• Twitter's Streaming Deal

    In the midst of all the hype surrounding so many tech companies these days, sometimes we forget that many of these companies are still not meeting expectations and in some cases they are not profitable at all. These brands might be high profile and have lots of users, but decision-makers still haven't figured out how to make enough money and provide the optimal return on investment that their shareholders demand. Twitter is one such organization. With an audience of 320 million-800 million people (depending on how one measures it), Twitter is all the rage; however marketers have struggled to generate sufficient revenue through advertising. In addition, the fairly new company is already starting to lose momentum, as Twitter saw user growth fall for the first time ever. Perhaps the novelty of the somewhat annoying technology is wearing thin. So how can the social media giant turn things around?

    Provide more content, and streaming live NFL games might be just the solution. For its part, the league has decided to license the rights to its Thursday Night Football property and, despite a rather weak audience for last year's Yahoo-streamed game, is nonetheless interested in further Internet experimentation. Clearly Twitter is not Yahoo, and instead of only one game, the service will stream 10 Thursday night games in exchange for $10 million, having beaten out Verizon, Amazon and Facebook for the rights. The games will stream on the Twitter website, through the app, and also will be available inside of tweets. And there will be ads. Pretty amazing stuff.

    Obviously this is a good licensing deal for Twitter since it will probably gain the company millions of new users who will no longer be able to view the games on TV. Consumers will be forced to use Twitter to access the games, which might be good for Twitter but what about for the NFL? Is limiting the audience to those who want to be on Twitter a good idea? Would it be better to offer both a TV as well an online option for Twitter users and other "cord cutters"? The NFL chose Twitter largely because of its ability to create a continuing conversation and its popularity with sports fans. This is a good thing. But will the NFL face backlash from older viewers? All of this remains to be seen, and if this 46 year-old professor is the norm, then this experiment might not be so successful. Personally, I have no intention of joining to see the games despite the fact that they are free. Are there a lot more people who feel like me out there or am I a statistical outlier? Time will tell.

  • Apple's Core Problem

    When Tim Cook took over the reins of Apple from an ailing Steve Jobs several years ago, the iPhone was surging, the new iPad was all the rage, and Apple's wearable technology was in the development stage. Fast forward five years and we see a rather different picture. Apple's quarterly revenue fell for the first time in more than 10 years on the heels of disappointing sales in key product categories, which is putting pressure on the tech giant to develop something new. But can the company still innovate?

    History suggests that innovation is not really what they are good at in the first place. A closer look at the company reveals that Apple has never been adept at developing disruptive, discontinuous innovations, but rather marketers there have focused on making existing innovations much more attractive to consumers. Just about all of its major products were initially based on categories that already existed in some form including the computer, the smartphone, the MP3 player, online music, the tablet, and the smartwatch. And Apple's watch product notwithstanding, the company has been relying far too much on the continued success of the iPhone. But revenue for that product has apparently already peaked, the iPad is already a mature product and might be approaching the decline stage of the product life cycle, and wearable technology in general has been experiencing slow but steady market acceptance.

    Apple is a public company and so it has to meet quarterly shareholder expectations, which means that it must continue to grow. It cannot do this effectively without innovating, and executives have already warned investors that revenue will fall another 13% in the next quarter. Uh oh. It's time for some major changes at Cupertino headquarters, and this might necessitate changes in upper management, specifically at the CEO level. After all that's where the proverbial buck is supposed to stop, and sometimes companies need new blood to energize people and grease the wheels of progress. But at the "cultish" Apple, it has been business as usual for far too long and, although the company is still wildly profitable, investors (as well as an increasing number of consumers) are beginning to lose patience.

  • A Quest for More Dollars

    NBA purists brace yourselves. The National Basketball Association has finally announced that its franchises may now accept advertising on game jerseys. Yep. Just like MLS soccer, WNBA women's basketball, and host of other leagues. So after years of speculation and a "successful" test involving practice and all-star game jerseys, it finally happened. Is this a good thing?

