Posted by Menachem Lubinsky on August 17, 2010 under Branding | 
If you're new here, you may want to subscribe to my RSS feed and "Like" my fan page on Facebook. Thanks for visiting!
By Menachem Lubinsky
How important is signage in a technologically advanced age? How effective is signage in the overall branding of the product? These were questions recently raised in a prominent marketing magazine. The author seemed to feel that huge flat screens in stores, internet access, and other electronic “tools” had replaced the age-old focus on signage, ranging from the store signs itself to strategically positioned signs at point of purchase.
The author used a local car dealership that he had known for years as an example of the change in recent years. He recalled with some sense of nostalgia that the dealership at one point had a showroom that was full of huge pennants hanging from ceiling to floor with the car brand interspersed between the cars on the floor. Today, he said the pennants were gone in favor of several large flat screens that showed the cars on a scenic road somewhere in Europe. In observing customers, he noted they occasionally glanced at the screens but it wasn’t the same “with the eye contact with the brand on one of the old signs.”
While the dealership did have a magnificent neon sign that was visible for several blocks, most of the windows were bare and as the dealer said: “I let my cars sell themselves.” The author felt that those signs with slogans, special messages, and focused images were, in fact, missing from the branding effort.
In the classical marketing mix, signage is an integral part of the branding effort. It is the most effective way to flag a brand, not only for shoppers but for passers-by who are potential customers. Signage does not only mean the external sign with the name of the brand. It extends to every opportunity for branding, from the sign near the register to the bag. More and more companies are putting emphasis on their shopping bags with the knowledge that the bags are roving marketing campaigns. They are looking not only to have their brands emblazoned on the bags but to somehow differentiate them from other brands. Color, texture, and even functionality play a part in this important exercise.
Point-of-purchase signage is also a key element in the effective e use of signage as a branding tool. This seemingly “in-your-face” strategy is designed to remind you of the brand, to associate the brand with a positive experience, and to reinforce the strength of the brand. Studies have shown that effective in-store signage can go a long way in the ultimate branding success of a product or service.
Strategically placed billboards are also part of the “mind game,” as one marketer put it. “The more you see the signage in different context, the stronger the brand becomes in your mind,” In other words visibility is a key element here but also an important form of association. I recall reading many years ago that customers in a survey associated the big billboards on highways and train and bus platforms as an indication of size and strength.
Companies who regularly update their image frequently ignore their signs. A large grocer updated his logo on bags and even on private label products without devoting the same attention to signage on the store, in the parking lot and even on carts. It is exceedingly important that when a change is made, it be done across the board and the line in the sand from a budget point of view should not be store signage.
Walking in a suburban mall recently, you could see the difference between well thought out campaigns to maximize branding opportunities versus those that paid only casual attention to their branding. A large clothier not only had large signs over the store, but hung flags that protruded into the mall, in addition to several self standing posters that spoke of the everyday values that the store offers. It is hard to say whether these additions actually resulted in more traffic in the store, but I would venture to say that a survey would conclusively find a relationship between the extra effort and store customers.
A client recently asked my opinion about posting signage on key streets in the neighborhood of his business. He particularly wanted to flag an annual sale that is well advertised in the local media. The easy answer is, of course, the more the merrier, but I did advise to be careful of local laws that restrict posting such signs on trees and light poles.
In one mall, several stores had agreed to allow signage of neighboring stores in an effort at promoting each other’s store. While the storeowners spoke glowingly of the program, I am still for maximizing the brand in or near the actual location. The more customers identify the brand with the location, the stronger the brand. I somehow feel that there is somewhat of a dilution in the durability of the brand when it is not directly associated with the location. Of course, if there are “other” opportunities beyond the location itself, it is a no brainer, which explains why billboards in strategic locations are so popular.
Take it from me, when it comes to signs, you just can’t scream your brand loud enough. And that’s effective branding!
Posted by Menachem Lubinsky on August 9, 2010 under Recession |
A young 30-ish couple recently recounted what they called their “horror” story of a business and a livelihood that was about to collapse. After studying in a yeshiva for 5 years, David and his wife Molly opened a small retail store with money from in-laws and an older brother. The business appeared to be doing well during the first two years, enough so that they decided to expand the business to an on-line operation.
David admitted that he got “carried away” with the on-line, so much so that he apparently neglected the retail establishment. He used whatever profits he made in the store to prop up the on-line business. Within two years, he found himself with a mounting debt, insufficient take home funds, and a business that was on the verge of collapse. You guessed it; he blamed much of his troubles on a business slowdown due to the recession but a closer look showed that the economic downturn was only a minor factor.
