Monday, December 8, 2008

A Bunch of Chrismas Creep: How Starting the Season Early Doesn't Yield Intended Results

Image from

The topic of this posting has been floating around in my head since September when I saw the first Christmas trees and holiday decorations out on display at my local Home Depot store. Ah yes, early fall was my first, 2008 sighting of the infamous “Christmas Creep." According to Wikipedia, “Christmas creep is the commercial phenomenon of merchants and retailers exploiting the commercialized status of Christmas by moving up the start of the holiday shopping season. The term was first used in the mid 1980s.” Every year this exploitation seems to occur earlier and earlier in the season. We see retailers tangling Jack-O-Lanterns and monster masks with evergreens and snow globes, mingling turkeys and pilgrims with nativity scenes. Christmas in November, then October, then September, and now some reports say this year it was extended to August? What happened to Christmas in December??? I mean we all joke about Christmas in July, but the way things are going, maybe next year we'll see just that. Surfing Santas anyone?

As a consumer –and- a marketer, Christmas Creep is one of my biggest marketing pet peeves. And it appears I am not alone. Peruse message internet boards and articles about the topic and you will find massive numbers of consumers complaining about “creeping” retailers. Some threaten not to shop at the first store they see with Christmas decorations up before Halloween or Thanksgiving. One poster writes: “It’s insulting…and they need to be boycotted. It completely ruins any given holidays because the holidays no longer represent a specific time of the year. If Christmas is 24/7 365 days a year, why bother doing anything about it?”

When we think about the marketing reason behind starting the holiday season early, we understand that retailers are attempting to influence consumer buying behavior. For example, last year The New York Times quoted several retailers regarding why they had put out Christmas decorations in October. L.L. Bean's spokesperson stated: "It's safe to say there is always anxiety. [The ad] serves the marketing purpose. It gets people thinking that the holiday is coming." But does it really? Consumers aren’t stupid. They know Christmas falls at the end of December every year, no matter when the retailers put up their decorations. So, with that said, has Christmas Creep really yielded the desired results? Many of us would argue it hasn't done anything other than annoy consumers and dilute the holiday spirit.


The National Retail Federation (NRF) conducts holiday surveys every year and defines holiday retail sales as sales in November and December. Looking at past data, today is no different than it has been over the past four years: around 40% of consumers say they’ll start their holiday shopping in October or earlier. Additionally, data collected since 2002 shows ~30% of consumers will have 10% or less of their shopping completed by the second week in December. In other words, people who tend to start early and plan their shopping will continue to do so and the Christmas Creep isn’t convincing holiday shopping procrastinators to start buying presents any earlier in the season. Finally, if we look at U.S. Census data, we see that total retail sales (excl. motor vehicle and parts dealers and food services) for November/December from 1998-2007, have consistently been in the 17% range. If you look at sales from October through December, they’ve consistently been in the 25% range and from September through December in the 33.5% range. In other words, Christmas Creep doesn't appear to be doing much to encourage consumers to spend more or buy earlier.

In March 2006, Wharton Marketing Professor Stephen Hoch wrote about Christmas Creep. "Are consumers going to revolt against it? No. Will it get people in a holiday mood? No; people will get in the holiday mood during the holidays. Does it give retailers a chance to set displays up sooner? Sure. Does it make stores more crowded? Yes. Decorations and special displays tend to make stores cluttered and hard for shoppers to move around." His article also quoted Herb Kleinberger, a partner and retail store practice leader at IBM Business Consulting Services. Klinberger stated: "Jumping the gun too soon can create an emotional pushback. In a certain sense, the consumer has to be emotionally ready to shop, and that may not happen until the weather [becomes colder]." In other words, your panic to turn your store into a Winter Wonderland in August could end up alienating shoppers.

So what should retailers be doing INSTEAD of putting up holiday decorations months before Christmas and calling early-bird sales "Holiday Sales." They should be working to identify some important consumer insights and determine what drives consumer behavior. For example, why do holiday procrastinators behave as they do? Lorraine Cohen, Life Strategist and author of the Powerfull Living blog, notes seven reasons why people procrastinate: Fear of success or failure, lack of desire, no inspiration, loss of momentum and motivation, negative self-talk and beliefs, overwhelmed by too many options, and too many distractions/loss of focus. In other words, a holiday shopping procrastinator is probably someone who can’t decide what they want to purchase, thinks there are too many choices (which causes them confusion and makes them feel overwhelmed), they don’t know where to start, and they don’t like shopping to begin with and are hence delaying the pain by shopping late. Knowing these insights, any decent marketer should be able to come up with ideas of how to appeal to this particular consumer set -and- potentially get them to both spend more money and shop earlier in the season. So with that said, I am personally challenging all you "Christmas Creepers" out there. In 2009, prove to us you know how to execute a pull rather than a push marketing strategy, show the consumer you actually understand them, and finally, quit acting like the people you want to purchase your products aren't intelligent!