    Like venue naming rights and traditional sponsorships, jersey advertising is a potential revenue stream that spectator sport properties simply cannot ignore. Unlike the WNBA, the league is profitable and doesn't really "need" the revenue, but generating revenue is why they are in business in the first place so who are we to judge? The patches will be relatively small (2.5 x 2.5 inches), and each of the NBA's 30 teams will be responsible for making their own deals. Although selling ads on jerseys is a common practice in low revenue-generating leagues, the "Big Four" have thus far been reticent to lease this valuable real estate to branded advertisers. But it's hard to believe that the other three leagues won't follow the NBA's lead in this new quest for dollars. Consider that the very first venue naming rights deal was in 1972. Prior to the Buffalo Bills deal with Rich Foods, these sorts of sponsorships simply did not exist.

    IFWT_NBA_Jerseys2 - In Flex We Trust

    Indeed, in a spectator sports industry where it seems that just about everything can be sponsored, it's tough to make the case that somehow jerseys should be taboo. As long as the logos aren't too large, this practice will very likely continue, and the fan backlash will likely be short-lived. Hundreds of millions in revenue await!

  • Coke's Identity Crisis

    How can a 100+ year-old brand that is huge and powerful, after all these years, not know who it wants to be? That's because market conditions change. And that's exactly the issue facing Coca-Cola as it struggles to sell fizzy carbonated sodas that fewer and fewer consumers want, and as it wonders where it should next focus its considerable resources. Sure, the company owns some brands outside of the still-ubiquitous fizzy stuff, but growth for the company has nonetheless been elusive of late and its portfolio of products is still inadequately diversified. Coke needs something completely new, and soon. So the latest marketing move, which for now will only involve products sold outside the U.S., would rightly be considered in the vein of "grounds-keeping" rather than something that is "ground-breaking".

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    In an attempt to better unify its products under one brand "look", marketers have decided to take a page from a basic branding textbook and unify its labels. So, rather than a largely black label for Coke Zero and silver label for Diet Coke and a green label for mid-calorie Coca-Cola Life (an exclusively international beverage), a strategy that has been the norm thus far, the bottles will feature a much more uniform look with the iconic font in a field of red as well as a subtle color-coding scheme that gives the line a very neat presentation. Of course this makes us all wonder why such a basic marketing strategy wasn't formulated prior to right now, which is a great mystery considering the resources the company commands. Because, after all, a global brand should have a one-size-fits-all look and message. Right? And isn't Coke sort of THE iconic global brand? 

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    Yet sometimes obvious marketing solutions escape even the most successful of companies. Just look at Blockbuster and Kodak. And why won't this strategy also be implemented in the U.S. How is this market different? Are Americans really that accustomed to the all-red, all-black or all-silver cans? Could a brand "face-lift" such as this one at least provide the company with something good to talk about and perhaps some much-needed positive publicity in the U.S.? Or is it too risky? That a behemoth like Coca-Cola still grapples with such a basic issue should humble all but the most over-confident of marketers. Let's see what they do next. 

  • Harley Abroad

    Times have been tough for the iconic American motorcycle brand over the past 10 years or so, as so many consumers in the U.S. have decided to trade their love of cars in for an even more obsessive love of electronic devices. Alas, it seems that the much-hyped self-driving car can't be delivered soon enough for a growing body of young folks who would rather take an Uber than drive. Maybe that's a good thing. And aging Baby Boomers, it seems, would rather drive nondescript sedans and surf The Net than stylistically cruise Route 66 these days. A driver's license is no longer the right of passage it used to be, and the generations raised on cars and the individual freedom they once represented are dying out. So, if much of the "cool" has been taken out of transportation, what should a brand selling a mature-to-declining product that positions itself on "cool" do for growth?

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    Despite flagging domestic sales )and since Harley-Davidson has decided that it still wants to be in the business of selling premium motorcycles), the place to generate new business is increasingly along the international spectrum. The company still occupies a little over half share of the flat-to-declining U.S. market, but the real growth for Harley is now found in places like Europe, Africa, and the Middle East. 

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    Indeed the savvy marketers at Harley are doubling down on this international strategy with its marketing budget up 50% over last year and plan to open up 200 international dealers through 2020--a steady, yet sure market expansion strategy. Foreign buyers now account for almost 40% of new customers in the company's portfolio and international sales are up 4.5%. For whatever reason, Harley is succeeding abroad while its domestic sales shrink along with the industry's market potential. It seems that these international markets provide virtually unlimited opportunities for a brand that has saturated a U.S. market comprised of people who are increasingly more interested in consuming experience-based services rather than tangible goods. And Harley-Davidson, rather than re-positioning its line or introducing an entirely different mix of products, has smartly re-focused its efforts on places where its brand message might still resonate. After all there are 6.5 billion people outside the U.S. and many of them still want to ride. For some of these places, driver-less vehicles are still a long way off, and Harley-Davidson will be there to meet demand. Kudos to these adaptable marketers.

