• Some Teens Eschew Social Media

    It is hard to believe, but there are actually teenagers who are not on social media. At all. No social media. Of course, this group represents a minority as a 2015 Pew research report revealed that 92% of Americans between the ages of 13 and 17 go online daily and 24% say that they are on their devices "almost constantly".  But not being online and using social media are not the same things.

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    So teens are online every day, but it is interesting that only 71% use Facebook, 50% are on Instagram, and 41% are on Snapchat. These numbers seem rather small to me, and we know that most social media users use multiple platforms. Could this mean that around 30% of teens aren't actually on social media at all? Has this trend finally slowed among the young and perennially bored? A previous report found that 81% of teens are on social media. Is this number falling? This calls for yet another study so that we can begin to recognize any significant trends that might exist, and it would be helpful if the next survey outright identified the number people who don't use social media at all. The Pew study did find that those eschewing social media are not in fact technophobes, but do have mobile devices, use the Internet, and text with frequency. These kids just don't feel the need to broadcast their behaviors and attitudes nor hear about those of their friends. Could this be the beginning of a cultural shift? Ongoing research is needed.

  • Shrinking Mussels in the Gulf

    In yet another example of what happens when too many people are using too few resources, a UC Irvine study has revealed that the Gulf of Maine's population of mussels, at one time very robust, has fallen dramatically over the past several decades. This drop of over 40% is almost certainly due to over-harvesting but warmer waters might also be playing a part; and a similar situation is still playing out in and around Cape Cod as very restrictive catch limits for the decimated cod population are hopefully increasing numbers as is their intent. The area has been receiving federal disaster relief funds to help compensate for the economic losses involved.

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    The Gulf is a vast area from Massachusetts to Canada and includes Cape Cod, so it is almost certain that the price of mussels will rise sharply when imminent government regulations are enacted. Local economies will be strained during this period of increased regulation, but will likely rebound once the restrictions are lifted down the road.  It all depends on how long it takes for the Blue mussel population to sufficiently recover. I wonder how the cod are doing.

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    And so consumers should expect to pay much more for their steamed mussels (if they can get them at all) in the not-so-distant future as the costs of limiting supply are felt throughout the supply chain and are ultimately passed onto consumers. Demand for mussels then might fall due to the price increase as consumers switch to substitutes. But once supply is back to normal, the price should fall once again and demand should return back to "normal". Indeed lovers of steamed Blue mussels dipped in melted butter should take advantage of the relatively low prices while they can. They might not last long.

  • Tesla: All Hat and No Cattle

    Tesla is viewed by many in the general public as an innovative company and its founder and CEO Elon Musk as a genius of the first order. In the eyes of many, he is a pioneer bent on saving the world from the ravages of global warming and other environmental problems. But a fairer interpretation might be that the company exists only because of billions in government subsidies, has never turned a profit, and has failed to deliver on more than 20 of Mr. Musk's projections over the past five years. And since marketing is predicated on being able to deliver on brand promises (in many cases it's best to under-promise and over-deliver), one wonders why so many are enamored with this maker of electric cars.

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    Is it innovative? Putting an electric battery into a Maserati and selling it for $90,000 to wealthy members of the eco-elite does not strike this marketer as particularly innovative. Although the new battery lasts for over 300 miles, which is certainly an improvement over previous iterations. Is it "Green"? Electric power is still mostly derived from fossil fuels such as natural gas and coal and the car's battery is made up of some incredibly non-recyclable and toxic materials, so no the car is not really very "green" by even the most liberal definition. The fact of the matter is that a major component of this brand is hype (which is not a sustainable strategy over the long haul) and the company is headed by a highly charismatic marketer of the first order who, despite a consistent failure to deliver on brand promises, continues to attract investors and fans. Months ago, thousands of people around the country lined to to pre-order a lower-end version of the electric Tesla car despite the company's history of delays. There seems to be no memory whatsoever of past actions among this loyal following. It reminds me a bit of Apple "Fanboys" and some of the the more fervent Chipotle customers, who also seem unable or unwilling to look too far past the marketing. Sometimes we see only what we want to see. Remember that Mr. Musk's latest move is to convince everyone to let him merge his money-losing car company with his money-losing and government-subsidy dependent solar company under the premise that such a merger would somehow product a profitable company and a "greener world". One fund investor defended his $300 million investment in the company by saying, "This guy wants to save the world. The odds are very favorable that we will make a lot of money on this investment" Hmm...The market for electric cars, which is less than 1%, would have to grow considerably for this scenario to play out. 

