Tah-Dah! The IKEA effect

A couple of weeks ago I called IKEA's BESTÅ BURS TV unit the Baskin Robbins Large Chocolate Oreo Shake of build-your-own furniture given its 27 pages of instructions and 44 steps. "I'm hoping," I said "that there's some pride of accomplishment if I ever get it finished." Well I'm pleased to report that it is finished (see above for proof) and I do, indeed, feel a certain degree of satisfaction.

Now I read in the Harvard Business Review that researchers are actually calling the labor-leads-to-love phenomenon the IKEA effect. Michael Norton, Daniel Morchon and Dan Ariely of Duke University have shown that when people construct products themselves from TV units to build-a-bears that they: "come to overvalue their (often poorly made) creations." Hey, wait a minute - my TV unit is perfect!

In the article, Norton points out that this phenomenon is a marketable one. Back in the 50s, instant cake mixes didn't do very well when they first came out because they were too easy to make. There was a reformulation that required the addition of an egg and, presto, sales rocketed.

The challenge is calibrating the IKEA effect to the right level. The researchers found out that if the task is too difficult and people fail to complete the project, the IKEA effect is washed out. But, as long as the task is doable, they concluded that consumers may actually be willing to pay a premium for do-it-yourself projects.

The last point that Norton makes is interesting. This same phenomenon may have implications for organizational dynamics and explain why managers are so reluctant to give up on projects when they've put a lot of effort into them and, at the same time, discount ideas developed elsewhere (the not-invented-here syndrome). Logically, all prior investment should be sunk cost. Emotionally, that would be loved labor lost.

Six of the Best: Super Bowl XLIII edition

Logo: Landor

Here's my summary of interesting things I read (or saw) this last week, Super Bowl-themed:

1) Flipping Awful: Slate
Tim Harford makes the case for replacing the NFL overtime coin toss with an auction system "in the natural currency of the game: field position. The team that was willing to begin closest to its own goal line would receive the privilege of possession." What's wrong with the coin toss? "In the 14 overtime games that produced a winner this season, the coin-toss victor won 10 of the games, more than 70 percent."

2) Ten Reasons to Like the Pittsburgh Steelers: Freakonomics
None of which will be persuasive to Cardinals fans

3) How Super is Your Super Bowl Ad Buy? The Keyhole
Brand Keys predicts in its 7th annual Super Bowl Engagement Survey that: "Denny’s, Hyundai, Budweiser, and Frito-Lay will be the advertisers most likely to get the highest ROI. Advertisers like Cars.com, E*Trade, Pedigree, and Coke – not so much." Here's the Pedigree spot:



4) 1 second ad.com: Miller High Life



"Paying $3 million for a 30-second commercial makes about as much sense as putting sauerkraut on a donut." Miller High Life, shut out of the Super Bowl itself by the exclusive deal negotiated by Budweiser, has found a way to play anyway. As posted by Ben Kunz: "MillerCoors cut a unique deal with local NBC affiliates who carry the game for them to run a series of 1-second spots."

5) Why do Super Bowl ads cost 6 times as much? Thought Gadgets
Ben Kunz asks why the inflation-adjusted cost of a Super Bowl ad has risen from $4.79 CPM in 1967 to $30.77 today. "Are advertisers spending 600% more because they're desperate to reach consumers in one of the few remaining mass mediums?" Yes. It's the one and probably last place where everyone tunes in and everyone watches the ads.

6) A modest proposal: 21,900 commercials for the price of 1: EYECUBE
What else could $3 million (the price of a Super Bowl spot) get you? Rick Liebling has an idea. How about give 60 people $50,000 each and a Flip camera to record 30-second interviews to post online. 21,900 ads for the price of one.

That's it. See you next week for more stories from the world of brand strategy.

Quote of the Day: on marketing spending

Worthy of its own post is this quote from the Morgan & Rego brand portfolio strategy paper I talked about yesterday:

"However, our results also indicate that efficiency-enhancing efforts to reduce marketing expenditures can be counterproductive. We find that relative advertising spending is positively related to firms' cash flow levels and negatively associated with cash flow variability .... This suggests that in contrast to current accounting conventions, marketing spending appears to be an investment rather than an expense."

