Marketing in a Minute + 200th Posting

It's been a long time coming but the Bright Ideas Blog has now reached 200 postings; a small feat for a consultancy with over 10 years of experience. A digital cake is in order.

Rather than a long-winded insight, I wanted to share a few real-life initiatives that I've come across over the last few days.

As I discussed in a separate posting, one of the best ways to grow a business in a recession is through product extensions. The above is another way; to increase the frequency of purchase, especially for consumables. This may be excessive for a burger advertisement, although Burger King does actually serve breakfast. Does an ad like that work? It all depends whether consumers find that Burger King is in their decision matrix for breakfast. Marketing research and product development to the rescue.

Spotted at the GO Bus Station at Union Station

The next is a take from Japan's preference and saturation of vending machines to sell everything and everything. Need that last minute scarf or tie? Mark's Work Warehouse has got you covered. Apart from clever positioning for the downtown business unit and seasonal product placements, it acts as an active advertisement for their brand as a whole. The company was founded on clothing friendly to trade workers; overalls and spill-resistant clothing. Only within the last few years have they taken a functional as opposed to fashion approach to designing professional clothing. Their benefits include shirts that repel stains and never need to be ironing. I believe that the vending machine serves more of a purpose to expand this helpfulness of the brand than counting on the volume of scarves it can sell at a high mark-up.

Spotted at the Union TTC Station

The last one for now is our good 'ol friend Uncle Ben. A new set of ads has blanketed the downtown core, hoping that everyone gets back in touch with him. Another ad read: "Why yes, I'd be honored to join you for dinner. I can be ready in 2 minutes.". A third? "The faster our lives get, the more sense BISTRO EXPRESS rice makes." It was really strange that I personally felt a draw to the ads. Growing up with the iconic orange boxes was a throwback to Uncle Ben himself. It might be tempting to imagine it targeting the baby boomer generation, but it is likely slightly younger; 25-35 not unlike me that grew up with the brand but have long neglected it for fast food or other prepared food options. Authentic and nostalgic is challenging to achieve without being cheesy or patronizing. Uncle Ben making a comeback is very much the former.

Mobile Wars: PublicWiMob vs. Robellus

It seems that everywhere you go that there's a new mobile carrier popping up, and its turning Canada into a veritable battleground. The prize for winning the war on attention? The Canadian mobile market, consisting of millions of people and businesses. Personally I love the mobile industry. What could be better than having low variable costs, high customer switching costs and guaranteed revenue for the life of a two or three year agreement (assuming you have already invested millions in cell sites)? Up to about a year ago, all the mobile carriers provided the ssame basic service (cell phone service), very similar phone options at almost identical price points. The only real differentiator amongst the industry was brand, and even then it was controlled by three major carriers with numerous sub-brands. It unfolded similarly to how a large CPG company works; introducing "flanker" brands to their "anchors" in order to squeeze out other potential competitors based on positioning.

This is actually a fantastic deal.

New entrants in the mobile industry are nothing new. However, previous to the Canadian government selling off new cell phone bands new entrants were forced to enter in shared use agreements with previous mobile networks to piggy-back off of their network. This really crippled their ability to be a major player in the Canadian mobile landscape. The large operators could simply raise their fees or terminate agreements altogether should they become too popular. Virgin Mobile (who operates off of Bell's network) has been highly successful in replicating their mobile brand model to Canada, although it remains a minor player within the industry. Until mobile operators could invest in their own cell cites and completely control their value chain, it would be impossible to drastically shift the industry.

Now let's welcome Wind Mobile, Mobilicity and Public Mobile to the stage. Tens of millions in investments later, they have a (relatively) strong network within some major metropolis areas (quasi-Nationally in the case of Wind) and they opened retail locations amidst a struggling industry. Its now become a revenue game for them; how many current mobile subscribers could they entice to a new and unproven mobile network? And almost more importantly; how?

Cute.