Doing some forensics on the business, I found that it had potential and that it would be a shame to close it down. That’s when I recommended that the business retain a consultant to help restructure the business, or as I sometime believe is to restructure the “thinking” on the business.
The consultant divided the tasks at hand to include debt restructuring, infrastructure, and future business model. Although there were some bitter pills to swallow, David recognized that the alternative was to shut down the business altogether, something he shuddered to think about. He admitted that one of his hires was doing tasks he did in the beginning, but when he got busy with the e-commerce, he retained the help. The consultant forced him to lay off the “expensive” worker, to resume doing those tasks himself and to suspend further investment into the on-line business.
Molly, who had been led to believe that the business was doing extremely well, simply withdrew to care for her home and the children. She was very instrumental in the early success of the business. She seemed to have an excellent rapport with customers and did the buying very well. The obvious recommendation was for her to return to rebuild the retail establishment.
The debt restructuring went much better than expected as most of the creditors were only too happy to have the business continue in a recession. Some insisted on COD but most even granted the business better credit terms than before. A few were adamant that David share his plans for the future, to simply make them more comfortable that there is a future in the business.
One of the biggest challenges was getting David to reposition his thinking of the business. It seems that in the past he lost focus on his core business and “jumped” to other ventures. This caused him to perhaps overlook opportunities that he had with his original business.
Restructuring has become a necessity for many businesses dealing with the reality of doing business in a down economy. There is no cookie cutter model that applies to all businesses, but I have found that there are some common denominators, most of which David and Molly had to deal with. For example, many people allow debt to pile up simply because they are somehow convinced that better days lie ahead. When the sun does not shine, as expected, the roof can cave in.
I strongly believe that many businesses end up in trouble simply because they do not reach out for professional help. One business consultant remarked that not reaching out for professional help is like “talking to yourself.” It is really important to include someone who is not emotionally attached to the business and who can offer objective advice.
Reconstructing, say business experts, can sometimes simply mean retooling. They recommend that every business take stock of their status and re-evaluate the way they do business. What worked a decade ago may no longer be applicable in today’s rapidly changing business environment. There should be no fear of making a business “leaner and meaner,” the experts say.
David and Molly seem to be on their way to recovery even as uncertainty remains whether the economy as a whole is in recovery. They now understand the value of being focused on the profit center before venturing on to other enterprises. As it turns out, David has not given up on the on-line business and was at this writing negotiating with another entity to merge the sites. One of the benefits would be that the other entity has strong on-line management. Restructuring may not be for everyone, but then again, maybe it just is!
Posted by admin on July 18, 2010 under Market Share, Out of the Box |
By Menachem Lubinsky
Marketers use the term winning when it comes to market share as if it were some kind of competition like sports. By the same token, there is the possibility of “loosing” market share which is often as devastating as losing a major competitive event. Market share is that significant!
Kellogg’s recently recalled some 28 million boxes of cereal because of an odor in its packaging. Marketing analysts were immediately assessing whether the recall would affect its market share, concluding that its world wide positioning would help carry the icon brand beyond the recall without any loss in market share.
Cereals is one of those categories where market share was always a key factor in the fight for the coveted # 1 position with such competitors as Post and General Mills. Market share directly relates to the positioning of a brand. Having the largest market share means leadership. It is the best evidence that a product is the leader in its category, which in turn can affect many other important variables: stock prices, profits, sales, valuation, and future mergers and acquisitions.
Market share in many companies is like winning a presidential election. The country is divided into regions and staff working for a candidate in each region is expected to win the lion’s share of votes (market share). The whole issue of market share for large businesses is in a way much like the electoral college in a presidential bid. The companies make a concerted effort to be the leader in the large cities because cumulatively they add up to the largest concentrations of consumers. How companies fare in large markets is also important in the overall positioning of a company.
The battle for having leading market share occurs daily in communications, food, technology, and in so many other categories. When a company actually “wins” market share, it usually means that it has successfully deposed a competitor. At that point a key imperative is to stay in the leadership position. For the dethroned entity, it becomes a challenge to recapture its former position. This was always the case not only with the cereals companies, but with the highly heralded Coke -Pepsi wars and also with the automobile manufacturers. At first it was the US manufacturers fighting for market share amongst themselves and then it was the Europeans who muscled their way into the leadership position in the US.
