• A "Must Win" in La La Land

    The Los Angeles area might be vast, and until recently, an under-served market for spectator sports; but we should recall that the region did lose two of its NFL franchises (one left after only a little more than a decade) during the 1990's due to lack of fan interest, inadequate facilities, and other issues. Around the time when the Raiders moved to the LA Coliseum from Oakland in the early 80's, the Rams banished themselves to Orange County, a relatively wealthy suburban region south of LA. And so they were no longer really in "LA". Both franchises languished in mediocrity and eventually moved on. And since the Raiders last year were refused by NFL owners a desired move to back LA , and the Rams have been allowed to return after a largely unremarkable 20 year stint in St. Louis, and the "also-approved" San Diego Chargers have decided to forgo continuing play in the NFL's second-worst stadium (and instead joining the Rams in LA), hopes are high that the So-Cal mega-region can sustain at least two teams.

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    Unsurprisingly, the Rams first season back in La La Land was another exercise in futility for the team since the all-too-familiar losing feeling teams can become accustomed to doesn't have any trouble changing time zones. The team still stinks. Indeed, large doses of marketing hype and willful customer excitement can't make up for a lackluster product in any industry, and by the end of the 4-12 season, sold-out seats were very easy to obtain on the third-party ticket market. But many fans in LA will be interested in the Rams for at least a while, and the addition of the Chargers should stir up a bit of intra-regional rivalry such as exists between the Clippers (another San Diego transplant) and the Lakers of the NBA or the New York Giants and Jets of the NFL. This would be good for the region, the franchises, as well as the league itself. But there is a wild card here.

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    Surveys show that even after a 20 year absence, the hyperactive Oakland Raiders are still the NFL fan favorites across all of southern California. If they move to Las Vegas, which does appear highly likely, there would in essence be a third team in this southern California mega-market. After all Sin City is just a five hour drive or a 45 minute flight from LA, and so a three team mega-region would be a very interesting development indeed. Is there room for three? With an adequate volume of residents and an immense volume of visitors, a stadium in Vegas will certainly draw fans no matter what, so the Raiders should be very happy being desert-dwelling, rather than sea-faring pirates. And the citizens of my hometown of LA are largely a fickle, wine-and-cheese eating, fair weather bunch who will love and actively support a consistent winner, but will largely ignore mediocrity and will outright ridicule sub par performance. In other words, win and you're in. If you languish it will lead to anguish. But don't worry. That's much better than the "If you don't build it, they will leave" problem of old stadiums and dwindling audiences found in former franchise homes like San Diego and St. Louis. And "languishing" in nice, new, state-of-the-art, billion-dollar facilities will keep fans coming for a long while before a consistently losing team would make an owner consider applying for yet another relocation. But methinks the league's already small appetite for approving relocation in general would be more than satiated by a Raiders move to Las Vegas. Three moves is a lot for a league to digest.

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    There are certainly enough NFL fans for three teams, but "affinity", that inexplicable "love of team", can be very fickle whether you are from southern California or not. Winning games will generate revenue, but winning the hearts and minds of loyal fans through effective relationship marketing is something else entirely. And so far, the neither the Rams, Chargers nor the Raiders is off to a very promising start. The NFL is a popular product, as we all know, but sports marketers will still have their work cut out for them.

  • Samsung Still Smoking

    The Samsung brand certainly took a hit when it's Galaxy Note 7 batteries, some of which tend to catch fire, forced an unprecedented FAA air travel ban and subsequent recall of the entire product itself. But it's important to note that the company is in fact a massive conglomerate and has been doing rather well in just about every other facet of its business. Samsung remains extremely profitable, but the brand did lose one in four Note 7 users to the Apple iPhone, and the company has announced that it is foregoing the introduction of the Galaxy S8 product at an upcoming trade show next month in Barcelona to make certain that the model is bug free. Or at least that it doesn't have a propensity to explode.

