- Posted by: Paul Christ
The ultimate goal of nearly all marketers, and especially consumer-oriented companies, is to get to the point where the name of a product or company is instantly recognizable. As we note in our Product Decisions tutorial, building a strong brand offers a number of benefits. And one of the major benefits is that when customers see or hear the brand name they associate this name with important attributes of the brand, such as great taste, excellent service, low cost, etc.
While the benefits of strong brand recognition are indisputable, there is a major downside that comes with this. The downside is that perceptions customers have about the brand can hinder the expansion of the brand into other markets. This is especially a problem for brands targeted to either very high-end, high-income markets or targeted to markets at the lower end of the economic spectrum.
Why is this a problem? Because people perceive a brand as serving a certain population. And targeting customers outside this population may not only be difficult (i.e., targeting high-income customers with a brand perceived as a value brand), it can also impact existing customers' perception of the brand. They may wonder if the brand is still as good as the brand they have come to know because it is now targeting customers who may not be like them.
So how does a company with a well-recognized brand name grow if they are stuck with a brand perception that may impact current customers if changes are made? Well, high-end food retailer Whole Foods is about to find out. According to this Fortune story, Whole Foods will attempt to grow its business by creating a new grocery chain targeted to more cost-conscious customers.
It appears from a company announcement, Whole Foods will launch this chain using a "uniquely-branded" approach. This appears to be code for naming it something other than Whole Foods. This is also a bit of a gamble as there are not many examples of retailers that have successfully launched a new retail concept using a name that does not contain the well-known brand name. For instance, Nordstrom has their Nordstrom Rack outlets stores, Target has a smaller version of its store for urban locations called TargetExpress, and Macy's has said they are testing a discount store approach. But each has retained its well-known name for the new outlets. Developing a new brand of retail outlets, with a name and retail model that is quite different from that of the main brand, is not easy. So it will be interesting to see how Whole Foods moves forward with their new retail concept.
- Posted by: Paul Christ
This weekend is one of those special times when sporting events will dominate television. In particular, three events – the Kentucky Derby, the Floyd Mayweather and Manny Pacquiao Fight and the National Football League player draft – are likely to attract hundreds of millions of viewers. While there are certainly other sports occurring this weekend, such as baseball and golf, the marketing activity that takes place as a lead up to big-time events dwarfs that of standard sporting contests. The reason is simple - there is enormous money in special event sports. For instance, the Mayweather-Pacquiao battle is predicted to generate over $300,000,000 just from those watching the contest on pay-per-view. The Kentucky Derby may attract nearly 160,000 paying customers and high advertising dollars from companies craving the over 15 million watching on television. The NFL draft, which is spread out over three days, also offers huge advertising dollars to both ESPN and the NFL Network.
While these sporting events are very different in terms of the competition taking place and, possibly, the customers they are targeting, marketing plays an enormous role in each. This can be seen in obvious ways such as through television, print and online advertising promoting the event, but in a less obvious way each of these events relies heavily on the news media to build customer interest. As we note in our Types of Public Relations Tools tutorial, the task of building customer interest through the news media is performed by PR professionals. And, one of the main ways they build a trusting relationship with the media is to respond quickly to media requests for information. For instance, a PR professional handling media relations for each of these events makes sure access is provided to those running the events, such as Roger Goodell, the NFL commissioner and Kevin Flanery, the president of Churchill Downs where the Kentucky Derby is run. Even though these executive are highly skilled at dealing with the media, they still require a strong PR staff to provide assistance, such as prepping them with key talking points.
Public relations also tries to make sure the athletes in these events (i.e., players, fighters and jockeys), also understand the importance of talking to the media. However, unlike those in charge of the event, athletes may not fully buy into the media's role. This was evident during the 2015 Super Bowl when Seattle Seahawks running back Marshawn Lynch had his "I'm just here so I won't get fined" talk with the media.
So while watching these events this weekend, keep in mind that interviews with any of the participants is likely occurring thanks in part to the efforts of the event's PR staff. Moreover, what some of these folks say may, in part, have been prepared for them a PR professional.
- Posted by: Paul Christ
We have talked many times about companies facing big problems when a product category reaches the Maturity stage of the Product Life Cycle (PLC). For instance, in 2014 we looked at how changes in the beer industry had dragged several older beer brands into the Maturity stage. Also in 2014, we saw how slow sales in the golf industry were likely a signal it was entering the Maturity stage. And back in 2010, we discussed how Apple's introduction of the iPad was driving several competitive products to the Maturity stage.