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    In all fairness and although it has had some problems, it does appear that Tesla does make a high quality vehicle, so perhaps it would be more advantageous in the future to focus marketing efforts on quality rather than dubious claims about "innovation" (Tesla is not doing anything other car companies aren't also doing at present) and even more dubious claims about saving the natural environment (the government is really cracking down on these sorts of claims these days). An electric car is neither innovative nor good for the environment, and once Tesla fails to deliver on its latest wild projection, one wonders whether or not a gullible public (consumers, investors and the media) will be willing to look past the "puffery" and marketing hype, think a bit more critically, and ask the bulletproof Mr. Musk some tough questions about what Tesla is really all about. In the Old West, a common expression for such a person was "all hat, no cattle", and that particular expression I think best describes the huge gap between a brand promise and what marketers actually deliver.

  • Internet Investment Pays For Best Buy

    For the past several years, Best Buy has been at the losing end of the battle for market share in the consumer tech product segment. Unable to match online prices, marketers have had great difficulty convincing people to pay more in-store for the same product they can get online. Indeed many consumers would view/sample the goods in-store, perhaps getting some additional information from a rep, and then go home and order it at Amazon, a practice so common it has a name-- "show rooming".

    But now Best Buy is reaping financial benefits from a recent push to improve its website and mobile app, enhancing the ordering experience and matching prices. Obviously brick-and-mortar formats have higher costs than online formats, and many retailers have struggled to integrate the two. After all, consumers want a seamless experience and now expect the same products that are in the store to also be offered online. As we all know Amazon was in the right place at the right time when the Internet took off, and they have made many excellent marketing moves over the years. But even this "pure-play" retailer is now in the process of opening physical locations as competitors like Best Buy hone their online marketing skills.

    For the second straight quarter, the company posted a 25% increase in online revenue while it closes under-performing locations and continues to improve its online shopping presence. The lesson? A multi-channel approach to retailing has become an imperative for major contemporary retailers. What is offered in the store must also be offered online, and it seems that just about every major retailer is reducing its physical footprint as consumer behavior becomes more complex. And indeed it's a good idea for online players to think about gaining physical distribution as the online channel becomes more cluttered and more competitive. Multi-channel marketing, at its optimum level, should be a two way street. And right now, Best Buy is offering a great model for others to follow. Let's see if marketers there can keep up the good work.

  • All Olympics, All the Time

    One would think that after what from a sports marketing perspective was perhaps the worst Olympics in recent memory, the folks that want to make money from the bi-annual event would sit back for a while and let things calm down a bit. A relative few attended the events themselves and TV viewership was way down from previous years. Combine that with bad publicity surrounding large-scale Russian cheating, the Zika virus, incidences of poor sportsmanship, the antics of Ryan Lochte and Hope Solo, as well as the environmental, economic, and social quagmire that has become Brazil, and you have a recipe for potential disaster. Indeed, it was good that nothing really bad happened over there, and many experts expect there to be some major Olympic changes going forward.

    This is why it is so interesting that investors picked such a seemingly inopportune time to announce the launch of the Olympic Channel, an all-digital, 24-7 mix of live sports, documentaries, archive footage, news and highlights. Think ESPN for Olympic sports. With the Winter Olympics only two years away and with the current Olympic mood so low, would it have made more sense for organizers to have waited to announce the new product? Would it have been more effective to use the new channel to hype the next Olympics a bit closer to the event? Would it have been better to introduce the channel prior to Rio in the first place? It would seem so. Is this even a viable concept? With the choices now available in the world of spectator sports, will people care enough about swimming, gymnastics, curling, rowing, or bobsledding when the Olympics aren't actually happening?

