Posts Tagged ‘branding’

Music Is Free–Let It Loose… and Reap the Benefits. PART II

March 11, 2011

This is what the Grateful Dead’s sound system looked like in 1973, from an article in Rolling Stone entitled A New Life for the Dead: Jerry Garcia is Checking Cash Flow Charts.

The Dead was a growing enterprise as the scale of this, their very own sound system in 1973 indicates. The ballroom days are long gone now.

It was a monster — state-of-the-art in those days. This hippie band was really taking off even then, as the 1960’s, the decade of their birth was now long gone. The Woodstock Festival in 1969 showed the world that rock music had an enormous audience and in 1973 that potential was becoming realized. The music business was now a big, big business!

The ballroom scene that featured multi-night engagements in small intimate halls with capacities of up to a thousand or so, described in Part I, was over. The capacity of these venues was not enough to sustain the escalating costs and fees of touring artists any more.

And we all know that things were to get bigger yet.

What is clear, as the last posting suggested, is that the Dead were riding the wave… and were now in control of their business and destiny. Consciously or not, they were also creating best practice marketing, building an ever-larger base of community support and demand for their product – improvised music that reflected the moment, the connection with a co-creating audience, that was different each and every night.

If we rewind just a couple of years earlier back to 1969, I can share how it looked on the ground as some of this was developing. Imagine we are at Boston’s top rock club, the Boston Tea Party, formerly The Ark, a venue that could hold an audience of 1,500 or thereabouts. It’s New Year’s Eve 1969/70 and strangely enough, the Dead are playing in Boston, instead of their home base in San Francisco. What a way to end that action packed decade.

I am helping the band’s road crew load in. Lot’s of gear to move, and extra hands help. There is one fellow that stands out. He is dressed in western gear with a couple of leather bandoliers strung across his chest, looking like a space-age cowboy outlaw. Instead of bullets, however, the bandoliers are filled with little bottles of liquid, containing what I do not know.

Introducing, The Bear, aka Augustus Stanley Owsley, the Dead’s sound guy and from what I could see, much, much more. He is overseeing the PA system he designed, making sure everything is unloaded safely, placed where it needed to be and in the process of getting hooked up properly.

I had met Bear before and was nervous at first. His reputation preceded him and I knew he was very, very smart. Plus I was just a teenager and Owsley (let alone the whole band) were in their mid-twenties at least and much older than I was, so it was easy to feel intimidated. I was around grown ups, legends already thanks to Tom Wolfe’s Electric Kool-Aid Acid Test, numerous articles in the early version of Rolling Stone, and Herb Greene’s iconic photos.

But Bear was cool. Maybe because I was helping out, I don’t know for sure, but I found he was very approachable and very friendly… he also exuded an air of authority, confidence and hipness just by his being. He didn’t need to talk too much.

The Sony 770 Portable Tape Recorder was state of art in the late '60s and as Owsley told me, a triumph of miniaturization. Check out the soundboard tapes from the era and you can hear just how good these machines... and the band were!

Two things I also noticed as we loaded in and set up for this New Year’s run. First, Owsley was carrying around, I remember this clearly, a couple of state-of-the-art Sony, I think they were Model 770, portable reel-to-reel tape decks. He used them to record each and every show right from a stage-side hook up.

They were sleek, portable devices, Sony’s top-of-the-line decks. The way Owsley talked about them, their bass response, wow and flutter and other such features, these machines were a triumph of miniaturization. I remember the price too. I lusted after one but the price was way out of reach, something like $800, which was a small fortune in those days.

The second thing I noticed happened right before show time. The Dead always took sound seriously and their monitor system, the speakers placed on stage so they could hear each other play, was very important to them.

I gather this was one of Owsley’s PA responsibilities and he would always reveal himself to the crowd as he adjusted things at the soundboard by the stage. He would bring one of those Sony tape decks (or two) down with him and plug them in to a junction box type of device.

Then something funny would happen. Every once in a while a fan would go up to him with a tape machine and ask if they could patch in. And it usually happened in one of two ways… some would ask nicely. And you could see it, if they did he would smile and help patch some of them in.

Others would demand this opportunity. These folks would be ignored. The pushier they got the more he ignored them, and at a certain point a burly member of the road crew would wander by and “gently” escort this individual away, without the sought after connection made.

What did it all mean?

Looking back, I now realize what I was seeing. This was an early version of band-accepted tape sharing at close range. And Jerry wasn’t the guy, nor was Phil or other band members. And it wasn’t the road crew either. At this point in time it was Mr. Bear himself.

At the time I didn’t understand what I was experiencing exactly, except that this was something different. After all no other band that I was aware of tolerated in any way, shape or form, fans taping “their” shows like this right off the soundboard, ever. Club maybe… fans, no way.

Whether it was by intent or lucky accident, now I know I was seeing what today marketers call Positioning in action.

Winning Hearts and Minds…

In simple English, Positioning is all about addressing the questions “How Are You Different?” and  “Why Should I Care?” in a clear and direct manner that cuts through the filters we all employ to drown out the marketing “noise” we are all exposed to each and every day. It is the key that opens the door to a customer/company/product relationship and a community interaction.

Differentiation is the “Mind” element of Positioning, and the Dead were different in all respects, including the music, which, since it was improvised, was indeed different each and every night.

The “Heart” side in this case is the connection audiences had and still have with the band’s music, the feeling it created in millions of fans all over the world that listened to and loved it then and do to this very day.

Sharing, whether by design or accident, supercharged this connection, this sense of Belonging and Community that are cornerstones to effective use of Social Media today.

The Dead, somehow found a way to position themselves to win both the Hearts and Minds of the people, and I saw it begin to happen right in front of me, in a hall that maybe held 1,500 folks with the person at the center of the whole thing, a couple of feet away.

That’s what Positioning is all about. It is not a battle as many think, but connecting in human terms the mental and emotional connections we have with people, with information, with products and services we let in through our filters and then, in the end, act on.

No box here!!! Courtesy of NASA.

We have all heard the expression, supposedly coined by Apple’s Steve Jobs, “In the box, out of the box doesn’t matter because, actually there is no box.” From what I can tell, Owsley had nothing to do with boxes and the results of how this helped drive the ever-expanding Grateful Dead community at that time, speaks for itself.

Luck, accident, invention? Conscious, strategic intent? Who can say? It was so long ago after all. However, there were real things going on. And one thing is sure, today we have the opportunity with the luxury of 20/20 hindsight to identify goodness where we find it, and the Dead is fertile soil that offers useful info, even marketing information that we can use today. Who knew? Now we do.

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Music Is Free–Let It Loose… and Reap the Benefits. PART 1

December 3, 2010

Intro: Back to the Future

I recently tee’d up final group projects for my Principles of Marketing classes this semester. Since I started doing classes in 2002, I have had students attack the music industry and break up into teams that represent major or independent record labels with the goal to create marketing strategies to grow their business from these two perspectives.