Now that's something that marketers having been saying forever but it's great to see it confirmed in a comprehensive empirical study (a 10-year study of 72 Fortune 500 companies).

Source: Brand Portfolio Strategy and Firm Performance, Journal of Marketing Vol. 73 (January 2009) by Neil A. Morgan, Associate Professor of Marketing and Nestlé-Hustad Professor of Marketing, Kelley School of Business, Indiana University and Lopo L. Rego, Assistant Professor of Marketing, Tippie College of Business, University of Iowa.

CMOs: Getting rid of brands won't necessarily make your life any easier

Photo: cobalt123 (Flickr)

In these troubled times, as companies see their sales slump and dark days ahead, marketers are battening down the hatches, eliminating non-core businesses and looking for ways to cuts costs and save money.

For CMOs such times, hard to deal with as they are, nevertheless provide an opportunity to push for changes that otherwise might be impossible. For those that have been frustrated trying to manage a complex portfolio of brands and products in a organization with independent-minded business units, this may seem like the perfect time to strike. What better chance to kill these two efficiency-draining birds with one stone? How much simpler, organized and controllable life would be with just one brand, run from one place, run by one person? If you are a CMO tantalized by this opportunity, hold on there just one minute. Here are a couple of things to bear in mind.

1) Fewer brands = less loyalty and less brand equity: Neil Morgan and Lopo Rego published the results of a 10-year study on brand portfolio strategy in the January 2009 edition of the Journal of Marketing. Their examination of 72 Fortune 500 companies concluded that brand portfolio strategy has a significant impact on a company's financial and marketing performance. The study shows that, while a small portfolio of brands has important advantages over a large portfolio (in terms of both marketing spend efficiency and market share), these advantages come at the expense of customer loyalty, brand equity and consistent cash flows. Efficiency has its price.

2) There are better ways to solve organizational challenges: David Aaker was interviewed by strategy+business about his new book: "Spanning Silos: The new CMO imperative." In the interview, Aaker makes the case that siloed marketing, where individual business units do their own thing, is inefficient and incompatible with an era of globalization. But he also points out that breaking the silo mentality can be a big challenge especially in companies that have developed a strong, decentralized culture, a distrust of centralized marketing and have incentive schemes that reward silo behavior.

As Aaker points out, typically an aggressive move to take authority away from silo managers is a recipe for failure. But in these economic conditions, that direct approach may have a better chance of success for the brave of heart. Otherwise, he recommends that CMOs find less threatening ways to boost communication and cooperation.

What I think is certainly not the right approach is to use brand architecture to try and solve such intractable organizational issues. Given that reducing the number of brands generally leads to a more centralized and standardized marketing system, it's tempting to go this route just to break down silos and get better control of marketing activity. This might work from an internal, organizational perspective but it's also likely to lead to sub-optimum brand strategies that make serving customers needs that much more difficult.

No easy answers, I'm afraid.

Six of the Best: Obama edition

Here's my summary of interesting things I read (or saw) this last week. It's all about Obama this time:

1) The inauguration speech: (via Thought Gadgets)

Brandy Agerbeck's beautiful illustration of the inauguration speech. (Full text with some branding thoughts from The BrandBuilder here)

2) Search findings from the U.S. presidential inauguration: Google (via SmartMobs)
All eyes were on Obama's speech. Google reportd that the overall volume of U.S. Google searches dropped significantly from the time President Obama took the oath of office until the end of his inaugural speech. Something we might have expected but now actually provable.

3) When did the president lose his drawl? Grant McCracken
By drawl, Grant means: "You know that way he had during the campaign of hitting the word hard in the first syllable and then letting up as he approached the end of the world. Kind of like a fade jump shot. In like a lion and out like a lamb." He speculates that the "office makes the man."