The US auto manufacturers are one of the bright stories to emerge from the recent recession. On the brink of bankruptcy and bailed out by Uncle Sam, they are in the throes of an unprecedented comeback. While leader Toyota was embroiled in a myriad of quality issues, the US manufacturers actually are producing a much better product and it is not going unnoticed. It will be awhile until they are once again locked in a battle for the leadership in market share with the Europeans, but many observers say that it is in sight.
While market share is most often associated with major brands, marketers say that it can be applied to almost any business situation, even for the local cleaners or restaurant. The upshot is that having the largest market share most often spells being the leader.
Being the leader with significant market shared directly relates to many characteristics of the brand, first and foremost is quality. When the majority of people in a given market prefer a certain brand, they are reaffirming that they consider the product the best value for their money. They are attesting to the fact that the product has an edge over competitors and that is worth its weight in gold.
But not always is winning market share synonymous with being number one. Cutting into the market share of a leader is considered to be a major coup for brands trying to compete in a given category. Gaining percentage points of share from a leader is considered to be a formidable achievement for a product or brand.
Many readers will remember when Avis and Hertz were vying for market share. While Hertz claimed that it was the leader, Avis came up with a slogan “We Try Harder.” In essence Avis was conceding the Number One slot but pointing out its formidable position in market share. Being second in market share or even third may for some brands be as important as it is for some brands to be the leader. Marketers say that Avis was actually hoping that its honest We Try Harder would catapult them to Number One.
I recently read about a number of power drink companies that are cutting into market share of the large beverage companies in an age when the power drinks are preferred by many young customers. The marketing director of one of the brands wrote: “Every customer that we wean off Coke and Pepsi is a major shift in market share. The battle for market share is with every purchase.”
The quest for market share is so vital in the marketing arena that almost every brand ultimately defines its success or failure by looking at its market share. A shift of even a percentage point or two can have major implications for the bottom line of a brand.
Out of the Box is a collection of strategic marketing articles that Menachem Lubinsky has published on various topics, trends and ideas in the marketing world. The articles have been published in the Hamodia weekly newspaper circulated on three continents to a readership of well over 100,000.
The name, “Out of the Box” is a term used frequently in business nowadays to describe creative thinking that is not the norm. It is meant to help a business pull away from the pack or separate oneself from the competition. It is to some extent fraught with risk, simply because it is not the run of the mill thinking, but it is at the same time the key to reaching the next opportunity.
Posted by Menachem Lubinsky on July 14, 2010 under Out of the Box, Recession |
By Menachem Lubinsky
Miriam, an office manager with seven years of experience, was laid off nearly six months ago when her company made some drastic cutbacks in the face of the continuing recession. The company consolidated her position with another key job to save one salary. At first she thought that her experience would help her land a job quickly but that has not happened. Miriam, like so many other unemployed workers has been hearing that the recession may be winding down, but for some reason she is still out of her job. She has stayed in touch with her former employer “just in case” he is hiring again, but that has not happened as yet, and she may just not be able to wait too much longer. The few interviews she did receive were more suitable for entry-level with a severe cut in salary.
Each month, when some of the key economic indicators are released, it seems that the number of jobs continue to decline, but a closer look at the jobs picture in June might offer a glimmer of hope. The nation is said to have lost 125,000 jobs in June, but the unemployment rate actually dropped to 9.5%, according to the U.S. Bureau of Labor Statistics. But many of those jobs were temporary employees working on Census 2010. The private-sector payroll employment actually increased by 83,000.
If the most recent data holds up, Miriam should soon be back either at her former employer’s business or somewhere else. Perhaps seasonal, employment rose by 28,000 in amusements and recreation. Approximately 21,000 jobs were added in temporary help services. There were also additions in professional and business services, management and technical consulting (+11,000), business support services (+7,000), transportation and warehousing (+15,000), health care employment (+9,000), and manufacturing employment (+9,000).
For people like Miriam, a temporary solution might be a temporary job. Many forms who are still not sure about rehiring full-time employees are instead hiring people for projects or on a temporary basis. There is evidence to suggest that many of these temporary jobs are indeed turning into full-time jobs as many businesses continue to experience an improved business climate.
The added jobs in various sectors is noteworthy for a variety of reasons. For one, it gives a job seeker an idea just where the jobs might be. Clearly, there are various industries that are in a recovery mode while others are not. While health care is one of the growing categories, for example, the hospitality industry is not. There may always be an opportunity for temporary jobs such as the Census workers, the clean-up crews for the BP oil spill in the Gulf of Mexico and perhaps with the midterm elections around the corner, there will be many temporary jobs helping governors, senators and congressmen get elected.