This is no small feat when you consider that the music industry was disrupted by peer-to-peer and other technologies that have empowered listeners with capabilities to distribute and secure music for FREE, and it committed suicide by suing customers and refusing to adapt. Who could have predicted in 2002 that a computer company, Apple, would operate the most successful legal digital distribution system, iTunes? Extraordinary!

How do you compete against FREE?, and make money at the same time?, is the knotty challenge, and there could be no conversation about this in class without taking a look at the visionary band that understood it all so long ago, and built a business and marketing model that made it happen, and happen on a grand scale.

A Bit of Historical Perspective

In 1969 I had the great good fortune to get a job at the best rock club in town called The Boston Tea Party. How I got the engagement is the story for another posting. It was a winter weekend in January that I started and the band, a little combo from Britain, was making their debut in Boston.

For the next year and a half or so, I had what I would describe as a front-row seat to one of the most creative periods in music, at least in my lifetime. Artists I was able to see, hear and hang out with ran the gamut from Ricky Nelson, The Who, Jeff Beck and Pink Floyd to B.B. King, Rahsaan Roland Kirk, Big Mama Thornton, Eric Clapton and yes, the Grateful Dead, the band that redefined marketing for me.

Since one of my duties was to help these bands load in (up two flights of stairs!!!) and set up their gear, I would really get to know the roadies, road managers and other behind the scenes facilitator of the music, as well as the artists themselves.

The Dead were unusual even then. They were as far out as you can go… very smart and very unique, obviously. More than anyone else they embodied the “be ‘hear’ now” hippie spirit… and expressed many dimensions through the music.

Their road manager whom I got to know a bit was a fellow named Owsley, otherwise known as the Bear. Bear was also a world-famous chemist and from what I now know, an all around Renaissance man and resident genius.

Looking back I don’t know how The Dead could play sometimes, especially once Owsley had done his thing. And yes, there were moments when they really couldn’t, like the first they night they followed the The Bonzo Dog Band (another story) in the Fall of ‘69. There was no way to follow this rock and roll musical circus, which was part of the extended Monty Python family, that had the audience freaking out and running for the exits by the time they finished.

Then there were the nights, when it all came together… and the music, created on the fly just for and with the audience, transcended everything. Electrifying. So when it worked, it worked… and when it didn’t, oh well, there was always tomorrow.

Hippie’est to Highest Grossing Concert Band of All Time: An Amazing Transformation

So how did The Dead go from hippie’est of the 1960’s hippie bands, to the highest grossing concert attraction of its era well into the 1990’s?, an era of Rolling Stones, Michael Jackson dare I say Neil Diamond, another huge draw?

Leesons for us all, 40-years later!

Of course it’s the marketing!

David Meerman Scott and Brian Halligan give us great insight into this with their recent book, Marketing Lessons from The Grateful Dead. They identified the genius level marketing developed and adopted by the band… best practice and learn’able lessons that are applicable to all products today.

I will argue that what The Grateful Dead understood, perhaps intuitively at first, was the sense of community they were a part of and had the power through the music to create, nurture and grow.

A 360-degree business perspective

As you can see from this pie chart, from the article in Rolling Stone*, A New Life for the Dead: Jerry Garcia is Checking Cash Flow Charts, from way back when in the November 22, 1973 issue, they were able to see themselves not only as a concert band, but as a business from a 360 degree perspective that included concerts, importantly, but also the totality of their business. They then created a variety of companies including a record label, a sound design and production company, a travel agency and much more to support the enterprise.

Building Demand

Around & Around It Goes: More demand = Larger Halls, More Equipment, More Gigs, Larger Overhead, Bigger Organization -- Repeat

At its center or core, was the live music itself, the concerts. As it turned out, this was where when the 60’s ended and the 70’s and beyond began, the overall Dead experience could be monetized as they played bigger and bigger concert halls.

They consciously realized that since each performance was basically improvised and different, it was possible that demand for tickets could be increased, where fans would come night after night, market after market, and invite their friends to share a unique musical experience each and every time.

The other, was the understanding that the music once played was no longer theirs alone. In other words, the notes once in the air, were no longer owned by the band or anyone for that matter. This was and still is counter-intuitive, in stark contrast to how the rest of the concert/music business views it – where the music in all forms is still considered the property of the artists themselves and fans are prohibited from “capturing” it in any and all forms, except for artist-authorized versions, and of course in our memories.

Live Music Creates a Connection between Artists and Audience

In creative terms, the one thing I learned by having had the opportunity to watch bands play multiple night engagements at the Tea Party over a two-year period was see how instrumental the audience is to the creative process.

There would invariably be a night, THE night when the connection between the artist and the audience would be at a more intense level. Bands were “on”, and we the audience didn’t just passively hear the music, we actively listened and a two-way connection was made that fed off and built on each other.

These were the nights we lived for and there was no doubt that the audience was integral to the creation of that night’s music. The Dead always understood and respected this connection and surrendered control.

Who Owns It?: Let “Remarkable Content” Loose…

Knowing this also allowed them to open up the concerts themselves freely to “tapers,” die-hard fans who wanted to record a living document of the show. These tapers, were then free to share the recording with friends and other fans as well, and in doing so foster and feed a community of friends and fans, who in turn would fuel more demand for the live, real thing and so on, round and round it goes, growing all the time.

Yikes!

You would think that considering their extraordinary success, other bands, and even products and services would surrender control and follow down this road. But sadly, this has not turned out to be the case, at least not yet.

…And a Community Flourishes

Today we need to understand that music is in a way like “information is free” (to quote Stewart Brand) and by that I mean not necessarily free relative to cost, but free in terms of being un-tethered by artificial restrictions. The marketer’s way is to let it loose, let the audience control it and in doing so give them a reason to share, to connect and then experience the real thing for themselves.

As the Dead proved with music, letting it loose unleashes the marketing power of the music (information), the more compelling and in today’s terms “remarkable”, the more the demand, the audience will grow and the more opportunities to monetize the total experience will emerge.

In today’s world with tools like social media where such a strategy based on collaboration with the audience aligns perfectly with transparency and customer control, who knows how much “further” the Dead could have and would have taken it!

Part II to come: How it all worked… From What I Could See, Owsley was The Guy who made it happen.

* I wanted to acknowledge the Rolling Stone: Cover to Cover, the DVD set that includes every issue, every page of Rolling Stone from 1967 to May 2007. You can read it all, as it happened, and see music and music journalism evolve from those heady days of the late 1960’s to today. If you love the music, you will love this!

I also wanted to call out the Grateful Dead Archive now housed at the University of California in Santa Cruz. They are in the process of digitizing massive amounts of the Dead’s memorabilia and making it available to all, in the same spirit that made this all happen to begin with.

iPhone 4 Static: Does “Fuzzy” Reception Kill the Golden Goose?

July 14, 2010

There has been a lot of media noise over the past week or so about the “antenna/reception issue” on the new iPhone 4.

This is exactly the kind of thing the precipitates the boundary between Early Adopter and Early Majority on the Product Adoption Lifecycle.