To conclude, it's refreshing to see that not all retailers have jumped on the Christmas creep bandwagon. Some of you may recall Nordstrom's 2007 ad: “At Nordstrom, we won’t be decking our halls until Friday, November 23rd. Why? Well, we just like the idea of celebrating one holiday at a time. From our family to yours, Happy Thanksgiving. Nordstrom will be closed Thanksgiving Day. On Friday, our doors will open to welcome the new season.” Their company policy dictates this and I am pleased to report they followed it to a "T" again this year. "Merry Christmas" to that!

Wednesday, November 12, 2008

Celebrity Endorsements: Do They Work?

Last week, USA Today published an article
calling out favorite brands of the Obama family. In the write-up, Bruce Horovitz stated if the president-elect were to advertise the favorite brands of his family(Hart Schaffner Marx, J. Crew, Planters, Fran’s Chocolates, Honest Tea, Nicorette and Ford), these companies would most likely receive an increase in exposure and/or sales. One example he mentioned involved Michelle Obama. "During a Tonight Show with Jay Leno appearance, she [Michelle] wore — and talked about — a $330 outfit she had bought online. Shoppers snapped the look up. 'All the items were gone the next day,' says Jenna Lyons, creative chief at J. Crew." When reading this, I was brought back to an often discussed marketing/advertising question: Do celebrity endorsements really work? And even if they do, are paid celebrity endorsements a good business investment (i.e. is the ROI worth the (most times) extremely high premium)?

In early 2007, innovations report wrote about research conducted by the University of Bath (UK) and University of St. Gallen (Switzerland) on this exact topic. The article noted that research results questioned the effectiveness of using celebrities to sell products since it was discovered “...that many people were more convinced by an endorsement from a fictional fellow student… because many people feel a need to keep up with the Jones’s when they buy.” Furthermore they found that people “ to make sure their product is fashionable and trendy among people who resemble them, rather than approved by celebrities...So they are more influenced by an endorsement from an ordinary person like them.” Besides this study, Brand Republic reported that some celebrities plugging products may actually turn off the consumer. In an article published in November of last year, survey results revealed “...that one in five mothers said the sight of Victoria and David Beckham plugging something in an ad would be more likely to put them off. Only 16 per cent were prepared to admit that celebrity endorsement would persuade them to buy a product.” Based on these reports, would you spend millions of dollars on a celebrity to advertise your products?

Besides the obviously monetary investment, when companies use celebrities in their ads they also take on the risk of damaging their brand/company/product image. For example:
  • Overexposure: If a celebrity is representing too many products or is in too many ads, that person may lose their credibility and/or lose their "turning heads" factor. Also, we may end up tying our brand/product to something we didn't particularly want to be associated. One case of celebrity endorsement over-exposure I can think of off the top of my head is Tiger Woods. Over the past few years he has represented General Motors, Titleist, General Mills, American Express, Accenture, Nike, Tag Heuer, Gatorade and Gillette. I know Tiger is popular, but honestly, do you really listen to him in an advertisement anymore since he's in so many of them?
  • Credibility: If your product is not something the celeb representing you would realistically use, then a partnership is probably not the best idea. Keeping with the Tiger Woods theme, a consumer could totally see him using Nike and Titleist products, what what exactly does he have to do with management consulting (Accenture)? Some other examples of bad celeb-product matches? Do you think Jessica Simpson would be caught dead eating greasy pizza in public or could you honestly see Fran Drescher shopping at Gap's lower-end chain? Probably not so much.
  • Reputation: We try to control our brand's image, but the fact is, even when a celebrity agrees to our contract terms, we can’t really control what they say or do, and a mis-step could lead to years of damage to our brand(s). For example, many companies could not have predicted the negative publicity Michael Vick would bring upon himself. reported: "Just one day after Atlanta Falcons quarterback Michael Vick pleaded not guilty to federal dogfighting charges, companies began distancing themselves from the controversy. Nike suspended its contract with him, Reebok stopped selling Vick jerseys and trading card companies Donruss and Upper Deck removed Vick's card from the rest of their 2007 card pack releases. The NFL also pulled all Vick jerseys, autographed items and other memorabilia from its NFL Shop site."
  • Consistent Brand Image: When we put our products out into the market place, it's important we present a consistent image to the consumer. It brings trust and recognition to our brand. However, continually swapping celebrities is one way we can take away that consistent image. One brand I can think of who constantly changes their celebrity image is the Gap. Since the late '80's, Gap has relied on the use of celebrities in their ads with a laundry list of probably 40+ including the likes of Sarah Jessica Parker, Joss Stone, Lindsay Lohan, John Mayer, Mekhi Phifer, Claudia Schiffer, Sarah Silverman, Liv and Steven Tyler, Michael Vartan, Madonna and Brittany Murphy. In August, Marketing Daily quoted marketing consultancy Brand Keys' president Robert Passikoff as saying the Gap has a "sustained problem with brand identity that isn't solved by using stars in ads."