    It is also interesting that they chose an all-digital format (which has a very fragmented audience) and decided to eschew traditional television. With the vast majority of people who watch Olympic events watching on television devices rather than mobile ones, it seems like an ill-advised strategy. Why not do both? NBC has plenty of extra bandwidth to go around. Well, investors in the $450 million venture are nonetheless committed to the idea that there is enough demand for Olympic-themed content to air it throughout the year, that people will watch on the Internet rather than TV, and that they need to launch this thing right now. It might be a rather turbulent start at the very least, and the long term viability of this product idea is certainly in question. It will be very interesting to see what happens here.

  • London: Now Open All Night

    Much has been passed down from our parents about all of the horrible things that are supposed to happen "after midnight", but not much is discussed about how much revenue is generated from the demand for 24-7 services. In London, what is described as "late-night work and play" generates an estimated 26.3 billion pounds annually and represents a full 8% of London's GDP. This is really staggering when you consider that not too long ago, lots of stuff was closed on Sundays, let alone all of the services that are now open 24 hours. This is a relatively new phenomenon. But without a public transportation infrastructure to support it, the growth of the late-night economy could cause more problems than not.

    And so London has now joined other huge metropolitan areas such as New York and Berlin in offering 24-hour "Tube" (subway) services to meet the growing demand within the late-night culture. The simple act of making The Tube a 24 hour service on the weekend is expected to create 2,000 jobs right off the bat and  boost the city's economy by $471 million. Once this additional transportation is available, businesses will be encouraged to stay open later. And it isn't just the bar business that expects top gain from this move, as even retail giant Tesco said it plans to test a new 24-hour concept in seven stores along two of the major rail lines.

    But crime and safety concerns are omnipresent, and the current late-night edition of the Tube, as you can probably imagine, has already developed a reputation for carrying  far too many drunken revelers. Perhaps spreading these folks out over a longer  time period will help alleviate some of the problems, but it is certain that the police will have to have an expanded presence to compensate for the added volume. Apparently, this is already in the master plan, and since city officials are optimistically predicting that this under-served market can eventually represent more than 30 billion pounds annually, there should be ample funding to enhance security. Let's see what happens.

  • Movie Flops Getting Tougher To Ignore

    Hollywood is having major problems with new product development. For most films, the life cycle is short, but for those fit enough to be developed into long-standing franchises replete with sequels, video games, toys, and more, the product life cycle is far longer. Readers of this column know that the past several years have been rather bad in terms of the number of successful films versus the number of big budget "flops". Also, it appears that sequels now represent the majority of successful films, and that animation is currently the only area that consumers are willing to risk their money on original ideas. This is not a healthy situation.

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    But now even most of the movie franchises are doing poorly. Consider that at this time last year there were eight major flops, while this year there are 15. The industry has gone to the same proverbial wells many times over the last several years, and now despite decent opening weekends, many films drop off dramatically as people learn rapidly through social media (and review sites such as Rotten Tomatoes) that the movies are indeed poorly made. Re-hashed ideas, poor writing, bad acting, over-reliance on gimmicks, too many recycled superheroes, too many recycled actors, poorly-done re-boots, and so many other problems continue to plague an industry that has been rather flat for quite some time.

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    The good news for movie fans who are fed up with the status quo is that 15 flops are far too many, and production companies will have to begin taking greater care in the selection and development of major motion pictures. Not even a push towards higher end concessions and more comfortable seating coupled with a growing and less discerning global audience can save the industry from itself if producers are unable to make the quality films that people will pay to see. Average box office return is down 32%. The industry must do something about it.

  • Rio Sponsor Activation Subdued

    To go along with the lack of ticket sales and sharply decreased viewership, Olympic sponsors in Rio de Janiero have rather subdued with their sponsorship activation at the event. One long-time IOC adviser has called it "a very conservative games".  The streets aren't packed with buses wrapped in advertisements and any signage you do see is lost in the sprawling, and rather dangerous, metropolis.

