May 05, 2008
From Seth Godin: "Make big promises; overdeliver."
March 21, 2008
Just in time for March Madness, Sneaker Wars has just come out, recounting the modest origins of the
now-multinational multi-billion-dollar sports shoe industry. I just happened to catch the book review in this morning's WSJ. The story begins with the Dassler brothers' little Bavarian shoe factory, started during the thick of WWII. Fraternal rivalry caused the brothers Adi and Rudi to part company in the late 1940s, when Rudi walked across the river to the other side of town--the medieval town of Herzogenaurach--to set up a competing factory. Adi Dassler's shoe became, of course, Adidas. Rudi developed the Puma brand. Together, the rivaling brothers and their rival brands came to dominate the world sports shoe industry for decades. Adi and Rudi pioneered what are today's standard marketing strategies for sporting goods and other consumer goods, giving away free shoes to athletes and later paying stars to wear the logo.
It's a treat for me to read about the history of Adidas. Anyone who played grade-school basketball in the 70s remembers the dominant basketball shoes--Converse All-Stars and the Adidas Superstar, with the latter gradually overtaking the former both in the pros and in the school yard. According to Wikipedia, three quarters of all NBA players in the mid-70s were wearing the Superstar. I remember well getting my first pair. They were navy felt with white stripes (I know, I know . . . but remember, this was the 70s). I was a mediocre basketball player at best, but at least the shoes looked cool.
The sports shoe industry took a big jolt in the mid-80s, when Phil Knight signed Michael Jordon for Nike and launched the Air Jordan, which became the best-selling basketball shoe ever. Nike has dominated the U.S. market ever since, though Adidas and Puma appear to be making comebacks. You can read about Adidas' recent comeback efforts with its signing of David Beckham in the Prologue to Sneaker Wars.
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February 04, 2008
I didn't watch the game, but the ads are available here. The top five, in my humble opinion, below the fold ...
December 26, 2007
Here. Some of the Best ...
Well, that was fun, but are you more likely to buy the products after seeing these commercials? I'm not.
December 19, 2007
I just purchased a new mobile phone. The last time I did this, I asked for advice from readers, and I read consumer reviews. While the honeymoon was promising, the marriage was a failure. I ended up disliking my Samsung SCH-i730 so much that I have completely abandoned the idea of having a PDA bundled with my phone.
This time, I didn't seek any advice or read any reviews before stepping into the Verizon store and purchasing an LG VX8350. The expert reviews are mixed, but it looks like it could be just the ticket for me. It's small. The keys are easy to press. And it's primarily a phone.
Which brings me to the topic of this post. Would user reviews have helped me with this choice? Adina Wise explores the value of user reviews on Salon as she labors over the purchase of tissue:
In a 2007 Customer Engagement Survey conducted by the global marketing research firm ACNielsen, online consumer opinions represented the third-most-trusted form of advertising, after word-of-mouth opinions and newspaper ads. (Magazines, television and radio all landed lower spots, proving today's tough reality for high-budget ad types.) Another market research firm, E-consultancy, asked online retailers about the effects of adding customer-generated reviews and ratings. Seventy-seven percent said site traffic increased, and 42 percent reported a rise in the amount of money spent. So people aren't just gravitating toward pages with ratings, they're also spending more when they get there. I may be sucked in by customer reviews, but I am clearly not the only one.
Adina frets about the credibility of anonymous reviewers, but for me the bigger issue is the noise-to-information ratio. Look at some of the consumer reviews for my new phone. Some people like it, some don't, which is exactly what I would expect with a relatively inexpensive phone like this one. johnny5z2 is very disappointed in the phone, but then you find out he is all in a lather because the phone is too light ("when you try open the phone it slides right out of your hand") and doesn't have many "display theme" options -- "Hmmm, I'm pretty sure a majority of people like having it their way, well with this phone you either have it all black and white with certain symbols in color or you have all the colors of the rainbow spread in all the seperate menus." Let's just say that johnny and I are not interested in the same features.
In most circumstances, when making a big purchase, I read user reviews, but I have come to treat them like student evaluations. I ignore isolated complaints like johnny's and look for patterns.
December 17, 2007
It's not a 30-minute guarantee, exactly, but Domino's wants us to remember the golden days. The problem with the old guarantee was a legal one: Domino's was worried about being held liable for accidents caused by its or its franchisees' delivery people.
Of course, the franchising context raises an interesting issue of agency law because franchisors generally are not vicariously liable for the acts of their franchisee's employees, even though franchisors exert substantial control over their franchisees. I once taught a case on Domino's in Business Organizations called Parker v. Domino's Pizza, Inc., 629 So.2d 1026 (Fla. App. 1993). The case arose from an automobile accident in which the franchisee's delivery person was accused of "operat[ing] a vehicle in a reckless, negligent and careless manner, causing it to strike another vehicle." The plaintiff's were pedestrians who were struck by a third vehicle that hit them while they were helping the victims of the initial accident. The key issue in the case was whether Domino's should be vicariously liable under agency law, and this issue turned on the level of control exercised by Domino's.
The court read the franchise agreement and operating manual, and found control provisions all over the place:
The manual which Domino's provides to its franchisees is a veritable bible for overseeing a Domino's operation. It contains prescriptions for every conceivable facet of the business: from the elements of preparing the perfect pizza to maintaining accurate books; from advertising and promotional ideas to routing and delivery guidelines; from order-taking instructions to oven-tending rules; from organization to sanitation.
Obviously, most franchise guidelines have nothing to do with a delivery accident (and the law here is muddy enough that it's not clear whether that matters!). The court also mentions the 30-minute delivery policy, though more in passing than as a crucial fact. In any event, the court concluded, "The manual literally leaves nothing to chance," and this leads to "the self-evident conclusion that it was error to determine as a matter of law that Domino's does not retain the right to control the means to be used by its franchisee to accomplish the required tasks."
