Thursday, September 30, 2010

Brand Loyalty in Sports

I was talking with a couple guys the other day who are die hard Pittsburgh Steelers fans. I asked one of them why he liked the Steelers. He responded that it was a hometown team and he grew up watching them, so it was just natural that they were his favorite. The other guy jumped in and said, "Because they're the best. They've won 6 superbowls!" To which I responded, "Are they the best right now?" "Well," the second guy said, "they're ranked number two in the Power Rankings."

This interchange got me thinking about brand loyalty in sports. There is perhaps no other context, with the exceptions of religion and politics, in which brands can instill such devotion in their consumers. Many companies in consumer product and service industries would kill for the fidelity of Pittsburgh Steelers fans. Win or lose, these fans are always there to buy the product because they believe in it. Many sports fans, like the first guy I spoke to above, are content admitting their loyalty as an emotional connection with the brand. Others, like the second guy above, feel a need to rationalize their devotion. Maybe they're not the best right now, but they will be again!

If sports fans truly wanted to root for the best, they would be shoppers--they would jump ship whenever a new team took the number one spot. No one likes a fan who jumps on the bandwagon, though. Sports fans who are loyal to a particular team are similar to other brand loyalists--like the guy who only buys BMWs regardless of how sophisticated Mercedes-Benz's technology becomes or the guy who only buys Starbucks regardless of how similar the quality is getting to Dunkin' Donuts. Why are customers loyal to certain brands? Why are fans loyal to certain sports teams?

In short, rooting for a favorite team is often a more satisfying way of watching the game. Sure, there will be losses, but the victories are that much sweeter. Just like the loyal Steelers fans can say that they stuck with the Steelers through their losing seasons in the late 90s, BMW fans can say they stuck with the company through its failed acquisition of Land Rover and Starbucks fans can say they stuck with the company through that awkward faze of selling instant coffee (wait, is that still going on?). Brand loyalists aren't stupid; they're just happier sticking to their guns than they are playing the field.

Monday, September 27, 2010

The Power of Social Brands

A recent case study brought to my attention the dual nature of the power within socially-oriented brands. Many brands are experienced by consumers more often in groups than they are individually. Of course, there is an obvious benefit to the marketers of the brand. When the brand is experienced in groups, more hype and buzz is created--which inevitably leads to greater profits. However, the consumers experiencing these social brands also benefit in that they find common ground with their fellow men. A social brand brings people together and creates lasting memories. Which is really the greater gain: the concrete profits received by the marketers or the intangible sense of belonging received by the consumers?

The brand that got me thinking in this direction was IKEA. While the Swedish large-scale furniture maker does do its share of advertising, I recently came to the realization that I had never seen any of it. I have never been to one but, yes, I have heard of IKEA. In the news? Maybe briefly. But where has my primary perception of the brand come from? Word of mouth. I've heard people at work and seen people on my social networks making plans for daytrips to got to IKEA together. Actually, come to think of it, I've never heard anyone say that they went to IKEA alone. Moreover, I've heard those same groups of people talking positively about their experience after the trip--like it was an outing to the beach or the park.

IKEA isn't the only brand that has brought people together--Starbucks, Apple, Harley-Davidson, BMW, Youtube, and--of course--Facebook, to name a few. Yes, Howard Schultz wallet is breaking at the seams, but his customers have irreplacably fond memories of gathering together with their friends for a latte. And Steve Jobs has no want of profits, but his customers are well-off socially as well. Harley Davidson and BMW are more than mediums of transportation--they each have their own loyal followers who share intimate social experiences. Youtube and Facebook--who hasn't watched a funny video together or exchanged comments on a friend's status.

As I think in my own experience, I realize that many of the brands I feel a connection to result from the fact that they were experienced with other people. And this idea goes far beyond the traditional business world. Which religious brands are most important? Likely the ones propogated by the youth group you attened. Which sports brands are most important? Likely those presented to you while you watched the game with your friends. Brands that are social are brands that are remembered. Check out Vitrue's list of the Top 100 Social Brands of 2009 and see if you've had social experiences with any of them.

Thursday, September 23, 2010

The Difference Between Sales and Marketing

Many people, on the producer side as well as on the consumer side, are confused about the functions of sales and marketing. When is a tactic a marketing tactic and when is it a sales tactic? When is a person a marketer and when is he a salesman? Are sales and marketing interchangeable?