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    The recall has cost Samsung billions, and the combination of lost customers and cash flow would have put many lesser companies out of business. And Samsung does face some trouble at home in South Korea as its heir faces a political scandal, but the problems with batteries do appear quite fixable and the brand will no doubt recover. And yet marketers do want to rebuild any trust in the marketplace that has been lost, so it will be interesting to see what kind of advertising messages emerge from the ad agency's creative team over the course of the next year. Customer rewards would be a grand idea, and some authentic brand messaging might be in order to remind people of what the company stands for. Loyal customers are a forgiving bunch, but another major product issue could cut much deeper than this past one has, and Samsung would do well by fostering a bit of goodwill in the marketplace.

  • Sauce Still Somewhat Special

    Although McDonald's has struggled to attract young adults, marketers at this global powerhouse aren't yet out of new ideas. All-day breakfast has been a big hit, but the positive effects of that move are beginning to slow. Most new products over the past decade or so, especially in the area of burgers, have failed to meet expectations and have been subsequently deleted. This is why the latest new products aren't really all that new, but rather iterations of the iconic Big Mac, an invention introduced by a franchise owner in 1968.

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    For those who think the traditional Big Mac is a bit too large, we now have the Mac Jr., and for those who want their sandwich a little larger than usual, we now have the Grand Mac. All of this has been conveniently timed to coincide with the release of the Michael Keaton movie about the McDonald's founder, and while it doesn't paint him in the greatest of lights, the film has surely resulted in some great publicity for the brand. The company also gave away 10,000 bottles of its signature Special Sauce, and some of these are being offered for resale online for thousands of dollars. of course much of this is just marketing fluff, but for a brand whose new slogan is "Taste The Feeling", this sort of thing has always been its true special sauce.

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    Mickey D's still needs a huge boost and needs to somehow attract a lot more younger consumers who have opted for so-called "better burgers", and it hopes that a major Big Mac re-boot can help get things going. Yet while extending breakfast and leveraging the Big Mac brand might be savvy moves, marketers will now have to begin do a much better job of truly innovating and, more importantly, altering brand perceptions among an increasingly skeptical group of young consumers. For now, at least for the over 35 crowd, it seems that the sauce is still somewhat special.

  • Re-Engineering The Tomato

    After decades of being a victim of what has largely turned out to be misinformation, Genetically-Modified Organisms (GMO's) might be poised to play an even larger role in our lives. The practice of making crops more drought and pest resistant has brought hundreds of millions of people in the developing world out of chronic hunger, but in the developed world, perceptions that scientists are "playing God" and developing "Frankenfoods", have threatened the practice, which goes well beyond drought and pest resistance. An outright ban by the EU was finally relaxed amidst hundreds of studies proving that GMO products pose no risks whatsoever to human health. Efforts on a state level to require the labeling of products that contain GMO ingredients have failed everywhere they have been attempted except in Vermont, but perceptions among many people that they are still somehow dangerous persist despite the overwhelming evidence to the contrary. And so some threats do exist.

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    Labeling requirements would be very expensive for food producers for a variety of reasons and would almost certainly result in higher prices as well as an additional lift for the still-burgeoning Certified Organic products industry, whose ingredients contain no GMO's by definition. So although many of the products we use do contain GMO's, consumers do have non-GMO choices. And perhaps more marketers will voluntarily opt to label their products as being GMO-Free (if indeed this feature is a competitive advantage), a far less expensive alternative to adding more regulations that force companies to re-engineer entire supply chains. Vermont, a state with a very big Organic lobby, might end up being somewhat sorry it passed it's labeling law if it ultimately results in higher prices or some products not being offered in the state at all. We learn in business school that although some regulations are necessary, when they become excessive they almost always lead to higher costs and a bevvy of unintended side effects.