4) Manifest Hope Gallery: DC: The Denver Egotist (via BrandFlakesForBreakfast)

Photo: Cliff/Nostri Imago

Obama's presidential campaign unleashed an explosion of art projects including the famous Hope poster from Shepard Fairey, now inducted into the Smithsonian’s National Portrait Gallery. Quite a change for a guy with 14 street art related arrests (including one at last year's Democratic convention in Denver where his posters were prominently displayed).

5) change begins at home: BrandFlakesForBreakfast

IKEA's vision of a redecorated White House is on display at Union Station in Washington DC. But if you don't like this selection, this IKEA site allows you to create your ideal Oval Office. With all the affairs of state, I don't think Obama has the time to be messing around building his own IKEA furniture.

6) Other links you might enjoy
Dave Barry was invited to participate in the parade as part of the World Famous Lawn Rangers of Amazing Arcola. See his report here. Nancy Friedman pulled together a few other links in this post including a link to some word clouds created by ReadWriteWeb that compare Obama's speech to those of former presidents as well as her earlier post about all the "Barackollectibles" available (like Orange "You Glad for Change" Soda from Jones Soda). And finally a link to all 44 presidents seamlessly morphing from one to the next

That's it. See you next week for more stories from the world of brand strategy.

Question authority?

OMG. The dead have risen!

For those that experienced technical difficulties, it was a bust. But for those of us that got in early enough, the CNN/Facebook partnership was a great success, showing the power of this media combination. Live coverage (without commentary) plus a Facebook feed of comments from everyone or just your friends.

The comments captured the genuine emotion of the occasion as well as some gems including the headline of this post which was the reaction of someone when Joseph Lowery stood up to offer the benediction. Coming soon after Obama's uplifting speech, the timing was perfect.

Update: More commentary on this partnership here and here. I think we not only witnessed a historic inauguration today but also a historic day for media. Although live posts and comments on TV programs have been done before, today's connection between CNN and Facebook was so seamless and simple that it heralds the dawn of a new way of watching what used to be called TV. Will the networks embrace this or drag their heels?

How did Slumdog get its Millionaire?

Photo: Shabbir Siraj (Flickr)

Great movie (see Ebert's review here) but I couldn't help but wonder afterwards how on earth the producers of "Who Wants to be a Millionaire" ever gave permission for the quiz show to be used. Without giving away the details, the movie portrays the show pretty badly, connecting it with torture, collusion and cheating. Not your typical product placement.

Luckily, I wasn't the first to wonder that and I found this article by Aaron Barnhart of the Miami Herald. He has done some digging and reports that Celador, one of the production companies behind the film, is also the company that created "Who Wants to Be a Millionaire." It sold the international rights in 2005 and used the proceeds to focus on the movie business, including this movie which (I think) undercuts the show. Nice.

But maybe it's all going to work out. Josef Adalian, writing in TV Week, says that ABC is considering bringing the show back to primetime. He thinks that the “Slumdog Millionaire” connection is a positive since it puts Millionaire "very much back in the cultural zeitgeist." It certainly does that and perhaps that's the most important thing? Contestants better be on their toes, though, if they answer too many questions correctly.

What's a trillion? Big but how big?

Although everyone gets that a trillion is a big number, most people don't have any idea how big.

In a recent speech about health care at the Commonwealth Club, Dr. Ezekiel Emanuel, felt that it was important that his audience got a better grasp on a trillion. He was setting the stage for his health care proposal by talking about the "big three" health care problems: Coverage, Cost and Quality: Too many not covered, too expensive and not good enough quality.

His data point on cost was that we spend $2.2 trillion on health care every year. To hammer home that $2.2 trillion really is a very, very big number, he translated dollars into seconds:

Q: How long ago (do you think) was 1 million seconds? A: Last week
Q: How long ago was 1 billion seconds? A: Round about when Nixon resigned the White House
Q: How long ago was 1 trillion seconds? A: 30,000 BC

Helps put our national debt into perspective as well.