There are a few sore touch-points when it comes to mobile providers. These include: price, contracts and customer service. And it's not surprising then that all the marketing communications of the mobile entrants touched on at least one of these three points. Not surprisingly, I would suggest that 90% of the ads had something to with respect to price. Either it's a $150 porting credit, 20$ off a plan for a year or student rates. There always seems to be some sort of significant concession to get people to pay attention to the new entrants. Generally this wouldn't be a cause for concern, however unlike the current large operators, the new entrants don't have a contractual agreement. This means that once the price promotions over; there's nothing to stop consumers from switching carriers, especially if a competing network is also willing to make price concessions.

Someone's working in the humour department. Spotted @ Yorkdale.

This can be a huge concern if the only differentiator between competitors is price. But it isn't. Behind these new entrants is more than just trendy logos and low prices but brands that are designed to be the most drastic change to the mobile industry. Their contract is an implicit one. By listening to the customer they're hoping to create a new generation of brand-loyal consumers. I recently had the opportunity to attend a fantastic American Marketing Association (Toronto Chapter) event on gen Y; 17-29 year olds in today's environment. Two of the most important touch points for the group as it pertains to marketing communications is to be authentic and genuine. It's something that is whole-heartily adopted by the new entrants, yet evidently overlooked by the previous players. The latter group is therefore left scrambling to re-position and introduce new sub-brands in order to give an appearance of new. It would've been much simpler to start a movement as opposed to initiating a shift.

Wind Mobile has arguably been the most successful of these new entrants, with official subscribers of at least 100,000 although current numbers are almost certainly higher. They're also relatively national in their presence when it comes to major Canadian metropolises. Their communication platform is based on having a "conversation" with consumers: activelty listening to their needs and being transparent in their operations. It's the service that the largest players outsource, which is hugely detrimental in a mobile marketplace no longer represented by an oligopoly. When it comes to selling the same service with new competition (and no contracts to enforce high switching costs), brands are all that's left to sway customers. Communication therefore becomes hugely important; and outsourcing your UVP is a certain way to infuriate customers.

My main concern however is with respect to the long-term strategy of the new entrants. Once the price concessions die off (they can't last forever), and the network is more robust, will consumers still stand by them or simply be enticed by the phone subsidies and stability of the large operators? It's been predicted that all the new entrants will eventually consolidate and become a single new entrant. But doesn't that mean we're right back to where we're started? It also implies a huge risk for Wind (likely the largest operator in the future and therefore most likely to pursue M&A fueled growth). Assuming they acquire all the customers how will they keep them without forcing them into contracts? Either customers will choose that Wind's way of operating is what they want and they force the rest of the industry to stabilize competition, or as previously mentioned, Wind gets forced into a situation where contracts become the norm (much the same way Virgin Mobile started and then subsequently ended up).

Personally I'm a huge fan of the new entrants. There's a veritable David & Goliath struggle right now, and as a victim of Robellus, I'll fight tooth and limb for no other reason than they're the little guy. Anytime people start discussing their frustrations with their mobile providers I become their salesman. Another outcome of their paradigm-shattering culture is that I find myself always paying my bills on time, preferrably in cash. Sure it takes longer to line up in person, but I feel better that they don't have to pay the 1-2% merchant fee. The old idiom of voting with your wallet definitely holds true here. I just hope that others choose to do the same.

The secret to growth in a recession

It seems that amongst foreclosures, unemployment and inflation, retail therapy hasn't lost its prominence. Sales figures are slightly up, and as far as the apparel industry is concerned, women are the pot of gold to keep numbers strong in a weak economy.

There are many different theories that claim to explain this phenomenon. Some attribute it to psychological consumer behaviour; that amongst the negative economic forecast they spend to feel better. Others claim it's simply due to the intense job market; the old idiom of "dress for success" may apply. It could also be attributable to the heavy discounting prevailing in retail. Irregardless of why women are spending; marketers are definitely starting to take notice.

The oldest misconception in marketing is that women can be marketed to the same way as men. Modern day media is smart enough to avoid this mistake.