  • Sponsorship Loses Sizzle

    In a strategic move that sports industry observers rarely see, a sponsor and sponsee have agreed to part ways before their contractual, multi-million dollar partnership was set to expire--one year before the deal was up, to be exact. A sport sponsorship, which is a marketing arrangement between a branded product and a sport property such as a league, team, or event, typically lasts for a period of several years, but the two partners do meet periodically to discuss whether or not things are working out the way everybody expected they would. And unfortunately for the NCAA and Burger King, the relationship has lost its sizzle.

    It's unclear exactly what happened, but for both sides to mutually agree upon termination, it really must not have been working out. One of the best ways to measure the effectiveness of a sport sponsorship is by tracking the percentage of avid and casual fans who recognize that the brand is in fact a sponsor (as opposed to thinking the sponsor of a particular category is a competitor or not knowing who it is at all). It's probable that those Burger King objectives have not been met, and a statement by an NCAA executive from the other side of the partnership was somewhat revealing. He said that retail fast food is a critical category for the league, and that it's a major platform for exposure, and that it expected Burger King to do more in-store consumer engagement as opposed to the major media buys it had focused on. Well, it seems that perhaps the break-up wasn't so two-sided after all. Perhaps the NCAA failed to communicate what it wanted from the deal. Maybe Burger King didn't deliver or simply had what it thought were better ideas on how to activate and leverage the sponsorship. It's commonly thought that sponsors should spend about 1.5 times what they spend of the sponsorship on additional marketing activities to reinforce the relationship in the minds of their audience. Maybe BK failed to do this as well. 

    The NCAA still has Buffalo Wild Wings as a casual dining sponsor and another 16 corporate partners in various sponsorship categories, but the league will certainly be looking for a Burger King competitor to fill the void left by the departed royalty. The NCAA does attract a college-age crowd and it is unlikely that such a lucrative category will remain open for very long. This could be an opportunity for rapidly growing upstart such as Smashburger or Five Guys to bet some serious cash on a major national sport platform. But major sport sponsorships are very expensive, the company must have ample funds left for leveraging, and executives must make heroic efforts to deliver whatever it is that the NCAA expects of them. This might require the deep pockets of a global chain. Let's see what happens.

  • Music's New Growth Stream

    Well, it's not really a new concept to most young people, but many of us over 40 are still transitioning into digital music, and most recently we are beginning to enjoy the streaming variety. While few disagree with the notion that digital music in effect destroyed the traditional revenue model for recorded music, fans of the live music rejoiced as every band still kicking was forced to go on tour. Concerts became a necessity for the professional musician and producers shifted efforts towards live productions of all kinds. Of course all of this live gigging is still happening, but it may begin to subside somewhat, as global revenue from recorded music is finally on the rise after two decades of stagnation.

    Streaming music, which is also an emerging threat to the existing broadcast and satellite radio business models, now represents almost half of all digital music sales at $2.9 billion. And digital music, which is growing rapidly, recently eclipsed sales of physical music products such as CD's for the first time. Streaming is becoming so popular that the entire recorded music category is up for the first time in two decades, growing 3.2% in 2015 and now at $15 billion.

    Grateful Dead - Grateful Dead Photo (728849) - Fanpop

    This is an attractive opportunity for marketers. Not only are many consumers willing to pay for access to the product (CD's, concerts, and current streaming services are useful examples), but the certainty that Streaming will be a major advertising vehicle is difficult to refute. Pay TV presents a useful case study. And like TV, there is a vast reservoir of songs recorded over the years from which to draw and thousands more added each year. And the industry is only beginning to discover the power of recording and distributing live music as an adjunct to the recorded variety. Many niche bands such as the Grateful Dead, Phish, Widespread Panic, String Cheese Incident, and others have delivered these live CD products successfully for many years. Perhaps acts of all kinds can leverage that marketing model profitably in the not-so-distant future. Indeed, music as a money-maker is back in black. And now it's more global than ever. Streaming is here to stay and, like movies, some products will be made for an increasingly global (and much larger) audience. Others will address ever more particular niches. Ironically, the technology enabled by the Internet, while initially quite destructive, has become the primary platform by which it is delivered. For the first time in quite a while, the industry and its consumers seem to be playing the same song.