Early Adopters are willing to put up with a host of issues that may arise in order to get their hands on the new product as soon as possible. If there is a bug or two, which is often the case with a new version, so be it. Being one of the first to have such a device more than makes up for any inconvenience, which in many cases is expected.

Mainstream Early Majority buyers on the other hand, are a different breed. They don’t like experiments or issues. They want a “baked” product that works as expected.

As we have discussed in the past, they buy when their peers or friends buy, and they naturally gravitate to the category leader. They want the “one” and reward leadership by being willing to pay a premium for it. If there is an issue in the early phases… they do what comes naturally. They wait until everything is sorted out!

Consumer Reports Downgrades iPhone 4

Apple’s initial public position is the issue is a software issue, and a fix is on the way. Yesterday (July 13, 2010), as reported in the Wall Street Journal and other publications around the world, Consumer Reports reported that the problem is intrinsic to the design and amounts to a hardware issue that apparently can be fixed with a piece of duct tape in the right place. In response they downgraded their rating of this “hot” product to “not recommended.”

Is this Issue an iPhone Killer?

We doubt it. Remember the first iPhone launch? I had a client who waited in line (actually he had his assistant do it) for hours and hours to get his hands on one. And then for almost a week, he literally pranced around the office showing the device off. He was in heaven. And then, weeks later Apple dropped the price a couple of hundred bucks!

The joy quickly turned to fury and anger. He knew the price would inevitably drop but didn’t expect to blind-sided by such a move for many months. Suddenly his joy didn’t seem like such a good deal. He was right too. Ah the perils of Early Adopter-hood!

To it’s credit, Apple quickly got the message too, and quite smartly offered these early buyers $100 Apple Gift Cards, and the smile quickly returned to my boss’s face.  Just what he wanted, another trip to the Apple Store!

Bottom line. He expected such a move, but later. And Apple acted, after the problem blew up. In the end, sales kept taking off and we know the rest.

It Comes with the Territory

In many ways the situation is similar here. Early Adopters know this kind of thing happens .

We also fully expect Apple will fix the problem. It’s intrinsic to the brand. Other computer makers often force customers to put up with “known issues.” Unlike these more “commodity”-like companies, Apple is premium brand, and we fully expect the problem will be fixed to Consumer Reports’ satisfaction.

Once this happens, Consumer Reports, which in general was quite positive about the device overall, will recommend the product again. The brand connection with customers will be strengthened as consumers worldwide see that the Apple stands by it’s products as expected and the Early Majority will jump in once the dust settles.

Now if they would just open up the iPhone in the US to other carriers!!!!!

Marketing The New Gillette Pro Glide: From a Positioning Perspective, Is this The Best A Man Can Get?

July 11, 2010

Today we will explore how we can use positioning best practice to engage the full range of the product adoption lifecycle simultaneously in order to:

  1. Capture the larger Early Majority segment
  2. Extend the reach to the Late Majority/Commodity buyer at the same time
  3. Provide a compelling value proposition and pathway to convert many of these commodity customers into more profitable premium buyers
  4. Lift the whole product category.

I have to admit it. When it comes to Gillette razors, I am a classic early adopter. I just have to get their latest and greatest right away. Why?

Maybe it goes back to when I was a kid. I remember watching my dad shave in amazement morning after morning. Such an arcane process that never seemed to change: shaking up his can of Foamy and slathering that creamy stuff all over his face. And then the razor. The heavy chrome handle that would pop open by turning a knob on the bottom. Slide in a Super Blue from the special dispenser, twist the handle closed and then let the shave begin. When completed he’d sprinkle Aqua Velva on his hands and slap it on. Done!

I also remember feeling his face. He had a heavy, scratchy beard, something I inherited. After the shave, his face felt smooth as glass.

Is it any wonder that at 10, I desperately wanted to shave too. Dad would always say, no rush, no rush. It really isn’t fun. And if you don’t do it right… ouch. I remember those little dabs or two of toilet paper on his face to staunch the bleeding on a bad day.

As you can see, there is deep connection I have with the process and the Gillette brand that transcends the actual experience itself and sets me up as a classic Early Adopter in this category.

In this light I recently found myself excited when Gillette announced that it’s latest and greatest Fusion Pro Glide System featuring 5 thinner blades with a special low resistance coating and a suspension system that would eliminate that pesky tug and pull. I couldn’t wait. My excitement mounted as the launch day, June 8, 2010 approached.

Needless to say, I got one right away and the product does not disappoint. It’s awesome! It really feels like the razor is literally gliding as I shave, and afterwards my face, well it feels smooth as “glass,” even smoother than my Dad’s.

The Right Message for the Wrong Audience?

Now regarding the marketing… Yes, it’s slick, it’s integrated… And it’s old hat. Not to say that this is bad. Or not effective, at least as far as it goes. After all, the previous flagship blade in the Gillette line, Fusion with its Turbo style imagery, was the most popular razor in the world. But is there more?

Here is a screen capture of Gillette’s today.

As you can see, in the current state, the message is all about the product and its features and the primary message is turning Shaving into Gliding. As an Early Adopter, see arrow, I am sold. And in truth, it didn’t matter what the claim or message, I was sold even before the blades hit the market.

It All Comes Down to Connecting the Dots

The goal in positioning is to connect dots and answer questions for the customer, not pose them. And as we have learned from Apple and other marketing virtuoso’s, linier time as far as the Product Adoption Lifecycle goes is often a self-imposed obstacle. So why wait if you don’t have to, especially when there is so much at stake on a global scale?

With this in mind, and stepping outside of my Early Adopter mindset, what do we see with Gillette’s Fusion Pro Glide?

Product Lifecycle: A Quick Review

Just to make sure we are all on the same page, here is the famous Product Lifecycle bell curve made famous in Geoffrey Moore’s landmark book Crossing the Chasm.

Early Adopters like me love a product and it’s features. We are not price sensitive and are always on a quest, in this case, for a better shave. We have to have the latest and greatest right away.

However, Early and Late Majority buyers, where the heart of the lifecycle (and greatest profits) resides, have no interest in product features.

The Early Majority is concerned with “what does the product do for me” coupled with market leadership and peer adoption. If my friends buy, so will I. These buyers are also willing to pay a premium for the acknowledged leader.

The Late Majority is concerned about price… getting the product for the lowest price. They also don’t want to be bothered with the rest.

Positioning to Win for Maximum Impact

As we all know, Proctor and Gamble, Gillette’s parent company, is a brand and marketing powerhouse. And Gillette is an established market leader in the razor space and has been so for decades.

This means that a big part what it takes to capture and exploit the Early Majority is in place already with brand leadership and millions of satisfied users around the globe.

In it’s current state, you can see that the current product messaging is actually talking to Early Adopters, NOT the Majorities. The marketing question is, is this it for now, or is there more we can do to exploit the new Fusion Pro Glide product?

If we look at positioning best practice, the answer is yes!

Here’s a structural model of how this can work (by segment):

1. Early Majority

A. Leadership
These buyers appreciate and will pay a premium for the leading product in the category, making this is a clear sweet spot for this particular product now.