Well, it doesn't seem so self-evident to me, but that sort of reasoning was enough for Domino's. According to the W$J, "After abandoning the guarantee in the wake of the St. Louis lawsuit, Domino's began playing up the taste and quality of the pizzas themselves."
Hmm. The taste and quality of Domino's pizzas?
No wonder they are going back to the 30-minute delivery policy.
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August 02, 2007
Recently, much time and attention has been given to advertisements of unhealthy food for children during children's programming; so much that some food manufacturers have volunteered to stop advertising certain foods during certain programs to forestall blanket legislation. I myself have never been worried about sugary sweet advertising to kids. If my child sees a twinkie commercial, that will only inspire her to eat a twinkie if there are some in our pantry. As far as I can tell, she can neither drive to the store nor order in twinkies. As long as I control the pantry, whether (and how often) she eats twinkies is up to me. Sure, a commercial may prompt her to ask, nag, beg or whine for twinkies, but that's what makes me the mom -- the ability to withstand nagging, begging and whining.
However, there is another set of advertising that I'm beginning to think is far worse than twinkie advertising: loan advertising. Some cable channel that my kids watch for children's programming carries quite a bit of ads for mortgage lending, debt consolidation and management, and stores that tout financing of products. I had not paid any attention to this until the other day when our daughter asked "When you buy a couch, why do you have to keep paying each month?"
Her debt-averse parents took this as a teachable moment to explain to her that if she paid cash for the couch, then she wouldn't have to keep paying each month. I actually sounded like my grandma: "And if you can't afford to pay cash, then you should save your money until you can." We tried to show her mathematically the difference between paying $1000 once or $90 a month for two years. I'm not sure how much sank in, but at least now the door is open to similar conversations.
Obviously, my 8-year old won't be taking out a mortgage or buying on time any time soon, but what messages is she receiving? Trying to view these commercials from her viewpoint, I think she could take away the following lessons: (1) financing ordinary consumer purchases is customary for average buyers; (2) one should not wait to reward oneself with fun purchases when you could take that product home today and pay later; (3) many people (portrayed by attractive actors in nice clothes in nice living rooms) get into debt that they cannot repay, this is OK and there is an easy way out; and (4) having bad credit is not an obstacle that one should worry about or try to avoid. I'm sure there are more.
I'm not calling for regulation by any means, but I do want to consciously counteract these messages with some personal finance "flashcarding" of my own. We wonder why in ten years her cohorts will go away to college, sign up for private student loans at high rates of interest because the financial aid person tells them the process will be quicker and require less paperwork, fill out credit card applications they find in the bag the bookstore clerk places their textbooks in and then put everyday consumer expenses on those credit cards. My daughter learned the food pyramid in kindergarten and knows what foods are healthy and what are not. As far as I can tell, we need to make an effort to teach her about the time value of money, the (white and black) magic of compound interest, and the virtues of deferred gratification.
Aside: As I was typing this, I remembered those old American Express commercials where someone would talk about the evils of "revolving debt." I remember Jerry Seinfeld riffing on still paying for that lunch two years ago. But now that American Express has cards that are revolving credit cards, we don't see those commercials anymore!
D
July 26, 2007
Like other law professor moms that I know, I have spent untold hours and energy creating a crazy quilt of day camps for my kids to attend so that I can continue to work when school is not in session. In the back of my mind I keep wondering how old the kids have to be before they can go to sleep-away camp. I went to church camp starting at 12, but it only lasted a week. I'm looking into religions that host much longer sleep-away camps.
Anyway, according to this Sunday's NYT, sleep-away camp may not give me the huge blocks of uninterrupted work time I'm looking for. Apparently, I will spend an hour each day babysitting my kids' Webkinz! (I have blogged about Webkinz before.) While the kids are at camp, someone has to feed and take care of the Webkinz, which will include earning Kinz cash each day to keep them healthy and happy. Great. Now I'll have to find a camp for our five Webkinz (Felipe Bananas, Herramiento "Harry" Rana, Coco, Alex, and one that I don't even know it's name)!
July 17, 2007
In the mid- to late-1990s, I become a tech-media junkie: WIRED, Red Herring, Business 2.0, Industry Standard, etc. Several years ago, I switched to blogs for my tech news. Forbes now tells us that advertisers are doing the same:
Silicon Valley is booming again. But if you work in tech media, there's blood on the floor. Take Red Herring. It hung onto its offices after getting the eviction notice earlier this month. But gossip site Valleywag is breaking story after story not just on its beat--but about its woes. Meanwhile, bigger publications are hurting too: ... Business 2.0 saw ad pages drop 21.8% through March from the same period a year ago; PC Magazine's editor in chief walked out the door after ad pages fell 38.8% over the same period; and one-time online powerhouse CNET is reporting growing losses even as the companies it covers flourish. It may be happening in tech first, but there's no reason the same thing won't happen, eventually, in every media niche.
Permalink | Marketing| Technology | Comments (0) | TrackBack (0)
July 16, 2007
This week, the WSJ newsstand price goes up to $1.50. Today, the NYT "suggested" newsstand price rises to $1.25. We talked about whether this would happen before (and at what intervals), and now it has. These rate hikes were announced in June, with the WSJ announcing its price increase a week ahead of the NYT announcement. Of course, it's interesting to think about why the NYT chose not to go to $1.50.
June 05, 2007
Traveling last week, I read several magazines. (As a rebellion against law firm practice, I never work on planes, which was required in order to bill airtime. Instead, I read magazines.) I noticed the same ad for Secret antiperspirant several times. What struck me was the slogan: "Strong Like a Woman."
Of course, anyone who watched TV in the 70's remembers the slogan "Strong enough for a man, but made for a woman." The commercial usually involved a man trying to snatch his wife's Secret, and the wife snatching it back, like the poor Trix rabbit who doesn't understand that "Trix are for kids." I actually used to feel sorry for the guy and wondered why he couldn't use Secret deodorant. Anyway, I suppose the ads were a way to sell a product to women without acknowledging that women might need the product -- we know that women don't really sweat, only men sweat, but you might buy this flowery-smelling product just in case.