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    All of this notwithstanding, much has been written among the ever-growing "foodie" crowd about the fact that the standard tomatoes most of us consume have grown rather free of flavor over the years as growers have focused instead on size and sturdiness at the expense of taste. And so a few rather enterprising scientists are in the process of re-installing five formerly-extinct genetic traits that are responsible for the sweet, acidic flavors that have been bred out as the yield of this oft-used crop has tripled over the past 50 plus years. A bigger tomato means less sugar per gram since there is a limit to how much sugar a tomato can produce; and less sugar means less taste, so a bit of engineering will likely solve the problem.

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    But here is the best part. These scientists claim they are using "mostly" natural breeding methods and not genetic modification technology, and so even the good people of Vermont might be happy with what these food chemists are doing. And think of what other applications this technology may have down the road. One wonders if eventually the anti-GMO crowd might turn against this sort of science as well, but for now a tastier tomato looks like a winner for all concerned. If that happens, expect crop yields to increase even more, and growers of the now-tastier (and much smaller) heirloom varietals to get a run for their money.

  • Pepsi's Premium Pour

    With soda sales declining across the board and revenues from sales of bottled waters still on the rise, it only makes sense for PepsiCo to follow rival Coca-Cola's lead and introduce a "premium" water brand to go up against Smartwater. It's a bit late, but Pepsi has lots of distribution and influence in the supply chain and can likely gain market share fairly quickly as long as it has a robust marketing budget. And with the company poised to place an ad during the Super Bowl, it doesn't look like marketers will be skimping on this new product introduction.

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    The Super Bowl is an effective way to introduce a new product as long as the marketing efforts continue well after the big game. Five million is a lot to spend for 30 seconds of airtime, but considering an audience of around 110 million, it's worth it if efforts are leveraged with continued marketing efforts. And such efforts should probably be integrated across several elements of promotion, including social media, personal selling, sales promotion, PR, sponsorship, and others rather than depending solely upon advertising. LIFEWTR will join Aquafina (a regular bottled water Pepsi product) in a bottled water category that has grown by over 50% in the past decade to $21 billion in the U.S. alone. And so it looks like there is plenty of room for a large-scale Smartwater competitor to help grow this lucrative category as consumers continue to shift their tastes and consequently their buying behavior. Sodas are so yesterday. LIFEWTR, despite its somewhat regrettable gimmicky nomenclature, is poised to do very, very well.

  • Apple "Goes Hollywood"

    Movies. Television. We have all heard that "content is king" when it comes to websites, but can it also be true for a tech company like Apple? Well the marketing strategists at Apple certainly think so, as the company is rumored to begin going in a very new direction that very few people are talking about. Much like Google, a brand mostly known for its search engine and now a diversified tech company known as "Alphabet", Apple plans on exploring areas outside of its current comfort zone in the world of consumer technology. And much like Netflix and Amazon, the company has decided to make a foray into the world of producing and delivering content.

    Apple isn't known for being as "first mover" or an "innovator", or at least it shouldn't be thought of in that context. Apple marketers are great at making existing products better and prettier, but rarely are marketers the "first" to innovate in a particular category. The tablet, a category now in decline, and iTunes could be considered exceptions. Often Apple's new products (like the iPhone and iPod) start off as market followers and then, leveraging the tremendous equity that Apple has in its brand, the product gains enough share to become the market leader. And so being no stranger to starting in second, Apple may soon begin to produce and distribute its own proprietary content. As such, original TV shows and perhaps even original movies will soon be available, but always sticklers for quality, Apple marketers have smartly decided to first offer just a handful of carefully selected shows and then possibly move into movies. The company hasn't indicated that it will spend nearly the money that Netflix and Amazon have spent to become major content creation and distribution players, but Apple is in fact sitting on tens of billions of dollars waiting to be invested or heaven forbid even returned to shareholders. And the company has struggled with its non-iPhone new product introductions ever since the death of Steve Jobs.

    Why not spend some of this cash? iTunes has been successful and the company does have Apple TV, so why not become even more of a "media company"? Why not compete head to head with all of the industry players? Indeed Apple has the brand equity and it has the money to do it, so if the initial foray is successful, expect Apple to become a very different kind of company over the next decade.

