Archive for the ‘marketing strategy’ category

Lowe’s Deserves High Marks for Latest Ad

October 5th, 2009

Any advertiser wishing to advertise low prices while still protecting its brand equity could learn a lesson from the latest Lowe’s TV commercial.

The ad creatively shows a variety of situations in which a t-shaped item (like an upside-down push broom sticking out of a shopping cart in a Lowe’s parking lot) is placed to the right of the Lowe’s logo, thus creating the word “Lowest”. The ad features several of these shots, each of which is clever and even mildly entertaining, while reinforcing Lowe’s claim of offering the lowest prices available.

The beauty of this advertising is that it registers the Lowe’s brand repeatedly throughout the commercial, which is in stark contrast to the typical commercial that seems almost embarrassed to show or say the advertiser’s name. Moreover, the cleverness of the ad reflects very favorably on Lowe’s’ image.

From a strategic standpoint, I never like to see a marketer hyping low prices, as there will always be someone to come along and undercut your prices and hence your strategy. Still, if that is the strategy you’ve chosen, it’s essential that you do everything possible to protect your brand equity and let people know that you stand for more than just cheap prices. And in that regard, Lowe’s has set the bar very high.

Taurus: A Hot Car By Any Other Name

September 13th, 2009

Ford CEO Alan Mulally made an executive decision over a year ago to resurrect the Taurus brand. While that might not be a mistake per se, what was a mistake was attaching that brand to a very stylish high-performance car that sells for up to $47,000.

The Taurus was a fairly strong brand over 20 years ago, as the then-stylish car won many design awards and for a time was the largest-selling car in America. However, for many years following its late 1980s heyday, the Taurus brand was attached to a series of uninspired models that, despite frequent deep discounts, sold so poorly that the brand was eventually unceremoniously retired.

Thus, while there is certainly some equity in the Taurus name, I suspect it has as much negative equity as positive equity. While I find the new design quite attractive, I would be much more interested in it if it had a new name that was as impressive as the vehicle itself.

Moreover, this seems to be a major opportunity lost for Ford. At a time when Ford, like its domestic competitors, is desperately trying to convince consumers that it has learned from its error-prone past and is now making better cars than ever before, why look backward and associate yourself with an era when your reputation was at or near an all-time low?

Under Mr. Mulally’s leadership, Ford has been by far the most successful of the Big Three U.S. car manufacturers from a financial standpoint, and was the only one of the three to avoid a government bailout. But Mr. Mulally’s financial instincts appear to be much greater than his marketing instincts. Thus, while the attractive new Taurus may experience some degree of success, I have to believe that it would achieve considerably greater success with an attractive new name.

In other words, when Mr. Mulally mandated that the Taurus name be brought back from the dead, someone at Ford should have had a better idea.

Great Lake, Greater Pizza, Greatest Marketing

September 7th, 2009

I just read a fascinating article in the Chicago Tribune about a tiny restaurant called Great Lake, which GQ magazine recently proclaimed to be the makers of the finest pizza in America. Great Lake breaks virtually every rule of marketing: they make customers wait hours for their pizza and show little sympathy for complaints; they have no interest in expanding capacity despite a clear opportunity to dramatically increase their revenues as well as customer satisfaction; and they do zero advertising or promotion because–heaven forbid!–that would attract more customers. Their goal is simply to make the world’s most perfect pizza, and–if GQ and the Tribune are to be believed–they are succeeding.

On the surface, Great Lake looks like the Great Anti-Marketer. Ironically, however, while Great Lake appears to lack a marketing strategy, the fact is that their obsession with creating the perfect product has effectively become their marketing strategy–and a powerful one at that. Great Lake’s off-the-charts product is generating the most cost-effective marketing a business can have: over-the-top media reviews and extremely positive word-of-mouth support. (Case in point: the Tribune article actually has me making plans to visit Great Lake knowing I’ll have to wait in line for 3 hours, which is something the greatest pizza ad ever created could never persuade me to do.)

So, does this mean you should ignore marketing and simply let your quality do the talking? Only if you have a product that is truly rave-worthy and unlike anything your target customers have ever before experienced. Put another way, if your customers are willing to wait in line for 3-hours for your product and then tell others about how great it is, you may not need to market. If this isn’t the case for you, however–and I suspect it isn’t for 99.9% of all businesses–then an effective marketing strategy needs to be a critical priority.

