Monthly Archives: September 2007

Mattel Lost in Translation

I was fairly neutral on the Mattel recalls, not really blaming Mattel but this was an interesting week, one that leaves me saying “hmmmm.”

 

First Mattel’s CEO apologized to the US congress for what he said were suppliers who went around Mattel’s safety measures and created bad products of lead and small parts.  Then the VP of International for Mattel just this week apologized to China for designing faulty products.  Wait, which is it, bad suppliers or bad design? 

 

This comes off as double speak in a big way and actually does more harm in the long run for Mattel because now you can’t trust them.  Which side of their mouth should you listen too?  They just shot their brand right in the head!  Lead paint is not bad design; Mattel should say that to the Chinese instead of bending over backwards.  If they designed things poorly, yes by all means apologize but is Mattel saying they designed their toys with lead paint being applied, in mind?  One could make that argument based on the apology given to the Chinese government.  Also doesn’t explain all the other bad products coming out of China so really this was just a bad move on Mattel’s part, really makes them look weak and more concerned with image rather than substance.

 

Then lets add in the 10% mark up on toys for “added safety.”  Wait a minute Mattel, if it was just a few rogue supplies or bad design, why are we paying more?

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Filed under Branding, Business, China, Consumerism, Globalization, International Trade, Marketing, Recalls

Marketing and Finance, Still Having Problems with Metrics

The National Advertisers Association and the Marketing Management Analytics released their annual survey with some rather interesting results.  Here are a few highlights:

 

45% of organizations lack marketing ROI definitions (up 20% from last year).

 

61% of marketers said there is only “some” cooperation between finance and marketing.

 

42% of marketing executives said they are dissatisfied with their marketing ROI metrics.

 

Those are some ugly numbers!  This seems to be an endemic problem at many companies, this poor relationship between finance and marketing.  I can only speculate what the root problem is.  But I think it is up to marketing to fix their end.  Having a lot of friends in finance I often get the impression that they think marketing is fluff, kind of a fluff department that really doesn’t add any value beyond cute pictures and slogans.  Unfortunately that is sometimes true on some companies.  In a lot of companies if these numbers keep up, it won’t help change this perception.  Better analysis of marketing activities are needed and needed in a lot of organizations.

 

This is not the first study that shows similar numbers so this is certainly not a one off situation or unique.  More marketers need to ask and address the questions regarding how they can directly demonstrate their impact on the bottom line.

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Filed under Branding, Business, Leadership, Marketing, Metrics

ROI Changing the Client Agency Relationship

More companies are demanding their ad agencies prove ROI for ad dollars.  This is really shaking things up as more ad companies are scrambling to find ways to prove their worth.  I am completely for this!  However I do wonder about the approach.  Many are moving toward the web marketers domain and trying to prove ROI in that area, which is a lot easier to do than say for TV or radio.  So this is really the easy approach, the real holy grail of ad metrics isn’t being touched yet by the majority and I am waiting to see what the industry will do to tackle the harder areas.

 

The really interesting aspect of this is what kind of cultural change is this going to create?  This is one of those touch points that has a ripple affect throughout the entire system.  Ad agencies are often best at the creative, I remember interviewing at a few and my numbers approach was an alien language to most of them.  They saw the value, just no in their domain, but 5 years later the market is demanding they change.  How does that impact the culture of many agencies?  We are seeing the first step, will they move further into other channels where measurement is not as easy?  In these other channels it demands a lot of creative thinking to find the right metrics.  I’ve heard of people using six sigma in ad agencies, I don’t find those of much use, we are going to see more agencies try such measures and fail, a new system will be needed, one that is unique to marketing and that has been my belief from the start.

 

In terms of the client side, many marketing executive demand the ROI because their boss demands it, but many marketers do not understand those numbers themselves.  So the client side is going to have to beef up on the numbers also.  This again is going to create a fundamental cultural shift.  CMO’s have the shortest tenure and I believe we are going to see a rise of the metric inclined CMO, will this help the tenure issue?  Time will tell but if I were to place a bet on it, I feel strongly it will. 

 

The overall impact is interesting and will continue to be something to watch for the next few years.

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Filed under Branding, Business, Marketing, Metrics

I thought You Said ATM’s Would Lower Costs?

Back when banks wanted us to use ATM’s they said it would lower our cost to bank.  Bank of America last week increased its ATM fee for non customers to $3.  Some other banks are looking at following suit.  $3 is rather steep, hell $2 is steep!  It is all electronic so it costs them pennies, so the margins are huge on these fees.

 

This is another case of the corporate white lie coming to cost you big time.  Remember, we were told ATM’s would lower the cost of banking for all.  $3 is steep, come on guys, you give us a terrible rate on savings accounts as is, why stick to us here too?  I think it is time for an alternative.  Hopefully someone does come up with one.

