that our population has increased by upwards of 50 million people during that time and that in that time the number of golf courses has skyrocketed. Luckily, the core of the industry includes a stout 20 million people who play golf regularly, but the worry is that these folks will not be replaced as they age out of the sport. And nearly 90% of those who left the sport in 2015 never became regular players; yet 37.4 million non-golfers are interested in learning the sport, so the problem doesn't seem to be a lack of interest, but rather that they don't like it once they've tried it. For a marketer, being handed new customers every year and then failing to retain them is a huge problem indeed.

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    So marketing firm NGF conducted some consumer research very recently and found that a primary reason for this lack of customer retention is that beginners do not feel welcome or comfortable in the cliquish, etiquette-intensive golf environment. Far from the good-old-boy network and high price structure of yesteryear, this batch of insiders is multi-cultural, multi-income, and still not very tolerant of beginners. It appears that "different is as different does". Ans alas, there is no "bunny hill" on which to make the many mistakes necessary to develop prowess in the game. Perhaps courses can include these in the future as ski areas have done. Another huge problem is a failure of the player to become competent in a time-efficient manner. Indeed far too many in our impatient culture simply don't have the gumption to do the hard work and take the reps required to be good at the game, or a profession for that matter. Unfortunately this social trend has been well-documented and well-studied and it goes along with the "entitlement" that we've been hearing so much about. Golf is a game that, for many, is only fun if you are good at it, inebriated, or a bit of both.

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    To be fair, most courses do offer lessons and other beginner-oriented services, but times have changed, and it would seem that there is a market opportunity for companies that offer structured introductory programs on a national level. So instead of the course-specific, hodgepodge approach we have now, the new model would be centrally-coordinated via a variety of service providers and golf courses could outsource the function to the experts, one of these third-party firms. In this way, the industry as a whole could address the issue and discover one or more effective formulas for keeping people in the game. Another approach might involve offering a golf product tailored to beginners and very casual players. Novelty golf-related products such as Top Golf are beginning to gain momentum, and a new idea might involve 150-yard fairways, larger cups, theme music, street tacos, and craft beer. This concept wouldn't replace the traditional golf course, but instead would offer a less-intensive alternative as well as a use for some of the land abandoned by closing golf courses. After all, cities can afford to maintain only so much open space, and not many residents want to see the closed courses go high-end condo to pay off the piles of debt they have likely accumulated. 

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    Here is another possibility. The game itself really only became popular over the last 40 years (helped along by greats like Tiger Woods as well as a more inclusive environment) and was previously enjoyed by a niche market consisting of middle-to-latter-aged people in a few spots around the world. It has really taken off! But perhaps the efforts to attract attention-deficient young people (a symptom of the young in every generation) is an exercise in futility, and the fact of the matter is that golf might be best enjoyed through the lens of experience. This is not to say that some younger people will enjoy the sport, but maybe marketers should not expend major efforts to attract them. Perhaps the sport should concentrate on the over-40 crowd, a rather large, well-off group of consumers who need hobbies. These are the people who, as they age, are forced to give up the more taxing activities for ones that require less physical output, but marketers tend to forget how lucrative these wealthier folks can be in their zeal to capture the coveted 18-34 demographic. And older people don't necessarily like to be around rambunctious younger people anyhow, a hospitality concept called "guest conflict". So it looks like structured, efficacious programs for beginners would go a long way in getting the middle-aged to try the sport and stick with it. Perhaps then the younger consumer can enjoy a different sort of golf product until he/she is ready for the patience and work required to make the real game of golf fun for the whole family. And then the mature crowd (buoyed by a robust program for beginners) can enjoy a well-earned day in the great outdoors, chatting it up, sipping an adult beverage, and chasing that nasty little white ball.

  • Sponsorship, Music and Money

    It's tough for musicians to make money in between albums these days. In the not-so-olden times, record-sale royalties provided ample supplemental income while artists were busy creating, relaxing, doing community service, or whatever else. But CD sales have been falling for many years and now download sales are in decline, leaving streaming (which is in the initial growth phase of the product life cycle) to pick up the slack. So it's no wonder that musicians have been highly receptive to corporate suitors when they come calling with offers of easy gigs and big money.

