- Published: December 5, 2013
Back in the 1950s and 1960s, when television was in its infancy, it was common for actors to appear in advertisements during the show in which they starred. Often this occurred with the actor pitching a product while outfitted in wardrobe and makeup in the same way they appeared on a show. The practice of having actors promote a brand was a carryover from the golden days of radio, where program sponsors (i.e., advertisers) demanded actors participate in ads in order to fund a program.
By the 1970s, the practice of actors supporting sponsors faded, as advertisers moved away from funding of a specific television show and, instead, opted to purchase shorter spots, such as 60 second ads, across multiple TV programs.
Now, according to this New York Times story, cast member promotion of products is returning. The story reports on cast member promotions for ABC and NBC owned programs. As was the strategy in the 1950s and 1960s, it seems the ads will appear within the actor’s show. Brands using this strategy include Target, Dodge and Jeep.
- Published: December 4, 2013
The line between what is real, objective online content and what is made up to promote a company is becoming blurry. The examples that are the most difficult to distinguish are so-called sponsored content (also called native advertising), where a website intentionally publishes content that presents an advertising partner in a favorable light. What makes this a controversial issue is not that the content has been paid for by the advertiser but that website visitors may not be able to easily identify who is responsible for the content.
The Federal Trade Commission is taking a dim view of native advertising. As discussed in this New York Times story, the issue is not so much with this advertising form but with the methods that are used to present the content. Specifically, the FTC is concerned with whether the sponsor of the content (i.e., the advertiser) is clearly being identified. For instance, the story discusses one popular technology website where authors of the site’s regular content also write some of the sponsored content and whether this may lead some visitors to believe it is part of the website’s editorially scrutinized material.
Yet this issue is not all one sided. In this story, websites offer their take on this practice, and for some, their views may seem quite reasonable. Whether you believe native advertising is a good or bad practice, the arguments put forth by both sides makes for a good read.
- Published: December 3, 2013
In our What is Marketing? tutorial, we indicate that the environment in which most companies compete requires marketers possess the ability to be creative. While the example we use in the tutorial relates to creativity for developing new products, this marketing decision is by no means the only one that may frequently require new thinking. In fact, most people would say the most creative part of marketing occurs with promotional decisions, such as developing a new advertising campaign.
Yet, while we say marketers must be creative, it should be clear that the level of creativity may differ from one industry to another. For instance, while technology marketers must fight off competition by constantly coming up with new ideas across their entire marketing mix (e.g. new products, new advertising, new pricing programs), marketers in less dynamic industries, such as those in many business-to-business markets (e.g., manufacturer of nuts and bolts), may be more limited to where new ideas are needed.
Additionally, it is essential to understand that being creative is often risky business. Why should a marketer push the creativity pedal when their company is already the market leader? Why not just cruise along with what has been working?
This leads to this story from Millward Brown. It offers a number of examples of the fate of companies that chose to be creatively different. The focus here is on creativity in advertising. Ad examples from the U.S. include Dos Equis Most Interesting Man and Kmart’s Ship My Pants. Also, several global ads are also discussed.
Of course, not all attempts at creative advertising are successful. The story points out key issues marketers should contemplate when considering an advertising strategy that clearly breaks from current industry norms. Also, since this story is from a research company, there are several useful stats presented.
- Published: December 2, 2013
It is not very often a story about product distribution is a big story. In fact, this story is not only the biggest business story of the day, it seems to have captured a prize for being one of the biggest news story. By now, most people have heard about how Amazon is testing distribution using drone aircraft. The delivery drones would operate within a 10 mile radius of an Amazon distribution center and could fly an order that weighs up to five pounds and get it to the customer within 30 minutes. Amazon’s experimentation with improving product distribution is part of an e-commerce industry trend to reduce delivery time to enable customers to enjoy rapid product satisfaction in the same way store-based retailers can.
Certainly the futuristic nature of product delivery by “octocoper” is a fun concept. But what is a little unclear is whether this type of shipping mode can be more efficient than fielding a human delivery force. Sure the 30-minute delivery guarantee is a key selling point, but pizza shops have been doing that for years. Additionally, a human can deliver much more than five pounds.
But human delivery does not do well in congested areas. And as Amazon’s Jeff Bezos notes, this will be a prime target for this service. So apart from issues the FAA may have with hundreds of small flying machines, what may actually be the key to this concept is landing space. For this to work in cities, drones may need to maneuver and land in very tight spots, such as on the balcony of a high-rise apartment building. If that can be done, then drones may provide some distribution advantages.
If there is one thing to take away from this story it is not to underestimate what Amazon can do. It is a fair bet they will introduce this service, but it likely will not be part of a free shipping option. It is more realistic, given the supporting infrastructure required to deploy a drone delivery force, that Amazon will need to generate additional revenue either by charging a stiff delivery fee or offering it as part of a “membership” plan similar to their Amazon Prime service.
- Published: November 27, 2013
This time of year the loss leader pricing model is a critical pricing tactic utilized by retailers. As discussed in the Setting Price: Part 2 tutorial, loss leader pricing is a form of promotional pricing that principally is used to attract customers to retail stores. Under this approach, retailers intentionally sell products at prices that are below the cost they pay suppliers (e.g., manufacturers) for obtaining the product. In other words, they lose money on each item they sell. The idea is that, while they lose money on this product, they will easily recoup their loss by selling other products that are profitable.
While a useful pricing tactic, some U.S. states have viewed this as a form of predatory pricing, where the low price is not necessarily intended to attract customers, but is designed to drive competitors off the shelf, or possibly, out of business. One state that did not appreciate loss leader pricing is Oklahoma, which not only considered to be illegal but, back in the 1940s they also said retailers had to sell a product at a price that is 6 percent or more above its cost.
Now, this has changed. According to this story, after 72 years retailers are free to engage in loss leader pricing in the state of Oklahoma. At least for some products. There are still limitations when it comes to drugs, gasoline and groceries. Obviously for retailers, this comes just in time for their Black Friday specials.