Now, the advertising is more upfront, acknowledging that women are not only strong, but they also sweat. "Some of us don't perspire. Or Glisten. We Sweat" is an homage to the old saying that "horses sweat, men perspire, women glow." The magazine ad pictures a very attractive woman divulging her secret that she sweats "like a pig." I also noticed that the woman, who could be in her 30s, is noticeably displaying her ringless left hand and seems to be traveling somewhere warm by herself. Very different from the housewife wranging her deodorant from her husband!
June 04, 2007
I haven't linked to Seth for awhile, but I enjoy his uncommon good sense.
May 30, 2007
Recently I have noticed that many of the music radio stations to which I listen appear to engage in a lot of product placement. By that I mean various radio personalities appear to spend a lot of time discussing how much they enjoy a particular product or service such as a weight-loss center or a breakfast food. Because they talk about the product or service in the context of their routine dialogue, it takes me a while to catch on to the fact that they might be engaging in some form of advertising. In that regard, these product "discussions" seem potentially deceptive, and hence problematic. And I wondered if they were a form of stealth advertising.
I recall that last year the FTC expressed concern about the dangers of stealth advertising, which is marketing that fails to clearly disclose the relationship between the marketer and the consumer, such as when a celebrity secretly gets paid to wear certain products. In addition, Ellen Goodman has written an article in the Texas Law Review about stealth marketing and the potential harms posed by advertisers who pass off promotional messages as editorial content. Goodman points out that such advertising is harmful not only because it is deceptive, but also because it harms robust public discourse by creating skepticism regarding the authentity of media communications, and potentially creating the impression that all communications are promotional in nature. I am not certain if the radio personalities to whom I listen are getting paid for their seeming promotions--that is there is no disclosure after their, in some cases lengthy, conversations about a given product. But of course that uncertainty is the problem. I will admit that my uncertainty has caused me to become much more skeptical about all of the conversations occuring on the radio--but maybe that just means these personalities need to get back to playing music. . .
May 15, 2007
A Slate.com article links to an interesting paper, "'The Real Thing': Nominal Price Rigidity of the Nickel Coke, 1886-1959." This article explains why Coca-Cola cost 5 cents during that 70-plus year period. The facts are really fascinating! Coke could not easily raise the price for various reasons. First, because soda bottle machines only took nickels. So, the price would have to be raised 100%, to 10 cents because the machines didn't give back pennies. Also, Coke had entered into some long-term contracts that constrained price increases. I was mostly interested in the customer inconvenience concern.
I've always wondered how long the New York Times will be $1. (I vaguely remember when it was 75 cents, but I can't say when that was.) To increase beyond a dollar will cause a bit of inconvenience. Newspaper stand machines seem to just take quarters, so the increase would have to be to $1.25 or $1.50. At many newsstands, one can just put in a dollar and take the paper without having to wait for change. So the price of many products, including the NYT, can't fluctuate perfectly, but only when the price can be raised to a convenient level. I would suppose that $1 is the perfectly convenient level, so that price would be sticky. Can anyone think of other products with convenient prices?
March 21, 2007
Dave Hoffman blogged yesterday about a story he found "horrifying": a young girl on a playdate took her Target knock-off of an American Girl doll to the Manhattan American Girl doll store and was refused the $20 hair salon experience for her nonconforming doll. The mom, who was not in attendance, wrote a satirical "letter" to American Girl, thanking them for teaching her child the harsh realities of life. The mom also claims to have been a former buyer for FAO Schwartz. Although I am generally an apologist for a store that charges $100 for a doll, I'm with AG here.
I've never been to the Manhattan AG store, but the Chicago one is a sight to see. You bring your doll, buy clothes and accessories (and possibly new dolls), and even attend tea (reservations only) with your doll. If you don't have a doll, you can get a "loaner doll" for tea, sort of like a high-end restaurant's loaner jacket or tie. Yes, your doll can get a spruce-up at the hair salon, and your child could even have a birthday party there. If you've ever walked up and down Michigan Ave. in Chicago, you'll see little girls walking with there dolls and bright red AG shopping bags. Unfortunately, half the fun of going to the AG store is making sure that other little girls know that you have been to the AG store. Not a pretty picture, but that's the picture. And AG knows this, and capitalizes on it by making the AG experience special for its loyal customers.
Have you ever been to a Mercedes dealership? The one in Houston is really nice. They have free soda and other drinks, snacks, and big screen TVs. The furniture is really, really nice. When you get your car back from service, it's freshly washed. If you require a loaner, you usually get a C-series, if you made an appointment ahead of time. Very nice. It makes you want to buy another Mercedes, even shinier than the one you have. Now, I would not fault the Mercedes dealership who refused to make an appointment for a non-Mercedes owner to have her car's oil changed at the dealership, even though the owner would love to be part of the leather furniture, free soda, big TV experience. Even if the KIA owner was willing to pay an exorbitant price for the oil change. So, I'm not too critical of the AG dealership for refusing to service the non-AG doll. (I'm sure there's a smaller argument to made that the hair stylists weren't sure if the non-AG hair would react the same to the AG salon comb-out!)
I think the mother's letter is an attempt to assuage her own guilt for thrusting her child into the harsh world of "Queen Bees and Wannabees" without either the requisite tools for the environment or at least a certain sense of savvy and equilibrium. As a former buyer for FAO Schwartz, she should have been savvy enough herself to know that her child was entering the intersection of retail marketing strategy and childhood and should have been better prepared. Surely she doesn't believe that the retail marketers of the world have a duty to protect our children's self-esteem when their parents miscalculate a real-world situation.