Note on Dr. Emmanuel:
Dr. Emmanuel is the Chair of the Department of Bioethics at The Clinical Center of the National Institutes of Health (and brother of Rahm Emmanuel, Barack Obama's Chief of Staff). He is a proponent of of a complete restructuring of health care, eliminating its provision through employers and replacing it with a voucher system paid for via a value added sales tax. Audio of the whole speech is here. Interesting if you're interested in health care.

Six of the Best: Newly discovered blogs edition

Here's my summary of interesting things I read or seen recently. This week's edition focuses on some of the blogs recently added to my Google Reader (the best way I've found to keep track of different blogs, btw):

1) The Responsible Marketing Blog: Patrick Byers
A blog where "commerce and conscience come together." Recent posts include a story about Whopper's (banned) dump-your-friends app. on Facebook and a post about a couple of companies sponsoring the second "Evolution of Dance" video. (The first EOD video is #2 on YouTube's all-time most popular and this second one is nowhere near as good, IMHO)."

2) Thought Gadgets: Mediassociates
Ben Kunz responded with a great comment to my post about the elasticity of brand equity which led me to the Thoughts Gadget blog: "Advertising, marketing and the media ... what works." Recent posts include thoughts about MTV sexing things up to keep its flagging ratings up and this post about pricing in a deflation.

3) The Phoenix Principle: Adam Hartung
Adam has a very decided point of view about the need for businesses to reinvent themselves in the 21st century. Sort of Blue Ocean Strategy with a twist. His posts like this one about The New York Times hammer away at his themes about disrupting lock-ins and not getting dependent on old success formulae. (Sidebar: The posts use bold type a lot which is mildly irritating. If ALL CAPS is considered shouting, is too much bold type considered raising your voice?)

4) stuff for your brain to chew on: Denise Lee Yohn
"Insights, information and observations about brands" including a recent post taking on Al Reis for his opinion that brands need to stay focused and this one that questions whether anyone wants to be BFF with a detergent.

5) Marketing Geek: Michael Fassnacht
The "intersection of marketing and the 3 forces of revolution: data, technology, and great ideas." Posts include this one about the difference in growth expectations between the U.S. and Europe and this one about reasons to blog.

6) Fairfax Town Manager's Blog: Michael Rock
My home town reaches out to its local community with this blog that includes things of absolutely no interest to those living elsewhere like an update on FEMA projects post the 2005 floods (Rebuilding the Creek Road Bridge is completed - yeh!) and information about the 2nd Annual Ice Skating event (it was actually plastic skating). For another example of hyperlocal see here (so much more potential than realized so far).

That's it. See you next week for more stories from the world of brand strategy.

Boomers quit spending, perhaps for good?

Photo: Jim Donnelly (Flickr)

Earlier this week, I predicted that the nation's resolve to stop shopping, which some see as a shift to more responsible shopping, won't last long. As soon as there is an economic recovery, it will be shop-'til-you-drop again.

Denise Lee Yohn (who has an excellent blog here) commented that she was already back to her "old drive-everywhere self" now that the price of gas has fallen from its record highs of last year. She also raised the issue of generations of consumers and that perhaps a "more socially-conscious generation that drives the trends today might be more committed to a scaled-back lifestyle than the repressed boomers who set the tone in the 80's."

That reminded that I'd seen something recently about boomer shopping behavior. I'm not sure what I read originally but this article from the Press-Telegram sums up the thought: "Baby Boomers have pumped up the global economy with their profligate ways for nearly two decades. It's been a great party. Now the music's over."

"Millions of Boomers," the article goes on to say "are realizing that 'hope I die before I get old' was just a sarcastic line in a rock and roll song, not a life plan." As Boomers hit their earnings peak right around the Millennium, the U.S. household saving rate went as low as 2 percent of income (from 10 percent during the early 1980s). Now the recession has probably provided an early wake-up call to this generation to change its ways.

Olivia Mitchell, a professor at the Wharton business school, commenting in the article says: "The Baby Boomers are going to have to work longer and eat less. And go back to what my mother was doing — saving string."