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    Recently, MasterCard hired Gwen Stefani to play a concert in Tokyo for customers. Marriott did the same with several acts in conjunction with the South By Southwest festival in Austin. And even fashion companies are getting into the act offering collections for music festivals. All of this is done in the name of trying to reach a younger demographic an effort to use music (as so many brands have used sports) to reach a desired audience.

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    As live performances become more important than ever to the relevance and ultimate longevity of a musical act, these sorts of corporate gigs are becoming an increasingly important part of the entertainment industry, and record companies are totally on board with the potential synergies these relationships can produce. After all, cooperation between industries is not uncommon when the desired target is the same. Big brands already successfully use movies and sports as major platforms for marketing activities, so why not give music more attention? In a world where almost everything is sponsored, this strategy just seems to make sense.

  • Free Burritos For Everyone

    There's just one catch. You have to go to Chipotle to get them. But that might be OK. Up until the successful chain's recent bout with massive product contamination and a corresponding 30% drop in revenue, things were going rather well. And although the loss of customers has slowed, marketers at Chipotle know that they have to work harder to get skeptical consumers back into line.

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    Recent marketing efforts have not focused on a major apology tour, as predicted by some, but have instead involved giving away free burritos, which is a sure-fire way to get someone to try your product, and the tactic has been met with success over the years. Although 5-7% of Chipotle customers have vowed to never come back, we know from Sean Connery's reprise of his James Bond role and Harrison Ford's Han Solo redux, never to say never. Some might return. However, this is also an opportunity for the company to acquire some new customers, many of whom enter the market each day as teens and young adults. And so Chipotle marketers will offer even more free product in the future as well as buy-one, get-one sales promotions to help regain customer trust, as well as lost market share. 

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    The company certainly has a long way to go before it is back where it was, but it has taken some important first steps towards that end. Operational changes are in motion and as long as product quality doesn't suffer and the outbreaks don't continue, Chipotle could rebound rather nicely. 

  • Feeding Indiana's Jones Once Again

    If it seems to you that there is no longer any shame in milking a movie franchise until it has absolutely nothing left to give, it might not just be your imagination. But we aren't talking about yet another iteration of Fast & Furious, nor does this involve any animated penguins or escaped zoo animals. No ladies and gentlemen, we are talking about Harrison Ford and his twice-retired persona, Dr. Indiana Jones. Distinguished professor. Archeologist. Carefree adventurer. Ladies man. Not politically correct and definitely not afraid to do what it takes to get the job done. Exactly what isn't there to like about this guy?

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    Obviously, any professor who doesn't willingly embark on dangerous adventures is apt to admire (and will gladly pay to see) a movie professor who does so, but the audience for a Jones sequel is certainly much broader than that. Get ready for the 73-year-old Ford to do things most of us in our forties couldn't dream of doing, all with a smirk on his face and a glint in his eye. Indiana Jones is kind of like an educated Han Solo, and although the last installment (the rather cumbersome 2008 "Indiana Jones and the Kingdom of the Crystal Skull") was not exactly well-received, this one is likely to perform much better. Why? American movie-goers have really taken to sequels over the past several years for reasons that are unknown. Perhaps an increasingly cynical public sees less risk in these "tent pole" films versus original screenplays that might fall flat. It's tough to say. But we do know that the death of Han Solo has probably left many movie-goers over the age of 40 (and perhaps some younger than that) hungry for some more 1980's-style Ford action.

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    The possibility of another Jones movie has long been rumored, and there has even been talk of replacing the aging Ford with a younger actor, but director Steven Spielberg has insisted this will not happen. And with good reason. Harrison Ford is still cool. So here comes "The Jones Awakens" (not the name of the movie), and we can only hope that Shia LaBeouf doesn't reprise his role as Indy's son and heir. But he probably will.

  • Sponsors Suspend Sharapova

    Using celebrity endorsers can be a risky proposition, but the right product/endorser combination addressing the right audience at the right time can be a huge boon to any brand. One of the most successful endorsers of all time, tennis great Maria Sharapova, has run into a bit of bad luck as a substance that she has been taking for a decade (one that was only recently banned by the World Anti-Doping Agency) has appeared in a recent drug test resulting in some very interesting behavior on behalf of sponsors.

