Oatmeal: The Next Battleground in Food Marketing

Successful product launches are wonderful. Since 80-90% of new products fail, a successful product is not only a welcome change from the norm, it is essential for a business' survival and growth. The only problem is that successful products tend to draw attention... and imitators. Such is the case for Starbucks. It rolled out instant oatmeal in its stores, quickly becoming the company's most successful food product launch ever.

Now, Jamba Juice is looking to get in on the oatmeal action. The company has been testing oatmeal in its Chicago stores and plans a full rollout in January. The product is not an imitation in that it is slow cooked and touted as "steel cut" oatmeal (steel cut as opposed to "plastic cut" or "paper cut"?). Jamba Juice is counting on consumers perceiving a quality difference between its preparation method and that of Starbucks.

The need to differentiate is key in any product launch, especially when you are a follower rather than a leader. Without a distinct point of difference, Jamba Juice will come off as a "me too" player with its oatmeal offering. A potential payoff for Jamba Juice is that oatmeal might attract customers to its stores during a daypart that has less traffic. It is a shrewd move to grow business by attracting customers at a time of day when there is excess capacity.

Link: Ad Age - "Jamba Juice Launches Volley in New Oatmeal War"

Xbox 360's 50-Cent Flaw

A lawsuit brought against Microsoft by an Illinois man claims his Xbox 360 console scratched three different games when the console was switched from a vertical to horizontal position during game play. While I am wondering why someone would want to change the position of his or her game console while playing a game, I am also wondering why Microsoft did not take steps to prevent the problem. According to testimony from a Microsoft program manager, this problem with Xbox 360 was detected before the product launched in 2005. Apparently, the problem could have been corrected with minor modifications to product design that would have cost as little as 50 cents per unit.

Maybe Microsoft was thinking like me, questioning who would move around their consoles while playing games. It is an issue because a product feature touted for Xbox 360 is the ability of the console to operate with either a vertical or horizontal orientation. While changing the orientation during game play may not be ideal, engineering the product to hold up to such a change is essential. While some people might think this matter is trivial in the grand scheme of things because we are not talking about a life or death consequence, it is a matter of maintaining brand integrity. If a company knows about potential problems with a product before it hits the market, it should proactively take steps to deal with the problems. If not, be prepared to suffer hits to brand reputation as Microsoft may experience yet again with Xbox 360.

Link: Yahoo! - "Microsoft Faces New Xbox 360 Reliability Accusations"

Clock Runs Out on Arena Football League

The Arena Football League is the latest casualty of the weak economy. The league announced it has canceled the 2009 season. Its goal is to return with a more viable economic model in 2010. Among the changes AFL team owners claim need to occur are linking players' salaries to revenues, generating more revenues at the league level, and streamlining costs across franchises. Even if those changes and others are implemented, there are no guarantees the AFL will survive.

The problems with the AFL are not operational, they are relational. That is, fan relationships with the AFL and its team brands are insufficient to sustain the league. Arena football has been positioned as sport entertainment, which is both a good and bad proposition. Positioning as entertainment is good because it expands the potential market beyond those people who are interested in the core product: indoor football. Positioning AFL as entertainment is bad because it expands the number of competitors the AFL battles for consumers' entertainment dollars. The idea of complementing the NFL season by having the AFL be a spring league has not worked. Also, in too many AFL markets there is simply too much sports competition for the AFL team to gain widespread acceptance.

The decision to suspend the 2009 AFL season surely disappointed many fans. Unfortunately, the absence of the AFL next spring may go unnoticed by even more people. I hope the AFL can solve its problems, but I am not too optimistic.

Link: ESPN.com - "AFL Cancels 2009 Season"

Teens and College Students to Marketers: "Text Me"

E-mails are so old school, at least to many of today's teens and college students. A recent survey conducted by eROI found that more than 6 out of 10 people in these groups say they hardly ever read e-mail messages sent by marketers. Perhaps the main reason for dismissing e-mail is that many of those surveyed said marketers do not effectively talk with them on a personal level. Text messaging has overtaken e-mail as the preferred communication mode of high school and college students in the U.S., with 37% of students surveyed indicating texting as their preferred communication mode. E-mail is not exactly dead yet as 26% of students surveyed preferring e-mail communications.

This trend poses significant challenges to marketers trying to reach this important but elusive demographic. Mobile marketing is an emerging area, much like e-mail was 10 years ago. Creating permission-based mobile marketing programs that maintain relevance with young people should be the focus. If marketers think only in terms of using mobile marketing to stimulate sales, it is likely that their audience will see through those efforts and grow tired of them quickly. Wireless devices hold great potential as a marketing tool because they provide a 24/7 connection to sustain brand relationships with customers.