February 27, 2007
While watching the Food Network show Unwrapped last week, my daughter and I were fascinated by a restaurant chain highlighted on Campus Classics, an episode that celebrated college food: Cereality. This cereal "bar & cafe" has locations near campuses in Pennsylvania and Chicago and in the Newark airport. The concept is simple: 40 kinds of brand-name cereal, various toppings from fruit to candy, and seven kinds of milk. Pick two cereals, one topping, and add your choice of milk; then mix in container that looks like Chinese-takeout container -- all for $2.95!! My daughter thought this was really, really cool.
Unfortunately, according to this Time article from last summer, the Cereality success story is vulnerable to competition. You see, the trendy cereal bar, which wants to start selling franchises, has no recipes. It merely packages together things that are made by others and sold freely: Trix, Golden Grahams, Pop Rocks, milk. So, now that the market has been identified, there's nothing to stop other would-be entrepreneurs from setting up their own cereal bars down the street. Cereality has taken an aggressive stance against copycats, writing cease and desist letters and attempting to get business method patents for such things as mixing two cereals together in a take-away box. Although this strategy has scared away some competitors, it also may have lost it some customers from the college-age, "we like to download and are skeptical of your drive to trademark the everyday" demographic.
What's the most popular cereal at Cerality? (According to the Food Network) Life.
February 16, 2007
UPDATE: I regret not knowing how to spell "Cingular." Sorry.
I hate rebates. I try to avoid "sale" items where the discount is in the form of a rebate; the transaction costs are just too high. "Please put every scrap of paper you touched on the day you bought this copy of TurboTax, the packaging of TurboTax, a time-stamped video recording of your purchasing this copy of TurboTax, and a notarized affidavit from the salesperson who sold you this copy of TurboTax, and you will get a check for $5 in 12-16 weeks." However, in December, when I accidentally put my cell phone in the washing machines (yikes), all the phone replacement choices at SCingular came with a rebate. So, I paid $80 for a phone with a $50 rebate.
Well, $50 is enough for me to jump through some hoops, (no weirdo offers today, please), so I sent inall my documentation the next day. I received my rebate this week, two months later. The time issue is not the point of my post, though. The point is that my rebate came on a Singular-branded debit card, not a check.
Weird. So, how is the card concept saving SCingular money? I suppose that people will lose the card, or just not redeem it, like a gift card. My trips to stores that take debit cards rarely result in bills of exactly $50, so many people will leave some sort of residual on the card and then just forget about it rather than carry a card around with $1.83. But don't people lose rebate checks? I know we have lost small ones before -- in this era of direct deposit, a $3 check requires a separate trip to the bank, etc.
I thought that one catch might be that they want you to reload the card or maybe if you make a purchase over the card then it turns into a credit card that charges interest. Nope. The card can't be reloaded or used for over the original $50. The card is Visa-branded, so I assume that Visa gets some sort of fee when I use it, so maybe that's how SCingular gets more value than from a check. Anyway, I hope we don't lose it.
February 04, 2007
When I was an undergraduate at BYU, my marketing professor showed some of the year's most popular television commercials in class. He asked us to vote on our favorites, and (inevitably) one of the beer commercials prevailed. Then he asked us to ponder this question, "Does advertising work?" After all, that student population was not likely to actually consume the beer we had seen advertised.
As a law firm summer associate in the late 1980s, I was asked to do some research for RJR on the effects of cigarette advertising. Did Joe Camel cause children to start smoking? Probably not. In any event, peers and parents were much more influential.
Of course, these thoughts about advertising were prompted by today's Super Bowl commercials. Bud Light's ads were far-and-away the best of the bunch (particularly the "Hitchhiker," "Classroom," and "Slap" spots), but I saw a number of entertaining commercials for products I do not use: Sierra Mist "Combover"; E-Trade "Robbery"; T-Mobile "My Favs"; and Nationwide "K-Fed."
Oh, I didn't watch the game, but congrats to Tony Dungy, Peyton Manning, and the rest of the Colts.
P.S. All of this talk about commercials prompted me to do a bit of searching on the internet, where I was reminded of the myriad jingles and slogans from my youth, including Alka Seltzer ("I can't believe I at the whole thing" and "The Unfinished Lunch") and McDonald's ("McDonald's is our kind of place, hap-hap-happy place" and "two all-beef patties, special sauce, lettuce, cheese, pickles, onions on a sesame seed bun). Just the other day, I was wondering about the effect of advertising in shaping young minds. Remember Coke's "Hilltop" ad? ("I'd like to buy the world a Coke ..."). I was only eight when that hit the air, but I remember thinking that it was really cool.
November 27, 2006
According to marketers, the day after Thanksgiving is Black Friday and the Monday after is Cyber Monday (see Gordon's post last year on Cyber Monday). Yesterday, however, I had the opportunity to do some holiday shopping, and I felt like I was carrying a tray of Margaritas around the neighborhood at 8:00 a.m. on a Sunday morning. I suppose that some of the craziness last Friday is due to a mob mentality: we're all here in line, and my overspending looks like nothing compared to yours. This craziness, however, does not extend to last night after dinner.
On Thursday, my mother and I saw that Wal-Mart was advertising as a "door-buster" a DVD/TV combination in your choice of Dora the Explorer or SpongeBob SquarePants for $79.88. This seemed like quite a bargain to us, but neither of us wanted to get up at 5:00 a.m. to stand in line for it. So, we let it go. When we checked the website mid-morning, the TVs were "out of stock." Darn. On a lark, I stopped in to the Wal-Mart last night to see if any sets were left over, and to my surprise there was a whole stack of them. Although a rumpled sign told me that they were $79.88 from 6-11 a.m. Friday morning only, they were still $79.88 at the register. However, I felt no sense of shopping victory lugging my cart with one of each for my kids (presents from my mom). I felt very conspicuous and kind of dirty standing in line with TWO TELEVISIONS behind a woman buying butter and a man buying lighter fluid. I needed the roar of the crowd.