In speaking with several job counselors, it seems that becoming disillusioned about finding a job is one of the worst problems they face with job seekers. One told me of a young man who had been looking for a year and out of sheer frustration said: “I will give this one more week and then I will have to consider an alternate course.” He found a good job within the week. The counselors say that timing is everything in a job search. Just because someone has failed to get an interview for weeks on end does not mean that it cannot happen and often revisiting an earlier potential employer can work out as well.
Many people like Miriam have found success in looking for employment with competitors who may just cherish the idea of hiring an experienced employee who knows the industry and the business. It seems that the recovery may not be on a level playing field in that while some businesses in an industry are indeed recovering, others may still be mired in the recession. This appears to be the case in retail as several chains have recovered nicely while others are still in the throes of the recession.
“Looking for a job,” said one of the counselors, “requires a bit of common sense and a bit of research.” The commons sense, he pointed out, was to approach potential employers who might have shown an interest in the past or in fact going back to past employers. The research is to know exactly what is happening in the industry you’ve been involved with before.
For job seekers this period might be a bit confusing because of the mixed signals that one gets reading the press these days. Perhaps the good news is that the signals are mixed as opposed to the “One Way” downward direction of just a year ago. It might make it a bit more difficult to negotiate, but there is activity and there is hope. The fact that the private sector has added 83,000 jobs in just one month is encouraging. If the July numbers, due out in August, continue that trend, it will be a clear signal that the economy has turned the corner and more jobs may be on the horizon.
Out of the Box is a collection of strategic marketing articles that Menachem Lubinsky has published on various topics, trends and ideas in the marketing world. The articles have been published in the Hamodia weekly newspaper circulated on three continents to a readership of well over 100,000.
The name, “Out of the Box” is a term used frequently in business nowadays to describe creative thinking that is not the norm. It is meant to help a business pull away from the pack or separate oneself from the competition. It is to some extent fraught with risk, simply because it is not the run of the mill thinking, but it is at the same time the key to reaching the next opportunity.
Posted by Menachem Lubinsky on July 1, 2010 under Brands, Out of the Box |
I read with interest several articles and comments by marketing executives who were assigned the task of branding British Petroleum (BP). There seems to be a sense of betrayal and disillusionment that a brand that they thought could never fail actually let them down. It seems that many marketing executives look at branding as more than a professional exercise. It isn’t just that they built a brand that was highly successful economically. It is an affirmation of perfection and even of doing good for the broader society. BP no doubt touted its multi-faceted programs at helping communities, the environment, cleaner energy, and helping the disadvantaged, all of which made the marketing professionals look good as well.
The stakes for the marketer in a branding effort are extremely high, particularly if the brand becomes a national and international icon. Those who worked on Exxon prior to its disaster and more recently on BP are asking themselves how they could possibly protect themselves from a brand that falls from the highest summit.
If you think that this discussion is well out of reach of common everyday business practices, think again. As marketers, we are always subject to the assurances of the client despite our own due diligence that their product or service is brand-worthy. In fact, many agencies today demand proof about a claim of a product’s quality. The fact that they will be paid well may not be enough to persuade the agencies to take on the account. They may be concerned about the long-term viability of the brand, but they will also want to be assured that the brand will live up to its name.
The power of branding is such that it is much more than a name, symbol, or logo. Customers actually become emotionally attached to the extent that they really do wear it on their sleeves. Wearing a brand is to many consumers not an ancillary item. It becomes very much a part of their persona. They really do take “you are what you wear” to a different level. But oddly this emotional attachment is not reserved for customers only. Officials at marketing agencies become equally as attached. Working on a brand account is somehow not only a sign of success, but it also becomes part of their persona.
So whether it was Exxon, BP, Toyota or Tylenol, the professionals working on branding pondered the key question of “how could it have happened?” Mistakes and accidents are simply not supposed to be a part of the branding effort, which is what makes them the brand. But as we have all learned in the recent past, brands are not invincible and when they fall it is from a much higher plain.
But brands are said to have yet another advantage which is why they are so coveted. They most often have the ability to recover when other products and services faced with the same calamity simply fold. BP presumably designated $20 billion for amongst other things compensation and damages to people living in the Gulf area. It obvious takes a BP to commit that kind of money to survive, but not only to survive, to resurface with the brand intact.
Over the past half century, several airlines have either had to fold, merge, or change their names after an accident. Safety is so paramount in the psyche of consumers that recovery is difficult unless the public is lead to believe that the brand is no longer a factor, one way or another. Or, as Tylenol did when its product was tampered with, create a tamper-proof bottle to essentially promise consumers that the calamity cannot repeat itself.