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Telemarketing is not Marketing

Lets clear the air, telemarketing isn’t marketing, in fact it has nothing to do with marketing and is actually quite damaging to a company’s real marketing efforts.

 

What is telemarketing?  It is a cold call to sell something over the phone.  Anyone in the US has experience with telemarketers and their efforts to sell us what they are trying to sell, there isn’t any marketing going on what so ever.  They often come in two varieties, the monotone seller who reads their script and waits for your answer.  Or the pressure sales person that tries to get you to buy no matter how many times you say no.  Where is the marketing?  There isn’t any.

 

So where did the word telemarketing come from?  It seems to have first been used back in the 70’s by the phone company Bell.  The word was created to soften the blow.  It was sales and still is and back then, that sometimes left a bad taste in the mouth of some customers who didn’t like being bothered with a sales call.  But back then, the word marketing didn’t have such a stigma and sounded a little cooler and sexy.  Keep in mind, this was when marketing was just getting into its own and getting a glamour image in some sectors.  So telemarketing sounded nice and at first at least, met less resistance when a customer heard “I’m not a sales person, I’m a telemarketer.”  Of course today, we either hang up or don’t even pick up the phone when we recognize a telemarketer is calling us.

 

A lot of companies now outsource their telemarketing or staff them with people who have little more than a script and a quota.  This does not help their brand or public image what so ever.  Telemarketing is a misleading word and often a misleading practice.  I can’t even remember the number of times someone calls me and tells me they are not calling to sell me anything but yes, actually they are!  Or they call and run through their script and hang up.  Or I have to hang up because they can’t seem to understand what “no thank you, I’m not interested” means.  This hurts your real marketing efforts in a deep financial way.

 

I was running some numbers of my own on a small test group (keep in mind I’m doing this in my spare time, I don’t have a research department for my pet projects, sorry), and with these test companies I saw that the negative impact of telemarketing added an additional 7-9% to the overall marketing costs just to over come the bad impact of telemarketing.  So your budget is impacted by almost 10% due to bad telemarketing, you are wasting that 10% and giving your competitors an advantage.  Not to mention wasting even more in terms of good will and customer patience’s, which you can’t put a price tag on.

 

In my opinion you are better off without telemarketing.  There are much more cost effective ways to reach your target audience without the need for telemarketing.  The direct cost and indirect costs seem far to high for the actual return.  A well thought out acquisition marketing strategy doesn’t need telemarketing, nor does it need any other method that is similar.  It can be done that actually has customers open to engaging you at every touch point.  And it can be done with excellent ROI, using real marketing efforts.

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Filed under Business, Marketing

A Year Without WalMart

I’ve been reading this wonderful blog here on WordPress called That’s Swell by a fellow blogger and her experience with giving up WalMart.  I particularly liked part II of the series as it talks about Sam Walton and how he was a real believer in Buy American and how after his death, the company took a dramatic change. 

 

Remember back then, we had NAFTA to worry about.  We had some companies already producing in China but it was so small, nobody really noticed.  The reflections on how times have changed in the last 15 years is amazing.  And something as small as stock prices of a discount retailer from Arkansas having that much impact on globalization and daily life for, millions if not billions around the world.  Cheap tainted goods for Americans and pollution and tainted goods for Chinese.  Was the stock price of Wal Mart worth it? 

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Filed under Business, China, Consumer Activism, Consumerism, Globalization, International Trade, Life, The World, Trade

The End of Brand

It was going to happen sooner or later and the Mattel recall finally did it for many.  The end of the illusion brand is here.  And it’s a really good thing too!  I don’t mean the concept of branding is dead, I mean the idea of using brands as a smoke and mirrors tactic is over as some consumers are now becoming aware of what a brand really is to many companies.  In essence, the brand they use is not a very good type of branding, and with that, perhaps we can move on to a better use of branding, one that actually ensures a strong connection with consumers and is what it claims it is.

 

Mattel’s brand relies on quality, traditions of American icons and safe toys that parents can trust.  All of this is false.  This is what we call a brand disconnect.  Mattel outsourced its manufacturing to overseas manufactures, Mattel has agreements but a contract doesn’t actually mean anything if you don’t do anything to enforce it.  So we have seen millions of toys recalled because the quality isn’t there.  The brand fails this aspect of its promise.

 

An American icon?  Back when Barbie was made in American, yes, now, no.  Sure I loved my Hot Wheels as a kid, tough metal toys that could take a beating, these Hot Wheels today are cheap and a few good hits and your kid can be a toy car mechanic.  A name and logo doesn’t make a product, Mattel did that and it failed.  Barbie and Hot Wheels are not traditional American toys anymore, the people making a dollar a day don’t really care about the history of these toys, what they mean to people, they just know they get a pay check for making them and that’s that.  For this, the brand promise fails.