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    The short story is that Porsche, TAG, and Nike have all announced that they are "suspending", not "terminating", their marketing relationships with the Russian champion. This seems especially harsh in light of her alledged intent and the fact that she took full responsibility and claimed that she didn't know that the doping policies had been updated. In fact, the agency said they sent everyone an email. An email! Didn't you get that email?

    Ms. Sharapova has some productive years left in her and will win more tournaments, so the brand endorsements will keep on coming. But her own personal brand has been tarnished, and therefore she might no longer command the premium she has been able to charge for her services over her outstanding career. She is a winner. She has been contrite and she responded immediately and I think truthfully. She hasn't has any previous allegations or convictions. She will persevere. In fact there are hundreds of athletes that have been caught "cheating" by using substances that were previously OK to use. perhaps the anti-doping folks should be a bit more aggressive in their communications when they decide to ban yet another substance. In Ms. Sharapova's case, it is highly likely that the three sponsors will eventually resume relations with Ms. Sharapova unless, and frankly it will probably look like these companies overreacted.So much for loyalty. Michael Phelps didn't receive such treatment when he committed his series of deviant acts several years ago. Nonetheless, she will likely be suspended from competition (and endorsing) for a while, but will emerge full of endorsement potential. Armed robbery this was not, and such a champion likely will not be defeated by a rather sneaky, and seemingly arbitrary, change in the rules. Perhaps in our zeal to cleanse competitive sport of any trace of taint, our anti-doping efforts has gone a little too far.

  • King Decides to Play it Fast

    Amid the pressure to offer healthier food options and adopt a more fast-casual model, traditional fast food companies have had to adjust a lot of what they do. These healthy offerings have been met with limited success over the years, and there is ample evidence that having a more complex menu does little else but raise costs and customer wait times for fast food companies. McDonald's has certainly learned this important lesson and is making efforts to fix the problem. Burger King faces many of the same issues, and no doubt these will be dealt with, but marketers have also decided to simplify the brand as well, returning to it's roots as a provider of quick order burgers, fries and hot dogs.

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    It's good to know who you are. In 2010 alone the company launched 30 limited-time offers and added 20 permanent products to it's menu, a simply staggering number that suggests that marketers are unsure of what they want the brand to be. Well, those days are apparently over. Gone are the apple cranberry salads and the failed Satisfries product offering. Back is the focus on flame-grilling, an original brand differentiator for sure, as well as applying a more discerning approach to new product development which so far has resulted in the successful Chicken Fries (a reintroduced product) as well as a number of hot dog combinations. A brand must know what it wants to be (brand identity) before it can be communicated to consumers in the form of a brand image. Perhaps this is one of the reasons why Burger King has struggled against the likes of Wendy's and McDonald's in the midst of this fast-casual revolution. Perhaps this brand is ripe for a comeback.

  • The Demise of Mass Formal?

    That American society has become a far more casually-dressed place over the past few decades is a forgone conclusion. Even the American Neckwear Association went out of business several years ago. That's a bad sign. In another sign of the times, Men's Wearhouse, the nation's top provider of mass-produced, inexpensive suits has announced that it will shutter hundreds of under-performing locations across the country. This is bad news indeed, especially considering that the company now owns Jos. A. Bank, a former close competitor which had fallen on tough times several years ago. When we see a "Buy one suit, Get three suits free" promotion as we do in Jos. A. Bank commercials, we know that marketers are at the end of their proverbial ropes. This sort of overzealous sales promotion almost certainly tends to cheapen a brand's image, and when marketers finally pulled the ill-conceived promotion last year, far too many customers evaporated with it. Indeed when a marketer over-discounts products and does so for too long, it's often difficult, if not impossible, to get consumers to eventually pay the "regular" price. 