Holt Renfrew; arguably Canada's largest high fashion retailer recently posted double digit increases in sales mostly attributable to womens' lines and footwear. Part of this trend is due to some or all of the factors above, but there's a new and emerging trend adding to the rise in women's sales; segmentation in old markets.

This is an important consideration for highly competitive industries. For example, Victoria Secret truly broke the mold of the distribution channels for lingerie and/or "sexy" undergarments. Before Victoria Secret's radical shift there weren't specific lingerie stores of its kind or scale, and lingerie as a line extension was a pipe dream for retailers such as Abercrombie or American Eagle. Victoria Secret's gone even a step further with their "pink" label; tailoring it to pre-teens and younger.

Another example of this trend is seen in a recent extension by Under Armour to attain a piece of the women's active-wear market. A historically testosterone-filled company, they got burned early on in the women's segment by utilizing the comically dubbed strategy of: "pink it and shrink it". Now ready for round 2, Mr. Plank their founder claims that eventually women will outpace men in sales for the company. Although the new set of ads to coincide with the launch only features women, Mr. Battista (VP of Brands) argues that women they target are not looking to be treated differently than men. This is an interesting division and a new segment perhaps otherwise overlooked by apparel companies that seem to favor the opposite at the moment.

Building on this trend is how a new segment can be reached not just from designing a new line of products, but by strategic licensing. Febreze recently became the "Official Air Freshener of the NFL" to many astounded parties. This poses a lot of questions, until it is explained that it isn't targeting men, but rather a growing group of women that are tuning in to the N.F.L. This has also led to changes in opening acts (think Taylor Swift and Olivia Manning) to promote the concept of "Being Game Day Ready". It's an incredible balancing act for Procter & Gamble; too feminine or too masculine in the message and the narrow segment will be missed. The sales numbers will be the true judge of success, although this ad seems to be akin to the last bowl of porridge; just right:

As marketers it is easy to throw our hands up in the air and flail them around while whining on how the recession has cut spending. While some decreases are expected, it's not as disastrous as some media may want to make us believe. I can guarantee you that many year-end marketing presentations will include a bullet point such as:

> Recession hindered otherwise positive levels of growth

or

> Current economic environment led to decreased consumer spending on goods

This isn't good enough. Top brands and CPG companies are proving that there's still success to be had (potentially that is; numbers are a different story) by keeping a close eye on consumers to re-segment the marketplace. Hundreds of books will (and have) been written on the topic of the "post recessionary" consumer. It may however be too late for marketers by the time their ink dries.

Is Vintage the New Vintage?

Some of my favorite quotes of all time have originated from Carl Carlson, the under-rated social narcissist on the simpsons:

"I am so sick of Oldies Stations-- hey geniuses, how 'bout some NEW oldies?!" --Carl Carlson, The Simpsons

Carl: I don't get it. What's so "great" about this depression?
Lenny: I like how everything is sepia tone. Makes me all nostalgic.

I guess Americans these days are seeing a fair amount of sepia.

It isn't surprising that a vast amount of advertising last year focused around value. Major brands were forced into price wars; most prominent in low-switching cost industries such as CPG or restaurants. With the media continually bombarding us with messages of high unemployment, high national debt and foreclosures, it was almost a no-brainer that people tightened their purse-strings to save a dollar or two. An induced effect of this bombardment is a consumer behaviour phenomenon called cocooning/anchoring. It suggests that as the prospect of a prosperous future is uncertain to bleak, consumers inherently fall back on brands they know and trust. This makes for a powerful basis for marketing communications. So welcome to the hallmark trend of advertising in 2010; Vintage/Nostalgia.

A perfect example of this nostalgia (albeit for new brands) from Moma Sao Paulo (I love how some of the most unique work come from South America)

Everywhere we go today there's bound to be some use of nostalgia marketing, whether it be billboards, clothing designs or store buildouts. When tastefully done, it can actually be quite effective. Coca Cola for example has always been excellent at this balancing act of new versus old. In comparison, Pepsi has taken the opportunity to fully re-invent themselves recently; a risky proposition when consumers are secretly seeking stability and familiarity. It seems to be effective though; I bought this box of Raisin Bran two months ago just because I liked the design of it. I don't even like the cereal.