It will take a lot more than the $20 billion for BP to prove that they have taken the necessary steps to assure the public that an off-shore drilling accident like what happened in the Gulf of Mexico will never happen again. Toyota is still busy trying to convince its customer base that its automobiles are safe. They are on an intense campaign to convince the public that gas pedals will not accelerate on their own and that brakes will stop when prompted.
Marketers agree that the public expects nothing short of perfection when it comes to brands. The professionals too want to feel that they are working on a product that exudes success. It is perhaps the dream of many entrepreneurs to develop a product that turns out to be a brand. Needless to say, the rewards can be enormous.
In the late ‘90’s a young man with an electronic testing gadget for physicians (and for home use) was convinced that he had the ultimate new product. He had an exclusive with the producers in Asia and had managed to raise a considerable amount of capital to market the product. As a first step, I suggested distributing the product (retailing at $249) to at least 10 physicians to make sure that the product lived up to its hype. The entrepreneur thought that it was a waste of time since it already had been tested and marketed in Belgium. He wanted this gadget to become a national brand or the “next Apple,” as he termed it. Seven out of the 10 physicians reported problems with the device including not working properly in sunlight. Needless to say, his dream fizzled. Like the marketers involved with BP, I was glad that I did not become emotionally involved with a product and potentially a brand that was less than perfect.
Posted by Menachem Lubinsky on June 30, 2010 under Marketing, Out of the Box |
Harriett, the accounts payable executive at a medium-size appliance store, did what she normally does to bills that come in for co-op advertising. She made a copy of the bill and forwarded it to one of the manufacturers that they carry to reimburse her for 40% of the bill. Within a week, she received a shocking response: “In reviewing the advertisement, we were not satisfied with the size and resolution of our logo. Please review the terms of our co-op advertising agreement for the specific requirements of our participation.” The bottom line was that the manufacturer refused to pay their share of the bill…
Posted by Menachem Lubinsky on June 17, 2010 under Recession |
By Menachem Lubinsky
There was actually some good news on the economic front recently as a new report indicated that the average credit card debt of American consumers has come down somewhat. I am sure that you have heard ads that promise to significantly reduce your credit card debt. They are obviously playing on a well known fact: Americans are trying to creep out from under a crushing credit card debt even as the credit card has emerged as the key method of payment for consumer goods and services. While there are many dimensions to the credit card issue, there is no escaping the fact that credit cards are directly related to the recession and to an eventual recovery.
While no one should feel bad for the credit card companies with their exorbitant interest rates and astronomical profits, this has not been an easy time for them. They have had to face an increasing number of personal bankruptcies and are beseeched with requests to renegotiate debt. Recognizing the difficult economic climate, they were also forced to adjust credit limits downward out of fear that growing insolvency by people affected by the recession may end up in default. A customer who owed a credit card over $25,000 received notice from the company that their $30,000 credit limit had been reduced to $10,000. But within a month after the card was cleared up, the company wrote to invite them to increase their limit to $40,000. Said the customer: “When I needed them most, they reduced my limit and when I needed them least, they increased my limit.”
Americans clearly recognize the dangers of accumulating debt on credit cards but may be helpless in the face of a growing dependency. Technology (namely on-line) has made the credit card the major method of payment. Incentive like accumulating points for free travel and other amenities has created a generation of what one financial expert calls “the points generation.” Financial advisors advise that the best way of dealing with credit cards is to treat them like bills, meaning that they are paid in full as soon as the bill arrives. What forces many consumers into an untenable financial position is when they use the credit cards as a lending bank. Many financial experts say that the current credit crunch has forced more Americans to use the maximum credit available to them on credit cards.
A bankruptcy lawyer relates that he recently filed for a Chapter 11bankruptcy on behalf of a business with debt of $347,000, more than $145,000 owed on credit cards, most of it on personal credit cards. He says that in the last two years alone, the company accumulated more than $90,000 on the cards, particularly when the bank it has been doing business with for 25 years cut their line of credit by 70%. Business had dropped by more than 50%, causing the business to go into tailspin, which was directly related to the recession.