November 09, 2006
I haven't shopped at Sam's Club in a few years, but I definitely remember those moments in law school when I would have a basket full of frozen chicken breasts, green bean cans, and peanut butter and freeze, wondering "Do I have my checkbook?" I always seemed to forget until it was too late that Sam's only took cash, checks and Discover card. Once debit cards became the norm, I never worried, but I may have had some aborted trips where I remembered too late that I did not have sufficient cash on hand to do the "big shop" I was planning.
Not any more. The WSJ is reporting that Sam's has made a deal with MasterCard that will allow customers to use those credit cards. Sam's has always said that not allowing credit cards kept prices down for all "club members," but I'm sure there was some lost revenue on the margins as folks had to keep their total bills less than their checking account balances (amazing!). Sam's does sell items that many people put on their credit cards -- computers, electronics, etc.
Of course now I would just freeze in the Sam's with my cart of chicken breasts, etc. and wonder "Is my [Bank Name] credit card a MasterCard or a Visa?"
October 24, 2006
At one time, magazine publishers sent energetic young people to your door to sell you magazine subscriptions. Then, publishers offered sweepstakes entries and "60% off the cover price"! And of course, readers of this blog know all about the "free trial offers." OK, but this story tops even my Best Buy/Entertainment Weekly story.
My colleague Bob Lawless (Credit Slips) was very courteous in responding to a media inquiry from Lawyers USA Weekly. The publication quoted him (although in the printed version his name appeared once as "Robert Lawless" and once as "Richard Lawless") and then sent him a copy of the publication. Great. However, the cover letter accompanying the complimentary copy contained the following paragraph:
As a thank you, we've enclosed a complimentary copy of the issue in which you appeared. In addition, we are sending you a complimentary three issue subscription to Lawyers USA. Your first issue of the bi-weekly paper will arrive in about two weeks. If after reviewing your three free issues you decide to subscribe, you'll save $81.00 off the newsstand rate, paying only $179 per year. There are no strings attached; if you choose not to subscribe, simply mark 'cance' on your subscription continuation notice and enjoy your free copies of Lawyers USA with our compliments.
Wow! I always enjoy responding to media inquiries, but I never saw them as marketing tools for the circulation department! I guess if the next reporter that calls asks me for my credit card number, I'll be a little suspicious.
In his inimitable style, Bob sent the editor who wrote the cover letter an email explaining to her that this marketing device was "highly inappropriate and of questionable legality." Although in the Entertainment Weekly scenario I agreed to a free trial offer, this situation is markedly different because the publication begins the free trial offer merely on the strength of having your address. Bob even warned her that the mailing of unordered merchandise or communications is an unfair trade practice under 15 U.S.C. 45(a)(1) and 39 U.S.C. 3009. As you may expect, the editor replied and assured him that the circulation department would be notified of his decision to cancel.
Now wait for next month when Bob gets the email that says, "Richard, We Want You Back!"
October 18, 2006
I have been thinking about the viability of different business models in the context of the seeming gravitation towards Wal-Mart and other companies that rely upon the "one-stop-shopping" business model. The seeming success of that model suggests that consumers are willing to forego a bit of quality for convenience and cost savings. It also suggests that consumers increasingly prefer a broad array of choices. Thus, in the food industry, it seems like every fast food chain feels compelled to broaden their menu—serving everything and none of it really good, but all of it convenient. That suggestion means that other business models, particularly the “boutique” model that depends on consumer desire for some specialized product, may not be as viable or certainly may be more at risk in our economy. Yet my lunch today underscored the fact that there are counter-examples, suggesting that there is plenty of room for these models to exist side-by-side. Indeed, I had lunch at one of my favorite burger places, Five Guys. It struck me that it was gaining success by keeping it simple. From its menu on the wall (just burgers, hotdogs and fries) to its no frills décor and brown paper take-out bags, Five Guys suggest that there is success in adopting a simple business model and refusing to give in to the pressure of offering people broad choices. I think you see a lot of companies jumping on the bandwagon of product expansion, but there are other companies whose success reveals that sometimes consumers just want simple and will pay (and even suffer some inconvenience) to get it.
August 07, 2006
I've been noticing news accounts that 13 states and D.C. are holding sales tax-free periods during the back-to-school season. I wonder if anyone has done any research into how these weekends affect consumer behavior. I went shopping during the first tax-free weekend in Texas seven years ago, and I have to say that I was very disappointed and have never made a point of shopping during that time again. As someone said to me, "I'm going to rush out for an 8% sale?"
I found that at the stores that I freqented at the time, Old Navy and Gap, no sales were offered during the tax holiday. These stores always have sales and special buys, but not during the tax holiday. I suspected that stores felt no pressure to recruit customers during this time as the stores were crowded with the tax-free shoppers. The next week, when the tax holiday was over, the same items were 20-30% off. Are tax-free weekends mere subsidies for retailers and not really breaks for consumers? I suppose there are some items that don't go on sale in August -- school uniforms? -- and maybe the 8% discount comes in handy. However, I suspect that instead of being a boon to the consumer, the state expenditure merely allows stores to charge more. If readers know of any studies, I would be very interested to see them.
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August 04, 2006
A new empirical paper has come out offering yet more evidence that firms generally treat corporate social responsibility as a tool for profit maximization: firms that anticipate economic benefits from CSR are more likely to do it. (See here, e.g.). Theory suggests that firms that need to resolve information asymmetry for their consumers may rely on CSR activities to do so. For example, firms selling difficult-to-evaluate goods may use CSR activities to signal product quality.
This recent study by Siegel and Vitaliano (both from RPI) offers confirmation of this prediction, showing that firms selling experience goods and credence goods are more likely to be socially responsible than firms selling search goods. (Search goods are goods that consumers can generally evaluate before they buy--clothing, for example. Experience goods and credence goods are more difficult to evaluate. Experience goods generally need to be used by the consumer before she can evaluate their quality. An automobile may be such a good. Credence goods are difficult to evalute even after the consumer has used the good. Vitamins or car repairs are examples.).