  • "Chips Ahoy" For Intel?

    Intel, the high tech company that has come to represent "the power behind the computer" over the years (at least in the minds of the average consumer), isn't about to exit the chip business any time soon. But  the segment's growth rate is slowing, and marketers at Intel might want to consider adjusting strategy to meet these changing conditions in the external business environment. So why is the market for chips slowing?

    The simple answer is that fewer companies are purchasing servers. Why? The Cloud. These days, rather than each company having its own exclusive servers, much commerce is now conducted on the internet, or "in the cloud". This industry centralization has reduced the demand for chips since individual companies don't need as many of them, and this has affected Intel, which does 30% of its business in chips, among other players in the industry.

    What to do? Diversify. The demand for chips will continue to weaken, at least in the near-term, and Intel should continue to find other ways to leverage its brand. Although the brand itself is known for chips, developing other kinds of technology products isn't too much of a reach for marketers, especially considering that Intel is a business-to-business brand, rather than a consumer brand. This means that it will be much easier for marketers to change hearts and minds in the much smaller and easier-to-reach B2B arena if Intel decides to focus on diversification. Perhaps even a foray into the consumer market might be in order, since the brand does have quite a bit of consumer awareness attached to it. But although growth is slowing, the chip/processor market remains lucrative and products will become "cash cows" for dominant brands such as Intel. This usually means that marketers will have more resources to invest in R&D and develop new products. Will Intel seize the day? We shall see.

  • Alibaba's Many Thieves

    Few young adults are familiar with the classic book, Arabian Nights, but one of the more familiar tales concerns Alibaba and his Forty Thieves. I always found it amusing that the Chinese "eBay-like" giant chose such a name for its business, especially considering the attitudes that most Chinese have held about intellectual property rights over the years. Without sounding too xenophobic, let's just say that most Chinese hold very different beliefs than Westerners about such things as patents, copyrights, and trademarks. While the West favors protecting intellectual property rights, the East tends to favor sharing such property communally. The West considers this to be unethical and illegal, and the evidence of trans-Pacific pirating over the years has been overwhelming. It is important that we remember to recognize the vast differences that might exist between cultures when we are doing global business, but that is for another post. Ah, the myriad joys of globalization!

    Tensions between the two cultures have escalated of late with the Obama Administration's U.S. Trade Representative to China labeling Alibaba's "Taobao" site a "notorious market" for counterfeit goods and a haven for pirates selling cheap knockoffs. Alibaba's Thieves indeed. The president of the company, not to be deterred, blamed it all on politics and attributes these so-called malicious acts of counterfeiting on Western protectionism. The evidence, however, is not on Alibaba's side, and the U.S. has been complaining for as long as ten years about the state-sponsored company's behavior. Also consider that in 2015, a Chinese regulator accused Alibaba of "long-term" and "illegal" practices. And Kering, the French parent of Gucci, a victim of so much counterfeiting over the years, has filed a lawsuit that alleges that 37,000 bogus Gucci handbags were sold on Alibaba in a single month. It does seem that Alibaba has a systemic problem, and as far as protectionism goes, they ain't seen nothing yet.

    Interestingly, in the week prior to President Trump's inauguration, Alibaba CEO Jack Ma and Mr. Trump met in New York to discuss these and other issues. Globalization has more skeptics now than perhaps ever before, and Mr. Trump has already indicated that his administration will follow a more protectionist path than administrations have followed in previous decades. And global business doesn't work well when countries are playing by different rules. Mr. Ma, for his part, in 2015 said that Gucci's stuff was overpriced and that essentially pirates are business people too. Huh? Sorry, Jack, but that's not what we call a level playing field, that's not how free market capitalism works, and that's not the way global business is going to be conducted going forward if President Trump has anything to say about it. And he most certainly will have many things to say. If his rhetoric is legit, then "China Inc.", will have to make some attitude adjustments going forward or risk conflict.