  • More Trouble With Mother Nature

    Advertisers beware! Making claims such as "natural" and "green" isn't quite as easy as it used to be. Indeed over the past decade, there have been dozens upon dozens of lawsuits filed by all sorts of entities against marketers who are charged with making false claims about the nature of their ingredients for the purposes of competitive advantage. And interestingly, almost all of these companies have agreed to cease and desist instead of going to court. This is a big deal because even the most casual observer has noticed that products positioned in such a manner have been outselling, in rather dramatic fashion, their more "mainstream" counterparts for many, many years. Marketers of "natural" products in particular gross hundreds of billions of dollars annually, appealing to consumer attitudes about personal health and the natural environment at the expense of products that contain ingredients considered to be less-than-benign. This is precisely the problem.

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    First, know that an "organic" ingredient is defined by U.S. law and that the industry is fairly well-regulated. Certified Organic products are not the issue here, as marketers may not call a product organic without it being first certified. It is the largely unregulated and much larger "natural" product category that is stirring up all of the controversy. Other than the fact that there are an assortment of non-government, third-party product certifications available and no enforceable legal definition of natural, the major issue is that many marketers have been somewhat liberal with the use of the term. Why? Natural products are quite profitable. But now the Federal Trade Commission is finally taking exception to this widespread practice and is taking some well-publicized actions against some offenders to send a message to the industry. Natural marketers beware! The FTC has said that it expects products labeled as all-natural contain "no artificial ingredients or chemicals". This might sound reasonable to the layperson, but chemists (and some marketers) know that ingredient processing often alters a compound from its natural state, and thus what might start as natural in the manufacturing process, might not end up as natural. So it's not always an easy call. And without a set definition, the nature of natural is open to interpretation.

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    As has been the case with previous natural litigation, almost all of the companies involved have indicated that they will remove the claims from packaging and advertising, but the FTC will move ahead with a suit against California Naturel, makers of a 2.3-oz. sunscreen that sells for $35. And although a federal definition of natural would be extremely helpful, some of the ingredients that are being used in products marketed as 100% natural are clearly synthetic, and the regulatory agency does require that companies substantiate claims with proof and refrain from making deceptive claims. Perhaps this legal action will be the proverbial straw that breaks the camel's back, and regulators will finally be forced to provide the industry with much-needed guidance in the form of clear labeling and communications rules. Or perhaps they will do nothing and the problem will only get worse.

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    Either way, the industry should have proactively engaged in self-regulation, requiring its association members to comply with the industry standard that had been painstakingly developed over three years by an industry task force (IANPP 2003-2005) led by yours truly. Unfortunately this approach failed to gain much momentum amidst all of the money being made. The industry can still adopt this approach if it wants to, although it might be a little late in the game for such action. But since it continues to choose the path of least resistance (and maximum profits), the natural products industry must now face whatever music that federal regulators decide to play. If things get much worse, marketers of natural products might end up hearing something from Widespread Panic. Hopefully from the band's earlier work...

  • Retailers Upping Their Apps

    A new phenomenon called "snacking" is sweeping the retail segment off its collective feet, as shoppers begin to shift their buying habits once again. Instead of placing one or more large orders on a computer and placing them in a virtual "shopping cart", many consumers are also making much smaller purchases in ever shorter and more frequent bursts throughout the day. In essence they are snacking. Why? Smartphones make it all possible, of course.

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    With sales of mobile devices up over 50% in the U.S. last year and advertising making its rapid migration from more traditional media to a one-to-one, direct marketing model, the so-called "appification" of retailing is sure to keep marketers up at late at night for years to come. Some experts say the retailers that are adapting successfully to this shift in consumer behavior are training their customers to think of their 'phones as a sort of 24-7 impulse aisle without appearing to be invasive. A tough balancing act indeed.