Now, I will seek to answer these questions without splitting academic hairs. Of course, marketing is a lot more involved than sales in that it includes product development, pricing, distribution, and advertising as dimensions of getting the product into the consumers hand. In sales, these parameters are already in place. Although marketing and sales have the same end-goal--to get the customer to buy--there is something different about them regarding the context in which they operate.

In short, sales differs from marketing in that it requires direct person-to-person contact. Yes, it is possible for marketing to sell products without a sales force--if it is really good. If the marketing is executed well enough to convince the customer to buy upon hearing the advertisement, a separate sales division is no longer needed. Sales becomes customer service. But, many times, marketing is subject to high competition and must have a sales team to market the product directly to the customer.

Let's think about it in some other contexts. In the context of religion, let's say you are a Christian practicing what Christians call Evangelism. Carrying your Bible around is marketing. Actually talking to someone about Jesus is sales. In the context of social media, updating your Facebook status is marketing. Responding to someone's comment on your status--that is sales. Let's say that you are a member of your favorite band's street team. Posting flyers throughout the college campus is marketing. Inviting someone to the show is sales.

Oftentimes, both marketing and sales are essential to selling the product, service, or idea you are offering. Marketing provides a solid message about what you are offering and primes the customer for the salesman. Essentially, the salesman is nothing but a closer. It is the salesman's responsibility to execute what began in marketing, closing the sale by engaging the customer directly.

Monday, September 20, 2010

QR Codes: Information (literally) at Your Fingertips

The business to business world has been using QR (Quick Response) codes for a long time to track inventory and data more efficiently, but only recently have they entered the consumer world. QR Codes have been described as 'real-world hyperlinks' that can connect you instantaneously to virtually any content via your smartphone. Want to watch a video, read a blog, study a journal article, etc.? Just download a QR Code scanner onto your Blackberry or Iphone and scan the corresponding code. Instantaneous information. You can even follow the QR Code below to reach a site,, that enables you to create your own QR Codes and put them on merchandise!

What's the catch? Well, not only is information at your fingertips, but your information is also at fingertips of the marketers who creat these QR Codes. When your phone scans the QR Code, marketers are able to collect your information, compile it with that of others, and track consumer behavior more precisely. Is it worth sacrificing your information to access other information? Well, many marketers will offer coupons or various promotions in order to entice you, but the fact is: QR Codes are not the first tracking devices to entire consumer markets.

When you browse the Internet on your PC, many websites will leave cookies on your computer tracking your seach history--knowing where you've been and how long you've been there. RFID (Radio Frequency Identification) tags, tracking devices placed in items to monitor their geographic location, have been used for multiple purposes not the least of which is tracking a product after it is purchased--measuring post-purchase consumer behavior. Even Facial Recognition devices have been made available to track consumers with a camera that identifies them based on the uniqueness of their facial features from those within an extensive database.

Obviously, with such invasive technologies such as these, ethical questions are raised in marketing. Without permission, is it ethical--or even lawful--for companies to 'steal' information from customers? Ultimately, you could argue, it ends up benefitting the consumer. The marketer only wants to know more fully the needs of his customer so that he can meet them more efficiently. Who doesn't want their needs satisfied with more ease and less searching? Nevertheless, there is 'personal' information that consumers don't want to enter the 'public' realm. No one wants insurance companies to know of risky behavior or law enforcement to know of legally questionable behavior.

The debate will go on--as many do in marketing-hovering perpetually in a gray area. As for me, I'm an open book. Marketers can read me all they want and keep bringing me better choices. And, when I get a smartphone, I will be scanning every QR Code I see because I just think it's too cool!

Thursday, September 16, 2010

Regulatory Engagement Theory: Which Prices Will Get Lower?

I read an interesting article last month in Business Week. Apparently, consumers have changed their spending habits somewhat in light of the recession. Discount stores like Dollar General and Family Dollar are becoming suddenly more profitable, as consumers are more willing to buy cheaper household products. However, sales of high-end prodcuts like the Apple IPad, the Amazon Kindle, BMW, and Mercedes-Benz are also increasing. Interestingly enough, it would appear that consumers are spending more on luxury items but less on convenience items.

While the article seems to indicate that consumers are buying cheaper convenience items like toothpaste and shampoo in order to justify indulging in luxury expenses like cars and electronics, I think something different is going on. According the Regulatory Engagement Theory in marketing science, value is not only determined by the benefit the consumer gets from the product. Value is also heavily dependent on how involved the consumer is in the product. Value is subject to how much the consumer thinks and how strongly he feels about the product--how engaged he is, how much he cares.