    And so Alibaba may be partially state-owned by a communist government, but it's still a global company, and as such it needs to play by international rules, as confusing and inconsistent as these rules sometimes are. The pirating of goods has been a long-standing global problem and the practice can be seen as one of the many high profile disadvantages of globalization. Under the new legal and regulatory reality of a new administration in the U.S., one would expect that Alibaba will be used as an example for all to follow. Stay tuned.

  • Wearables Already Slowing

    Wearable fitness tracking devices have been all the rage for the past couple of years if you pay attention to the mainstream media (and you should), but just like tablets, the high growth phase of the Product Life Cycle was very short. And if high profile Fitbit is any indicator of the shape of things to come, the wearable segment might already be in decline.

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    Demand for wearables has been on the wane lately, and Fitbit has actually stopped production on new devices because the products have been piling up at retailers across the nation. And retailers despise excess inventory. It is clear that marketers failed to accurately forecast demand, and the company has even canceled several new product introductions. That's a big deal. What's going on?

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    There isn't anything wrong with the products themselves or with the brand, which has managed to gain much awareness in a very short period of time. Competition from the likes of Apple and Xiaomi (China) has certainly had an effect on Fitbit, but the more likely culprit here is an overall lack of need in the marketplace for wearable devices. While counting steps and monitoring vital signs might be fun for some folks, it certainly hasn't gained traction among average Americans. After all, traditional watches for the most part have been replaced by smartphones, and most smartphones can do much of what a smartwatch or other wearable device does. It's hard at this point to avoid admitting that the market potential for this product category was way oversold. The  fitness enthusiast market is relatively small. Some analysts actually predicted that this would happen and wonder just how many gadgets the average person really wants to juggle. In many ways, a tablet is just another device that no one has asked for. It hasn't replaced the laptop, and the product category is in decline. Are smart watches and other wearable devices traveling down that same road? It appears that indeed they are at present. This will be a very important year for Fitbit and entire wearable technology category.

  • A Fading Fad

    Fads can be fun, and if marketers are on the cutting edge of one, they can also be rather lucrative. But the problem is that fads, by definition, fade quickly. And fads that involve adults doing things that are more appropriate for small children to do probably fade even faster than most.

    But let's give some credit to Barnes and Noble, a bookseller plagued by a stagnant book industry, for capitalizing on the now-fading coloring book craze, a phenomenon that has lasted only a couple of years and might never truly disappear, but is in decline nonetheless. It has been a nice  temporary boon for the store, yet early holiday season estimates indicate that traffic at brick-and-mortar locations in general did not meet expectations, and Barnes suffered its first holiday sales decline in three years.This suggests that the brand has its work cut out for it.

    But marketers at Barnes and Noble are a pretty savvy bunch. Between the introduction of the Nook e-reader that took the country by storm (now largely replaced by the tablet) and the company's the foray into offering a larger selection of toys and other non-book products, Barnes has weathered the recession and the industry's move to e-commerce rather well. So what's next? One thing is for sure; 2017 will be a very pivotal year for Barnes, and hopefully marketing strategists have big plans for the brand that don't involve coloring books.

  • Taco Trauma?

    If there is one thing Taco Bell marketers have been good at over the years, it's an uncanny ability to be able to continuously come up with new product introductions while using essentially the same bunch of ingredients. Of course, classic Mexican food lends itself to this. After all, an enchilada, a chimichanga and a burrito are pretty similar to one another. But Taco Bell takes this experimentation to a higher level, inventing combinations that are nothing if not fabulously creative. The Chalupa immediately comes to mind.