As we note in our Planning With the Product Life Cycle tutorial, while reaching the Maturity stage may seem like a bad thing, it also should be a signal to marketers that changes are needed. Such changes come in many forms including: adding different features to a product in hopes of renewing customer interest; keeping the product mostly the same but targeting new markets; or accepting that things are changing and different products are now needed. The key to all of these options often comes down to timing. Marketers, who are ahead of their competitors in recognizing a leveling market and make the needed changes, often end up in a much better position than their rivals. Of course, if it turns out the market is only temporarily leveling off, such as what may occur during a recession, then making big changes may prove costly if the market recovers. But if a company has made the right decisions and the market is leveling off then their changes may pay off in a big way.
We can see an example of company winning by making changes ahead of a flattening market in this Fortune story. It provides insight on the strategic changes beverage company Dr. Pepper Snapple has instituted in the soft drink market, where carbonated beverage sales have declined for ten straight years. While other companies, including industry giants Pepsi and Coca-Cola, have seen their sales decline, Dr. Pepper Snapple sales have increased.
To keep ahead, Dr. Pepper Snapple has made a number of marketing adjustments including adding new non-carbonated products, addressing demands of growing markets, such as the Hispanic market, and engaging in product distribution deals with rivals Pepsi and Coca-Cola.
- Posted by: Paul Christ
Looking back on the many posts we have made over the years, one market to which we have not directed enough attention is the online content market. By online content we are referring to websites providing information to a specific audience including sites offering text-based information (e.g., blog postings, news and how-to articles), discussion forums, and multimedia sites (e.g., video and audio content). For example, our site, KnowThis.com, is a good example of a content site targeted to those interested in marketing issues.
To maintain a business targeting specific issues, most websites need to generate revenue to help fund their operations. They primarily do this in two ways: 1) charge a subscription fee, or 2) display advertisements. As most of us know, most content websites choose the latter. While some websites will handle their own ad management, including finding advertisers and collecting the advertising fee, the large majority of online content websites rely on ad-serving companies to present ads and to collect payment from advertisers.
The most important ad-serving service is run by Google. Its AdSense product is used by tens of thousands of websites. We at KnowThis.com have used this for many years and have always found this product's performance, including their backend analytics, to be outstanding. While online content websites looking to generate revenue have many ad-serving choices to choose from, Google is often at the top of the list.
Once a company or individuals operating a content website has decided to display advertisements; ad revenue numbers are something they watch closely. For most sites, the amount of traffic on the site is a pretty good indication of revenue. That is, the more traffic, the higher the revenue. However, that is not always the case, as it may depend on how much an advertiser is willing to spend for their ad to be delivered on certain websites. But even this can be tricky, especially if there are visitors to a website who are intentionally looking to raise an advertisers' costs.
A good example of this has just happened to KnowThis.com and many other sites on the Internet. Someone, somewhere in the world set up a system in which ads on sites were automatically clicked on April 19 and 20. The impact of this was startling. For instance, the images below show, that while KnowThis.com web traffic was fairly consistent, our AdSense ad revenue showed a dramatic increase for these two days.
While Google has now addressed this issue, it is important for anyone running a website generating revenue from advertisements to understand they should not get euphoric when they see a nice gain in ad revenue. But even more important, organizations advertising online need to pay close attention to their ad delivery. Certainly Google will evaluate this situation and make amends, but less reliable ad-serving services may not possess the skill to handle this type of malicious attack.
In any event, if a marketer is going to spend money advertising on the Internet, it is a good idea to be well schooled in the good and the bad of this promotional method.
- Posted by: Paul Christ
As we note in our tutorials dealing with pricing decisions, for many organizations, and especially those selling tangible products, setting price is often fairly straightforward exercise. You figure out what it costs to produce your product and then set the list price by determining what the markup will be. Of course, there are adjustments that can take place to the list price, such as offering discounts to encourage purchasing. But for many marketers determining price is a rather mechanical exercise and not the most exciting part of their job.
While such a rote method of pricing is common for product marketers, services marketers often take a much different approach. They view the demand for their product as being quite variable and look to adjust their price accordingly. For instance, during some periods demand is very strong in which case they can get away charging a higher price compared to times when demand slacks off and a lower price makes more sense. This approach to pricing, called dynamic pricing, is common with transportation services, such as airline fares, and hospitality services, such as hotel room pricing.
A key reason dynamic pricing has become an accepted practice in these industries is because of the evolution of e-commerce technology. Because of the Internet and mobile technology, these industries derive an extremely larger percentage of customers without directly communicating with them. While this may seem to be a bad thing, consider that what these industries do obtain is information captured when customers use these technologies. This information enables marketers to see what is or is not in demand at any point in time. Knowing this can then signal what the right price should be.
A great example of how a service company uses customer information to set price can be seen in this Washington Post story. It explains the dynamic pricing methods used by taxi service Uber. Their so-called "surge pricing" approach is powered by sophisticated computer programming that then determines what price to charge its customers. While the angle of the story is a college professor's assessment of how Uber drivers are affected by surge pricing, there are additional details presented explaining how this dynamic pricing method works.