I recently read that the average credit card debt per household with credit card debt is $15,519. With an average APR of 14.67 percent (Federal Reserve, May 2010), you can imagine what affect interest payments are having on these households and why it has become so difficult for many families to climb out of debt. It was interesting to note that more Americans are using credit cards for such necessities as education and food, a sign of the economy but also in many ways a warning sign. The inability to borrow money through banks is why many families carry multiple credit cards with the average family carrying 3.5, as of yearend 2008, according to the Federal Reserve. The U.S. credit card 60-day delinquency rate is 4.18 percent and the default rate a staggering 11.17 percent (Source: Fitch Ratings, May 2010). It is because of this default rate and the increase in personal bankruptcies that credit card companies are now more inclined to negotiate. One financial advisor told me that he negotiated $43,000 in credit card debt to $11,500 in several installments.
A Brooklyn storeowner said that the recession had a direct affect on his sales with credit cards. “Many people who used to shop with cash or checks are instead buying with credit cards, causing me to lose a few percent on margins that I can ill afford to reduce.” In this economy, he pointed out, raising prices was not an option. He complained that some people challenge the sale later, causing an undue delay in payment by the credit card company. He recalled that his father, from whom he inherited the store, had not accepter credit cards. “Imagine if I did that today,” he said, “I would most likely loose many customers.” He said that the first question he frequently hears from new customers is whether he accepts credit cards.
Financial counselors say that one of the biggest risks in the overuse of credit cards is to lose perspective on what you can afford. They say that some people who fall victim to impulse buying have no idea on how they will be able to repay a purchase with a credit card other than to figure that “something will materialize.” It is this blind faith in the unforeseen that often sinks consumers into bigger debt. Obviously, a recovery will no doubt help many consumers either pay off their credit cards or at least renegotiate debt. That is why the report of reduced balances on many American credit cards was such a welcome sign, but as the statistics indicate, only a drop in the bucket.
*Picture Credit Andres Rueda
Posted by Menachem Lubinsky on June 7, 2010 under Out of the Box |
There are disasters and then there are disasters. The oil spill in the Gulf of Mexico is a monumental disaster that BP (British Petroleum Company) promised to eventually get right in ads it had taken out a few weeks ago. The problem is that by the time that they do get it right, it may very well end in an unprecedented environmental catastrophe. Long after they finally cap the leak, the oil spill will continue to be headlines not only in the affected communities but throughout the world. The president promised an investigation and so did Congress. Americans are assured of months and perhaps years of coverage of the nightmare. Some political pundits are already predicting that the BP fiasco will have major repercussions in the mid-term elections for Congress and perhaps make Barack Obama a one-term president.
I am sure that PR specialists, crisis management experts, and marketing strategists are hard at work trying to spin, just about any spin. The immediate charge is to show some remorse while assuring the public that they are competent to bring this disaster to a successful conclusion. Each attempt at sealing the leak so far has brought only frustration and more bad PR, so much so that some media personalities now say that BP stands for “bad publicity.”
Many marketers are using the BP case as the latest laboratory for crisis PR and marketing management. For example, one marketer says that the company needs to constantly say that it is sorry, even if it puts the company in a position of weakness. Others say that the company should only discuss what it is doing and perhaps what it will be doing to prevent such spills from happening in the future 5000 feet beneath the surface. There is no point in minimizing the damage since the public has a front row seat of the gushing oil spilling into hundreds of miles of ocean.
There are those that say that there is no way out for BP and that no amount of assurance will put Americans at ease about their oil drilling. That may change if BP somehow comes up with a credible plan to make such drilling safe. At this point it certainly appears that no amount of reassurance can in the short term mitigate one of America’s huge disasters. For decades any large-scale PR calamity will reference the BP event as an example of a PR nightmare that perhaps only time can heal.
So what do you do if you are BP? It goes without saying that heads will roll and that there will be much finger-pointing on how the disaster was handled, but the company has little choice but to acknowledge its mistakes and invest into a future strategy that is reassuring and upheld by the scientific community. It may become victim to a new age of regulation on off-shore drilling.
There is something to be said for taking responsibility. In truth, BP did from the beginning treat the fiasco as if it was its problem. It is, say some, a double-edge sword. If it could have swiftly solved the problem that would have been admirable, but when it began to “let’s try this and let’s try that,” it might have been better off if it reached out for US government intervention. Of course, the Obama critics are saying that he should never have waited for BP to solve the problem and that the government should have stepped in forcefully and resolutely. Even if the government had no better answers than BP, the fact that they were making the effort could have helped the Obama administration.
OK, if BP takes the responsibility, then what? Marketers say that the next step would be to be completely transparent. In a sense, they would need to bring the average American into their command center as a means of reassuring the public that the search for a solution is unprecedented. It took quite some time until Americans were even allowed to see photographs of the spill, as damaging as that might be to the company.