The only product that comes to mind that was able to generate so much “free” buzz that it didn’t need to advertise was the iPhone during its initial launch. See if you can think of any others.

Perhaps it will give you something to do while you’re waiting in line at Great Lake.

Jay Leno’s Branding Strategy: Mass Over Class?

August 28th, 2009

What is the Jay Leno brand? As far as I can see, there are two versions, and they couldn’t be more polarized.

First, there’s what I would call “Edgy Jay.”  This is the Jay of the late 1970s and 1980s, when he was a refreshing, inventive stand-up comic. A few years ago, I saw this Jay emcee an awards ceremony honoring entrepreneurial companies (including my employer at the time), and he was hysterical. (The big winner that night was the octogenarian ultra-entrepreneur, Jeno Paulucci, who brought his attractive 20-something granddaughters with him. Just before closing the show, Jay said something like, “And girls, don’t forget–After Granddad falls asleep, give my room a call!”)  And the other night I saw him on “Real Time with Bill Maher” on HBO, and I found him to be every bit as quick, biting and provocative as Maher.

But then there’s what I’d call “Dull Jay.”  This is the dumbed-down Jay Leno who hosted “The Tonight Show” for 18 years, and based on the uninspiring, derivative TV commercials I’ve been seeing lately, this is the Jay who will be hosting “The Jay Leno Show” starting in September. Clearly, this Jay has a very different target audience than “Edgy Jay,” and based on the solid ratings “The Tonight Show” received throughout his tenure, a much larger audience as well.

As you might have guessed, as an audience member–as a consumer–I much prefer “Edgy Jay.” However, as a business person, I understand that “Edgy Jay” is not for everyone, and that there’s a bigger market for “Dull Jay.” Thus, I can’t fault Jay Leno for embracing “Dull Jay” as his primary branding strategy–although I’m pretty sure he doesn’t refer to it using that phrase!

(For what it’s worth, I also suspect that deep down he much prefers being “Edgy Jay” to “Dull Jay,” which may be why he still emcees awards ceremonies or appears on Bill Maher’s show. He just needs to be sure he doesn’t overexpose “Edgy Jay” to his primary target audience, or he could damage his brand equity.)

Your business might have to choose from similar options: Do you pursue a niche strategy that allows you to delight a relatively small segment of the market, or do you go after the mass market with a product or service that is less likely to delight but also less likely to turn people off? The latter might seem like the obvious choice because of the bigger scale, but it also likely means that you’ll face much more competition and need much deeper pockets.

When I worked as a marketing director for the E. & J. Gallo Winery, each year we hired the top graduates of the top school of oenology in the country (UC Davis), and most wine industry observers would tell you that Gallo’s winemakers were unmatched in their expertise. However, Gallo’s goal at the time was to be the biggest winery in the world, which it achieved by formulating and producing wines that appealed to the palates of millions of everyday consumers rather than thousands of wine snobs. Had Gallo wanted to, it could have produced exceptional $300 and $400 bottles of wine, but the market for good-tasting $10 jugs of wine was much more lucrative.

The mass market strategy has proven to be the way to go for Gallo, and for Jay Leno. However, Gallo had tremendous financial resources, and Leno had access to the massive clout of NBC. Without those advantages, you’ll likely find that targeting a niche with an “edgy” approach will have much better odds of success than going after the mass market with a “dull” offering.

So what’s your preference: mass, or class?

Give CA CEO a C in Advertising

August 11th, 2009

One of my rules over the years has been to avoid companies whose CEO makes himself or herself the focus of the company’s advertising. CA, a leading IT services firm, recently began running an ad showcasing its CEO, John Swainson. It will be interesting to see if CA will be the latest embodiment of this rule, or if it will somehow manage to be the rare exception.

From everything I’ve read, CA appears to be a successful, well-run company. They’re the biggest independent IT management software company in the world, and they’re growing both sales and earnings despite a rough economy. But while they may know a lot about IT, they don’t appear to know much about effective marketing communications–at least not yet.