In times of economic uncertainty, producers of high-involvement goods like luxury cars and electronics are going to be able to keep prices up because the engagement consumers have in such products drive interest. When it comes down to toothpaste, shampoo, trash bags, cereal, etc., many consumers don't really give a lot of thought to such commodities. Price competition becomes more likely in these items because consumers are more or less indifferent to the quality of the items. The only difference they see is the price, so they may just buy the cheaper one. Consumers are heavily involved in their BMWs, though. The price doesn't matter so much because they can see the difference between the Bimmer and other cars. They can justify paying the higher price.

In theory, then, the only prices that will get lower are those in commodity industries--or mock-commodity industries. Only in industries where consumers see little differences between products will producers be forced into price competition, giving the consumer a lower price. As long as there is product differentiation within an industry, as long as the Ipod stands out from the generic MP3 player at Walgreens, prices will continue to be high. If you want lower prices, then, just stop caring so much. The moment you lose interest, producers will be forced to lower prices to get that interest back.

Monday, September 13, 2010


What does overpriced really mean? I've heard people complaining that certain things are too expensive: gas, Starbucks coffee, movie theatre popcorn, bottled water, new cars, healthcare, the list goes on. Perhaps you've complained about these products and services. I know I have. But when we say they are overpriced, we are not just saying that we don't want to pay that much for them but rather that no one should want to! We are calling it absurd to pay the asking price and yet many of us do it anyway! So, why do these items cost so much and why do we continue to buy them if we don't like the prices?

First, there is a common misconception about what constitutes a price. The price isn't simply the cost of production. No one would ever make anything if it costs them the same amount to produce as what they were selling for. So, most of us realize there will be a little profit for the producer in the price. But how much profit is too much? If the mark-up in movie theatre popcorn is 1200%, is the the movie theatre industry ripping off the poor consumer? Most of us would be outraged to hear this statistic. Of course that's too much profit, right? Well, what is a reasonable profit? Who decides what that profit should be? The answer: the consumer does. That is the only true cap on a producer's profits--how much the consumer is willing to pay for his product. Prices can only be astronomical if people are willing to pay astronomical prices.

But we have to buy these things and the producer is taking advantage of it, we say. We need gas. We need healthcare. For goodness sake, we need our Starbucks' latte! But do we really need these things? Have we considered the alternatives? Working closer to home so that we can walk to work? Simply not going to the doctor? Drinking, heaven forbid, instant coffee? There are always alternatives. We pay the higher price because we don't want to settle for the alternatives. As a matter of fact, most of us don't even want to consider them.

Nothing is really overpriced. We call it overpriced, because we are angry that the alternatives have such high costs. We'll save money on gas walking to work but we may have to settle for a lower paying job. We'll save a lot of money on healthcare by not going to the doctor but we may just get sick and die. And I don't even really need to go into instant coffee. Next time we start to complain about the high prices of something, let's truly consider the alternatives. They can be sobering thoughts.

Thursday, September 9, 2010

What's in a Brand Name?

Would a product by any other name smell as sweet? What is the difference between a Q-Tip and a cotton swab? A Kleenex and a tissue? A Band-Aid and a bandage? We seem to have some notion of the distinction between 'Brand Name' and 'generic.' Some of us think that they are typically the same but with different labels. And yet some of us see extra value in the product that has a recognizable brand name. So what purpose does branding serve? Why would sellers want to offer Brand names? Why would buyers demand them?

You know that 'Boots n Barkley' chew toy you bought for Fluffy? Do you remember where you got it? I do. You got it from Target. What about that 'Private Selection' roast beef that you had in yesterday's lunch? You got that from Kroger. How do I know that? No, I wasn't digging through your trash. Those are store brands. Target's pet products are branded 'Boots n Barkley' and Kroger's premium line of food is branded 'Private Selection.' Why do Target and Kroger give their generic in-house products brand names? Because it sets them apart. It gives them idenity. It makes them more than commodities. Look in your medicine cabinet. You may think you're stocked up on generics but what you'll really see is the 'Equate' brand from Wal-Mart and perhaps the 'Up and Up' brand from Target. More and more, businesses are branding everything they sell. Branding helps products previously indistinguishable to rise above the clutter to actually have recognition in the consumer's mind.