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    Rather than being concentrated in a single Olympic Village, as events were in 2012 London, the events are clustered in several areas (only 45% in the Olympic Park) and in many places you can't tell the Games are even happening. Combine this with a collapsed local economy and an overall lack of visitors and it's difficult to see how sponsors can get the same value out of these games that they did in London. But it's important to remember that much of the activation that surround sponsorship spectator sport events doesn't necessarily happen at the event but rather through TV, radio, print, outdoor, and internet advertising, in-store promotions, and other mediums in markets that are important to the brand. It's clear that sponsors, who made their marketing deals long before the games began, finally became resigned to the fact that on-site promotion for these particular games was going to be a unique challenge. Major sponsors have been returning unused tickets even for hugely popular events like the swimming finals for the first time in recent memory, which suggests that these marketers aren't optimizing opportunities to entertain clients and do business.

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    All in all, these Olympic games have been fraught with difficulties of every type. It is clear that Brazil lacks the infrastructure to hold such an event and with its current political, social, economic and environmental challenges, we should consider ourselves fortunate if nothing horrible happens. For sure, there will be changes to the site selection process, and it's possible that many sponsorships for the 2020 Tokyo Games might be a bit less expensive than they were this time around considering the inadequate opportunities they have had to engage with a sufficiently large audience. Organizers will certainly have to placate a disappointed and skeptical sponsor and advertiser base. 

  • Fighting Fish Fraud

    On the heels of the rather shocking results of a study conducted several months ago that revealed the "not-so-farm-to-table" nature of misrepresented foods served in many restaurants and small stores (a previous post), an even larger study conducted by the environmental group Oceana revealed that one out of three fish in nearly 700 stores across 21 states was mislabeled.  While some of this is almost certainly due to human error, much of it is probably deliberately mislabeled. And that's fraud. It turns out that once fish are filleted, it can be very difficult for even experts to tell them apart.

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    While this large-scale, industry-wide deception is indeed shocking, what really makes all of this interesting is that 85% of the mislabeled fish was correctly labeled at the last point of wholesale distribution. Thus it is primarily the retailers and restaurants who are responsible for much of the fraud, and many of these are the small businesses that many consumers tend to trust more than they do the corporate behemoths. Much of this distrust is misplaced. Larger companies have to be much more accountable since regulation is focused on them, and they therefore have far more efficient chain of custody systems that help insure the integrity of the product than do smaller "mom and pop" operations.  Does this mean that larger companies are more trustworthy than smaller ones? In many cases the answer is "yes". Regulation at the retail level, especially when dealing with non-chain retailers and restaurants, is very difficult if not downright impossible, and smaller players have many incentives to deceive consumers in the name of the bottom line. Many of these businesses barely scrape by.

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    So the buyer must beware and ultimately, she must take a larger role in protecting herself. Just as is the case in the natural and organic products industry, third-party certifications are becoming increasingly important to savvy buyers. Two such certifications, the Marine Stewardship Council and Global Aquaculture Alliance, are useful. Experts also recommend that consumers "Buy American", as the U.S. is the world leader in fishery management and sustainability. China? Not so much. Also, when you are out a restaurant (where 70% of all seafood in the U.S. is consumed) order fish that is whole rather than filleted whenever possible. the most commonly substituted fish are snapper and grouper, so avoiding those fish can be an effective strategy. In general, consumers are encouraged to ask questions and if they can't get informed answers about what the fish is, where its from, etc., it might be best to just order the burger.

  • Rio Reveals Consumer Shift

    The Rio Olympic Games are certainly the most popular thing on TV right now, but viewership on traditional television devices has been nowhere near where it was for the 2012 Summer Games in London and has been slightly less than Beijing in 2008. This should be bad news for the advertisers, who pay for much of the programming, and were promised a larger audience by NBC. But is it really so bad?