The only thing riskier than completely re-inventing yourself is pretending to be old and authentic. Heritage is one of the most powerful tools for nostalgia marketing; and many companies and brands are quickly writing or grossly over-rating their ability to be vintage. Consumer backlash is bound to ensue.

I remember growing up with Super Soakers, but this ad means nothing to me. Do marketers really expect me to relate to an oil on canvas recreation loosely related to the American Civil War? Personally I think it's offensive to classical art of that time and earlier to represent it in such a way. And since my generation is likely the last to even know where a museum is located, I can't imagine that this is relating to current consumers of Super Soakers either.

Here's another example of misguiding consumers to a "vintage feel". Timothy's was founded in 1975; although the typography is more reminiscent of the 1950s and 1960s. The colours used in the typeface are also strikingly close to Dunkin' Donuts. Dunkin' Donuts has however been around since the 1950s.

The last risk of vintage marketing is the associations to cultural stigmas such as the sexist attitudes towards women that was prevalent during the mid 20th century. The above advertisement by BIC (founded around 1945) recently sent much of the social media world aflame. However, even more offensive than long legs with a revealing short dress are the odd new commercials by Mr. Sub; essentially dubbing over old B/W instructional videos:

When I first saw this commercial broad casted live my draw dropped in utter disbelief, climaxing when the secretary is awarded the role of: Vice President of Lunch Selection. To elaborate, the video's title is dubbed "subcretary". I presume it was meant in a humorous tone, but I feel it failed in a galactic fashion. If you disagree let me know in the comments.

This entire trend has been wrongly associated with the wild popularity of HBO's Mad Men; a drama revolving around a (fictional) 1960s Madison Avenue advertising agency. This only aids in re-enforcing the interesting moral fibers of the time, including drinking/sleeping at work, disrespecting women and the "safety" of cigarettes. It stands as a relatively accurate representation of the era, although as is usually the case, consumers take it too literally. This is especially true when marcom is utilizing nostalgia as portrayed in the television show.

As it always does, general trust in advertising is based on two components; responsible and ethical companies and educated consumers. On the latter, consumers must make their own judgement as to what is appropriate and inappropriate. Ads reflecting on cultures and standards of decades past does not make them instantly acceptable and forgivable. For example, imagine if the Mr. Sub commercial was shot in a 21st century style with real actors' dialog. It's not so funny anymore, although it shouldn't have been the first time.

Companies also need to be responsible in line with cultural beliefs of the time, and be honest to their true heritage. In other words; be socially conscious and don't elude to a long history which does not exist. The Journal of Brand Management described it best:

"The key value that has moved to the front and centre of brand image in this time of uncertainty is authenticity, consumers seek the comfort of the real, something they can trust and count on. Authenticity has two meanings: the original and the substantive, things that are honest and are what they say they are." - Ronnie Ballantyne, Anne Warren, Karinna Nobbs. Journal of Brand Management. London: Apr-Jun 2006. Vol. 13, Iss. 4/5; pg. 339

Vintage can however be applied as a style. There's nothing wrong with producing items that reflect that style, as seen in the Fossil store:

Personally I'm not crazy about the whole vintage style. Isn't it about time we get some new vintage?

Apple's Biggest Branding Mistake

By the looks of the malls these days, it is hard to believe that we're still in the midst of recovering from a global recession.

This was the view of Yorkdale Mall today, which as I mentioned in my last posting has become the environment for some of the most interesting consumer behaviour I have ever witnessed. Here's some evidence of this strange phenomenon:

So why is this line-up of willing iPhone 4 buyers an immense branding mistake? The first problem is the control of their brand. I would suggest that Apple has lost control of what it truly means.