As mentioned earlier, the key to effective positioning here is connecting the “what’s in it for me?” question in the clearest terms possible that yields maximum results. In this case, Gillette has opted for a “Turn Shaving Into Gliding” message, which begs the question, “What does Gliding mean?” It glides, perhaps, but so what? What does Gliding do for me?

And yet buried deep in the current presentation, there is an answer… all the wonderful product features, YouTube videos, NASCAR endorsements, and Dream Job promotions are designed, perhaps indirectly to support the message that Fusion Pro Glide delivers “Gillette’s most comfortable shave ever.”

That’s what Early Majority buyers looking for. Now we get it! The big benefit, the compelling reason to buy. It was there, but buried by the Gliding message. All we need to do is call this message out front and center. And if you want to be slick about it, again from the current messaging, add… “Guaranteed.”

Roll it all up, here is what’s in it for the Early Majority buyer. Pro Glide Fusion is: Gillette’s most comfortable shave ever. Guaranteed.


B. Peer Influence
The next element to drive this segment is peer influence. “Do my friends have it, and do they like it. If so, I want one!” This is where endorsements fit. Gillette is a master of professional endorsements and has been so for decades. Today it’s in the form of NASCAR personalities and the “Young Guns” Challenge.

Even more interestingly perhaps is Gillette has begun to masterfully use social networks to get the “every man” endorsements that most likely will be more important as a marketing activity moving forward.  It takes a lot of guts to surrender control, which is essential for authenticity to address “Do guys like “me” use it, love it, etc.”

This is where Early Adopters come in. If we love the product, we are natural advocates and influencers, and can be one of these authentic  guys “like me” who heartily recommend the product to our “Johnny come lately” friends. What we need is some help or incentives to voice our feelings. In other words a promotion.

Example:
Right now men are invited to vote for their favorite “NASCAR “Young Gun.” The winning driver gets to donate $10,000 to their favorite charity. What do we get? How about adding a Win Blades for Life! premium? This could be for the vote if the person registers. And if we are looking for real endorsements by real men, it could be for submitting the funniest Pro Glide testimonial. And the prize, along with the charity donation could be presented to the winner at say, a NASCAR event.

2. Late Majority

Research I found seems to indicate support my Dad’s feelings about shaving. It is a necessary evil, something we have to do due for social conventions, but inconvenient at best. This attitude sets up commodity-style, low-price “just get it over with” thinking.

As it stands, Gillette has a dizzying array of lower cost blades and razors from earlier category leaders Fusion and Mach 3 to a whole slew of disposables. “Dizzying” is the operative word. Extremely complex.

What we need here is a clear roadmap of products, perhaps broken down into 1. blades and 2. disposables from Good to Better and Pro Glide in the role of BEST… with a blade price of “lowest” to “more” to “most” expensive. Your Choice.

And since Fusion Pro Glides fit in millions of Fusion handles already in the market, it is easy to slip in a free blade and coupon for later purchase in the package to engage these established buyers and get them into the pipeline.  We have to assume this is in the works already.

3. The Best A Man Can Get: Positioned for Growth Across the Lifecycle

If we go back to Gillette’s core brand, we can see we have the platform we need to cut across the whole razor line… “the best a man can get.” I was surprised to see that it is still alive and core… embedded right in the logo treatment itself. As one would expect with a brand of this caliber, it was like seeing an old friend. Powerful indeed.

This offers up a value platform with the opportunity to move customers up the ladder from “cheap” to Better and Best products and from a commodity buyer to a premium one. I call this Marketing JuJitsu. Here is where positioning focused on costs per shave and other metrics commodity buyers think about can come into play to demonstrate brand value to the these buyers too.

Example:
Let’s assume we can get two-weeks of shaves out of one Fusion Pro Glide blade. (Note: I have gotten up to four weeks, even with my heavy beard). Two weeks of comfortable shaves at $3 per blade equals approximately $.21 per shave. Let’s assume you can buy a disposable for $.20 per razor that safely delivers a shave, or two. Now the value proposition to this segment can be turned around to something like…

“For just pennies extra a day you can move up to Gillette’s closest, most comfortable shave. Take the challenge to see and feel the difference for yourself. Low(est) cost and most comfort from Gillette… The Best A Man Can Get.”

Here is what the structure looks like all together with above.

As you can see, now we have a Strategic Framework capable of positioning Fusion Pro Glide in multiple segments across the Lifecycle simultaneously under the Best A Man Can Get Brand Platform:

  1. Early Adopter with Glide
  2. Early Majority with Comfort
  3. Convert Early Adopters to Influencers building on incentives and promotions
  4. Create simple and understandable tiers of lower cost products for Late Majority
  5. Drive a Cost per Shave Value Message and convert Commodity into Premium buyers


Brand Repair: BP’s Environmental and PR Crisis… Should BP Continue It’s $50 Million Ad Campaign?, or Throw in the Marketing Towel Until the Oil Flow is Stopped?

June 18, 2010

Summary:

The Situation
– It’s Ugly by Definition
– A Clear Marketing Choice: Open It Up, Pay BIG Cash or Wait?

21st Century Marketing Mandate: No One Said It Was Easy
– Surrender Messaging Control or Perish
– Let the Public In To See, To Share, To Act

Marketing To Win: Three Steps to Protect the Long Terms Value of the Brand
1. Surrender Control
2. Act
3. Align the Company and the Public’s Desire to Stop the Spill and Clean Up the Mess as Quickly and Safely as Possible (And Prevent Future Mishaps)

Conclusion
– Opening it Up Protects the Brand
– Controlling the Message: The Cost is Too High

In Control Means Marketing Out of Control!

Marketing 2.0 Win is never shy about taking on the big business challenges… the one’s that keep executive teams awake at night. And if ever an executive is up all night these days it has to be Tony Hayward, CEO of BP, recently dubbed the “most hated man in the world!”

It seems that every move, every comment he makes… and everything he doesn’t say just makes this catastrophic situation worse and makes public and policy makers alike more and more angry, upset and distrustful as we are all impacted by this terrible crisis.

What is also clear is that the marketing and communications are out of their control, the brand polluted, perhaps permanently as reflected in their current stock price which many, except perhaps current stockholders, feel is quite justified and hasn’t really been punished enough.

Our job isn’t to get into the how and wherefores of this mess. It exists.

What is clear is their “crisis management” strategy, apparently designed by PR firms and lawyers to minimize losses and protect BP’s image culminating to date in their $50 million what I call “Mea Culpa” ad campaign, hasn’t, can’t and won’t work.

This posting is inspired by an article that came out last week in the Wall Street journal entitled BP Rolling Out New Ads Aimed at Repairing Image that questioned the wisdom of this strategy. The last line in the article in particular caught my attention.

A quote was attributed by the author Suzanne Vranica to Chris Gidez, U.S. Director of Crisis Communications at Hill & Knowlton NY, a Unit of WPP, who is quoted as saying: “Until the leak is stopped, no amount of advertising or PR will help,” in particular caught my attention.

