Who wants a relationship with a bar of soap? Social media opportunities for CPG

If you start from the premise that no-one wants a relationship with a bar of soap and that social media is all about relationships, then how can CPG brands ever hope to effectively participate? That's the question I explored in an article just published in The Hub (Here's the writer's cut (i.e. longer version).)

My conclusion-- there are some social media activities that every brand can do but, the deeper the level of branded relationship, the more options are viable. Sticking with soap; sure if you are selling a plain bar of  soap then your social media opportunities are limited. But if you're Dove and you built a deeper relationship based on a strong sense of purpose, there are a lot more options.

Even the most miserably anti-social, functional product can take advantage of social media. Consumers are always interested in coupons and social media is becoming an effective way to distribute them. But, at the other end of the scale, brands like Coca-Cola, Doritos or Red Bull have legions of passionate fans who will willingly participate in relationship-intensive activities. Where most CPG brands go wrong is acting as if they have a strong relationship with their consumers when, in fact, they don't.

Those CPG brands that wish they could more fully participate in social media but find themselves wanting in the relationship-with-their-customers department don't have to settle. They can upgrade their status and move up the relationship ladder if they are determined and committed.

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The vexing problem of M&Ms in the mini-bar

"Fun" M&Ms at Kimpton Hotels

Hotel mini-bars have always been a flashpoint of confrontation between hotels and their guests. Guests hate the egregiously high prices and being charged for things they never ate. Hotels have to deal with their guests substituting tap water for bottled water (and vodka), tea for whisky and otherwise behaving badly.

I read a WSJ article about mini bars on the way to Los Angeles (summarized in this video) so I was curious to see what Kimpton Hotels has decided to do about this vexing issue. Turns out they've gone the obfuscation route, meaning they've substituted well-known brands with obscure ones which look more premium and perhaps worthy of their breathtaking price. So, instead of Evian or Aquafina, there's Fred Water at $8.00 and there are other products with no easy reference at all, like a Kopali Organic Mango snack for $7.00. (By the way, the Kimpton prices are nowhere near as bad as some other places.)

But what about those must-have products, of which one of the mustest-have of all is M&Ms? No substitutes allowed! The clever idea from Kimpton is to repackage/resize them and sell them in a resealable pouch bag, called 'Fun' so that the $7.00 price looks kinda/sorta justified.

Other hotels are trying different strategies--some have given up the fight completely, either taking out their mini-bars or leaving them empty for guests to stock themselves. Others are using technology to escalate the battle with their guests, installing fully automatic mini bars that monitor and track guests as if they are on some FBI list. And others (including Kimpton) are trying to lure their guests to buy more by strategically placing baskets of snacks and bottles of wine in easy reach.

From a brand perspective, mini bars are nothing but trouble--what consumers expect (all their favorite snacks and drinks at cheap prices) seems to be more than the business realities of hotels allows them to provide. (Apparently, mini-bars generally lose money, even with prices as high as they are.)  This appears to be a no-win encounter where the Kimpton strategy is about as good as it get in terms of damage limitation.

Anyone got any bright ideas about a better approach?

Netflix: Too far, too soon?

Sooner or later, DVDs will be outdated as cassette tapes, typewriters and buggy whips. The mistake that most companies make when faced with the decline of their core business is to be in denial and to try and hang on too long. They focus all their energies trying to maintain revenues in their dying business and little time or no time trying to reinvent themselves. 

That's what obviously been gnawing away in the mind of Reed Hastings, CEO of Netflix and he's been determined that he won't make this same mistake. In his already famous memo to subscribers, he says: "For the past five years, my greatest fear at Netflix has been that we wouldn't make the leap from success in DVDs to success in streaming. Most companies that are great at something – like AOL dialup or Borders bookstores – do not become great at new things people want (streaming for us)."

But has his determination to avoid this fate pushed him too far, too soon in other direction? In the memo, Hastings announced that the DVD service will now be split off as a separate (non-integrated) service and given a new name (Qwikster). In doing this, he's forcing fence-sitters like me (who subscribe to both services) to make a decision one way or the other, he's reducing the company's ability to get more than its fair share of DVD users as they slowly transition to streaming and he's separating the businesses by business model, not by customers mental model. He's also doing this when DVD sales are still strong and when the Netflix streaming service is still weak (limited content).

It's a bit like getting a medical diagnosis of a terminal illness where you'd still have years of active life and deciding to go for radical surgery that's quite likely to kill you. I think it's pretty much certain that this action will hurt the company in the short run, perhaps fatally. But it also increases the chance that it may be around in 10 years time. What do you think?

(I'll leave it to others to opine on the new name.)

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A great article on the perils of bad strategy, forwarded to me by a Landor colleague. Written by UCLA management professor Richard Rumelt, the article (free registration required) covers some typical mistakes. These include: Mistaking goals for strategy, a "dog's dinner" of objectives and a "flurry of fluff" (restating the obvious using fancy language).

The highlight of the piece is an all-too familiar bad strategy template:

The Vision. Fill in your vision of what the business will be like in the future. Currently popular visions are to be the best or the leading or the best known.

The Mission. Fill in a high-sounding, politically correct statement of the purpose of the business. Innovation, human progress, and sustainable solutions are popular elements of a mission statement.

The Values. Fill in a statement that describes the company’s values. Make sure they are noncontroversial. Key words include “integrity,” “respect,” and “excellence.”

The Strategies. Fill in some aspirations/goals but call them strategies. For example, “to invest in a portfolio of performance businesses that create value for our shareholders and growth for our customers.”

If this is you, I suggest throwing it all away and starting over.