Shouldn't IKEA's products carry a warning label?

At 27 pages and 44 steps, IKEA's BESTÅ BURS TV unit is surely the Baskin Robbins Large Chocolate Oreo Shake of build-your-own furniture. Or maybe there are even more outrageous examples?

Anyway, I'm hoping that there's some pride of accomplishment if I ever get it finished. I'm also praying that I don't get to the last instruction and find out that I screwed up somewhere along the way and have to start over. (Been there before.)

Meanwhile, blogging and all other non-essential activities have been severely curtailed to make room for this monster.

How long will the nation shoppers resolve to stop spending?

Photo: chrisphoto

We're two weeks into the New Year. Still feeling good and strong about those New Year resolutions? Sliding on anything yet? Or still confident that, this time, you're really going to make it and stop/reduce/cut out whatever long-held bad habit you've chosen to tackle?

Lee Scott, the outgoing CEO of Wal-Mart, thinks that the recession may have caused a "fundamental change" in our shopping habits. Speaking at the National Retail Federation's (NRF) convention of retailers and suppliers in New York, Scott cited a recent meeting with young shoppers. They told him they aren't eating out or going to the movies any more. "Everyone has given up something and said how good they felt about it," he said.

If over-consumption is the bad habit that Americans have been indulging in, Scott sides with those who believe that the recession will give us the resolve to change. I don't agree. I think that our resolve will fade away and we'll go back to shopping a go-go just as soon as the economy lets us. Or perhaps a couple of weeks afterwards.

As I mentioned in my weekend post, we've been here before. Back in the 70s, in a previous recession, Jimmy Carter said: "We’ve discovered that owning things and consuming things does not satisfy our longing for meaning." He was wrong. Do we really think things will be different this time after the fun of frugality wears off?

Six of the Best: "A little too much Schadenfreude?" edition

Here's my summary of interesting things I read or seen recently:

1) With Recessions Like This, Who Needs a Recovery? Freakonomics
The rich and well-to-do are having some trouble adapting to the recession and its insistence on adopting a frugal outlook. As Stephen Dubner reports, Vogue just came out with “inspired ideas ...all in tune with environment- and recession-minded resolutions.” The list includes a sewing kit, price tag $975.

2) Who killed the Yummy Mummy? The Daily Beast
Along the same lines, Molly Jong-Fast reports that the superrich in NYC are also having to adapt to the new economy and how it frowns on the vulgar display of wealth. As she says: "There will still be ladies Botoxing, and Dr. Mel Practice will still lovingly break your nose and make you look like Michael Jackson, but the culture of waste, of bragging, of bragging about waste, is slowly being replaced by a culture of sheepishness and shame."

3) America's Biggest Billionaire Losers Of 2008: Forbes

#1 on the list is casino mogul Sheldon Adelson who was down $24 billion in 2008. Warren Buffet and Bill Gates are also on the list. In a related article, the WSJ's Wealth Report talks about the respect you can get by being a FRIP (Formerly Rich Person)

4) Talk is cheap: Consumed
Rob Walker cautions us not to believe that the recent reduction of spending signals a radical change in consumption mentality from: "vacuous shopping-bots" to "virtuously sober citizens" overnight. He points out we've been here before. Who said: "We’ve discovered that owning things and consuming things does not satisfy our longing for meaning"? Jimmy Carter in 1979, that's who.

5) Advertising on the Edge: The Economist
With clear vested interest, The Economist lays out the reasons to keep on spending money on ads during the recession. Well presented though. (via brandflakesforbreakfast)

View SlideShare presentation or Upload your own. (tags: branding recession)

6) Flynt, Francis Want Porn Bailout: msn money
Porn titans Larry Flynt and Joe Francis want some federal help. They sent a joint request to Congress asking for $5 billion in federal assistance, "Just to see us through hard times. In difficult economic times, Americans turn to entertainment for relief" etc etc.

That's it. See you next week for more stories from the world of brand strategy.