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    But there is another side of the story, clearly illustrated in the above business graph. While neckties might be on the outs for the time being, the men's wear industry is growing at a healthy 5% annually, and believe it or not, sales at Men's Wearhouse are growing as well suggesting that industry conditions might not be quite as bad as they seem. But Jos. A. Bank has been experiencing a mass exodus of customers as a result of a return to normal pricing. Ultimately, it makes lots of strategic sense for marketers to kill the struggling brand entirely and rename the stores as Men's Wearhouse locations, eliminating any remaining redundant locations. After all, it makes little sense to incur the cost of managing two brands that compete against one another for the same customers, especially if one of them is losing it's brand equity. However, it doesn't appear that this is what they plan to do at least for now, since both brands are mentioned in the closings announcement. Clearly retailers overall are going to have to get smaller as an increasing share of the consumer spending pie rapidly migrates to the Internet. Luckily, suits require tailoring, so a leaner, healthier Men's Wearhouse might be able to maintain a profitable brick-and-mortar operation for many years to come. If things continue they way they have been going for Jos. A. Bank, however, the company may have yet more excess layers to shed.

  • Wider Seats? Higher Prices

    The Law of Unintended Consequences often says, "Be careful what you wish for." While having wider seats on airplanes sounds like a really comfortable idea, like many populist notions the application of it has it's unintended economic consequences. Nonetheless, Senator Chuck Shumer, always a man of the people, wants the FAA to set minimum seat-size guidelines, recognizing as we all have that the average posterior has widened immensely over the years along with still-rising levels of obesity (as well as a steadily-shrinking airplane seat). To Mr. Shumer, a highly influential politician who flies commercial first class or in a private jet, it's just plain unfair that consumers should have to pack themselves so tightly into such a small space.

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    Obvious recommendations about the desperate need for societal weight loss aside, Mr. Shumer does have a point, but like most politicians probably lacks the necessary business acumen to make these sorts of suggestions. So what would happen if consumers suddenly received a government-mandated upgrade? Fewer seats. This means that airlines would have to add more flights which would surely crimp profits, and certainly result in higher prices for consumers. How do we know this? It's Economics/Marketing 101, for starters, and there are examples everywhere illustrating the unintended consequences of regulations that increase costs for businesses. When a regulation is enacted that an industry finds prohibitive, the costs are almost always passed on to the average consumer, who if you ask her, might actually want the option of having a smaller seat for a lower price. This is all very instructive, especially in an age where many of us seem to be forgetting basic economic lessons about what happens when something becomes more expensive. Obviously we tend to use less of it. And even more importantly, SeatGuru.com has estimated that on average two rows of seats would have to removed under such regulatory conditions. Again higher prices for consumers.

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    And don't most airlines offer better seats, replete with more legroom and other amenities, for higher price points? In an age when so many politicians are concerned about the negative effects of commerce on lower and middle income Americans, does it make sense to then increase the cost of an airline ticket for these same people? How many borderline fliers might be forced out of the market? Unintended consequences indeed. There is even ample evidence that airfares have shrunk along with seat sizes (from 36 inches to 31) over the years, so the two variables do seem to be correlated. More seats mean lower prices. And the fact that airlines have decreased capacity by retiring planes and thus enhancing efficiency, a once unprofitable industry is now doing rather well. But 31 inches does seem a bit small, especially considering that society is moving in the opposite direction. But, do passengers value more room as much as they do lower fares? An analysis by the travel website Skift suggests that they do not. So in light of all these facts, hopefully Sen. Shumer will move onto more pressing congressional matters.

  • The Case of The Hidden Register

    Fashionistas (and those aspiring to be fashionistas) may have noticed that paying and leaving the boutique with the loot isn't quite what it used to be. In the midst of an emerging trend of some higher-end eateries eliminating the practice of tipping, there is a new industry trend emerging among some prestige boutique retailers and department stores as well, and it doesn't involve the store merchandise. It concerns the checkout register.

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    More and more marketers are hiding the means of paying and thus delaying the consumer's act of leaving. There isn't really much of a mystery here. Burying the register in the back next to the free periodicals and rest rooms not only makes the consumer see more of the store selection as they hunt for the gateway to freedom, but it also tends to hide any unsightly lines that may have formed while he has been shopping. Even better, it encourages the customer to interact with the clerk..ahem...associate who is often conveniently equipped with a tablet in order to facilitate your purchase. And of course this will also provide the highly-trained retail sales professional an opportunity to cross-sell (related items) and up-sell (more of the item or an upgrade to a better model) in an effort to get more business out of the captive consumer. Good luck finding the register at Barney's New York, but you will find plenty of sales associates toting iPads (or more inferior mobile devices) ready to serve you, and up-sell, and so on.