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    Although stores are busy working on their own apps, it may be the technology that effectively aggregates purchases of all kinds *(from multiple sources) onto one platform that show the most promise since eventual consumer "app overload" is a very real and looming probability. And both Wal-Mart and Amazon have taught us much about the consumers desire for one-stop shopping. So marketers must remain very vigilant, constantly scanning the technological environment for app-based breakthroughs, working on R&D projects of their own, and monitoring changing attitudes as consumers adapt to the changing retail landscape. Making multiple purchases from multiple retailers is still largely technologically unfeasible, but it is likely that a consumer desire for simplification in the buying process may disrupt the marketplace much in the same way that e-commerce initially did almost 20 years ago. Retailers adapted to that digital reality and it appears that yet another paradigm shift is already here.

  • Another Gamble Vegas Will Win

    Well, granted it was a not-so-new (and recently reunited) Guns 'N Roses headlining the grand opening weekend, but nevertheless the brand new T-Mobile Arena finally opened this weekend in Las Vegas to much fanfare and high expectations for the future. But don't judge this young arena based on kicking things off with a washed-up band. Lots of people have been waiting for Slash and that other guy to get back together, and the arena has already booked 70 acts for the year. Very promising indeed.

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    It's true that Las Vegas has lacked a truly state-of-the art arena for many years, and this is largely due to the lack of major professional sports in that gambling mecca. That will probably change soon with a probable NHL expansion into the market (it has been playing preseason games there for 20 years); but it is certain that the arena, much like the Sprint Center in Kansas City, can be profitable without the income base that major sport properties typically provide. After all, we all know that there is quite a bit of non-sport entertainment in Sin City. So anew arena has been built in hopes that they will come.

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    As a result of this move, existing facilities such as the MGM Grand will lose lots of business and consequently, The Grand is in the midst of a major $100 million remodeling project to upgrade the venue. The famous home of so many concerts and boxing matches over the years probably can't compete directly with T-Mobile and is instead opting for a more intimate neighborhood experience, which will probably involve smaller acts and maybe an older crowd. This should work out very nicely. The city hosts many millions of visitors annually and is home to an increasingly large number of people, most of whom are refugees from California seeking lower taxes and a growing economy. Clearly the market is ready for a state-of-the-art arena, and existing venues will be upping their game as well. Sure, this sort of things is always a gamble, but this is a game that the House is set to win. And all of this is great news for the residents and visitors of Las Vegas with more swanky, new venues on the horizon.

  • Giving Up On Print Ads

    In an unprecedented move by a major magazine publisher, the producers of Prevention, Men's Health and Runner's World magazines have decided to no longer accept advertising for the print versions of its publications. That's right, no advertising. The publisher (a second generation heiress) not only inherited a magazine company (Rodale) but also a rapidly shifting world order in print media and has decided on a radically different sort of revenue model for the future. What does such a model look like?

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    Migrating content from print online is one thing. Everyone is in on that act since that's where an increasing number of eyeballs are headed. But publications that have dumped their print models for online pure plays successfully have been few and far between, and so a multi-channel model is preferred by most strategists in the magazine biz. But Rodale Press will no longer take ads, raise its subscription price by around 25%, drop the size of the publication to 96 pages from 140, settle on 2/3 fewer subscribers (500,000 instead of 1.5 million for Prevention), and lay off 13 ad salespeople, but will continue to accept ads for the online medium. Wow! Those are some serious changes, and the entire industry will be waiting to see whether or not such a model will be profitable. Can't Rodale simply accept fewer ads instead of eschewing them all together? Will consumers accept the higher price point? Can a leaner, meaner operation survive without ad revenue? Is this the beginning of the end for the print versions of these publications? We shall soon see.

  • White Wave Goes Bananas

    WhiteWave Foods, makers of milk-substitute product Silk and pioneers of the "soy revolution", has seen the writing on the wall before. A number of health and environmental concerns have driven many consumers to seek substitutes to the myriad of dairy-based products that we consume. And for a while, soy was the go-to ingredient until the category began experiencing publicity issues of its own. Soy milk consumption is down almost 14% from last year. Smart, and probably mildly freaked-out, marketers at the firm quickly moved to expand the company's product offering to meet this societal shift in preferences and have experienced much success with lots of help from almonds, cashews, and coconuts under the Silk moniker (a non-soy milk substitute category growing at 4.5%). Competitors have entered the fray and have experienced success as well. Dairy alternatives are now rather plentiful indeed, and the dairy category itself is down almost 8% from last year. Things are changing. So what's next for White Wave?