Is This True?, and the Best BP Can and Should Do?

Our position is perhaps not.

But to make it so, BP needs to make a fundamental change.

In thinking about this, we come back again to Jet Blue and former CEO David Neelman and his response to the Valentine’s Day Storm of 2007 that was the catalyst for a very public and embarrassing system wide melt down that left many passengers stranded with no means of getting to their final destination, for in some cases many days.

Crisis Marketing: A Customer-Centric Response

Let’s be clear at the outset. I do not mean to suggest that this business crisis that involved perhaps tens of thousands of inconvenienced travelers is in any way on the same scale as this one, that has involved loss of life, livelihoods and loss of irreplaceable environments, let alone cost to clean up.

What I want to focus on here is Neelman’s response itself.

Watching it even now I am struck by his authenticity. You can see the circles under his eyes, he stutters a bit, his presentation is clearly not scripted or smooth.

And not only does he apologize, he also tees up a set of actions including what became Jet Blue’s Travelers’ Bill of Rights, an industry first. What’s more he didn’t wait for the Government to legislate consumer protection. Jet Blue acted because from their customer-centric of view, it was the right thing to do irrespective of cost, and in fact a cost of doing business.

You also see and hear a CEO that truly is connected to his brand. He understands the connection of his company with his customers, and its long-term value. He gets it and clearly, as CEO dealing with a crisis, is prepared to have his organization pull out all the stops to make the changes required to solve the problem and earn customer trust again as Job #1.

We got it too, and have come back to what is a better Jet Blue.

The Gulf Spill: Command and Control Messaging Will Lead to Long Term and Costly Brand Attack

Now let’s circle back to our current situation. What we see here is a carefully crafted, command and control marketing program, telling us the story as BP itself sees it.

What we also see is a company on the hook for potentially $ billions in liabilities apparently trying to limit the damage.

On the positive side, we also see a company who although they may have promised regulators what it couldn’t deliver in terms of environmental protection, and perhaps it even “misled” regulators as to it capabilities to prevent a disaster like this, is clearly pulling out all the stops it knows to come up with solution. I see a company making it up as they go. I see a company trying, perhaps clumsily. Could it be any other way?

We see a carefully crafted brand disintegrating before our eyes. The public is angry and upset. Leaders appear ineffective and out of touch, and ready to “kick some ass” to demonstrate their power.

The stakes are incredibly high and BP finds itself is perceived as defensive, untrustworthy and unable to get out of its own way especially relative to its image and prestige.

What is now clear is the less transparent they are, the more they hinder journalist and public access, and the more they try to push its version of the message out “there”, the worse it is getting for BP.

Right now the marketing advantage is with the anti-BP forces, who make more noise and have more visibility, more friends, and a louder marketing voice. Fear and anger trump crafted messaging here and will do so until BP surrenders message control.

Here is How Marketing Can Help… Transparency is Essential

BP needs to open the gates, to let us in on the action, and let us see what is happening for ourselves. They have to realize that we need to see the whole thing.

The company must also be real, and show its human side above and beyond just Tony Hayward. It must listen without hindrance or defense, knowing full well that what it may hear won’t be flattering or pretty, at least for a while. Talk about thankless.

If BP can become more open, if it gives the public, for example, direct access to its daily briefings, where heaven forbid, anyone, even you or I can ask questions to its engineers and other experts, it will get an audience. Over time this can in fact turn down the heat on the ever building and rightful frustration and anger. The key if is… if the forum is authentic and real.

This is just the beginning.

BP can take us behind the scenes and give us a view in real time of the what I gather must be extraordinary measures they are taking to get this under control… both the ones that work and don’t, warts and all as they happen. It doesn’t have to cost either. There are plenty of journalism students, perhaps even a Walker Evans or two, who would be happy to help!

By showing (not just telling) us how the people of BP that live on the Gulf are affected just like the rest of us, we are then connected as human beings, and aligned to the same objective, getting the spill stopped, and the mess cleaned up.

The political and “who pays what” elements, important as they are, lose their potency as messages and can then recede to secondary story status.

And for Part B. Then Act in the Interests of People Effected…

One suggestion. Perhaps BP creates a Gulf Crisis SWOT Squad, specifically available to help individuals and families get the help they need immediately. Instant help, NO red tape.

BP could perhaps even build a partnership with say a Wal Mart, one of the unsung heroes of Katrina, and other businesses so that individuals affected can get supplies, rent and other necessities NOW when they need them, as the other details gets sorted out.

Perhaps this could be seeded by what’s left from the ill-fated $50 million ad buy?

BP. Let us see for ourselves that you as a company in fact understand the human cost of your actions and about solving the problem, and ironically enough, about your brand that you invested so heavily in.

Show us that we matter, no matter what the cost. That we are worth it… and that your brand is too. After all it is customers that make the brand, any brand come alive.

This is what it means to be a responsible brand. Not just build it and market it in good times, but to be it… to do its best, to meet public need as best as it can in bad.

Brands Are Living Entities That Require Action to Restore in a Crisis

And if history is any guide, those courageous companies that take this posture find themselves in a stronger position once the dust settles. That’s because they have shown through action that the promise of the brand, the connection of the product its audience is real, and we as customers tend to reward those that do so over the long haul.

That is the lesson Jet Blue. And so far, BP has no clue.

Waiting It Out Is Too LATE, and Cash Is NOT King…

BP needs to show us that yes it’s a company, a huge multi-national one at that, but as such it is run by and operated by human beings.

This massive mistake was not caused by a robot or a machine… And its time BP let go of controlling the situation and wake up to marketing in the 21st century, I hope they do so soon…

And we can assure you Mr. Hayward, once you do, you will be able to get some sleep again!

It might not happen overnight, but access, dialog, transparency and truth trump the noise of fear and anger each and every time, over time. Give us these things so we can all get aligned with the ultimate goals and you will protect and enhance the brand, the people and the company that is BP.

Pay now or later… doesn’t matter, you will pay. But by letting go of control, by understanding and investing in people not ad campaigns, you will win in a marketing sense and in ways that may seem unimaginable today, as the payoff.

Post Script

As we got ready to post this, we find that BP has been sent a letter signed by members of the US Congress with a demand (request?) for BP to set up a $20 billion victim compensation fund, held in escrow and executed by a 3rd party. This has been underscored by President Obama today (June 16, 2010) in a personal meeting with Tony Woodward at the White House.

From a marketing perspective, how much more interesting and powerful would this be if BP had gotten ahead of things and set up such a fund under its control without political prompting?

Now that others have led the charge for such a program, what may not be so good for BP is having independent 3rd party in charge.

If not positioned correctly and I can see no reason yet why it would be, BP could now be put in a place of not only being the villain causing irreparable harm but now they are on the hook to pay the bills, and then get no brand “credit.” Terrible and costly.

This is a razors’ edge they walk! One thing for certain, just waiting for the crisis to end to begin re-building the brand is not a strategy for success. And 20th Century/Command and Control Communications will not work.