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    This experiment will either be a resounding success, as consumers revel in what will be perceived as a high-touch service experience like they tend to do when they pay a lot to go out to eat. Or an increasingly-grumpy shopper, who is becoming increasingly willing to purchase less expensive online apparel and accessories sight unseen and unsampled, might become annoyed and force the registers back into the picture and the associates back to their kiosks. Either scenario seems likely at this early stage. This is one of those marketing tactics that not many people notice (and thanks to the Wall Street Journal for noticing), but if successful it can become ubiquitous, eventually industry standard, and perhaps coming soon to your favorite retailer. Will you appreciate the changes in the servicescape?

  • Hot Dogma

    It's baseball season, and although the designated hitter rule divides an otherwise peaceful tribe, the one thing most baseball fans can agree on is that you gotta love the hot dog. Burger King sells them. Sonic sells them. They are a staple of the American cookout. And a quick dinner/treat for the kids. The hot dog, although sometimes questionable in composition but nonetheless delicious, is enjoyed by most Americans on at least an occasional basis. And the cool thing is that the hot dog is very regional in nature. Tastes vary across the U.S., and in order to get an idea of what Americans in different regions consider to be the most appropriate representation of what embodies the ideal dog, one must look no further than the local major league ballpark.

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    Levy Restaurants, the concessions service provider at seven MLB stadiums across the nation, has quite brilliantly developed seven signature dogs that in some way represent the region in which they are served and consumed. Wrigley Field's Chicago Dog is the commensurate classic with onions, peppers, celery salt, yellow mustard, bright green relish, and a pickle spear on a poppy seed bun. Both dog and bun are steamed. Simply delicious. At Chase Field in Phoenix one may enjoy a Sonoran Dog which is grilled, wrapped in bacon, and smothered in a pico de gallo/pinto bean combination with a dab of mayo. Sounds pretty southwestern to me. Washington D.C.'s Nationals Park offers Ben's Chili Dog, a grilled pork-based classic featuring mustard, chili (from locally-famous Ben's Chil Bowl), and onions on a steamed bun. Do people in D.C. like chili dogs? We are unsure, but the hot dog sounds scrumptious. My hometown Dodger Stadium in L.A. has the trans-pacific King's Hawaiian Dog a wider-than-the-average dog topped with pineapple salsa and served in an uber-sweet King's Hawaiian hot dog bun. Marlins Park's Miami Mex Dog actually makes little sense from a marketing perspective since Mexico is fairly far away and the culture has a heavy Caribbean influence; however the chargrilled dog does have chili con carne, Monterey jack cheese, cilantro coleslaw and the foodie-fan favorite jalapeno-lime aioli. Well, at least it's Latin, and it does sound pretty darned good.

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    And here's the genius part. when the visiting team comes from one of the other six parks, the company serves the opposing team's dogs as well. This way the enemy has something to comfort them when they get trounced by the home team and a sympathetic local might want to see what the other half eats. A stroke of strategic marketing brilliance that gives the veteran marketer goosebumps. But this is the sort of localization that so many consumers crave these days. If it isn't locally grown/made/brewed then by gum it should at least represent the region from which it comes. Kudos to Levy who has indeed figured it out. No chance of them deposing the current provider in my adopted 30-year home of Denver anytime soon, but hopefully the likes of Aramark and Center Plate, et al., will get the message and up their game. I for one can't wait for the Coors Field Rocky Mountain Oyster Dog. On second thought, I'll stick what with we have for now.