Apology. Responsibility. Transparency. All that may seem appropriate and could have been taken from a crisis management manual, but BP will have to do a lot more. Compensation. It will have to deal with the devastating losses by people who live in the Gulf. After all, it is the image of despair that is coming from that part of the country that is setting the tone for how Americans view the oil spill. BP will have to do something very meaningful to ease the pain of those people. This is remorse that comes with a bit of cash. Leaving this to government or to anyone else will not quite cut it.
Interestingly enough, not much focus has been placed on BP being a foreign company. In today’s world of multi-nationals, foreign firms are simply part of the mix. Their expected standards of behavior are no different than Americans.
Once BP will have passed the remorse stage, then and only then, will it be able to move on to the fifth stage which many call rebirth. The company will make an effort to redefine itself with the public, hopefully because all of the other steps were successful. I am not sure where the company will ultimately end up, but I am sure that they just wrote a new chapter in Crisis Marketing Management.
Menachem Lubinsky is President and CEO of LUBICOM Marketing Consulting a firm that specializes in strategic business and not-for-profit planning and implementation. LUBICOM is also well known for its role in developing such major events as Kosherfest, Jewish Expo and Jewish Marketplace.
Posted by Menachem Lubinsky on June 2, 2010 under Recession |
The travel and hospitality industry continues to be a major victim of the recession. In fact, many economists consider it an industry that may very well be a key litmus test for the prospects of recovery. While many continue to watch the banks for signs of economic revival, some carefully eye the business traveler as a key indicator.
Here is a perfect illustration of just how critical the business traveler is to the economy: Raymond, a vice president of sales for commercial energy saving electrical bulbs, used to travel at least once a month to visit some of his distributors in various parts of the country. In addition, he would also fly to at least 3-4 large trade shows a year. He estimates that he spends an average of four days on the road on each of his trips.
In the good days, Raymond would travel in first class whenever he was able to upgrade his reservation. He usually stayed in what he calls 4-star hotels, ate out in good restaurants, and spent considerable amounts of money to entertain distributors. In 2009, the company began to feel the effects of the recession and as part of some cost-cutting measures slashed Raymond’s budget to include only 4-5 trips to distributors and at most two trade shows.
Raymond’s new budget meant that hotels would loose out on some 40 hotel nights at an average of $250 per night. The airlines lost some 10 trips and then there were the restaurants, taxis, and many other services that he would normally utilize that also lost out.
When the economy went south several years ago, Raymond’s story repeated itself in thousands of businesses. The cutbacks in travel had a snowball effect on many related businesses. The trade show industry, for example, took it on the chin. The number of exhibitors declined as did the number of visitors. Not only did the travel and hospitality industry suffer from the decline in trade show participation, but so did graphic artists, producers of exhibits, bus companies and so forth. Oh, let’s not forget the local governments who benefited from sales tax.
What is perhaps even more troubling is that Raymond may never return to his pre-recession routine. In the past few months, the company is doing much better but management has gotten used to the idea of the more austere way of life, which means that there is a good chance that even if the recession ended tomorrow, Raymond would still not resume his pre-recession ways.
The airline industry is beginning to recognize the challenge of doing business without the coveted business traveler, or at least not as many business travelers. It is pitching its upscale services to people with high net worth in the hope that they will fill the seats of the missing executives. Hotels too are offering all kinds of incentives to attract the premium traveler.
There are new reasons why Raymond might never return to his old ways. He has learned to effectively use such tools as videoconferencing and skype with good results. He can now communicate with some of his distributors in a one or two hour meeting and does not have to spend four days on the road for the same meeting.
Unless someone comes up with a good reason why Raymond is physically needed at these meeting, he will certainly be asked to conduct business from home. There are many good minds at work trying to revive what some have called the “eyeball-to-eyeball” way of doing business. This is a school of thought that says that technology can never replace human contact. One businessman wrote: “There is no replacement for looking someone in the eye and observing body language. I just can’t see doing large business deals based on a video image.” But many businesses are not buying into it and are cutting out travel altogether in favor of the technological methods of communications. One large law firm with many offices abroad has completely banned travel.
The hotel industry seems to have shifted its focus from relying on the business traveler to more regional and local business. They are putting up new hotels in cities that are regional hubs which might involve bus or car travel. In fact, a recent fad is intercity bus service that offers passengers such amenities as Wi-Fi in an effort to lure regional business travelers.