Apple is one of the few technology companies that has transitioned from a supplier of cool gadgets to status items. Not to stir up any controversy, but the new iPhone 4 isn't the most technologically advanced phone on the market (although Apple may want you to think differently). It's this status allure that has fueled international demand for the product, which has led to the sub-culture of grey-market distributors.

And where are all these iPhones going? From what I know personally; South America, East Europe and Southeast Asia. These are all markets which currently do not sell iPhone 4s (with the exception of Hong Kong). The grey market phones are trodden around by the wealthy and privileged; making a nice profit for importers and exporters alike.

So where does that leave Apple? In a position very similar to a luxury apparel brand. Their new product releases are scheduled like clockwork; slightly offset from Spring/Summer and Fall/Winter releases. Everything about the device is "beautiful", but not necessarily advanced. It would also appear that design is favored over functionality in Cupertino; haute couture anyone?

But why is this a problem? The profits in the electronics business is no longer in hardware; but media. iTunes's return on investment is miles ahead of the 100% direct cost margin on most hardware. Apple would be lucky to break even on their hardware when it comes to all the indirect retailing costs associated with a direct retailer. Selling music, magazines, books, applications and anything else software-based has been the sustainable source of revenue and profit for Apple since it launched iTunes.

Apple used to be the cool "Mac" guy. They used to be the counter-electronics culture; focusing on being different and unique, and definitely niche. And as they fail to reach this consumer and are by-passed by distributors who they allow to line up hours before the store even opens; they're alienating their most profitable customers.

It would appear that as time goes on, people aren't thinking as differently when it comes to Apple.

The second brand failure is leveraging the line-up. For those companies who are fortunate (and smart) enough to justify people lining up, it's baffling why they don't make better use of those whom are brand disciples or could potentially be one.

Line-goers typically left to their own device will entertain themselves only for as long as their iPad's battery will last. Apart from books, sleeping and arguing over what's the best feature of the new iPhone, there really isn't much to do for 10 hours while in line (from my experience). And yet marketers tremble at the notion of soaring TV commercial prices with ever decreasing audiences. Does anyone else see a gap here?

Why don't companies like Apple entertain these bored yet fanatic consumers while in line? Why does it even have to be considered a line? Why can't it be an experience? I can imagine there being free concerts (broadcasted to TV monitors around the world outside of stores), food, giveaways, webcams between cities and live discussion? If well-executed you could probably sell tickets. This is how Apple can start to shift its brand perception back to being cool and niche to sell profitable media in the long-run as opposed to fashion in the short-run.

But then again, the way people were lining up today for the launch of Victoria Secret today, you'd think everyone was walking around in the nude. They even needed bouncers at the front doors.

Apple's Biggest Branding Mistake - Preface

I feel that it's appropriate that this blog posting is actually being written from the Apple Store line-up at 4am in the morning. The last three weeks have proven to be one of the most interesting consumer behavior experiences I have ever witnessed.

On July 30th Apple released their highly anticipated iPhone 4. The first person in line that day arrived at 9pm the night before. I arrived around midnight; a full 10 hours before anything would be sold; the line was already about 60 people strong. The crowd is a real mix characters, but all fit within three very distinct categories:

1. Die-hard fans: these are the people who actually use the stickers that come with iPods. They will have numerous Apple devices, defend his Majesty Jobs to the bitter end, and who's emergency contact is their local store manager. They're easily spotted listening to iPhone 3Gs and reading Winnie the Pooh and 1984 on their iPads.

A little background: this is where things get interesting. For those unfamiliar with the iPhone 4, they are currently available in numerous countries, however very few are fully unlocked, making Canadian iPhones very valuable to countries where they are not yet sold or are sold unlocked. To avoid dealers, the Apple Store limits purchases to 2 per customer. This has necessitated a breed of placeholders.

2. Placeholders: people paid to stand in line to fill quotas of iPhones for international grey markets.

3. Cash Men: these are the ringleaders of the operation when it comes to placeholders. Typically there are 2-3 of these per store. They each manage a varying number of placeholders; 4 up to 10. They're easily spotted nervously pacing around on their cell phones carrying messenger bags full of at least $10,000-$20,000 in cash in neatly folded piles.