 

Safe toys?  There was a time you could trust Mattel for a safe product without question.  Sure now and then they had a problem but we believed that was the exception, not the norm.  Today, you have to wonder.  Mattel has very little control over its suppliers and we know this, you don’t have millions of recalled toys if there is just a small problem now and then.  Since Mattel has lost control of it’s safety standards, it fails this part of its brand promise as well.

 

This all adds up to a total brand disconnect.  This is mainly due to the philosophy of branding employed.  For most who don’t understand branding, it is not a concept like accounting where you have agreed upon standards, it’s very wide actually with many schools of thought and ways to use.  The type of branding you see with Mattel is actually very common among the multinationals and they do it because for the most part, you the consumer fall for it.  Don’t think this is limited to Mattel or toys, this is widespread and as people start looking closer at more products, you’ll see this is actually surprisingly widespread and for a good reason, it makes money.

 

Generally what is done is, a shell game is played, a brand is held up as being one thing, when in fact it is quite another.  I was out shopping and saw a product that said “An American Company”  yes it was based in the US but made overseas.  Was that nice shiny red paint up to US standards of being lead free?  Who knows, you can’t tell without testing it which means you have to buy it!   But would most consumers even notice it isn’t made in America.  With the “American Company” phrase all over the box and American flags, it really looks like it is American made, but it’s not.  Enough people do get fooled by this and buy it, not really looking at the fine print. 

 

A lot of this was done during the 90s and early part of this decade when companies like Wal Mart decided that low prices at any cost was the way to go.  You as consumers ate this up!  You loved the low prices and while I and others told you that those low prices came at a cost, you didn’t listen.  So now we have a situation on our hands where low prices often me, not up to regulatory standards and our definition of safe.  Are you sure that utensils set you bought is lead free?  How about those pant, are they on the list of clothing that has 900 times the safe level of chemicals?  They were certainly cheap, but what’s the price to you?  You don’t know, neither does the store you bought it from, the brand company that markets it or even probably the manufacturer.

 

What are the companies doing about it?  Most people feel that the consumer outrage will cause them to change.  Not really.  What’s going on is they want to change the regulations so what they are having made, gets in legally.  Don’t expect Mattel to build plants in the US and start making toys here again.  Don’t expect Wal Mart to realize that their demanding of production be sent overseas is the reason why 70% of Americans can’t make ends meet at the end of the month because that nice factory job got replaced with a lower paying service job.  See the real savings wasn’t for you the consumer, it was for the corporation.  When they ship overseas, they now don’t have all the overhead they had here and that means better margins and if you are CEO, you like better margins.  That means bigger bonuses, so do you really expect these companies to give up the personal gain they are making off this branding bait and switch they are doing?

 

More people are realizing this is what is going on and are disgusted, they feel cheated and they should!  They were lied to and it shows.  But you lied to yourself as well.  Back in 1999 when I was writing on this topic, people told me that low prices will only help the consumer, lead to better choices.  Better choices?  If you like lead, sure.  How about toxic fish?  Clothing with questionable chemicals?  Cough syrup, toothpaste, pet food from China anyone?  If you want quality you have to look beyond the price tag.  And many consumers did not do that nor did they stop to wonder what the impact all this would have, the race to the bottom was too good.  It’s like fast food, the value meal sounds like a good deal, but how many more hours on the treadmill is that going to cost you to super size it?  Not so great when you thinking of it that way.  And that’s what you need to do, start thinking of it in different ways and look at it in ways that get you seeing the whole value.  When you do that and vote with your dollars, branding will be forced to change, as the illusion branding tactics just don’t work when you change the rules and demand accountability and have a “show me” attitude.

 

Experiential branding is what I would use if I were in a market with competitors who have already been busted for tainted goods.  In fact any market with consumers who source overseas, doesn’t matter if you are in Canada, Panama, Germany, if you have competitors that source outside the area of your regulatory market, you are at risk.  Because as we see with Mattel, it’s not just Mattel that is being looked at, now all toy manufacturers are being looked at.  Experiential branding would save some, assuming they move fast.  It is like open book management for branding. You combine parts of operational branding and create an experience, where consumers can really interact with the brand, touch it, probe it know how it was really made.  Place the information about who made it.  I did this once where we have pictures and the stories of the manufacturers.  We showed people where the products came from, the actually people who made them and really made that connection all the way through the supply chain.  So that people really knew exactly where and who made their product.  People loved it, and they had faith in the product and the ROI per sale improved as a result.  We gained a lot of trust from consumers where as our competitors had little to nothing to show and couldn’t do that.