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    Why, bananas of course! New product development is an imperative for branded product marketers since all products have life cycles; and marketers must continue to place innovations of all stripes in the market to replace those that inevitably decline and exit the market. Achieving equilibrium is one of the greatest challenges a brand manager of multiple product sku's can face. The folks at White Wave, always on top of the latest trend, are now placing bets on Sir Bananas, a milk derived from the nutrient-rich tropical fruit that is now being test-marketed in several states including Colorado, Michigan and Ohio. It looks like it's for kids but the product might also attract a larger customer base among a more mature age demographic. And, driven by work done at the company's new multi-million dollar R&D firm near Denver, the product does contain 2% milk, but the remainder of the formula is basically bananas. It's more like a smoothie than like a glass of milk, and if the test proves successful, one would expect that Sir Bananas will take its rightful place in White Wave's widely-distributed product mix and perhaps in the homes of a large number of Americans.

  • Automation Angst

    Automation is a threat to our future. Robots will soon replace workers in most job categories. There will be legions of unemployed people with inadequate skill sets as an ever-increasing population deals with a need for fewer jobs. Some of these predictions are rather dire. Whatever will we do? Well, it certainly won't be as bad as some believe, since the U.S. weathered the shift from agriculture to manufacturing quite nicely, and our society remains rich despite the more recent shift from a manufacturing to a service-based economy. But the alarm has certainly been sounded for employment prospects in dozens of industries, and none might be more vulnerable to the ravages of "creative destruction" than food service. Certainly robot bartenders and cooks, although not immune to this creative destruction, are not about to be used on a large scale any time soon, but the relatively cozy, schedule-flexible, largely tax-free world of the server is ripe for destruction. Why? 

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    For one, these employees are getting expensive. Increased burdens on employers include, but are not limited to, increasing health care costs and employee taxes, the pressure to pay benefits, and a rapidly-rising minimum wage (as well as the gradual elimination of the lower-than-minimum "tipped wage) in many places across the country. And we know from basic economics that when a resource becomes prohibitively expensive, a business (or consumer for that matter) will actively seek a substitute. In this case it is the server that is the most expendable since the technology to replace much of this function is now relatively cheap and is already being employed on a limited basis in many chains. The tablet-based (and soon to be app-based) technology is not only inexpensive for the owner and easy for the consumer to use, most of the early feedback has been very positive, especially among the tech-savvy Millennial generation. So an age cohort that loves the freedom and relatively good living that being a server can offer, also appreciates better service and a technology-friendly model. Uh oh. 

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    With larger and larger retail chains adopting this labor-saving, cost-reducing, and consumer satisfaction-enhancing improvement to the dining experience, it's hard to imagine that the existing labor-intensive world of casual dining will last for very much longer. One need only look at the banking industry (now devoid of both tellers and increasingly devoid of brick-and-mortar locations) as well as the airline industry, whose customers now check-in via email and a series of kiosks, for clues as to how casual dining might soon look. Millions of jobs will indeed be destroyed and the practice of tipping may eventually fade as well, resulting in a far superior experience for the fast food, fast casual, and casual dining customer (the vast majority) as well as a need for millions of workers to acquire new skill sets. It does appear that a deadly combination of lower costs as well as as an enhanced customer experience will move most operators towards automation just as safety and other large benefits is moving the transportation industry, among many others, in the same direction. Technological shifts often drive social changes as well as product innovation, but it also can have some rather uncomfortable side effects. Adjusting to these changes is a major challenge for marketers everywhere.

  • A Natural Contradiction

    When people ask me why I closed Green Marketing, Inc. after 16 great years, I remind them that I have been in the industry since the early 1990's and have seen it grow from a tiny cottage industry into a massive group of goods and services that permeate almost every product category. So it's been a good ride, but it's also time for a change. Sustainability is now a fabric of just about every business in every industry, so the specialized expertise of a green marketing consultant is much more easily found (and much cheaper) than it used to be. The Internet is surely to blame! But being greener and more natural is simply something that most consumers are beginning to expect as a matter of course and not necessarily something special that they are seeking in a product. This is a dynamic that few in the industry could have anticipated.