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    To be sure, the audience, at 33 million viewers and down 15.5% from London, is still the best August advertising option available in terms of total audience, but all of this does reflect how changing media habits are influencing the world of advertising. Eyeballs are shifting online, resulting in a much more fragmented audience, which ultimately makes it more difficult for advertisers to reach everyone at once. And reaching a large audience at once is kind of the point of marketing through a major sporting event, which always involves spending big dollars for significant reach.

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    Despite the drop, NBC has made an extra $30 million in ad sales, and some advertisers report that they are happy with the results so far. In the future, one would expect that NBC would make a more concerted effort to integrate ads across all programming to give advertisers the audience they have been promised. After all they do control the distribution rights. And a handful of advertisers might have to pony up even more cash to enjoy this expanded presence across multiple media platforms, or risk losing the spots to competitors and reducing their reach. For its part, the Internet continues its path of creative destruction while both content providers and the advertisers that pay for the content must continue to evolve and meet these changing environmental conditions.

  • Water To Eclipse Soda in 2016

    When a particular product category is on the rise and another category is on the decline, it is inevitable that the two shall eventually meet. Indeed this is just what is happening right now as bottled water finally becomes more popular than soda in the United States. But don't feel too sorry for the soda providers, who have enjoyed success for several generations, as it turns out that Coca-Cola, Pepsi, and Dr. Pepper are already major players in the bottled water industry.

    There is no doubt that these savvy soda marketers years ago saw that the bottled water category would be more than just a passing fad, and so they invested in developing products to address the emerging need in the marketplace, successfully leveraging existing distribution advantages to get these products front and center on store shelves. Increasing water contamination issues, taste, the rise of water-based functional beverages, technological advancements, calorie and other health concerns, and other factors have all converged to encourage Americans to consume 27.4 billion gallons of the clear stuff versus 26.2 billion gallons of the fizzy stuff in 2016.

    Per capita soda consumption is at a 30-year low and there are no signs that this trend will be reversed, but a scenario involving reversal is always a possibility. When a product enters the decline stage of the Product Life Cycle, marketers almost always reduce the marketing budget dramatically so that resources can be more efficiently diverted towards products that are still in the three earlier stages. It remains to be seen whether or not marketers at the Big Three will follow historical convention because of the sheer visibility of the product category. The stuff is simply everywhere, and so perhaps marketers believe that they can make some moves to change things around. Perhaps some exciting new soda product can become wildly successful and stimulate a reversal of the current trend. Maybe folks are just tired of the same old flavors. One thing is for certain and that is the sheer availability of substitutes will make it difficult for even the largest of companies to regain that lost market share.

  • Bison Business Begins to Burgeon

    The hype probably began with Ted Turner and his massive Montana land holdings and rather vast herds of bison. As the herds grew, Mr. Turner doubled down on efforts to shape the nation's tastes and increase demand for this sweeter, leaner alternative to beef so he could sell more bison and help save the species in the process. He even went so far as to open Ted's Montana Grill in 2002, which is not only a bison bonanza if there ever was one, but also serves as a great example of vertical integration along the supply chain. He was joined by other ranchers, specialty stores, and a host of restaurants.

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    Right around the time of his large-scale introduction, the industry suffered greatly as supply flooded the market at the same time that a massive drought hit, resulting in a drop in prices and no requisite rise in demand. Mr. Turner helped turn all of that around and now bison meat sales are at $340 million annually. Granted, this is but a sliver (less than half of one percent) of the $100 billion beef industry, but the real story here is in the industry's growth rate. Bison meat sales have grown 22% over the past five years as retailers such as Wal-Mart, Kroeger, and Whole Foods have upped their respective antes as well. 

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    As prices drop and distribution has increased, consumers are enjoying lower prices resulting in the consumption of more bison. The trouble here is that if demand continues to rise without more growers being recruited by an industry dominated by beef ranchers, prices will rise resulting in the consumption of less bison. The industry does recognize this reality and so its major trade group, the aptly-named Bison Association, and others are actively engaged in recruiting growers, reminding us of the organic industry, which has struggled for 30 years to match supply with demand, resulting in some pretty high price points over the years (and probably less overall consumption). Unfortunately, the organic products industry still struggles with converting traditional farmers to organic practices despite the proven financial rewards involved. Hopefully the bison industry will have more success.