  • Tesla's X Factor

    Tesla's electric cars haven't really gotten any "greener" but, with a new round of product introductions, certainly just became even more remarkable. Since most electricity still comes from fossil fuels including coal and natural gas (renewables are not yet nearly efficient enough to carry the load), it's difficult to justify product positioning based on being any greener than many other automotive options that don't involve electricity. And when one considers the composition and life cycle of the rather toxic battery on which these vehicles depend, green positioning becomes even more far-fetched. Not to mention the fact that no one talks about how efficient the vehicle is at "burning" this fossil-fuel generated electricity. Yet these inconvenient truths haven't stopped marketers of vehicles such as the Smart Car and Chevy's Volt from making such assertions, and this green marketing veteran appreciates the fact that at least Tesla's eco-positioning has largely fallen by the wayside. And in Colorado, where Tesla just previewed three of it's new high-performance "Model X" vehicles and consumers can qualify for up to $13,500 in state and federal tax breaks for purchasing an electric vehicle in the name of environmental responsibility, it is clear from interviews with Tesla enthusiasts that "green-ness" is merely the icing on the cake.

    Electric skepticism aside, about 40 people were allowed to test drive Tesla's exciting new Model X vehicles with comments like "We really gunned it on the test" and "Honestly, even if this was a gasoline car, I'd probably still buy it", as well as "Oh man, we pulled off before we got to the metal". These early customers love the design, the way it drives, and the performance of this fast, strong vehicle (it can tow 5,000 pounds). Founder Elon Musk is emphasizing Tesla's roominess, family-friendliness, safety, and power, rather than touting environmental benefits. Yet one expert summed it up nicely when he said, "The family with a lot of financial resources that also wants to be environmentally friendly, this will appeal to them." 

    The so-called environmental benefits of high performance electric vehicles are highly debatable, but Tesla's souped-up battery can now handle up to 250 miles at a single charge and Colorado has tripled the number of charging stations in the last few years. Yet at just over 6,000 registered vehicles in the state, the category is still stuck in the "introduction" stage of the industry life cycle. Tesla is great at marketing. They take lots of pre-orders, run a social media campaign, and tap into the excitement of these "innovators" and "early adopters" to generate buzz for the product before it is introduced. Yet, because there is very little demand for electric vehicles as a whole and these pricey cars appeal only to a very small niche market with both the ability AND the desire to buy the product, the hype wears off until the next round of introductions.

    This niche orientation may change along with the inevitable technological advancements which would undoubtedly make this sort of product more accessible, and with federal regulators now a bit more vigilant than they used to be about companies making broad and unsubstantiated green claims in the wake of the most recent "Green Guidelines" revision, perhaps the makers of these really cool vehicles are already backing off on the eco-hype and instead are relying on more traditional features and benefits. And Tesla-buyers, like most people, seem to be far more interested in the "X Factor" than any green factors. Folks with greener priorities probably ride their bikes, take public transportation, do ride share, drive smaller and cheaper electric vehicles, or own hybrids. Tesla has indeed made another round of awe-inspiring new products (they even feature old-school sports car, winged doors), and some are even almost as cool as that space company Mr. Musk owns that also has an "X" in it. Maybe soon the vehicles will be powered by electric rockets, or perhaps the more promising hydrogen fuel cell technology that has been in development for 20 years. But for now, Tesla is a luxury, high performance brand powered by electricity, cool but not necessarily green.

  • Sports Spending Lags Big Time

    In a development that should concern and perhaps disturb sports marketers of all stripes, fan support for spectator sports is softening even as the economy is improving (albeit slowly and not adequately). Results from an ESPN sports poll exposed some fairly significant data shifts from the 2011-2014 period compared with 2015. Here's what it found:

    The percentage of Americans over 12 years of age who describe themselves as sports fans was thankfully unchanged. However, people who describe themselves as avid fans fell by 2%, and people who describe themselves as less interested in sports than they used to be rose by 4%. In addition, "priority given to sports activity" fell by 4% while the percentage of people who have more to spend than last year rose by a whopping 24%. At the same time, the percentage of people who spend on sports at least monthly fell by 6% and the percentage of people who have a positive view of sport sponsors dropped by a considerable 9%. Perhaps not as relevant, but certainly interesting and very disturbing is the finding that the percentage of people who "spend most of their day online" has gone up by 12%.

    What does all of this mean? Aside from the sad fact that an increasing number of us prefer the virtual world to the real one, these numbers could be a very bad omen of the shape of things to come. As aging baby boomers (between the ages of 52-72) distance themselves from spectator sports, as the elders of previous generations have also done, and Millennials (between 17-36) continue to migrate away from sports and towards other entertaining distractions (social media anyone?), the market for sport could be on a declining trend. Indeed the same study found that Millennial men spent 12% less on sport during 2015 than in the 2011-14 period, and even Generation X (aged 37-51) has reduced spending by 7%. Every age demographic dropped in 2015. Of course we need to see what happens over the next two years to make sure that 2015 wasn't a statistical aberration. That's just good science. But the winds of change shall blow as they are wont to do, and it's impossible to blame the economy when you have numbers such as these. Building party decks in all the stadiums and arenas around the country won't likely stop the wind from blowing in the wrong direction, but it might slow the decline down a bit. In the meantime, we will wait for more data.

  • The Law of Unintended Consequences

    Dietary/nutritional supplements, a category of ingestibles which include herbs, vitamins, and minerals among several other classes of goods, were previously considered as "foods" by the Food and Drug Administration, and as such they were regulated just like breakfast cereal. In 1994 Congress enacted the Dietary Supplement Health and Education Act (DSHEA) which allowed dietary supplement companies to market their products as a third category, a position somewhere between a food and the heavily-regulated drug category. Among other benefits, this Act allowed marketers to make marketing claims about their products called "statements of nutritional support". Until then claims could only be made by drug marketers and marketers of a few select foods such as oats, which have been approved for heart health. Thus, claims such as "supports the immune system" (cold care) and "helps the body maintain optimal metabolic levels" (weight loss) were born. Mostly careful not to make "health claims", which are reserved only for approved drugs, the industry has grown to $32 billion just in the United States. It's well over $100 billion globally.

    Of course in a semi-regulated area like this, one might imagine that there are a number of unscrupulous actors in the industry, and indeed many products are found through testing to either contain inadequate levels of the ingredient listed on the label or contain ingredients that are not listed on the label at all. This can be very dangerous, especially for people taking prescription drugs, and a number of recent studies have exposed contraindications for negative drug-supplement interactions. Some commonly-used herbs like Echinacea, which has been shown in numerous clinical studies to stimulate the immune system, also reacts negatively with anti-cancer drugs, while St. John's Wort, an effective treatment for mild depression, may also interfere with prescription anti-depressants in a dangerous way. These are just two of many, many findings. 

    This is especially concerning given that 68% of Americans take at least one supplement in one form or another, a number that has held steady during my 25 years of working with natural products companies, and that a similar number of Americans are also hopped up on at least one prescription drug. Negative interactions are a surety under such conditions. Also consider that 70% of patients don't share their supplement habits with their doctors and you have a perfect storm.

    This has always been an issue in this slowly maturing industry, but the proliferation of products containing these ingredients has made studying them a societal imperative. An herbalist will probably tell you not to take the prescription drugs in the first place and she may be right in some cases, as we are surely an over-medicated society, but in many cases it simply cannot be avoided. It is possible that regulators might eventually require warnings on labels and in marketing communications in the not-so-distant future as a result of these discoveries, but that will probably take some time. And a move like this would certainly make sense in light of what we are beginning to know about the drawbacks of certain nutritional supplements. Right now it's "buyer beware", and it's up to the user to make sure there are no contraindications. It sure is a good thing we have the Internet.

  • Maserati Steps On Gas

    Just the mere mention of this luxury brand can make car enthusiasts salivate. These high performance vehicles are sleek and very expensive, but one doesn't see very many of them on the road. And at only 32,000 vehicles sold last year, they are as elusive as the much-hyped, but poor-selling electric Tesla vehicles, which actually bear a resemblance to some Maserati models. But parent company Fiat Chrysler wants to change all that and is doing so by shifting product strategy in a potentially brand-altering manner. How?

    By making an SUV of course. Introducing the Levante, a rather generic-sounding, but well-intended effort to gain market share in the important SUV category. The vehicle starts at $81,500, so it is not for those who are light in the pocketbook, and the product will be introduced in Europe with export to other markets planned for late 2016. And since Fiat has recently spun off it's Ferrari brand, the pressure is on Maserati to begin performing at a higher level. The company sells 4.8 million cars a year overall, so at present the piddling Maserati brand is hardly worth mentioning. Yet this foray into the world of SUV's looks like a good move for the company, although the vehicle is super expensive and the name marketers have chosen sounds more like it's describing a mood-elevating prescription drug rather than a luxury SUV. I also recall having a Spanish teacher named Mr. Levante. But global products often have generic-sounding names in order to appeal broadly to different cultures and languages.