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    But the fact that these products are now available in so many places and at lower price points than ever before means that there are more marketers who wish to benefit from positioning products as "natural" even though there might be one or two ingredients whose nature is somewhat less than "natural". And since the government provides little guidance here, there are more and more cases being settled on the judicial side of things. In fact, there have been many dozens cases that have been settled without any judicial precedent set for future cases, but in all cases the marketer has removed the offending marketing tactic. In all but a few cases, the offenders have been large companies making large batches of products rather than the smaller industry players, and now it is the entire category of natural food and cosmetic brands that joins the makers of herbs, vitamins and other nutritional supplements as product categories that are under a great deal of legal scrutiny. You can count me out (but in all fairness I have opened up "Duber-Smith Consulting", a much more broadly-targeted strategic service firm that may still work with some natural, organic and green companies).

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    Of course there are a number of voluntary third-party certifications available such as the Natural Products Association's seal but very few companies opt for these. For certain there has been an ongoing effort in the industry to get the FDA to define the term once and for all (and your proud author was the initial leader of this effort back in 2003 that resulted in the above NPA certification), but government action still seems to be several years away. It might even take an Act of Congress to change things as was the case for our Certified Organic regulations. So we will have to wait to see whether a marketer can use the term natural a food product with high fructose corn syrup instead of sugar, or a shampoo with sodium/ammonium laureth/lauryl sulfate in it, or even a toothpaste with sodium fluoride in it. Without clear federal rules and in an age where consumers demand increasing corporate transparency, the industry just gets more and more opaque.

  • Unclean Marketing?

    At least that is what the Federal Trade Commission is alleging with its recent complaint against the troubled German car-maker that its advertising has falsely promoted its diesel vehicles as environmentally-friendly. This wonderful news comes on the heels of the well-publicized scandal involving the fraudulent manipulation of emissions testing software by company engineers so that vehicles could pass emissions tests as well as provide support for environmental claims. So this recent complaint isn't about the software fraud but the communication of bogus green benefits. It has not been a good year thus far for the marketers at Volkswagen.

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    It's easy to see this as sort of a "witch hunt", but a closer look reveals that the federal government, empowered by it's newly updated Green Guidelines for marketers, is cracking down on many marketers who make sweeping environmental claims without substantiation. And as for those who manipulate data in order to make claims, the penalties will probably be greater. Volkswagen ads have included such statements such as "Green has never felt so right", "Diesel, it's no longer a dirty word", and "Clean as a whistle". Not exactly huge exaggerations, but ones that nevertheless may not sit well with the federal court in San Francisco which is consolidating all of the existing litigation against the company.

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    Things aren't quite as bad for the brand as they have been for Chipotle, another company experiencing a major bout of bad publicity, but additional negative publicity could result in further erosion of the brand equity Volkswagen has built over so many years as well as lost market share, revenue and profits that go with it. How can the brand recover from all of this? What should marketers do? Will consumers eventually forget that it ever happened? How much do they really care right now? These are interesting questions, but we do know for certain that the marketers at Volkswagen will have many challenges ahead.

  • An Electrifying Product Preview

    Amid much media fanfare, electric car maker and pet project of entrepreneur Elon Musk, Tesla Motors previewed its long-awaited Model 3, the first affordable vehicle offered by the luxury brand. Not only does this mean that the company can no longer be considered a pure luxury brand (Mercedes and others sold out decades ago), it also means that Tesla has expanded its market potential (those with the ability and desire to buy the product) exponentially by doing so. 

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    Up until now Tesla has appealed to a small group of wealthy eco-supporters, high tech junkies, and assorted enthusiasts, since its cars often run between $80-100k. The company has only sold about 110,000 total units since 2008, a number that if not for the publicity generated by the creative and popular Mr. Musk, would not be worthy of mention in such a huge industry; but this could all change with the Model 3, which starts at $35,000. A multi-city preview last week resulted in 180,000 pre-orders for the product, which may not even be available for a couple of years, a number that clearly dwarfs what the company has managed to sell thus far. This is good news for Tesla and it is also a great example of what can happen when a brand expands its market segment reach. Even Mr. Musk has admitted that meeting the unanticipated demand generated by the preview might be a challenge. Unfortunately, Tesla has already demonstrated that it sometimes has trouble keeping up with demand (as thin as it currently is). Although is it possible that this all a "scarcity" marketing tactic cleverly employed by a billionaire and savvy marketer who also has plenty of time and patience. Only Mr. Musk knows for certain.