Blackberry's #1 Fan: Obama

Photo by: xmatt on Flickr

President Elect Obama is not going to give up his Blackberry without a fight. Despite the concerns of the Secret Service and government lawyers he is still "in a scuffle" about keeping it. "How do you stay in touch with the flow of everyday life?" he asked rhetorically in an NBC Today Show interview.

Over in the UK, in the unlikely event that the Queen had the urge to experience everyday life by tapping away on a Blackberry, she could bestow the right for the company to display her coat of arms with the words: "By Appointment to Her Majesty the Queen."

Such pomp and circumstance is not part of the U.S. tradition but Obama's continuing, reported battle to keep his Blackberry may be endorsement enough.

Update: The New York Times reports that various marketing experts put the value of this endorsement at between $25 and $50 million

Is brand equity elastic?

Jonathan Salem Baskin had an interesting post over the holidays titled: Holidays 2008: Price Cuts Eroded Value. I didn't buy the main argument which was (and I hope this is fair) that consumers are entering a new age of enlightenment where they will no longer be influenced by branding trickery.

But this quote got me thinking about brand equity elasticity:

"When Chanel kicked-off the October with an 8% or more price cut, it didn't offer more "value" to consumers as much as remove the "luxury tax" it normally charged for its products. Being charged less is not the same as getting more.

Does the premium that consumers are prepared to pay for brands vary depending on market conditions? Now that we're in a recession, will premium or luxury brands have to reduce prices not just because people have less money but also because the amount extra they are prepared for a brand name is also less? What Jonathan describes as a "luxury tax" might also be called a brand premium surcharge.

As with many of my posts, this one might be completely off-base so please set me straight if necessary.

Outliers: The elements of success

Photo: tsechuen26

I have a growing pile of books to read and, despite the best of intentions, I didn't get through very many over the holidays. But I did finish off Outliers, the new book by Malcolm Gladwell. No need to review it. That's been done. Instead, here are a couple of things the book made me think about.

The elements of success: The book seeks to answer the question: "Why do some people succeed more than others?" In the nature/nurture debate, Gladwell is a strong nurture supporter, meaning that he prefers to explain success by looking at things like: hard work, luck and culture rather than innate talent.

One of the interesting ideas of the book is his description of the theory that it takes 10,000 hours (or about 10 years) to become really good at anything. Studies have shown that the single thing that distinguishes the skill of one musician over another is the amount of practice that they have put in. What Gladwell doesn't address is the motivation issue. Why do they do it? No amount of cajoling on the part of my parents, for example, would get me to practice the piano where I was a spectacular failure (and caused my piano teacher to retire). I just didn't want to play.

For me the right equation is something like: Mastery = (Talent + Opportunity + Motivation) x Practice. But as Seth Godin points out in his post on the book, mastery is not the same as success. Success means being the best and you can achieve that with many fewer hours of practice if you happen to pick the right field with less competition or if you're the first to do something.

The power of (and sometimes trouble with) stories: Malcolm Gladwell is the consummate story teller. Each theme in the book is introduced by a story that sets up the point he wants to make. There's the story about successful Canadian hockey players all born early in the year, showing how being in the right place at the right time is important; the story of the crashing Korean pilots showing the impact of culture and even the story of his own family used to summarize the book. If anyone ever had any doubt about the power of stories to help sell an idea, this book should put those doubts aside.

But I think this book also shows the trouble with stories. Their power can override facts. Several reviewers have criticized the book exactly on these lines. For example, Joel Spolsky takes issue with "anecdotes disguised as science" and Michiko Kakutani says: "The problem is that he then tries to extrapolate these observations into broader hypotheses about success. These hypotheses not only rely heavily on suggestion and innuendo, but they also pivot deceptively around various anecdotes and studies that are selective in the extreme: the reader has no idea how representative such examples are, or how reliable — or dated — any particular study might be.”

It's part of the broader question of presentation vs. content/ideas. I saw this first hand back in my Nestlé days. When we did concept-to-use testing it was clear that how a concept was written was often more influential than what the idea was behind the concept. Which, of course, is disastrous in that particular situation.

So be careful with stories and, in particular, be careful not to use them to cover gaping holes in your knowledge, insights or ideas. You may get away with it sometimes but you're not really doing yourself any favors in the long run.

Chopping prices without killing the brand

It's all very well for people to say that brands should not cut prices to prop up volume. But these are recessionary times. In Economics language, the demand curve has shifted and the law says prices must fall or quantity will fall even further.

Some may try and ride out the storm but most will take a hard look at their pricing strategy and come up with options, hopefully trying to figure out which tactic will help sales without hurting the brand. Here are some of the pricing strategies I've seen or heard about recently. Let's see if we agree about their brand impact:

1) Costco TV bundled pricing: Ah! the venerable Buy One Get One deal. Favorite of sales people everywhere because it "moves boxes." Costco has come up with an inventory-clearing variation of the theme by "bundling" TVs together and selling them for one low price: Two Sharp 42"LCD HDTVs for $1,499.99! "One for the living room, one for the bedroom." Best Buy is also using bundling pricing at the moment but its strategy is a little more sophisticated--they are bundling different things together like TV and an Xbox or a TV and free installation.

Brand Equity Verdict: This promotion is great for Costco, not so good for Sharp. A 50% off deal would have been worse so perhaps Sharp should be relieved. Best Buy's approach is much kinder to the manufacturer's brand equity.

2) Starbuck's 20% off sale: Starbucks broke one of its cardinal rules with this promotion: "We will not discount our whole bean coffee." For a limited time in December, Starbucks had 20% off merchandise as well as some blends of whole bean coffee.

Brand Equity Verdict: A promotion that lacked imagination and was poorly executed, at least in the store I visited. Just some unenthusiastic hand-written notes on the merchandise and a message on the chalk board. The short time period helped but overall not helpful for the troubled Starbucks brand. The company's efforts to boost the attractiveness of its loyalty card seem much more promising.

3) The Black Friday sales: Not just the early opening feeding frenzy sales that had such unfortunate consequences at the Walmart in New York but the general trend to start sales earlier and earlier. Sales that were once designed to clear out inventories after the holidays are now used to draw in customers at the height of the season.

Brand Equity Verdict: Consumers have learned the game and are now well-trained to avoid paying full price for anything. If brand equity is measured by the premium that brands can charge, then these sales have done an effective job in wiping it out. Still, now that almost all retailers have played this card, it's only the brave few that won't join in. Abercrombie & Fitch's CEO Michael Jeffries is one of those few. He told analysts during an earnings call, “We will use markdowns only to clear through seasonal product in a brand-positive way…It is clear to us that the short-term relief provided by the use of promotions is more than offset by the damage inflicted on the brand in the long-term.”

4) Bailey's value-added holiday pack: Baileys (and a host of other brands) took center stage at BevMo! in the holiday period with packs featuring free glasses. Although these packs were designed for gift buyers, the same principle can be applied to add value as an alternative to discounting. In my Coffee-mate days, we sold our fair share of bonus packs or jars shrink-wrapped together as a way to boost sales without cutting prices.

Brand Equity Verdict: Adding value rather than cutting price is a preferred approach but watch out. Programs like these can be logistical nightmares. Not just dealing with the new codes, manufacturing headaches and new shipping arrangements etc but, most difficult of all, forecasting accurately. Produce too few and suffer the wrath of unsupplied retailers. Produce too many and wait for ship-backs and/or clearance bins (which are real brand killers).

Any other/better examples?

Other people's thoughts on price discounting and pricing strategies:
1) Can your brand afford to discount? Paul Williams
2) Price Reductions Threaten Brands: Jack Trout
3) How to Think About Pricing Strategies in a Downturn: Nick Wreden
4) The Illogic of Sales: Jonathan Salem Baskin
5) Frequent Price Promotions Threaten Quality Brands: ScienceDaily
6) more power to ya, a&f: Denise Lee Yohn
7) Segment Customers and Price Accordingly in a Downturn: Dana VanDen Heuvel

A post office dream: The computers are down. Nothing is working

One hates to fall back on old clichés but sometimes it's difficult not to. Never have I seen a post office worker so smug and content as she announced to the lunchtime crowd running in from the rain that: "The computers are down. Nothing is working"

"Can we buy stamps?" "No"
"Can we weigh packages?" "No. Everything is connected to the computer"
"Can we do anything?" "You can try another Post Office."
"Is their system down too?" "I don't know"

The Post Office is one of those businesses that could do everything right for months and months and the only thing that would really register would be an event like this.

Marketing professionals not as gloomy as you might think

Based on all the recent news, what percentage of marketing executives do you think would be expecting to work with lower marketing budgets next year? 100%? 90%?

This year's Top Marketing Trends for 2009, a survey of the members of the Marketing Executives Networking Group (MENG) conducted by Anderson Analytics, says that, in fact, only 50% of marketers will be working with lower budgets. And three quarters of those surveyed think that R&D and use of Market Research will either stay the same or increase.

Dig a little deeper into the numbers and you can see that the recession is having an impact. 44% of those surveyed are either reducing staff or not filling open positions and availability of credit is the marketing buzz word or trend with the biggest increase in terms of its importance.

The focus is very much on the basics. The most important concepts: customer satisfaction, customer retention, marketing ROI and brand loyalty. At the same time, buzz words that these executives are most tired of hearing about are: Web 2.0, social networking and social media.

The mood perhaps best summarized from this quote from an open-ended response: "In this economy, too many people are trying to shrink their way to success - cutting faster than the next person. I think its critical to go on offense while the competition is hiding. Finding inexpensive ways to gain competitive advantage and grow share is critical to longer term success when the economy starts to recover."

Full survey results are at: www.mengonline.com/visitors/newsroom

About MENG
MENG is an networking community of senior level marketing professionals. I've been a member for the last four years. To learn more, visit www.MENGonline.com.

Six of the Best: 2009/2009 edition

Here's my summary of interesting things I read or seen recently, this time focusing on the ones that looked forward or back.

1) Uncle Jay explains: A year-end review of the news. As he says on YouTube, Uncle Jay "explains the news to the innocent, wide-eyed and ignorant. Also to children. He depends on the Internet to reach kids, now that he's no longer allowed within 200 feet of a school."



2) An Unhappy Year: Freakonomics
Justin Wolfers takes issue with Sonja Lyubomirsky who suggested in this New York Times article that we're all still happy because we're all in the same, sinking boat. Mr Wolfers says "no." We are, in fact, unhappy and he then provides the data to prove it. We're struggling, suffering and, despite Kaiser Permanente's best efforts, not thriving.

3) In a 'Bad' Year, the Good News of Our Times: FOXNews.com
Fox News found the silver lining in 2008. The list of good news events includes: Crime rates are falling, life expectancy is up and we have more leisure time than we used to.

4) As if Things Weren't Bad Enough, Russian Professor Predicts End of U.S.: WSJ
"Mr. Panarin posits, in brief, that mass immigration, economic decline, and moral degradation will trigger a civil war next fall and the collapse of the dollar. Around the end of June 2010, or early July, he says, the U.S. will break into six pieces -- with Alaska reverting to Russian control." Insert Sarah Palin joke here.

5) "Best Message Creation of 2008": The Winner is Will I. Am: BusinessWeek
David Kiley nominates this video as the best piece of message creation in 2008 because, amongst other things: "The passion for Obama, the product or brand in this case, is infectious not contrived."



6) The top rated YouTube video: brandgym
#1 in the UK and #9 globally (with 73 million views) is the video: "Charlie bit my finger"


As David Taylor points out, it's the perfect video: Brilliant "casting," amazing execution (comic timing par excellence), based on a real human truth (about the games kids play), has drama, ups and downs... and yet ends on a happy note and is short and sweet: less then 60 second long.

That's it. See you next week for more stories from the world of brand strategy.