Alongside these groups there is always one leader, usually a cash man who controls The List. It adds order to the line, recording who arrives and in what order. When you aggregate the market situations such as super-low supply, high international demand and a lots of globally-sourced cash, Apple has inadvertently created a new society.

This new "line society" has its own currency (ticket reservation stubs), its own market (the line itself), a leader (the line master), a god (Apple itself), a purpose (to attain iPhones) and inherent laws. The creation of this society was a completely unexpected and is uncontrolled. It will also prove to be Apple's greatest branding mistake of all.

Old Spice: Are men self-conscious?

Chances are that if you watch TV, have a Facebook account or browse YouTube, you've seen the new slew of Old Spice commercials. Not to be cliché, but Isaiah Mustafa has literally turned into an overnight phenomenon.

The man. The legend.

Or so it would appear. Old Spice has made some dramatic changes in its spokes people; as of late forgoing celebrities such as ex-NFL player Terry Crews and LL Cool J. The legend refers to his character more than Isaiah himself; a low-level movie star and ex-Euro NFL player (did anyone else even know there was a European division of the NFL?). Isaiah appears first in a washroom, then a boat, then a horse; a senseless scenario of the "perfect man".

Seems oddly similar to the new face of Dos Equis beer; "The Most Interesting Man in the World"

In a day and age where women are typically associated with being the targets of self-improvement ads for makeup, clothing and weight loss, are men now feeling the pressure? Apparently so, but are being targeted in a completely different way. Men aren't typically as self-aware as women are, which is why the type of delivery for personal improvement ads for men are drastically different in their approach.

I want to first demonstrate how self-improvement ads have targeted women. Whether it be skin care or hair care, before and after images are always a staple. Clogged pores, frizzy hair and that extra ten pounds. Where? Alone in their powder room, sitting at their desk or locked away in their room. All of a sudden brand xyz releases product abc and miraculously their day is saved, and typically has an ending shot of the previously distressed female laughing in the mall with girlfriends or out at the club. They have a very damsel in distress tone, and I presume that since it's been the status quo since the invention of the 3am infomercial that it's working. Their endorsers are also typically very popular female celebrities and idols.

Men are admittedly much harder to target; as showing a guy with frizzy hair all sad in black and white doesn't seem quite as effective. Men are however quite concerned about what others think of them in social situations and secretly seeks self-improvement. Men want to be the most interesting, the best smelling, and definitely don't want to be caught at a sporting event or DJing with yellow stains:

So is the secret to selling personal care products to men to attack their ego? Not exactly. As a marketer, you cannot attack their ego directly, but rather suggest what would happen in a social situation if you don't use a certain body wash, soap or drink a certain brand of beer. Typically if an ad demonstrates the "after" situation and its negative outcome without the product, men figure out the before themselves.

Measuring success with this strategy is however elusive. Commercials for Dos Equis' "The Most Interesting Man in the World" on YouTube struggle to surpass a million views, while the original video for Old Spice is nearing fourteen million in a shorter time span nonetheless. Does that mean that the former has been ineffective? No. Old Spice's ad targets what Malcolm Gladwell refers to as the shopping "mavens"; female significant others. The video spread virally between women rather than men. Men however may have been enticed by Dos Equis' offering, but would be embarrassed to discuss it or share it, suggesting that perhaps they're not extremely interesting or sociable themselves.

The most important take-away here as marketers is that with CPG/consumables which have low switching costs and are low-involvement purchases, to perform very strong market research to identify and target a single facet of men that they're secretly self-conscious of socially. We also have to be responsible that we're honest not to take advantage of it. It's not scrupulous because it can actually be very helpful for men seeking help, yet are embarrassed to discuss it (a trait not necessarily shared by females). Then again, men have been known to be susceptible to such minute things as bacon: