Newsletter Archive

Presidential Debates

 Well, the third debate was two days ago as I write this epistle. I have my own opinions about who won; on the other hand, I have yet to talk to anyone whose vote was swayed by either candidate’s performance.

In marketing terms, the entire campaign season has been disappointing (as expected) – lots of insults and rhetoric, but precious little in the way of facts, concrete proposals, substance, or intelligent discussion. And, we’ve been paying for this for years in terms of diminished consumer attention, cynicism, and polarization. Perhaps part of the problem is that campaigns tend to be relatively short, so that the normal marketing practice of branding just doesn’t have time to take effect. As in marketing any product, the mass repetition of slogans and minutia still work for a short term situation.

Anybody have any solutions?

Airlines

Here’s a novel approach – American Airlines is now advertising “We know why you fly”, instead of continuing the industry mantra of deceptive low-fare advertising (each way ONLY if you book a round trip, does not include taxes, airport surcharges, or federal fees; limited seats available, etc.). I was wondering when one of the majors would finally figure out that there are very few winners when everybody focuses on low fares. Airlines have trained us for so long to look just at price that they have left themselves little room for profit, risk, errors, etc. When most of your competitors are parroting the same message, that’s often a clear signal to create differentiation by striking out in a different direction. Plus, for any given product situation, there’s room for only one lowest-price provider.

I’ve actually used the U.S. airline industry as a case study in my marketing and management courses for several years. Students are always interested to hear that the architect of U.S. airline deregulation, Alfred Kahn, once observed that the industry has made no cumulative net profit since its inception. Admittedly, they have been buffeted lately by the vestiges of 9-11 (although that excuse is wearing thin three years later) and fuel costs (it was reported yesterday that Southwest Airlines, arguably the most successful airline, has hedged over 50% of its fuel needs through 2007 at prices less than $25 a barrel. Doesn’t anyone else have a hedging strategy?). There are also factors such as fat union contracts, bloated management layers, myopic short-term plans, etc.

My biased marketing view? This is a classic study of niche vs. mass marketing. Why does every fledgling airline, having proved successful in a region or state, then decide that it has to rule the world? Inevitably, it will be beaten back by recession, management incompetence, or competition. But, once beaten back, the next quarter of economic growth will resurrect the idea that it must spread throughout the globe.

Whatever happened to the idea of finding your niche, becoming the best company in it, and serving it well? Over my 52 years, I’ve seen no better strategy for keeping your competition at bay, and your customers loyal.

Early Quick Shot

Since I’m picking on airlines…here’s a blurb I picked up on my Amsterdam-Detroit flight in March. Being utterly bored somewhere east of the Maritime Provinces , I actually stooped to reading the in-flight magazine published by our carrier, KLM Royal Dutch Airlines. An article talked about how KLM was in the process of changing its logo slightly (making one horizontal stripe wider, eliminating another stripe, etc.). Here’s what was involved in changing the logo on ONE Boeing 747:

• 3.5 kilometers of masking tape
• 1300 liters of paint (not your K-Mart variety, I’m sure)
• 4500 pieces of sandpaper
• 7 employees, three shifts, ten days (210 work days)

All of this just to change a logo, slightly, on one plane. Care to guess how many travelers switched to KLM because of this historic branding decision?

Is it any wonder that financial problems caused KLM to merge with Air France over the summer? Did anyone at KLM think to use ROI as one of the considerations behind the “change the logo” decision?

Baseball Playoff Ads

Those of you who have been glued to the TV for the major league baseball playoffs, like we have, probably noticed the plethora of FOX TV shows that have been advertised on the “billboards” behind home plate. Of course, no fan in the ballpark cares about these shows, which is why the ads are computer-generated for display only for TV viewers. This ad trend started several years ago with MLB and the NFL (ads projected between the goal posts), and has been popping up lately in swimming, auto racing, and other events. There are many ingenious new promotional possibilities thanks to technology advances.

Holiday Sales Forecasts

 Are you being inundated with holiday gift catalogs yet? It seems that every year retailers are pushing the holiday shopping season further and further ahead. Of course, they wouldn’t do it if consumers didn’t respond positively. I remember the local Hallmark store when I lived in Elkhart , IN (left there in ’93) complaining that Hallmark required them to put up the Christmas ornament display on July 5. Of course, there were always people waiting to jump on those offerings on July 5, sending the obvious message that midsummer thoughts of Christmas were perfectly welcome.

This is a great example of why you need to pay attention to people’s actions and reactions, not their stated opinions. There are far too many business decisions made on the basis of what people say they will do, rather than what they actually do. This often occurs in cause marketing. For example, while up to half of survey respondents claim that they will patronize an environmentally-conscious company over a cheaper competitor that is perceived to be a polluter, it is rare that there is an actual shift of more than 5%.

I’m having much more success lately in predicting future sales by watching what people do, rather than asking what they think or intend to do. This seems to be particularly true in the online world.

In any case, I’m still looking for some consensus on how holiday sales will fare. Predictions early this summer called for increases of up to 5.5% over last year. Early this month, the estimates were more in the 1.4 – 2.5% range. Then, last Friday, we got hit by jumbled economic news:

• oil closed yesterday at $54.86
• retail sales were up 1.5% in September, ahead of expectations
• consumer confidence sank more this month than expected
• the trade deficit last month was the second highest in history

Does this bode for a good, mediocre, or bad selling season? I have no better crystal ball than anyone else. But, given the sputtering economy, my preference is to run lean and take the risk of running out of stock, instead of the risk of having to dump excess stock in January.

 Quick Shots

Well, I’ve been warning you for several newsletters to purchase your 2004 media early, on the grounds that between the summer Olympics and the most costly round of elections in history this year, demand will be higher than normal. It appears that I was right, but only for the last few months of 2004. While online ad purchases are showing extraordinary gains, print and broadcast media are relatively stagnant when adjusted for the seasonal election ad splurge. Perhaps those of you who procrastinated on your early-2005 media buys will be rewarded with bargains.

According to the New York Post, it now costs less to lease a seat on the New York Stock Exchange than it does to lease a taxicab in NYC ($60,000 vs. $64,000 annually). An interesting commentary on the relative value or profit potential of the two endeavors.

Over my years of teaching, I’ve compiled a 6-page list of URLs for various topics – business data bases, marketing metrics, general interest, my students’ favorite job hunting sites, etc. It’s about time I made it available to you! Just drop me an email, and I’ll send it back as an MSWord attachment.

Media Post reported this week that, according to a member survey of the American Association of Advertising Agencies (AAAA), the average production cost of a TV commercial in 2003 was $372,000, doubled since 1989. Of course, those tend to be commercials for national brands, not the Buddy’s Carpets and Ricart productions that every market experiences.

Have you yet read the recently-passed corporate tax reduction bill to see if there are any new marketing opportunities for your company? I haven’t yet churned through the entire 633 pages (plus assorted references), but there are hundreds of industry-specific breaks imbedded. Make sure you incorporate these opportunities into your 2005 promotional plans.

Getting increasingly irritated by the number of pop-up ads that interrupt you as you’re on the web? If so, I’m betting that you use MicroSoft’s Internet Explorer as your web browser. While IE has made a few strides in the past year towards suppressing pup-ups, you’ll be far better off switching to a more internet-compliant browser such as Opera or Mozilla. I haven’t had a pop-up in the past 18 months while using Opera.

NEED HELP OR HAVE A QUESTION?

 Of course, there’s no way we could let an entire newsletter go by without one bold, self-serving pitch. We’re here to be your marketing experts whenever you need it, whether it’s for an entire project or just a few hours to give a fresh perspective on a situation. We’ve recently completed projects for new approaches in self-propelled transporters, high-class educational vacations, online banking, non-profit fund raising, software marketing, and education, and we’d love to put some of that expertise to work for you. Even if you just have a question you’d like to discuss, or see addressed in the next newsletter, email or call us at your convenience.

Have a safe and happy Autumn.

Neil Brown, President
Stratamar, inc.
neilbrown@stratamar.com
614 946-4614

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