Siegel & Vitaliano show that firms selling a credence good are 23% more likely to engage in CSR; firms that sell experience goods are about 15% more likely to be socially responsible.
Permalink | Corporate Social Responsibility| Empirical Legal Studies| Marketing | Comments (4) | TrackBack (0)
July 15, 2006
Why are executives so enamored of quoting Chinese proverbs? Daniel Gross over at Slate has the answer. In a nutshell:
[E]xecutives quote Sun Tzu and Lao Tzu for the same reason they started exchanging their bespoke suits for business-casual khakis: They have to show that they're with it. China represents the future and is the locus of immense growth. Casually tossing Chinese proverbs into conversation shows that you're down with the latest trends, even if you haven't (yet) relocated your manufacturing capacity to Shenzhen.
Read the full story for some amusing uses and misuses.
Permalink | China| Management| Marketing| Popular Culture | Comments (1) | TrackBack (0)
May 23, 2006
That's the NYT, lamenting the world's first live theatrical commercial.
Well, the theater may be tainted, but there still are no ads on Conglomerate.
April 27, 2006
Here in Boston for the Oracle/MasterCard and Bloggership conferences, I'm staying at 
"The Hotel at MIT." It's a Doubletree hotel (which is itself a Hilton hotel brand), but here it's quietly branded and tricked out for the nerds. Wifi everywhere. You can print documents, like your powerpoint slides, to the front desk. Sleek modern furniture. A robot in the lobby. And the bedspread has a bunch of equations on it.
I love it.
One lesson I learned from the branding talks yesterday is that modern branding is more about creating a set of mental associations rather than direct pitches. When universities dumb down their marketing, Brand U-style, I wonder if they're underestimating their audience and damaging their long-term image. It's not the crass commercialism that bothers me so much as the ineffectiveness and transparency of the efforts. They should mimic Google, or Apple, or Pixar, or The Hotel at MIT. At least it would be more fun. Doesn't everyone think equations are fun?
April 12, 2006
An evangelical church in Denver is using a unique name as a way of marketing itself to a particular niche audience. The church is called the Scum of the Earth Church. Yes, it is a real church, not a joke.
The church is upfront about the marketing goals behind its unusual name. The church's website notes:
It doesn't sound like a church name ... on purpose. We really want to connect with people who have no interest in "church" by society's definition. There are plenty of churches for "normal people" and we think we have a unique calling to reach out to our otherwise unreached friends. Our name is integral to that process. Whether outcast by society (e.g., punks, skaters, ravers, homeless people...) or by the church itself, many who come can identify with the name "Scum of the Earth" since they have been previously treated as such.
More important to us, however, the name implies that being people of faith does not mean we are better than anyone else. We know many non-Christians who think Christians are out to cast judgment on them. Our name makes it clear that we aren't about that. We are just aware of our need for God, as Scum of the Earth. Fortunately, God never sees us like that! But the name is humble and we like that. --Chris Baker
To this very hour we go hungry and thirsty, we are in rags, we are brutally treated, we are homeless. We work hard with our own hands. When we are cursed, we bless; when we are persecuted, we endure it; when we are slandered, we answer kindly. Up to this moment we have become the scum of the earth, the refuse of the world. (1 Corinthians 4:11-13)
March 28, 2006
As I mentioned yesterday, our new condo in Boulder will be in the Holiday Neighborhood, a development in North Boulder. It's considered an example of New Urbanism design. Some of the key features are:
1. Sustainability. It's a relatively high-density project, with both townhomes and multi-unit condo dwellings. The idea is to cut down on suburban sprawl.
2. Mixed-use. The development includes not only residential space but retail space, and lofts for people working at home.
3. Environmental-sensitivity. The development uses "green" building materials and is designed with energy-efficiency in mind.
4. Pedestrian-friendly. There are sidewalks, several "pocket" parks, and stores to walk to.
5. Affordable housing. Some of the units are set aside for "affordable" (non-market rate) housing. Some of the units are even "co-housing" units, where residents share community living areas like kitchens and laundry. (On co-housing, see Mark Fenster's article.)
Unlike some other New Urbanism designs (think Seaside, Florida, which you saw in The Truman Show) the Holiday neighborhood is more loft-y in feel. It's very "Boulder-Chic," as Miranda would say.
What I find interesting about the project is how it depends on a market demand for socially responsible policies. This isn't corporate social responsibility for its own sake. Nor is it top-down social engineering. The project is working because consumers want the product. (To be sure, some of the features may have been included to please local regulators. As you might imagine, it's not easy to build in Boulder.)
Like the Prius, or Whole Foods, or Eco-Tourism, the new urbanism design creates a premium product. It's the housing equivalent of Ben & Jerry's ice cream. Conspicuous consumption you can feel good about. But I'm not kidding myself -- notwithstanding the affordable housing set-asides, this project is more white-collar than blue. The project succeeds only to the extent it satisfies upper-middle-class preferences. (Not that there's anything wrong with that.) The retail establishments include a coffee and dessert shop, a high-end pizza place, a health club, a bicycle shop, and, soon, a high-end restaurant and wine shop. It's ground zero for Bobos in Paradise.
One thing that I've yet to figure out is whether the Bobo-branding of real estate will work in other locales. Boulder Chic relies on simultaneous inputs of money and socially-liberal views, and Boulder has oodles of both. One reason it may still work elsewhere, however, is that you don't have to be a true believer in each and every aspect to appreciate (and contribute to the consumer demand for) Bobo-branded products. Some people shop at Whole Foods because it's organic; others shop there because they have high-quality salmon, or because it's trendy. Miranda and I aren't really environmentalists, but we happen to like walking to things and buying local.
Suburban sprawl is a social problem. I wonder if we've overlooked a partial solution in the form of unmet demand for non-sprawling housing. Maybe entrepreneurial developers elsewhere will cater to the high-end New Urbanism market. Build it and the Bobos will come. Or is it just a Boulder thing?
February 05, 2006
If you are looking for this year's commercials, you can find them here.