    Now it looks like marketers at "The Bell" have outdone themselves. Introducing the Naked Chicken Chalupa, a product that marketers hope turns the fast Mexican food segment on its ear. Instead of a shell, this Chalupa features an all-white, seasoned, fried chicken breast packed with lettuce, tomato, cheddar cheese and avocado ranch sauce inside. Take that Colonel Sanders! It certainly sounds like a strange idea and features a fried chicken breast (a very different ingredient for Taco Bell), but the product tested well in Kansas City, MO and Bakersfield, CA, and so marketers have decided to introduce the Naked Chicken Chalupa on a national level. Even if the product doesn't meet strategic revenue expectations, it will certainly generate a high degree of publicity for the brand, as so many of Taco Bell's unique creations tend to do. Is this a great new product or a fast food abomination? Time will tell. In the meantime, brace yourself, because on January 26th,  the world's first mass marketed fried chicken taco will be available across the country. Yum?

  • More Moves For Starbucks

    The stores may be everywhere, but marketers at Starbucks still have to find ways to grow the business. And the company's foray into offering prepared foods in addition to its signature coffee drinks has been very successful over the years, so it certainly makes sense for marketers to figure out what's still missing in the product mix, and fill the gaps. As such, Starbucks will begin selling a bite-sized egg snack product, called Sous Vide Egg Bites, the first in a series of new food product introductions that the company hopes will boost sales.

    Customer research conducted by Starbucks several years ago revealed that many folks wanted more protein options, and so the company spent three years developing a bite-sized, wheat-free, snack food product to meet that need in the marketplace. Much like the case with egg rolls at Chinese restaurants, customers will get two egg bites for $4.45. A bacon version of the product weighs in at 310 calories for two egg bites, while an egg white option has only 170 calories. Something for everyone.Will it succeed? If they are tasty, then there is little doubt that these new items will be successful. After all, marketers assessed a consumer need using research methodology and then developed a product to meet that need, a classic example of the Marketing Concept in action.

    What could go wrong? Well lots of things, but Starbucks knows what it is doing and has demonstrated an ability to make market-driven changes when needed. Its foray into alcohol sales (to develop a larger evening customer base), on the other hand, was not at all successful. Starbucks announced that it will soon stop selling beer and wine at hundreds of U.S. stores, as it appears that convincing people to hang out and drink beer instead of coffee just didn't  work out. One wonders if Starbucks marketers did their homework on that one. It sounded like a weird idea from the get go, and the concept flopped rather quickly. One wonders if that decision was research-driven? Only company insiders know the truth, but it does seem that at least this new bite-sized concept fits very well within what the brand currently offers. And there are more new products to come. Bon Appetit!

  • Packing The Planes

    If you have noticed that most planes are rather full these days, it isn't just your imagination. Several years ago, airlines finally grew tired of losing money and so they began paying more attention to per-passenger costs. Marketers retired the one-size-fits-all pricing strategy and moved to an a la carte approach wherein consumers pay for add-ons beyond the actual seat itself. This was huge. In addition, too many half full planes were costing airlines plenty of money and so reducing "capacity" in terms of the number of aircraft in operation became of paramount importance. Marketers simply reduced the number of planes in operation as well as the number of flights (capacity) resulting in most subsequent flights being full, and this has done much to help the bottom line. Most airlines are now as healthy as they have ever been. But that hasn't stopped them from finding other ways to increase per-passenger revenue.

    The most recent effort at cutting costs and maximizing revenue involves engineering and increasing capacity for each full flight. Due to a reduction in the size of both galleys and lavatories, the average flight now has 142 seats on board compared with 137 two years ago. And an extra five seats can make quite a difference. In fact, Airbus plans to boost its capacity from 180 to 189 on its A320 jets and from 220 to 240 on its A321 jets, which should also make quite a dent in the bottom line. But how will consumers react? More people on each plane might mean less comfort and lower levels of customer satisfaction, but does that really matter if the entire industry is doing it? Will more people pay for premium seating as a result? Or will the overstocked planes result in the industry attracting federal scrutiny for failing to deliver an acceptable level of service? Interesting questions for interesting times.