Link: eMarketer - "Have Students Graduated from E-Mail?"

"Change" is '09 Marketing Buzzword, Too

"Change" is in the air. It was the one word uttered by Barack Obama that propelled him to the White House. Change is being forced upon us in the business world as well. First it was escalating prices, then deteriorating credit access and finally, a sharp pull back on consumer spending. With no immediate end in sight, 2009 will require change in marketing and strategies.

An excellent article on the need for change in marketing was written by Jonah Bloom for Advertising Age. Among the most critical points Bloom makes is that short-term obsession on sales and profit growth should refocus and become a long-term view of brand building. In particular, brand building efforts that entail environmental and social responsibility components can elevate the relevance a brand holds for consumers. Bloom points to Jet Blue and Starbucks as two brands that may have gotten too consumed with growth and lost some of its relevance with customers in the process.

There are concerns that weak economic conditions may force companies to abandon social responsibility initiatives given that they often create expenses that lead to higher prices for their products. In Bloom's view, companies must not back down from becoming better stewards of the places where they do business. In a list of 8 resolutions for 2009, Bloom quotes Nike chairman Phil Knight on the role brands will play going forward: "The performance of Nike and every other global company in the 21st century will be measured as much by their impact on quality of life as it is by revenue growth and profit margins."

Link: Ad Age - "Recession Provides a Chance to Build a Better Capitalism"

McDonald's Shows How to Succeed in Lean Times

Economic news is bleak daily. Today's bad news includes Tribune Co. filing for bankruptcy protection and layoffs at Dow Chemical and Anheuser-Busch. But, a glimmer of good news comes from McDonald's. Its same store sales in November were up 7.7% globally and 4.5% in the U.S. over the previous year. An obvious explanation for the positive results is pricing. McDonald's low priced fare is less immune to a down economy like casual dining restaurants. As a matter of fact, fast food restaurants probably benefit as people who might not patronize Applebee's or Chili's to save money would venture to McDonald's or Sonic instead.

Attributing McDonald's growth to low price does not give proper credit to the company's other marketing moves. Stores have received makeovers, as has the menu. The addition of Southern style chicken sandwiches and biscuits as well as premium coffees has strengthened its offerings. Customers' needs do not go away altogether when they are trying to save money. McDonald's shows good marketing goes beyond offering value prices. It is all about meeting the needs and desires of customers.

Link: USA Today - "McDonald's Same-Store Sales Jump in November"

BK's Whopper Virgins Make Point or Make Fun?

Burger King has to take on the underdog role as it goes up against McDonald's in the fast food burger wars. Its latest approach to making market share inroads is to put BK's signature burger, the Whopper, against McDonald's iconic Big Mac in a taste test. But this is not your typical blind taste test. BK says to find impartial judges, it must venture to lands where people are unfamiliar with hamburgers, let alone the BK and McDonald's brands.

The result is the current "Whopper Virgins" campaign developed by BK's ad agency, Crispin Porter & Bogusky. The shop that created the Subservient Chicken is back at it again for BK. Comparative advertising can be a very effective technique for contrasting the benefits of your brand relative to competitive offerings. It worked effectively for Pepsi in the 1980s. More recently, comparative ads have been used by Apple Computer to take digs at Microsoft's Windows platform.

The question surrounding BK's campaign is whether it exploits or makes fun of less sophisticated consumers (if you consider having no knowledge of fast food restaurants makes one less sophisticated). Having typical customers render a judgment on whether the Whopper or Big Mac tastes better would be accepted common practice. Creating a scene that reminds one of a National Geographic TV special as the setting for a taste test may be too bizarre for some tastes. But, that is the MO of Crispin Porter & Bogusky, push the envelope on conventions to create memorable advertising.

Link: Ad Age - "Burger King, Crispin's Latest Stunt: 'Whopper Virgins'"

Black Friday Shopping Frenzy Unnecessary

The tragic death of a Wal-Mart employee in New York last Friday should serve as a call to evaluate how retailers use early morning "doorbusters" on Black Friday. These attractive early morning specials are intended to generate store traffic. Unfortunately, high demand for certain items creates a situation where some people become so obsessed with getting an item they seem to lose their senses. How else can you explain the scene at the Wal-Mart on Long Island where a crowd estimated at 2,000 people took the term "doorbusters" far too literally?