In the ‘90’s many start-up trade shows were able to compete with existing trade events just by relying on hefty travel budgets, In the past few years that has dramatically changed with the number of start-up trade shows declining. Existing trade show strongholds like Las Vegas have also taken a hit as has almost every major city.
Despite the ominous facts that the business traveler is a fraction of what it was, many in the travel and hospitality industry still believe that a comeback is in the offing when the rest of the economy rebounds. But most executives are making the necessary adjustments to deal with what appears to be a new era in business travel. Even if the industry does come back some believe it will be far more restricted. Raymond, for example, may visit one city and then rent a car to travel to another city for a day or two, a destination he would normally fly to separately. So when you see a business traveler rushing through an airport, make way. The economy may depend on him.
Posted by Menachem Lubinsky on June 1, 2010 under Customers, Marketing, Out of the Box |
By Menachem Lubinsky
Jason, a Queens resident, has been a patron of a hardware store since 1977, despite the fact that he had left the neighborhood in 1991. He travels more than a dozen miles whenever he needs a hardware item to the small family-owned store instead of shopping in one of the large chains just down the road from where he lives. You see, on a summer day in 1977 New York City was in the midst of a blackout and Jason badly needed a large flashlight to care for his ailing father. While most of the stores in the area were closed, the hardware store was open for just an hour or so, working under candlelight. Earlier in the day there had been a run on the flashlights and the store owner wisely put two aside for his own family.
When Jason walked in, he learned that the store had sold out its flashlights, but when he told the owner why he needed the flashlight, the owner handed him one of the two large flashlights without hesitation, refusing to take any money. “Just go ahead and take care of your father.”
A Staten Island police officer still frequents a downtown café after the owner shared some food with him while on duty in the aftermath of 9/11. You probably can relate your own story of a benevolent act that you will never forget. Sure, this might be ascribed to human kindness but marketers say that it is this kind of benevolence that leaves a lasting impression on customers who enthusiastically share these acts of kindness with hundreds and even thousands of others.
There were many examples of this during the recent volcanic ash episode which shut down more than 100,000 flights. JFK became an instant shelter for the thousands of stranded travelers. Saveria, which owns many stores at the airport donated hundreds of bottles of water and soda. Some f the restaurants even offered free food. These are all acts of kindness that will no doubt be remembered for a long time.
Customers, however, were not so kind to Jet Blue when it stranded travelers on a tarmac for eight hours on a cold day in February, without a bit of information on the cause for the delay (which turned out to be weather related). It took the airline many weeks to recover from what was the airline’s worst PR fiasco.
While travelers were appreciative of the water and the cots that were provided by the Port Authority during the volcanic ash shutdown, they were not as forgiving when it came to the airlines. It appears that while some airlines had their staff cut and run, others were there to lend a sympathetic ear. Others went well beyond the call of duty: Wrote Ad Age: “At Terminal Seven at JFK, British Airways’ concourse was virtually empty because the airline had paid for hotel accommodations for all its passengers, and had handed out food vouchers.”
Ad Age also noted: “And, to its credit, the hotel industry in the U.S. for the most part did not try to take advantage of the situation with price gouging. A group of almost 40 hotels in New York banded together to offer stranded passengers a 15% discount on room rates, although the Associated Press reported that a Hong Kong hotel raised its rate from 250 euros to 800 within the same day.”
Writing in a business column, a noted marketing consultant, actually urged businesses to seek out “situations of despair” to demonstrate “that it’s not all about the money.” He pointed to a linen store in the Midwest that was quick to donate a new set of linen to a family of six that had been displaced by a fire.
He and other marketing consultants have always argued that customers have a long memory. Just as they remember the good deeds, they are also likely to recall when a business simply does not rise to the occasion. Some of these deeds might even sound petty. A woman staying in a Midtown Manhattan hotel could not get over the fact that the hotel had “given” her an oversized umbrella to protect her from a rainstorm as she was heading to an interview. She wrote to a local newspaper “You better believe that I will never stay in any other hotel when I am in New York.”
A restaurateur I know well says he trained his waiters to observe customers who appear less than thrilled with the dish they ordered. As soon as the waiters “guess” that the customer is unhappy, they immediately offer to replace the dish. “I will do the same for customers who appear to leave over most of the dish. It’s a small cost for customer satisfaction.”
While you might say that this column has more to do with human decency and good behavior, it is to a great extent just that, but it is also marketing at its best. The ability to recognize that a deed is a small cost for “satisfaction” for whatever reason is not as widespread as it should be. Imagine a marketing program that actually kills two birds with one stone: Indifference and bad marketing.