    Of course, it is a bit risky to add an SUV product to a brand known exclusively for high performance sports cars, but at only 32,000 cars sold last year, Maserati surely needs to do something disruptive. And if the SUV is successful, perhaps the high performance sports car models will experience a resurgence as well. Let's see what happens over the next year or two.

  • No Rights for Digital Media Companies

    At least not yet. But for a while, it looked like the Arena Football League might become the first sport property to sign a significant rights deal with a digital media company such as Google, Amazon and Yahoo. It's certainly a matter of time before one such deal happens since these companies have been actively offering all sorts of content for quite some time now, and sport content is certainly a natural extension of that strategy. Last year, for example, Yahoo offered an NFL game streamed live for free, although the size of the audience was rather disappointing. One wonders if Google would have drawn more viewers than the struggling Yahoos managed, but until the search engine giant tries it's luck we will never know.

    Image result for arena football fans

    Arena Football, an indoor league that launched in 1987, expanded into upper-tier and lower-tier leagues over two decades, but has since shrunk back down to a handful of teams. The list of defunct franchises on Wikipedia is rather extensive indeed! The sport was actually patented by its inventor, who came up with the idea while drinking beer at an indoor soccer game, but that 20-year monopoly expired in 2007. It looks like there aren't any imitators at present, so the sport might be on a permanent decline, and with a shrinking fan base, the league is a great candidate to move from TV  to an online channel. Both CBS and ESPN currently have the rights and have indicated that they will both be on board for the coming season in a bid to see if ratings can improve. After all, it is football in a nation that is football-crazy, but it isn't quite the same thing. For one, the rules are very different and there is an absurd amount of scoring. And looking at the make-up of the fans in the stands, it seems to be more of a game targeted towards young men rather than the much broader age demographic that the NFL and NCAA bring in. The U.S. Army was a primary sponsor for several years if you need proof. One thing is for certain, if ratings don't improve, a shift to the Internet will be imminent. But will a Google audience be any larger than that of ESPN? Highly unlikely.

  • Ambushing, Parasite Marketing, and the Olympic Games

    Defending against "ambush marketing", the act of a non-sponsor making efforts to appear that they are a paid sponsor, has never been easy. This is partly because there are so many ways to do it, using tactics that must fall short of exploiting league, team or event-owned intellectual property, which is illegal. Ambushing isn't illegal, however, and one of the most common ways that competitors like to ambush sponsors is to use players (out of uniform of course) as product/brand endorsers.

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    Among her many other duties, the U.S. Olympic Committee's chief marketer is tasked with preventing ambush marketing which was a lot easier to do up until this year when the International Olympic Committee stopped prohibiting athletes from promoting non-sponsors during the Games. This was done in an effort to balance the interests of the sponsors with those of the athletes who do not get paid to compete and thus must strike while the iron is hot, taking advantage of what is almost sure to be fleeting fame. And it stands for now. So as long as the ambushers don't refer to the Olympics in name and logo then they are free to place as many ads as they like, and there isn't really very much a chief marketer, or an entire international organization for that matter, can do.

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    Somewhat less damaging than ambush marketing is the practice sometimes called "parasite marketing" wherein a brand (the parasite) attaches itself to an unwilling host (the Games), but it isn't quite ambushing because there is no sponsor in the product category or no product category at all. An example would be a farm equipment manufacturer making reference to the Games or using an Olympic participant in its advertising. I don't think there is an Official Farm Equipment Provider of the Olympic Games, but if there is, then I've offered a poor example and apologize. At any rate, both sport properties and paying sponsors dislike ambushers because their efforts tend to dilute the effectiveness of what is often a multi-million marketing proposition. But, hey, that's what competitors do. Parasite marketers are especially irritating to the sport property because they don't pay anything at all and attempt to draw nourishment (in the form of marketing benefits) from the property's role as a most unwilling host. Watch for lots of these rather insidious (and occasionally very creative) marketing strategies in action as the Games draw nearer.