The weekend after Thanksgiving is crucial to retailers in terms of their success for the Christmas season and beyond. But, as shopping has been made more convenient with stores open 24/7 in some cases and always open 24/7 online, the need to orchestrate a customer mob scene is unnecessary. It is one thing for retailers to call on workers to open stores at 3:00 and 4:00 AM, it is quite another matter to put their safety at risk by creating a frenzy for a small number of products. Rather than straining their employees' energy levels and customers' patience levels with doorbuster promotions, retailers should explore ways to generate more interest and store traffic throughout the entire Christmas shopping season.

Link: Ad Age - "Lawsuit: Marketing Blamed in Wal-Mart Trampling Death"

Citi Field: This Park Brought to You by Taxpayers

How cool it would be to have a sports stadium named after me one day. It probably will never happen, especially not a professional sports stadium. But, I can take some comfort in knowing that I may be helping pay for naming rights to a Major League Baseball stadium. The New York Mets are preparing to open their new park, Citi Field, next season. Yes, that is "Citi" as in Citigroup, one of the financial institutions in line to receive a bailout from the federal government.

Citigroup committed to $400 million over 20 years for the rights to have its name on the new park. Engaging in a naming rights sponsorship can be a smart branding move... if you can afford it. Apparently, Citigroup can no longer afford it. What a painful reminder to New York and the country of the excesses of a financial institution that seeks a $300 billion bailout and laid off more than 50,000 employees. The stench is almost as bad as Enron Field in Houston, which disappeared swiftly following that company's demise in 2001.

One New York lawmaker has called for the name to be changed to "Citi Taxpayer Field." Here's a better idea: the New York Mets should renegotiate the deal or walk away from it altogether. The Mets must remember that their marketing partner's image can impact the image people have of the Mets. If Citigroup is perceived unfavorably, the financial gains of the naming rights deal could be offset by hits to the Mets' brand image.

Link: Fox News - "Lawmakers Fight to Rename Ballpark after Citibank Bailout"

Saturn's Demise Squarely on Shoulders of GM

As General Motors fights for its life, one scenario for a slimmed down GM calls for deletion of some of its brands. Among the brands on the deletion list are Hummer, Saab, Pontiac, and Saturn. While Saab and Hummer may be candidates for sale, Pontiac and Saturn would more than likely be eliminated like its late sister brand, Oldsmobile.

As an owner of two Saturns, the possible elimination of Saturn is disappointing. As one reviews the twenty year history of the brand from its conception to its precarious state today, there are many missteps that can be identified. Saturn hit a home run early on with its no haggle pricing, folksy image, and dependable, fuel efficient cars. Then, in the mid 1990s the SUV craze hit the market. Saturn continued on selling its fuel efficient cars. By the time the VUE SUV was introduced in 2001, GM had missed an opportunity to take advantage of the SUV market.

GM has been all over the board with Saturn, trying a mid-size sedan that failed (the L Series), and now selling a minivan (Relay), crossover (Outlook), roadster (Sky), and European styled sedan (Aura). These models were pushed at the expense of Saturn's core product, the economy car. As GM has tried to expand Saturn's product mix (and raise price points), the market has come back to lower priced, high gas mileage vehicles. Also, GM missed a golden opportunity to use the Saturn brand as a development brand for hybrid or electric vehicles. An experiment with an electric vehicle in the early 1990s, the EV1, was a modest success. GM decided not to pursue the EV1 further and destroyed all of them once their leases expired.

Perhaps the destruction of the promising EV1 more than a decade ago was a foreshadowing of what would ultimately happen to the Saturn brand. I hope I am wrong.

Link: Business Week - "GM, Ford Prepare for Congress"

Black Friday Results: The Good and the Bad

Early feedback on this year's Black Friday performance for the nation's retailers is encouraging. Sales rose to $10.6 billion, up from $10.3 billion last year. Any increase is good news as retailers braced for the worst in the face of an economy that has been now officially deemed to be in recession.

The bad news? The cost of attaining the sales increase means lower profits. Retailers had to aggressively lower prices and use other incentives to lure shoppers into their stores. The result is a hit on retailers' profit margins. The challenge faced by many retailers is the lead time required to place orders. Orders placed for this Christmas season were placed several months ago, in many cases before retailers were fully aware of the economic train wreck that was about to happen. Now, with inventory on hand, the choice is to forgo profit margins and move product or not budge much on price and take a bath in an even deeper sea of red ink.

The big winners? You and I. We need a break from rising prices, and the battle for our holiday shopping dollars means we should continue to see attractive prices through the end of the year.

Link: USA Today - "Early Data Show Strong Black Friday"