UPDATE: Or here. My votes ...
The Best: (1) Ameriquest - Hospital; (2) Sprint - Theft Protection; (3) FedEx - Caveman
The Worst: (1) Emerald Nuts - Druid; (2) H3 - Li'l Monster; (3) United - Knight
"Huh?" Part I: Toyota - Camry ("Why did you learn English?" "For your future.")
"Huh?" Part II: Gillette - Fusion (Five blades!?)
Bad Taste: Bud Light - Camping (Didn't you folks see "Grizzly Man"?)
Best Super Bowl Theme: Disney
January 11, 2006
Have you ever tasted Coke with sugar? Depending on your age, you probably
have, but not for about 20 years. Coke in the U.S. is made with high fructose corn syrup and has been for some time. In Mexico, Coke is still made with cane sugar and bottled in little glass bottles. And it tastes better.
The WSJ has an article today reporting that Coca-Cola is trying to fight retailers importing Mexican Coke for sale in the U.S. The soda company claims that in taste tests consumers can't tell the difference and that former Mexican residents are buying it for nostalgia purposes, but I throw the flag. It tastes different, and it tastes better. In Texas, every once in awhile someone would give you a Mexican Coke, and it tastes better. I won't drink a full-calorie Coke unless someone offers me a Mexican Coke because only then is the calorie trade-off worth it to me. But, Coca-Cola is fighting this bootlegging because Coke makes more money off of corn syrup Coke because of its distribution agreements.
Why doesn't Coca-Cola sell Mexican Coke here? I'm not sure how they would market it. Sure, there is Diet Coke with Nutrasweet and Diet Coke with Splenda, but I'm not sure if consumers want to be reminded that they are drinking "Coke with sugar" or especially "Coke with corn syrup." If some brilliant marketer can pull that off, and charge more for Coke with sugar, then Coca-Cola should try it.
January 02, 2006
I am a little late to this story, but I just noticed that Intel is changing it's logo from this ...
to this ...
And the new tagline is "Leap Ahead," which replaces "Intel Inside."
Does anyone else think that new logo has a retro feel? The swooshing is definitely 1990s. That makes sense because it echoes the "intel inside" logo, which was introduced in 1991:
I suppose they are trying to hang on to some of that magic, but why go retro when you are trying to convey a message that says "Leap Ahead"?
And the font ... blech!
While I understand that changing the tagline was intended to signal that Intel is more than PC chips, the new tagline is boring. Among other problems: no alliteration.
Don't they know that they are supposed to ask me before they make big changes like this?
UPDATE: Hannibal at Ars Technica correctly observes that nothing Intel could do would be as bad as Dell's promotion of the DJ Ditty. Ugh! Don't say I didn't warn you.
December 29, 2005
The NYT today has a small article extolling the virtues of American Girl dolls. These 18-inch dolls reflect the innocence of childhood with their childlike bodies and costumes, unlike the too-hip Barbies, Bratz and Groovy Girls dolls. (Yes, the article slammed Groovy Girls dolls for being too "street" -- they are rag dolls!) If you really think that buying an American Girl for your child is a virtuous thing to do, then I bet you drank a lot of 240-calorie Snapple because you thought it was good for you, too.
The magic of marketing of the American Girl doll is that the girls' superficial wholesomeness attracts well-meaning parents with too much money. One doll comes close to being $100. I bought a Barbie last week for $7.66. I have bought Groovy Girls dolls for $10. What's wholesome about paying $100 for a doll? Yes, the dolls come with a book, but I don't know of any girl who actually reads the books, which are dull and boring.
Some of the dolls are "period" dolls (courtesy of my grandma, we have "Kit," the perky Depression-era girl and "Josefina," the Mexican-American doll living in 1800s New Mexico), but many are not. Note that last year AG introduced a hip, "street" doll named Marisol, who takes hip-hop dancing and has been sold out for months. I say buy the doll if you want, go to the fancy stores in NYC and Chicago if you want, but don't fool yourself that the dolls are health food.
October 12, 2005
What could be better than a year's worth of free gas? Mitsubishi is giving away free* gas for a year with all new car leases!!! Here's the deal -- you lease a car, and you get a gas card (within 4-5 weeks of purchase) with enough money to buy gas to make the car that you bought go 12,000 miles at its average mpg rating, based on $2.95/gallon. But, you can't use it for anything else. And if gas goes higher than $2.95/gallon, you're out of luck. And, this offer cannot be combined with any other of the myriad offers which certainly have the same value.
But doesn't it sound niftier than "cash back" or "zero APR"?
September 14, 2005
Even Bloomberg.com is picking up the theme:
Google shares ended the session at $311.68, almost matching the initial digits in the endless mathematical term ``pi'' that starts 3.14159. Google founders Sergey Brin and Larry Page showed their penchant for mathematical equations by using pi -- minus the first digit -- to set the number of shares being sold. They also named one of the buildings on their corporate campus pi.
September 12, 2005
Thanks, Gordon, and thanks to Christine and Vic as well, for inviting me to sit in with them for a little while.
Gordon mentioned a couple of projects that have taken up a lot of time recently, one being the "Things" paper; the other being my other blogs. (I'm actually part of *three* blogs altogether; the third is a group blog that focuses on happenings in my little suburban corner of Pittsburgh, Mt. Lebanon, PA.) I've also recently finished a short paper on informal groups, and I wrote earlier articles about places, and about stories. I teach IP, but maybe it's fairer to say that I write about stuff.
Gordon suggested that I post about IP/corporate law overlaps, among other things, and I'll try to do that. First up is a note about blogging itself. My hometown paper, the Pittsburgh Post-Gazette, ran this little feature yesterday about how the world of corporate PR is catching the blogging wave:
In the past three months, large traditional firms Ketchum and Burson-Marsteller and small Web development and online marketing agency Ripple Effects Interactive, all with offices in Pittsburgh, have unveiled services to help clients manage and shape their online reputations.
