Archive for May, 2010

The End of Mercury

May 28, 2010

Ford is killing off the Mercury brand.

This news is getting a lot of attention today, with a big article on the front page of the Wall Street Journal, but it shouldn’t be a surprise.  Mercury has been fading for years.

Indeed, the only notable thing here is just how long it took Ford to make the final decision.

Mercury is an old, well-known and famous brand.  But it is a brand that hasn’t been relevant for a long time.  What makes Mercury unique?  What makes Mercury special?  What is the difference between Mercury and Ford?  Nothing.

Supporting a brand is expensive; it needs consistent marketing support, new products, product improvements and customer service initiatives.  Without support, a brand will gradually fade away.

Ford hasn’t been investing in Mercury for a very long time.  Job #1 at Ford these days is fixing Ford.  With limited financial resources, Ford hasn’t been able to support to support Mercury.

I suspect Mercury survived as long as it did for two reasons.  First, killing off a brand is unpleasant and expensive.  You don’t just announce the decision and walk away; you have to unwind all the dealer relations, reassure current owners and liquidate the existing inventory.  This takes time and money.

Second, brands are emotional.  Some senior executives at Ford had a deep attachment to Mercury.  They fought to keep Mercury alive until there was absolutely no reason to believe the brand could come back.

It is sad to see an old brand pulled from the market.  But brands don’t always last forever and a cumbersome brand portfolio is a major problem.

Ford is making a difficult but very smart decision.

Michigan Sticks with a Winner

May 20, 2010

Things are tough in Michigan.  Tax revenues are slumping.  The U.S. auto industry continues to struggle.  And the big news in Detroit is that the city is getting ready to knock down thousands of buildings, which is always a sign of progress.

Despite all this, Michigan is continuing to invest in its compelling tourism campaign, Pure Michigan.

The latest spots are now posted on the Michigan tourism website.  You can see them at:

www.michigan.org

Michigan’s commercials are compelling and distinctive.  The branding comes through and the benefits are very clear.  The spots really work.

The only disconcerting thing is that Michigan is apparently cutting spending on the campaign.  Despite the efforts of Governor Jennifer Ganholm, the state legislature has cut 50% of the marketing budget this year.  You can read Ganholm’s comments on the campaign here:

http://www.thegovmonitor.com/world_news/united_states/pure-michigan-advertising-campaign-vital-to-tourism-30476.html

Cutting spending on the campaign makes absolutely no sense.

The Pure Michigan campaign is a proven winner.  Michigan doesn’t have a lot of these right now.  The state should be investing more, not cutting back.

Sizing up the Pampers Crisis

May 13, 2010

Just how big is the Pampers crisis?

P&G recently introduced Pampers Dry Max, replacing Pampers Cruisers and Swaddlers. The Dry Max product features an extra absorbent liner which makes the diapers thinner and improves overall performance. The Dry Max product is also cheaper to manufacturer than the old product, so P&G builds profits without taking a price increase.

The Wall Street Journal wrote about the story today:

http://online.wsj.com/article/SB10001424052748704635204575242521217158484.html?mod=WSJ_hps_LEFTWhatsNews

The launch hasn’t gone well. While P&G claims that sales are fine, consumers are in a bit of an uproar, with people complaining loudly. Media outlets are starting to pick up the story. Some stock market analysts claim the Pampers story sparked last week’s big moves.

In theory, P&G should be fine. Pampers is a strong brand and the new Pampers is supposedly a better product. According to P&G there is no evidence that the new Pampers causes rashes or other problems.

The problem is that the Dry Max story is taking on a life of its own. People are noticing the product difference and asking tough questions. Consumers are looking for rashes when they use the Dry Max product. Kids get rashes, of course. This means that consumers looking for rashes will see them. And the momentum behind the story could build, whether there is a real problem or not.

P&G has some unpleasant options. The company could simply stick with the new product, repeating again and again that there is not a problem. This might or might not work. The company could bring back the old product. This is probably a very unappealing option; one does not change a paper mill without enormous capital investment. It is hard to see a happy outcome for P&G if consumer concerns build.

There is a lesson in this, and it is the same one Coke learned many years ago. Be very, very careful when changing an iconic brand. It is easy to add new products but changing the core items is always risky.

GM’s Marketing Struggles

May 7, 2010

General Motors continues to flail in the marketing area. This week brought two rather disconcerting announcements.

First, GM announced that (surprise!) it was appointing a new head of U.S. marketing. This is apparently the fourth person to hold the post in the past 12 months, which means GM is going through marketing leaders about every 3 months. This is not a good way to build strong and enduring brands.

The latest hire, Joel Ewanick, appears to be a gifted marketer. He was apparently behind Hyundai’s rather impressive rebound last year. Still, Ewanick will need more than 3 months to have an impact.

Second, GM announced that it was preparing a new marketing campaign for Chevrolet based on the line “excellence for all.” This is not promising.

A basic marketing rule is that you can’t be all things to all people. If you try to make everyone happy you will probably make no one very happy. And this is a problem when you have lots of capable competitors.

The line “excellence for all” seems to be a “let’s target everyone” type of effort. This simply isn’t going to work very well.

GM has a long way to go in the marketing area and based on these developments I’m not optimistic. Of course, things can’t get all that much worse.


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