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    Electric vehicles have been around for many decades, and there are already some relatively inexpensive low-priced electric models on the market, not to mention those offered in the relatively successful hybrid category. And a relative few electric products have been sold thus far, suggesting that American drivers do not have much of an appetite for electric vehicles, or at least the ones currently on the market. This could eventually change as these vehicles continue to improve in quality and drop in price. But for now, changing hearts and minds could prove daunting even for the talented Mr. Musk. Will the strenght of the premium Tesla brand help this struggling product category to finally catch on with a broader base of consumers? Tesla has yet to earn a profit and eventually it will have to demonstrate to investors, who may not be as patient as Mr. Musk, that it is capable of doing so. The Model 3 is the company's best bet.

  • Lululemon Targets "YogaMan"

    Lululemon Athletica, the brand leader in the yoga-wear market, has built its highly successful foundation on targeting yoga-practicing women. And, despite a fairly recent supply chain hiccup coupled with a statement made by the CEO that insulted some its "heavier" customers, the road for the Canadian company has been relatively clear. But all products have a life cycle and, once a product penetrates enough of a market, it's harder to demonstrate the growth that shareholders are looking for. At $2.1 billion in annual revenue, the brand expects to get to $4 billion by 2020 and must do everything in its power to avoid progressing to the maturity stage of its life cycle from its current high growth phase. Brands have life cycles just as the products that comprise the brands do, but brand life cycles are much, much longer than products. The overall Tide brand, for example, will outlast any particular individual unit within the brand.

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    For their part, brand managers have the luxury of adding products to product lines and can do so successfully for many decades. In fact they are actually "leveraging" the equity the brand has built over time through brand extension. Brand extension tends to increase an individual product's chances of success since the brand has already developed an image and hopefully lots of equity. So how does a marketer grow revenue if the market she has been addressing is becoming saturated? One way is to introduce new products to that particular market a strategy appropriately called "product development". Another strategy is to sell the same products to new markets, a "market development" strategy that is not applicable to most categories of apparel. Age and gender, for example, have much to do with what we wear. And one can only go to these proverbial wells so many times, so eventually a "diversification" strategy must be employed wherein new products are developed to appeal to new markets. 

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    As such, our friends at Lululemon have added YogaMan (they don't really call him that) to the brand's target audience, a group that now comprises 10 million of the 37 million-person U.S. yoga market, almost double the number from a few years ago. It's an obvious move since men comprise a significant and growing part of the yoga market, but unifying both men's and women's products (as well as those for children) under one brand can be risky. Gender is a major demographic, and for many product categories the two groups of people prefer different sets of features and benefits as well as brands that have gender-tainted personalities. We are human after all. This is why marketers often opt to tailor different brands to different genders. Is the world of yoga ready for a Lululemon brand intended for everyone?  Will men respond to a brand previously intended for women? Will women want to share their brand with men? Does this gender stuff really matter that much anymore? An experiment like this can tell us much about where we are and where we are going as a society. Let's see what happens.

  • The Beef Is Back

    After decades of many Americans opting for healthier substitutes, beef is making a comeback. It's been ten years since the category last demonstrated any positive growth, a short "low-carb" fad that was characterized by a massive, albeit brief, resurgence of meat eating in the name of weight loss. But what is driving the current trend?

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    Cheaper beef prices are driving much of the shift. Drought conditions several years ago caused ranchers to cut back on beef production, culling herds to meet the new conditions in the natural environment. Of course, this caused prices to rise, encouraging even more consumers to switch to chicken, turkey, fish, and vegetable-based substitutes. More recently, as ranchers have added cattle, prices have fallen, encouraging consumers and large restaurant chains like Chili's to embrace more beef-based dishes. In addition, popular diets such as the Paleolithic and Auto Immune Protocol programs continue to keep beef in the national nutritional conversation.

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    But even with these lower costs and persisting diets, beef consumption remains below historic levels. Indeed the average Americans now consumes "only" 54.3 pounds of beef per year, well under the 94.3 pounds of the stuff we ate back in 1976. Chicken has outpaced beef for the past 25 years, and consumers are expected to consume even larger amounts of chicken, turkey and pork this year. But beef is back for now, and many of us love the low prices and the discounts that come with oversupply in the market. Yet when beef prices rise again, and they will, consumption will surely drop once again. The ancient laws of supply and demand are still in play, and marketers must understand how these changing economic conditions and consumer behaviors influence marketing strategy. Beef eaters rejoice!. For now.