Archive for December, 2009

Diminishing Returns

December 28, 2009

The good people at Kohl’s would be wise to consider the law of diminishing returns and slow the pace of email promotions.

I’m always happy to sign up for promotional programs.  I sign up in part to learn about good deals.  But I mainly sign up to see what people are doing in terms of marketing efforts.  So a while back I signed up to get emails from Kohl’s.

This year it seems that Kohl’s has gone totally overboard with promotions.  So far in December I have received 22 emails from Kohl’s.  That is just about one email per day. 

They all have a similar style:

Tick Tock. Only 4 days left to save an extra 30%, 20% or 15%!

ENDS TODAY! Extra 15% or 20% Shopping Pass LAST DAY!

Extra 15% Off Everything + FREE Shipping! TUES. & WED. Only!

Kohl’s Cash-In Sale + Online-Exclusive Deals Starts today!

Save an EXTRA 30%, 20% or 15%

CLEARANCE + Lowest Prices on Power Hours & Extra 15% Off

There’s Still Time! Save up to 65% Off Last-Minute Gifts

When these emails started arriving I was tempted to read them.  But after a while the constant flow of great deals and big discounts became totally numbing.  Which deals are good deals?  Are any of them notable?  What is a good price at Kohn’s anyway?  I have absolutely no idea.

The only certain conclusion is that paying full price at Kohl’s is really a bad move.

Focus is a wonderful thing.  Next year Kohl’s would do well to focus on fewer, more distinctive offers.

McDonald’s Internet: Points of Parity, Points of Difference

December 17, 2009

Yesterday McDonald’s announced that it would be introducing free internet access.  This is a good move and a long overdue one.

There are two important concepts when it comes to positioning: points of parity and points of difference.  When a brand establishes a frame of reference, or competitive set, there are obvious points of parity.  These are features and benefits offered by basically everyone.  They do not differentiate, but a brand that falls short on these dimensions will surely be hurt.  For example, all small cars have four wheels, a steering wheel, lights and pretty good gas mileage.  These are all points of parity.

Points of difference are the things that help a brand stand out.  These are the factors that drive purchase.  Small cars are all pretty similar but the Mini Cooper is uniquely sporty and fun to drive. 

For McDonald’s, internet access is fast becoming a point of parity.  In the world of coffee establishments, in particular, internet access is almost universal.  Starbucks, Caribou, Argo and my favorite local Chicago coffee shop, Intelligentsia, all offer it.  McDonald’s has to offer free internet simply to be a viable competitor in the space. 

This move will result in some lost revenue in the short run, as people no longer have to pay for internet access, but it will protect share.

Marketing isn’t always about growth.  Sometimes companies have to focus on improving the product simply to keep up.  This is one of those times for McDonald’s.

Timing is Everything

December 14, 2009

I spent the last week in Turkey teaching a course on branding.  While I was there a major snowstorm descended on Chicago. So I followed the storm, from a distance, by frequently checking the Chicago Tribune web site.  And as the snow flew, who bought all the advertising space on the Chicago Tribune home page?  It was Toro, advertising snow blowers.  The ad stated:

Shoveling is for amateurs.  Move more snow in less time.  Toro.

This is an example of effective marketing.  At the moment when everyone is thinking snow and shoveling, Toro shows up with the perfect message.  It was a case of the right message being delivered at the right time.  This is a good marketing lesson: timing is everything.

There was only one problem.  I did precisely what the Toro ad suggested and clicked over to the Toro website (www.toro.com).  And I found myself looking at a website featuring…drum roll…sprinkler systems.

Sprinkler systems?

Is there a category less appropriate for December?  As the on-line advertising kicked in, sending people to the Toro website looking for snow blowers, the site was firmly focused on an irrelevant category.  It wasn’t even obvious where one would go to learn about snow blowers.  

This is another good marketing lesson: execution is everything.

Tiger Sponsors Laying Low

December 9, 2009

It is always delightful when theory and reality align. 

I spend a lot of time in my courses at Kellogg discussing marketing theories.  I also spend time explaining why the theories don’t always work.  Every situation is unique, and sometimes companies violate basic marketing rules and succeed nonetheless.

In the Tiger Woods case, the theory suggests that Tiger’s sponsors should not walk away.  Tiger was and is one of the world’s great brands.  Companies that have invested in a sponsorship deal should stick with it unless there is compelling reason to change.  And while Tiger is in the headlines for all the wrong reasons these days, his actions don’t appear to be unusual or unforgivable (for the public at least…I can’t comment on the state of his family life).

At the same time, it doesn’t make a lot of sense to heavily publicize a Tiger Woods sponsorship at this moment, either.

So in theory companies that have deals with Tiger should continue to work with him, but temporarily pull back on marketing activities.  Once this has all settled down and Tiger’s agent has cut generous deals with all the offended parties to minimize the negative revelations, and once Tiger starts winning again, then the marketing campaigns can resume. 

And that is precisely what seems to be happening.  The Wall Street Journal is running a story today about how sponsors are responding to the crisis.  The basic message: sponsors are defending Tiger and standing with him, but pulling back on promotional campaigns featuring him.  You can read the story here:

http://online.wsj.com/article/SB10001424052748703558004574584211344741656.html?mod=WSJ_hps_LEFTWhatsNews

So, this time at least, reality and theory align.

That is one of the few good things about the disheartening Tiger Woods story.

GM: CEO Churn and Branding Problems

December 2, 2009

Yesterday General Motors CEO Fritz Henderson stepped down.  Apparently the GM board, concerned that things were not changing quickly enough under his leadership, asked him to step aside.  Fritz was CEO for less than a year.

Churning through CEOs is not the way to fix GM. General Motors has many, many problems.  But perhaps the toughest problem is that GM’s brands are weak and muddled.  GM can make wonderful cars but the company won’t regain pricing leverage until the brands improve.  It is very hard to sell cars with a negative quality perception and a generic brand image.

Fixing a brand takes time.  Changing the perceptions of a well-known one can take years, and in some cases it simply can’t be done.  You can’t just roll out a commercial saying, “Look, our quality is terrific.”  People won’t believe it.

Compounding the problem is the fact that GM has little credibility with consumers.  Quality has been spotty for many years.  Everyone in the U.S. knows that GM has very big financial woes.  Fritz Henderson, featured prominently in GM advertising earlier this year and host of the Tell Fritz web page (www.tellfritz.org), is now out.

There is no quick fix for GM’s branding problems.  Indeed, the way to improve short-term financials at GM, massive discounts, cost saving efforts and promotion gimmicks will only make things worse for the brands.  Bringing in a new CEO dedicated to making some sweeping changes and driving short-term results is not likely to fix the branding problems. 

Repairing GM’s brands, if it can be done at all, will take time and dedication and stability, not a string of new CEOs determined to have an immediate impact.


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