Like it or not we are all in it with you, and there is much you can do now to get us all focused on real solutions to this mess, but you have to let us in without restriction.

Otherwise, you will be an object of contempt that could take generations to fix and will cost your company and its investors more than you can imagine. It’s your choice Mr. Woodward and BP.

Toyota and Tiger… Brand Collapse or Rebirth or Both?

March 25, 2010

We have all heard the news…. 8+ million Toyota automobiles are recalled due to a variety of malfunctions; and everything and more than we wanted to know about the many loves of Dobie Gillis… oops, I mean Tiger Woods.

Toyota, a brand synonymous with quality and reliability for decades appears to be imploding right before our eyes. Their war room/siege mentality, ready to rebut “any and all” negative customer comments strategy does not resonate with the public or in any way appear authentic. Whether it’s the floor mats, the gas pedal or of course, customer error, yes, the company is sorry, so sorry for injury or death. Software, hardware issues? Apparently Toyota can’t replicate some of these problems, therefore it appears they do not exist, or isn’t it our fault anyway?

And does this calm our fears?, and support the brand promise of quality and reliability?

I don’t know about you, but I feel a deep and shocking sense of uncertainty with Toyota’s response. And I own two Camry’s, although of a vintage before these apparently unstable “drive-by-wire” electronic technologies we adopted. Yikes!

Talk about a brand conflict, reliability versus uncertainty.

This is a huge problem for Toyota. And a major inconvenience at best for customers worldwide. We have to bring our cars in for a fix we aren’t sure will solve the problem. Oh, and now what about the resale value of these cars? Toyota was noted for high resale value… who wants to buy a used and potentially unsafe Toyota now at any price? Not me! You?

And if that isn’t enough, Toyota appears to be diddling. You can sense it, and as some of their internal e-mails we hear about attest, their approach is to delay, stall and of course, minimize the cost of the damage.

Their ads add insult to injury. “Thanks for sticking by us,” they intone… and to “thank you, we are offering incentives like 0% financing so you can buy a new one.”

Just what I want! Even though you, Toyota can’t replicate them, these issues may still exist. People have died, cars have very publically careened out of control for who knows why, and resale value at least for now has gone down the tubes. And to top it all off, I have to suffer the inconvenience to bring in my car to get a fix that may or may not take care of the problem, and you thank me by trying to sell me a new car!

This is outrageous and insulting. Add it all up and what this says to me is that Toyota has lost touch with the power of their brand. And such moves like these are damaging it, perhaps permanently.

Tiger has a similar problem. Although perhaps not on the same scale as Toyota, he is a very public, well known brand, like it or not, and a multinational one at that. For many people Tiger is golf itself and a $ multi-billion corporation burnished with a champion’s glow…. He and his handlers positioned him as a problem-solving icon able to take on and beat any challenge that may come his way. Until now.

We now know this is may, I repeat may, be limited to the golf course and in the “perception is reality” world of brand recognition, but certainly not in real life.

I will argue that Tiger’s final lot as a brand is not yet set in the public mind. Yes, he is certainly human, a junk yard dog perhaps, but is this unusual? And yes, a number of high profile sponsors like Gillette and Accenture have pulled away.

Questions still linger that if answered authentically and humanly, could likely restore his brand image to be even more powerful than before.

Here’s how.

Tiger himself proclaimed at his highly staged news conference a few weeks ago that he thought he was above it all and could behave as he wished… that the rules the rest of us follow didn’t apply to him.

He also told us that he understands the hurt he has caused and the error of his ways and that he will do what it takes to be a better person. Great stagecraft!, and positioning…. I am working hard to be a better person. Who can throw the first stone with such a revelation?

So that is where we are.

Two powerful brands under attack, one disintegrating right before our eyes, the other, a work in progress, the jury still out. What kind of marketing thinking and strategy could be applied to turn these brand conflicts around?

Let’s look at Toyota first.

Toyota’s issue is that they appear to be self-absorbed and cheap, focused on cost containment and damage control, going so far as to lay the blame on those pesky customers that are us.

This is not the time for that type of non-marketing approach by an automobile company. Audi famously blamed their customers in the 80’s for cars that apparently shifted into gear on their own. They had to change the names of their models and literally re-build demand for their vehicles from scratch, a costly process that took them out of the game for years.

In this case, assuming Toyota is doing everything in its power to solve the issues, known and unknown, the company needs to remember that it’s the brand connection and it’s relationship with customers that matters most. That is where real long term value is.

I am not privy to the details but over time, the value of the Toyota brand, as the perhaps soon to be world’s former #1 auto maker, has to be in the $ hundreds of billions, or even more.

From an integrated, marketing to win perspective, Toyota needs to take a two-pronged, pedal to the metal communications approach:

1. Reassuring the public that the cars are safe, and

2. Acknowledging customers’ inconvenience and uncertainty along with the hassles of bringing cars to the shop entails.

In other words, they need to be bold in terms of solutions, it will cost, and the investment is worth it!

As far as reassurance is concerned, good news or bad, in today’s instant, social media world, transparency is essential. Customers need to be in the loop to see for ourselves what the company is doing to make us safe again.

It easy today to take us the labs and testing grounds, give us Q&A and other access to the engineers and scientists, etc. Let us see that no stone is being left unturned and at the same time show us the operational excellence the company is famous for, in action.

And as far as customer inconvenience is concerned, Toyota needs to honor the value of our time, let alone the anxiety we feel, and understand it in the context of brand value as well.

Once understood, the company then needs to then honor us with something tangible. That means, Toyota if you are listening, setting up drive in check stations for all post 2002 cars and then, give us something in return like a free oil change or service, something of value that honestly recognizes the value of our time and our loyalty. Giving to receive is the operative principle here.

I can tell you now, that a great deal on a new Toyota feels cynical and indeed is NOT it! And if they were clever, perhaps Toyota could partner up with say a Sirius/XM or other outside entity and offer a free 3-month subscription or something like that… because “you care… care about us, your valued customers!”

On the Tiger front.

His solution is a bit more under his personal control, but no less impactful. He can no longer claim the cover of privacy to be left alone… the genie is out of the bottle and won’t fit back in. And yes, just like the Wizard of Oz, we now have peered at the man behind the curtain, and see all too well that he is human like the rest of us.

Now that Tiger is off the pedestal and the announcement has been made that he will indeed play at the upcoming Masters Tournament, it comes to two things again:

1. His performance on the course, and

2. His performance on the course.

What do I mean?

On one level, we will expect him to play well and perhaps even win. He is to many, Golf after all. But we also expect that he has learned from his self-induced embarrassment, that he is, in fact, in the process of becoming that better person. This means that no, we don’t necessarily want him to be more approachable, but we need to know he can perform in this “better,” more realistic and human manner.

So how does this play out?

First, that he handles the catcalls, the embarrassing hoots, questions and other assorted unscripted realities that will inevitably come his way with humor and poise. That he not dodge but roll with it in a manner befitting a champion. In other words, the focus and drive (no pun intended!) that has made him the champion he is, also extends to his personal improvement, and that he is a winner here too.