The goal is to sell clients on using PR experts to sort through the confusing world of blogs, search engine marketing and other technologies such as podcasting before the online world turns on them.
That kind of us/them mentality can get a person in trouble, especially when what seem like "ordinary" questions of marketing and reputation get caught up in the tangles of trademark law. As I was reading this, I thought immediately of last week's flap involving Monsanto's heavy-handed effort to silence a critic's use of the phrase "Roundup, ready" (note the comma) as the title of a series of posts about the politics of food. That episode offers a nice illustration of a point that I make frequently in my IP classes: IP law isn't just for IP lawyers. Everyone in the corporate world needs to know some IP basics.
Permalink | Blogs and Blawgs| Intellectual Property| Marketing| Technology | Comments (0) | TrackBack (0)
August 28, 2005
I've posted a rough draft of my Google/branding paper on SSRN. The paper still has a ways to go, but I will be presenting it in workshops this week and next, so I thought I'd go ahead and seek some feedback from the Glom readership as well. Feel free to comment below, or just email me separately.
Here's the abstract:
Branding is an unappreciated feature of contract design. Corporate finance scholars generally assume that consumers focus on product attributes like price, quality, durability, and resale value. But consumers choose brands, not just product attributes. This Article claims that the legal infrastructure of deals sometimes has a branding effect - that is, an effect on the brand image of the company. Deal structure affects the atmospherics of the brand.
I explore this link between deal structure and brand image by examining the Google IPO from last summer. From a traditional corporate finance perspective, the goal of a properly structured IPO is to overcome the information asymmetry between issuer and investors and to lower the cost of capital. From this perspective, the success of the Google deal is questionable. Few would call the deal elegant or efficient. But this is not really what the Google IPO structure was about, or at least it is not the full story. When Google structured its IPO as an auction, it reinforced its image as an innovative, egalitarian, playful, trustworthy company. Talking about Google's IPO makes you want to use Google's products. By that measure, the deal was a success.
I also examine the branding effects of three other deals: the Ben & Jerry's public offering in 1984, which sold stock only to Vermonters; Steve Jobs's contract with Apple, which entitles him to cash salary of exactly one dollar; and Stanley Works' failed attempt to reincorporate in Bermuda to minimize its tax liability.
Finally, I conceptualize the role of branding as it relates to deal structure. Certain legal events in the lifecycle of the company - what I call branding moments - provide opportunities for firms to signal company values. I also three types of companies - cult companies, integrity companies, and social responsibility companies - that are in the strongest position to take advantage of the branding effects of corporate deal structuring.
I'm still working out the theory section and very much open to suggestions or ideas. Thanks!
Permalink | Google| Initial Public Offerings| Marketing | Comments (4) | TrackBack (0)
August 16, 2005
All Alone is All We Are. Except for our iPods.
I am feeling some existential angst lately, brought on by Nate Fisher and Six Feet Under. Ann Althouse shares my fascination with the show (but not my angst), and she has been posting about the NARM episode, eco-burial, the architecture of the Fisher house ... which has led me to think more about the relationship between Gen X and branding. And a NYT article from the weekend discussed Gen X and branding. Does my generation have a special relationship to consumer products?
(If you are not caught up on the show, you may want to stop here. If you are caught up or don't care, read on below the fold.)
Six Feet Under has been intense lately. Nate Fisher, the older brother, died of a sudden stroke ("Narm" -- numb arm -- was the last word he uttered as he collapsed). Nate was the conflicted moral center of a deeply conflicted show.
Nate turned 40 this year, which places him at the front end of Generation X. More to the Gen X point, a flashback with Claire last week showed Nate distraught over the death of Kurt Cobain. The title of the episode, All Alone, refers to Cobain's lyrics, "All in All is All We Are." All alone. Grunge and Seattle may have passed on, but existential angst is still right here, still defining my generation.
What I am interested in is my generation's relationship to brands
and consumer products. Gen X's relationship to products is more
complicated and nuanced than either the boomers' or Gen Y's. My branding
paper brings a Gen X flavor to analysis of corporate deal structure.
Traditional economic analysis assumes that consumers focus on
attributes like price and quality when they buy products. The internal
corporate governance of the manufacturer would seem to be irrelevant.
But as the purchasing power of Gen X increases, that sort of un-branded
analysis doesn't work any more.
A bit of background: Gen X
refers to those of us born between 1965 and 1977, more or less. I'm
right smack in the middle. Irony is our defining characteristic. We
are labeled underachievers and slackers, but we created the dot com
boom. We are idealists, but we reject the naivete of the 60s. We grew
up in an "accelerated culture," watching way too much TV.
We are postmodernist, not modernist. (Although pomo predates us, our
generation was probably the first to really embrace it and incorporate
it into our pop culture.)
Whereas modernist critics resist advertising and branding, we resign ourselves to it. We understand and accept that our identities are shaped by the things we buy. The purchasing decision is not primarily about functionality. It is about shaping our identity.
Boomers are different. Baby boomers tend to fall to either extreme in their relationship to brands. Either they fully embrace the consumer lifestyle, irony-free, living in the suburbs and accumulating wealth. Or, influenced by the sixties, they resist. They boycott products. They move to Boulder. They avoid brand names as much as possible. They think corporations are evil.
Gen X doesn't boycott. We don't fight consumerism, at least not in
the same way. Instead, we accept that marketing suffuses our very
identity. Going to the supermarket isn't just about buying food. It
is about defining ourselves. Some Gen Xers buy Kraft Macaroni and
Cheese, seeking a nostaligic substitute for the home life
they were denied as latch-key kids. Other Gen Xers, knowing
that Kraft is owned by Phillip Morris, opt instead of an upscale
organic brand. But either way it's not just about the mac and cheese.
Back to Six Feet Under. Nate's character has always reflected my generation's dreams and troubles, from the life he led in Seattle (where he worked in a crunchy food co-op), to his trou