So, how does branding benefit you--the consumer? Well, you may be the most ardent generic-shopper around, refusing to purchase anything with a proper noun on its label. Yet, I still say that you are attracted to brands. Let me prove it. Are you a Christian? Muslim? Buddhist? Well, those are religious brands. Are you a Democrat or Republican? Those are political brands. Football fan? Which team? Cleveland Browns? Pittsburgh Steelers? Merely football brands. In short, what I am saying is that brands are merely reputations. None of us can ever sort between every available option in a decision, so we often go with what we perceive to have a reputable name. Back to actual purchasing decisions, it may be better to go with Tylenol than with 'Equate' pain reliever, because Tylenol has an established reputation for working effectively. We purchase brand names instead of generics because we have come to rely on those particular brands.

So, back to the original question? Is there really any difference between a 'brand name' and a generic. Well, most of the time, probably not. But are you willing to take that risk? Maybe on cotton swabs and tissues, but on an MP3 player? How about your groceries? I know that I have come to trust certain brands. If I see a new flavor of chips put out by Tostitos, I will be more likely to try it than some generic corn chip brand. Ideally, we'd have all of the time and information necessary to decide between every consumption option presented to us. But, sometimes, we have to simply go with what experience has taught us to be true. Sometimes, we need brands.

Monday, September 6, 2010

Why Won't This Guy Leave Me Alone?: The Importance of Follow-Up

All of us, it seems, have a natural tendency to detest salesmen. We hate taking calls from people who are trying to sell us something. It should be obvious to them, after all, that we don't want what they are offering, right? 'If I'm interested, I'll call you,' we say--which generally translates as 'I'm not interested.' But what of that rare occasion when we actually do buy something from a salesman? We may or may not gain much benefit from the product, but at lease we got that salesman off of our back, right? Wrong! We'd better hope not!

Whether it be the guy that sold you your car, your dentist, Fluffy's Vet Clinic, or your insurance agent, the best thing for you as a consumer is to have a salesman that continues to bother you after the sale. Why is this so important? Because it shows that the salesman wasn't simply trying to make a quick buck. If he or she is interested in feedback, that is a good sign. The mark of a good salesman is whether or not he still cares about you after the sale.

Good follow-up from a salesman demonstrates that he views you as a long-term investment. He continually views you as a future source of income and therefore always treats you with the highest level of customer service. So, next time you buy a product and don't hear from the salesman again, don't be relieved that you got him off of your back. Instead, try wondering why he is no longer interested in you? Is his product not beneficial enough to sustain you as a customer in the long run? It's quite possible. On the other hand, next time you do hear back from a salesman, trying giving him some honest feedback--understanding that he is showing a great amount of faith in his product to be inquiring about its usefulness after he's already been paid. Good follow-up is good sales.

Thursday, September 2, 2010

The Revolution in Distribution of Artistic Content

Last week, marketing guru Seth Godin announced that he would be bypassing the traditional publisher for his next book and would instead be publishing himself online. This announcement no doubt came as a blow and perhaps an eerie foreshadowing to the traditional publishing industry. Godin, whose blog has more than enough followers to get his name out, simply found it less costly to self-publish. Of course, the benefit to an artist of surrendering the bulk of his earnings to his distribution channels is that more people are going to know about his work. But, with the advent of the Internet, the gap between the artist and those who admire his work is getting smaller and smaller.

Just look at Youtube. Many actors, actresses, filmmakers, and movie producers would love to make it big in Hollywood but the distribution costs are far too high for most. What are the odds of an aspiring actor of getting a role in the next box office hit? Very slim. But what are the odds of making a smash hit on Youtube? Probably still slim, but much less costly. Rather than tirelessly working through 'gigs' and bolstering a lacking resume, it's simple matter of clicking, 'upload.' Many movie makers today make six digits a year off of a Youtube channel that costs them nothing to have.

And what about iTunes? Probably the distribution channel that has been treated with the most scorn over the years is that of the music industry. When you buy a CD, are you supporting your favorite band? No, not really. You are supporting its record label--its distribution channel. Now, with avenues like iTunes available for self-promotion, musicians are able to 'stick it to the man' and scream 'I am rock and rock' directly to their fans. A friend of mine from high school went this route and, while there are no CDs from Alert New London on the shelf at Target, the digital inventory on iTunes is endless.

Of course, for any artist or entertainer wishing to distribute his or her content directly to fans who value such content, social networks like Facebook, Myspace, and Twitter make it even easier. Essentially, the much needed middle-man is losing his job to simpler self-publishing formats like Amazon Kindle, Youtube, and iTunes in additional the the promotion given by ad-supported social networks. Today, the only thing keeping artists from 'making it big' is the fact that there are only so many fans to go around and other aspiring artists have access to the same Internet technology. Those who will really be successful are those who take advantage of it most.