If he does a Brat Pack-type, moody thing and wrap a club or two around a tree or smash a camera, punch someone out or otherwise behave poorly, or that he sets up an impenetrable barrier so no one can get near and utter a bad word, he will be positioned by his own actions as an arrogant “bad person” which will forever tarnish the best golfer, iconic status that he has already achieved.

If you don’t believe me, remember 2004 presidential candidate Senator John Kerry? Like him or hate him, that wishy-washy answer he gave at the Grand Canyon regarding whether he would change his vote for sending troops to Iraq, knowing the original premise of “Weapons of Mass Destruction” was inaccurate, forever labeled him as… well you know, a Flip Flopper, irrespective of his many impressive achievements.

The jury is still out on this one, at least for the moment. One thing is certain, the embarrassment and hurt will fade over time, but the position he takes and fosters in the public eye through his next set of actions will stick, and the choice in the end will be his. So what will it be, great golfer and jerk, or very human champ for the ages. What would you choose?

And I will guess that if Tiger does take the high road and shows us he has or is mastering his demons like he has mastered his sport, will Accenture, Gillette and other more lucrative sponsorships be far behind? It is clear that the “championship, do anything image” would be more real this time, and well earned to boot.

Move forward Toyota… Go get ‘em Tiger!

Starbucks… Back to the same old Grind???

December 17, 2009

Recently Starbucks launched its VIA Instant Coffee product, for $1 a packet or cup. When I first heard about it, I thought they were crazy! Here you have a true category creator, in this case premium coffee, coming up with what to many is a downscale, basically commodity type of product. Look at it this way, currently you can get a 20 ounce cup (“venti”) for over $2 today in the Boston area where I live, or you can get a cup of instant (Nescafe and even Tasters’ Choice) for pennies.

Is there a difference in taste? You bet. Then does this mean that Starbucks is lowering its standards?, in essence looking to capture that “cup of joe” on the run crowd?, probably not, at least directly for a $1 a packet.

To most of us Starbucks means affordable luxury, infinite choices, the third-place on top of home and office, “Venti” and “Grande” instead of large and jumbo, rich flavored beverages, etc. How does this square with a product category that we associate as bland, chemically adulterated, “instant” coffee…

The danger here is if we associate VIA as an instant coffee product. If it comes down to price, it is very expensive. And if it is not positioned strategically, then the “instant” product can take the Starbucks brand down a notch or two. Talk about a potentially very dangerous brand conflict in the works!

If customers begin to associate a premium brand with a commodity product, the risks are:

  1. elevating the commodity product while at the same time lowering your brand value, and/or
  2. trying to swim upstream and justify an off the charts price against other much cheaper products in the, in this case, instant coffee category.

A mis-fire and at best the product will fail with worse consequences possible if people sense that brand is deteriorating and losing value.  Talk about high risk and high stakes.

And Starbucks has muffed it before.

Remember how in their zeal to speed up service they mechanized the bar drink process in order to serve more customers more efficiently? They reduced the hand crafted nature of the beverage and role of the barrista. This opened the door for potent “new” competitors such as Dunkin Donuts and even McDonald’s to leverage mechanical processes and also offer such beverages, enter the premium category and take market share.

Add to this that the company has taken what appears from the outside to be a passive marketing posture these past few years with flattening sales to boot, and I wondered how they could pull this off.

Glad to say, Starbucks did it… and did it with superb marketing intelligence!

You could see this high level of marketing thinking in the launch itself.

If you are a Starbucks fan you may remember that this past fall they had VIA tastings in each store as part of the rollout. The interesting thing was what they tasted VIA against. My initial thought was that they would taste against Instant Coffee to show how much better (hopefully!) it was.

But instead they did something completely different… they tasted and literally positioned VIA against Starbucks brewed coffee itself and used Instant to define convenience, not the category.

I will argue that this was a stroke of marketing genius. Here’s why.

  1. They redefined the instant coffee category into Blue Ocean, uncontested territory, from a low price/commodity play to convenience… take it anywhere.
  2. Instead of trying to push up market in the instant coffee category ($1/cup price for a product costing in the pennies), they pushed down in the brewed category (Starbucks flavor for $1/cup).

Roll it all up and with VIA now you can now have a cup of Starbucks you can take or have almost anywhere for a buck! Sounds good to me, and tastes good too! Apply marketing at this level to the company overall, well Happy Days may indeed be back at Starbucks again.

HULU Contemplates a Lulu

December 6, 2009

OK. This harkens back to those internet “go-go” days of the late 90s – get first-mover advantage and scale and the money will follow. Sounds like the script for the movie Field of Dreams… “build a better product and the customers will come,” which as a marketer often working in the tech sector, is a line I hear all too often.

If what I just read in Business Week (“HULU’s Tough Choices”, Dec. 7, 2009) is any indication, HULU, the very popular free video streaming site with 40 million downloads per month (second only to You Tube) has run up a $35 million annual loss and is suffering just such a fate as the web bubble did.

HULU is not just an ordinary site. Funded in part by NBC, Fox and ABC, HULU was the film/video industry’s response to the technological disruption of FREE that had obliterated the music industry and with the prevalence of cheap bandwidth and storage, was heading it’s way. They saw how the music industry not only lost control of the new now dominant digital distribution channels but also found itself rendered obsolete, and did not wish to suffer the same fate.

One of the experiments put forward was HULU and lo and behold, I can get yesterday’s episode of 30 Rock and all sorts of video and film content on demand (1,700 titles) playable on my computer any time I want. And with WiFi-enabled LCD flat screens upon us, let alone the ever easier ability to integrate TVs into our home networks, this free content on your HiDef TV is nearly a reality. Or is it?

If the Business Week article is to be believed, the era of premium content at HULU is upon us. In other words, content we will have to pay for. And what is to be the price for this content? Your premium cable service!

Wow! Let me see if I have this right. Here comes this disruptive force of free streaming video content sponsored by the broadcast and film industry. It’s ad supported model is not really sustainable, at least right now. So yes, those happy days of free content appear to be coming to an end. And now the industry in its wisdom is telling us we may have to pay, and the way we will pay is in support of the what were soon to be disintermediated cable TV interests!

I mean after all, do we need cable anymore if a thriving online channel is delivering this content through our medium of choice through our server, versus the cable box? I guess the cable industry saw the handwriting on the wall too and isn’t about to go quietly into the night.

We could spend all day trying to figure this out. Is the Comcast acquisition of Universal (and NBC) from GE a factor in this equation? I will leave this to others to decipher.

My beat is marketing, and the question on the marketing side is, is this the best you can do, HULU? You have built a brand, you have scale, you have content and now you want to punt, snatching defeat from the jaws of victory while the experiment is in process? What a waste for you and the viewers who love you, and if my students are any indication, many do.

We all know that it is one thing to point out problems, another to pose solutions. Marketing is all about solutions, so let’s see what we can come up to get HULU out of this mess, knowing their ad model as currently in play isn’t sustainable.