I’ve always felt that CEOs should be the focus of your advertising only if they bring badly-needed credibility to the brand–as Lee Iococca famously did for Chrysler in the 1980s–or if they possess exceptional charisma that can uniquely and effectively position the brand. Since Mr. Swainson is largely unknown and far from charismatic, it’s hard to see why someone thought it would be a good idea to make him the star of this ad.

The ostensible point of the ad is to educate viewers about what CA does. Having seen the ad several times, however, all I’ve learned is that CA makes really boring ads. And while Mr. Swainson may well be a highly capable CEO, he is not a particularly charming or telegenic spokesman. If anything, his drab business suit, dated hairstyle (too long on the sides) and monotonous, unsmiling delivery all conspire to fight the high-energy, state-of-the-art feeling the company was no doubt hoping to create.

Sometimes a starring advertising role for the CEO reflects an out-of-control ego that is dangerously manifesting itself in other parts of the company as well. I have no reason to believe that this is the case at CA. In fact, it may well be that Mr. Swainson and his marketing people are smart–and honest–enough to eventually realize that this ad is not doing the trick and that it’s time to go back to the marketing communications drawing board.

If that’s the case, I can’t wait to see their new ad and finally learn exactly what it is that CA does.

Starbucks Bucks Mac Attack

August 5th, 2009

In announcing Starbucks’ recent quarterly financial results, CEO Howard Schultz announced that the company’s coffee sales have actually been helped by the efforts of McDonald’s to eat into its market share. It turns out McDonald’s actually got more people thinking about coffee, and that many of them decided to get theirs at Starbucks rather than McDonald’s.

This anecdote reinforces two long-established and still-relevant tenets of marketing strategy. First, if you suddenly face a new competitor or an existing competitor that decides to up its aggressiveness, it’s often a good thing. The stepped-up competition will raise awareness of your category, and if you’re good at what you do, you should benefit from the increased exposure. There’s no need to panic, and certainly no need to do something rash like slashing prices to defend your turf.

Second, if you decide to enter a new category or ramp up your aggressiveness in an existing category, don’t do it by attacking the market leader. Not only are you likely to help them by by virtue of the attention you generate for them, you’ll come across as a poor knock-off at best or a cheap-shot, low-blow artist at worst. Instead of making your story what’s wrong with the market leader, make it what’s right with you.

As the late rocker (and marketing maven) Jerry Garcia once advised, don’t try to make people think you’re the best at what you do; make them think you’re the only one who does what you do!

Ally Needs to Ally with a Better Advertising Strategy

August 3rd, 2009

Have you seen the series of TV commercials in which an adult uses “fine print” to tease a child? In one, one girl is given a toy pony and then watches as a playmate is given a real pony; in another, a boy is allowed to play with a cool toy airplane for a few seconds, only to have it abruptly taken away and replaced by a sorry cardboard cut-out. These acts of meanness are supposed to be metaphors for how financial services companies use “fine print” to abuse their consumers. Clever, huh?

If you have seen these spots, do you remember who the advertiser is?  I highly doubt it.  The answer is Ally, which on its website bills itself as “a new bank built on the foundation of GMAC Financial Services.”  When I read this, I had a true LOL moment, having used this blog on numerous occasions to criticize General Motors for its automobile and truck advertising. The Ally campaign certainly rivals GM’s vehicle advertising for incompetence.  First, it commits advertising’s cardinal sin by failing to register the brand name–an especially flagrant foul given that this is a new company that badly needs to establish consumer awareness. Second, the story line of the commercials has virtually nothing to do with financial services; the viewer comes away with little or no understanding of what benefit is being promised. Third, the teasing of these children is downright mean; although this meanness is ostensibly meant to represent the way Ally’s competitors treat their customers, it seems more likely that Ally will be the brand associated with the meanness. It almost makes you wish for at disclaimer saying, “No child’s emotions were irreparably harmed during the filming of this commercial.”

In short, these commercials don’t effectively convey either the benefit being advertised or the brand doing the advertising, and those few viewers who are somehow able to identify the brand will likely associate it with meanness.

For a company claiming to know that consumers don’t read the fine print, you’d think that Ally would have the good sense to put its benefits–and its name–in the headline, rather than to associate itself with the teasing of innocent children. What consumers would want to ally with a company like that?