  • Nike Gives Up On Golf?

    Well, the company hasn't completely given up on providing products that complement the complicated, time-consuming, and now declining participation sport. But it has decided to exit an industry that marketers there no longer believe provides the brand with opportunities for growth. And that is a big deal.

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    We know that the sporting goods segment has been in trouble for a while now with number-four player Sports Authority now a memory and three major players--***'s, REI, and Big 5--dominating a retail segment challenged by online competition and changing consumer preferences. But the decision by Nike to completely cease making and selling golf clubs, balls, and bags is almost certainly a harsh commentary on the future prospects of not only the sporting goods industry, but also the sport of golf, which has been decline for some time. The company does plan on maintaining a focus on shoes and apparel for its Nike Golf brand, but the days of swoosh-emblazoned equipment are at an end. For now, competitors can cheer about the new market share that has just opened up, but in the long run they too might have to make some tough decisions if more folks don't start playing the sport. Instead of investing in shaping such a future, Nike has decided to punt. Could this also mean less future investment in terms of golf sponsorship and advertising for Nike? Does this suggest a threat to the future of golf?

  • Barbie's Big Bounce

    Barbie is on the rebound! After several years of sluggish sales, Mattel announced that sales of the classic doll increased by 23% in the second quarter this year. That's an impressive rate of growth in a very short period of time for such a well-established, relatively large brand. What is going right?

    Marketing. The company, which is losing market share overall (sales are down 3%), has revamped its product mix to include newly-sized Barbies (petite, tall and curvy) as well as a more ethnically-diverse line-up of dolls. This probably should have happened about 10 years ago, but it did finally happen. In addition, marketers have altered their creative approach to advertising by emphasizing the imaginative play that girls (and probably some boys too) can experience with the dolls rather than a focus on the various accessories and other material possessions. My how times have changed! Let's see if the company can keep up the momentum it has built through making a series of good marketing decisions. Competition in the toy segment is fierce, and Mattel will have to make all the right moves to turn things around for the company. The resurrection of Barbie is an excellent start.

  • Under Armour to Diversify

    The sporting goods market has been very, very good to Under Armour. But the brand that marketers have positioned as a fairly exclusive line for "real athletes" (a market opportunity Nike exposed when it started selling plus-sized sweat suits to the not-so-athletic masses) has now taken a cue from its nemesis and is in the process of going more mainstream. Business professionals know that a company must grow to satisfy shareholders, and there is no doubt that Under Armor continues to deliver on that front as revenues are up 27% in the most recent quarter. But a company must also be profitable to satisfy those same shareholders, and this is where Under Armour is having a bit of trouble. Costs are rising and increasingly the sporting goods business is migrating online. So marketers have decided that operating within the core athletic segment won't be enough to insure the future success of this $4 billion company and that developing new products for a new market might be the best way forward.

    This is where a new casual wear line and Kohl's come in. Beginning next year, Under Armour products will be available in 600 Kohl's outlets, and strategists hope that this will be win-win for both parties. Under Armour will have access to Kohl's customer base, and Kohl's will carry a product line that will hopefully expand its market as well. Indeed, it worked for Nike, and so there is no reason to think that it can't work for the number two player in the category. Under Armour will develop a new line of stuff we haven't seen before and will address a new market making this a classic example of a "diversification" product/market strategy.

    But will this new distribution strategy dilute the equity Under Armour has built in its premium brand? Does a non-sporting goods, discount retailer like Kohl's really fit with Under Armour's brand image? These are important questions for marketers to ask, and Under Armour marketers are betting that the benefits of increased distribution will far outweigh the negatives. Under Armour has broader appeal than it used to have, and remember that Nike faced these same questions many years ago. It's likely that Under Armour will be able to learn from Nike and follow in its footsteps. As such, casual wear seems to be the next logical step in the brand's development. One thing is for certain, if this strategy is successful, we will soon see Under Armour products in all kinds of department and apparel stores.