 

If consumers demand real change and vote with their dollars, this can change.  But if you continue to shop as you have been the last few decades and believe the brand without much question, don’t expect any change.  Companies are lazy for the most part, make them work for your money.  They say a citizen should never trust his or her government but always question the government and make the government prove its intention are good.  The same is true with companies; you shouldn’t believe a brand until it has proven it is what it claims it is.  When enough consumers do this, things will change.

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Filed under Branding, Business, Consumer Activism, Consumerism, Customer Satisfaction, Globalization, International Trade, Marketing, Recalls

The Wall Street Journal Gets it Wrong on China

The Wall Street Journal in its article Watch Out for the China Bashers, demonstrates it is completely out of touch with the average consumer.  It states that the recent concern over China has nothing do with recalls, it’s because China is an economic competitor.  Wrong!  The pet owners don’t really care, they care that their pet was sick or is still sick or dead.  The families of 500 people killed or made seriously ill by the poisonous cough syrup from China sent to Panama, don’t care about the competitiveness issue, the see their family members seriously ill or dead.  The parents who bought toys for their kids are not concerned about competitiveness they are concerned about the safety and well being of their child being compromised by a toy!  

 The WSJ totally dropped the ball on this one, it is not about competition, the average person on the street doesn’t care, they want a safe environment that allows them to pursue their goals with products that are safe.  If it was a competitive issue, nobody would by China made products except those in China!  People would make their purchasing decisions based on location and only buy local products that ensure their economy is always on top!  Companies wouldn’t go to China because nobody outside of China would buy the products and it would be a money loser.  The WSJ should know better, perhaps the writer of the article should get out on main street a bit more before writing.  It looks more like a theory piece than one grounded in the realities of on the ground conditions.  Which are, people are concerned with safety and global competitiveness rarely if ever gets in the mind of the consumer when making a purchase.  With real wages falling in the US, the question most consumers think about when making a purchase is on price, not global competitiveness.    

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Filed under Business, China, Consumerism, Globalization, International Trade, Recalls, Trade

Recall Conspiracy?

I have been hearing a lot of talk now that there must be a conspiracy going on against China goods, why all the recalls?  Well it is quite simple and easy to explain without the need to rely on conspiracy theories of any kind.  This isn’t anything new, we have known about it for a while, the problem with China goods.  Just look at the FDA’s own records, the fish problems have been going on for years. Nobody paid attention to it, until some pets got sick and people started looking around at other products.  This is natural.

 

Never underestimate the anger of pet owners whose beloved family member got sick from bad pet food.  China was the problem and the source.  It actually took some time for this to get rolling, very little in March or April.  Some news in May and then an explosion this summer in the form of massive recalls.  If you look at the way most trends, products or information gets spread, this follows a natural pattern.  A few early adopters notice, the trend setters catch on and then the masses. 

 

So we had a few people who caught on, then the trend setters and finally everyone is looking around every corner wondering if their product from China is safe.  Add to that, the products in question are for kids, that gets people’s attention!  When you mess with someone’s kids, you are asking for more trouble and people are now questioning anything from China, where as before they just believed the brand promise without question.  The alarm is sounded, this is going to get wider.  Which is a good thing because if it had gone unchecked, imagine if people became ill or worse from these products on a wide scale.  Remember the spinach scare last year?  I know a lot of people who do not eat spinach anymore.  The ball is rolling so this is here to stay, and with the Christmas season coming, you can be assured more testing is going to bring up more recalls.

 

I don’t have any sympathy for the producers or China; they failed in their brand promise to deliver us quality goods, which does imply a safe good.  They will have to work hard to earn the trust of consumers.  Which is a good thing, consumers should question their manufacturers about the products they sell.  That’s how consumers stay informed and keep producers focused on quality.

 

Why some people want to claim the recalls are a conspiracy are because they don’t fully understand how people as a group react to alarming information.  I’ve been watching this since the first story on pet food hit the media and this is not a conspiracy, it’s not even a fad, it moves too slow.  We haven’t even hit the peak yet.  The great thing is, companies are taking advantage of this and new channels for businesses are cropping up.  In fact I just read how a local supermarket is going locally grown for produce as a result of concerns about where produce come from and they are doing great.  This is great, consumer demands are being met.  It goes to show that when given a chance, consumers will pick quality over cheap goods. 

 If anything the above example probably shows if there is a conspiracy, it was on the part of big multinationals who claimed we were getting inexpensive goods by moving production to China.  Not really, just their profit margins got better, the prices didn’t get that much lower. 

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Filed under Branding, Business, China, Consumer Activism, Consumerism, Customer Satisfaction, Food, Globalization, International Trade, Recalls, The World, Trade