The King Is Dead. Long Live…McDonalds?!?

May 18th, 2009

A few weeks ago I ranted about Burger King’s latest horrendous TV ad in a post titled, “I Hate Bad Ads and I Cannot Lie.” I must admit that I just took some pleasure in reading an article titled “A Royal Headache at Burger King” in the May 25, 2009 Business Week. Among the many marketing gaffes cited by the article is the SpongeBobSquarePants ad that was the source of my ire. Now, as a result of this and other marketing misjudgments by Burger King and its ad agency, Crispin Porter + Bogusky, Burger King’s sales are suffering while competitor McDonalds is experiencing relatively healthy growth.

Burger King’s franchisees are particularly furious about the SpongeBob ad, which prompted 10,000 letters from angry consumers (not to mention one post from an angry blogger) and failed to boost sales despite a big advertising budget.

To be fair to Burger King, any successful company has to take risks, and that sometimes includes running ads that at first blush might seem inappropriate but eventually have a positive impact. The key, however, is to be able to differentiate between those risks that are likely to pay off and those that will likely bomb. Unfortunately, Burger King and its agency have not been demonstrating that particular skill of late, and their franchisees and stockholders are now paying the price.

Sony: Like Every Other

April 17th, 2009

A headline in yesterday’s Wall Street Journal read, “At Sony, Culture Shift Yields a Low-Cost Video Camera.” In essence, Sony has decided to launch a low-cost camcorder to compete with the Flip camcorder, which was launched three years ago. Sony’s product, called the Webbie, not only has no meaningful competitive advantage over the Flip, it has two major disadvantages: it’s available in only 3 colors, versus hundreds for the Flip, and it cannot be personalized with the customer’s own images.

This announcement is yet further confirmation of just how far Sony has fallen from the days when it was considered not only the most innovative electronics company in the world, but a brand that warranted a significant price premium. Back then, the tagline “Sony. The one and only.” was both memorable and truthful. Unfortunately for Sony fans–and investors–the company decided about 20 years ago to get into the movie business. As so often happens with dramatic diversification moves like this, the company soon lost focus, and its vaunted innovation soon disappeared. Think about it: what’s the last big idea Sony brought to the market? The Walkman? (Speaking of which, when’s the last time you used a Walkman, let alone bought one?)

Around the time it was losing its capability for innovation, Sony also lost its penchant for marketing, opting to replace the catchy and ownable “Sony. The one and only.” with the utterly forgettable “Sony. Like no other.” Sadly, Sony now seems content to act like every other consumer electronics company by simply knocking off the market leader and competing on price. What’s worse, it clearly hasn’t even mastered the art of knock-offs, as its new entry is an inferior product…and a few years late. That’s not great news for Sony customers, and it’s worse news for Sony investors.

When the Going Gets Tough…the Smart Raise Prices!

February 23rd, 2009

Recently Procter & Gamble announced that its response to the weakening economy would be to increase its prices and use its marketing efforts to persuade consumers that its products are a superior value despite the premiums they charge. In other words, P&G–the company that invented the concept of brand management–has decided that our economic woes are no excuse to panic and abandon the long-held value-added marketing strategy that made the company one of the most successful businesses on the planet.

As someone who used to compete against P&G, I have always had tremendous respect for the rigor and consistency of their strategic thinking. (Their creativity sometimes leaves something to be desired, however, but their huge budgets allow them to compensate for that shortcoming.) While their decision to stick to their guns is thus hardly surprising, it is nonetheless refreshing and admirable–particularly when institutions like Saks Fifth Avenue are indulging in marketing myopia and slashing prices left and right.

Early in my career, I was in a meeting in which someone suggested cutting prices in order to stimulate our sales. I’ll never forget the response from the senior manager in the room: “Any business you get because of price you’ll eventually lose because of price.” He directed us to come up with ideas that would increase revenue by adding value rather than subtracting price. And we did.

Perhaps his direction–and P&G’s decision–are not particularly profound, but in an environment in which so many once-esteemed companies are taking the easy way out and abandoning the principles that built their brands, it’s encouraging to see a company respond to a tough market by demonstrating the courage of its convictions.