Recommendation #1.
Up the value of the advertising.

How so?

As I see it from the outside, HULU has been a pioneer of offering choice to visitors? Watch the long ad and see the show uninterrupted… or choose the shorter ads sprinkled throughout. This is a great start.

How about going further and offer viewers even more choice? Offer a menu of ads by type and even product. Let the viewer self-select their ads of interest.

You can be high or low tech about it too. Low tech… base the ad offerings by the show, or if you want to be more slick, apply behavioral information to narrow down the choices based on each visitor’s clicking habits.

How does this improve value?

  1. You are empowering your viewers with more, not less control
  2. Ads are more relevant as a result
  3. And in doing so, viewers actually act and “raise their hands,” which direct marketers know is the most costly and difficult part of the customer acquisition process

What this means is that response and conversion rates should be higher and I will argue in the absence of evidence either way, at least worthy of testing. And should indeed response/conversion rates improve, the value of the advertising will go up and command a higher premium.

And one other point. Advertisers could be charged based on actual visitor selection and or performance. If viewers don’t click, they don’t pay. And when visitors do engage, they pay more. Integrate some interactive promotions and calls to action for those that do select and powerful interactions can take place.

Recommendation #2:
HULU Ju Jitsu

I see HULU as more than a platform for streaming video… free streaming video on demand. I call it a Network of One. It is our own personal Video network, programmed by us just the way we want it, with the content we love, when we want it and hopefully soon, where we want it too.

The motor that has driven it’s success to date as the second most visited source of streaming video content is the fact that it is free. Don’t kill it! Use it! Since Fox, NBC and ABC are principals, create premium content that bring fans closer to the shows, films and actors they love with interviews, webcasts, blogs, tweets, contests, and even closer interactions and behind the scenes access. Create opportunities and other reasons to join fan clubs and other communities and pay for the privilege based on the degree of proximity and interaction.

Peel off some percentage of 40 million for tiered service and subscription packages that supplement the free streaming content, and some interesting numbers come into play. 1% of 40 million is 400,000 prospective customers. Find reasons to get them to pay up to say $100 per year for something special above the free content… well you get the idea.

For one thing, HULU is no longer operating at a deficit. Up the percentages… every .1% is 40,000 customers afterall, and the return can be even more radical. Personally, I would love the opportunity to win a lunch with Tina Fey, a comedic genius if there ever was one.

The Case for the Negative Brand?

April 11, 2008

What a week in the airline industry! We all know the airlines are suffering. High fuel costs have decimated profits and now it appears many carriers as well. Just today Frontier went into bankruptcy in attempt to reorganize, and Aloha and a number of others out of business entirely.

Now add to it the FAA and the “inspection crisis” plaguing American Airlines in particular and their MD80 airplane which makes up more than half of their fleet. For the last couple of days, this fleet has been grounded for apparently long overdue wiring inspections in the wheel wells of each plan, causing thousands of flights to be cancelled and over a quarter million customers inconvenienced at best, often stranded in locations they didn’t intend for hours and even days.

Passengers by law can be compensated for hotels should they be stranded overnight, and of course American will rebook passengers on any carrier and will even issue vouchers for cancelled flights as long as you initiate your next flight by April 17.

And if you go to their web site at http://www.aa.com/index_us.jhtml, you can see crisis control marketing in action… notably an “ADVISORY: AIRCRAFT INSPECTIONS AFFECT SOME AA TRAVELon the home page and special jump page at dedicated just for this at http://www.aa.com/aa/pubcontent/en_US/urls/md80.jsp.

If you look carefully you will see that American is terribly sorry, its not our fault, safety is concern #1 and please e-mail us if you are stranded overnight. It appears to be written by a team of lawyers to mitigate liability, nothing else.

Are you kidding!!!

E-Mail us with your travel info and we will get back to you… it doesn’t appear that effected passengers are buying it either. Phone lines are jammed, and customers have been know to try to get through for hours on end with no luck. And ticket lines at airports are no better. Passengers are waiting for 4 and even more hours just to talk to an agent!

What a mess! I will argue, especially in light of the inspections, our trust is shaken, passengers are having vacations ruined, businesses are being disrupted, and all American can do is offer an apology and tell us to e-mail them. The only thing that’s even more surprising to me is the apparent lack of outrage by the public and government officials.

Now let’s go back to Valentine’s Day 2006. A snow storm hits the east coast of the US, shutting down JFK in NY, hub to another airline, in this case a brand that is beloved by its customers. This disrupts Jet Blue to its core. Thousands of passengers are stranded again, some for days. In other cases, they are actually stranded on planes on the tarmac, without electricity, running water and other amenities for hours, in one case up to 14 hours. Not good.

On top of that, their phone systems went down, planes and crews that could have been mobilized to take up some slack, were not utilized and sat idle. There was no apparent recourse and outraged customers went ballistic.

The media also took up the charge. Business Week, which was getting ready to announce their Top 25 Customer Service Champs, had just enough time to publically eliminate Jet Blue, who was ranked #4 overall, from their list entirely. And the talk shows went crazy, with Leno and Letterman all over it.

In this particular case, here was a darling brand in trouble, and Jet Blue rose to the challenge. CEO David Neeleman responded authentically and quickly to the challenge as you can see in this You Tube video produced in response that you can see at http://www.youtube.com/watch?v=-r_PIg7EAUw.

First you can see Mr. Neeleman is tieless and clearly upset. He is not rehearsed or smooth at all. It looks and feels authentic. He apologized, of course, immediately, and then takes responsibility… and potential liability as well. Then he announced 3 steps they were taking to attack the problem immediately and to top it all off, announced their new, groundbreaking Customer Bill of Rights to ensure better performance in the future.

Talk about getting ahead of a crisis!

Contrast that with American. JetBlue messes up and creates outrage, the far bigger American messes up on an even grander scale, they blame the government, seek to minimize liability and we just yawn and thank the powers above that it wasn’t us on one of those flights.

The difference from our Marketing 2.0 perspective… is brand. American’s brand along with the other once platinum carrier brands is tarnished, almost an anti-brand. When we think of major carriers today, we think delays, inconvenience, lousy service, and with all this FAA stuff going on, minimal trust at BEST.

So a problem like this comes up for American, and from a brand point of view, its business as usual. We expect it. Yikes! No brand conflict here, clearly.

Jet Blue on the other hand was another story. People love flying on it for a number of reasons and have a strong brand connection. That was why when they stumbled back in 2006, the brand was in conflict and we were outraged.

I will argue that in the long term, JetBlue understood that they had to act, and that action, pro-active action would have a cost and a short term negative financial impact on the business. I will argue that these kind of issues can be considered a marketing issue and fixing it marketing spend, which as we now see has strengthened customer loyalty and is likely keeping the business healthier in these times.

American has no brand, nothing to protect. Their quote unquote marketing is all about damage control at best and placing the blame on others. This is not a good indicator of American’s marketing prowess, and long term health of that and other similar airlines.