Over the past couple of years it appears more and more companies are realizing consumers may not buy something just because a celebrity face is linked it. Brand Republic commented: “In 2001, 17 per cent of TV ads the company was testing featured a celebrity. Last year, that fell to 8 per cent, and this year it's at 6 per cent." reported on Pepsi dropping celebs from their ads stating the company “...said the celebrities were too big and the Pepsi brand didn't get the promotion out of the ad campaign that the stars were getting." On a similar note, Chrysler dumped Celine Dion after signing a 3-year, $14 million dollar deal with her. "Insiders at Chrysler say the commercials featuring Dion driving a Pacifica produced great sales...for the singer, not the car.”

Thursday, October 30, 2008

Corn Syrup's Sticky Situation: Can You Change Consumer Perception?

Have You Heard? Corn Syrup is Good for You!

Alright, so that's probably not the complete truth. We all know high-fructose corn syrup (HFCS) isn't the next "health food." But recent commercials released by the Corn Refiners Association attempt to convince consumers that corn syrup in "reasonable amounts" is completely safe. This campaign ( according to CRA president (Audrae Erickson), "is designed to correct the record...not a campaign to drive consumption (of corn syrup)" (per AP article posted on MSNBC).

See the commercials:
Corn syrup has faced public criticism, primarily due to studies linking obesity problems to sweetened beverages. Per the Mayo Clinic, "...research has yielded conflicting results about the effects of high-fructose corn syrup. For example, various early studies showed an association between increased consumption of sweetened beverages (many of which contained high-fructose corn syrup) and obesity. But recent research — some of which is supported by the beverage industry — suggests that high-fructose corn syrup isn't intrinsically less healthy than other sweeteners, nor is it the root cause of obesity."

Recently I've written entries about how deceiving consumers can negatively impact a brand. And although I think the corn syrup campaign message is misleading and also don't think it will be completely effective in "re-educating" consumers, I don't plan to turn this into another "what you shouldn't do" entry. What I am going to talk about is how the issue driving this campaign is a realistic marketing problem. For example:
  • What do you do if your product/brand has a bad reputation in the public eye – because the consumer is misinformed?
  • What does it take to change consumer behavior/perceptions about your brand/product(s)?
  • Will an ad campaign like this set consumers straight and be able to re-educate them/make them change their beliefs?
  • Is changing perceptions possible when the message isn't consistent? (i.e. various external sources are promoting different “facts” about your product)

Changing the way consumers view a company, product, brand, etc. is one of the largest challenges a marketer will face. It is difficult to break perception since it has been developed over time from a variety of influences – psychographics, knowledge, feelings, family, culture, etc. The good (or bad) new is that perceptions are dynamic, changing as the consumer becomes more or less familiar with things. And thus, as marketers, we try different things to change the consumer's mind. Most of the time we look to the 4-P's: Product, Placement, Pricing, and Promotion. For example:

  • Product: Is there a component of the product that is turning off consumers? Should we change the product all-together?
  • Placement: Is there any way to re-position the product so it will appeal to a different customer or fit into a different product category?
  • Pricing: Sometimes reducing the price will cause a consumer to purchase the product (although many times this may cause a temporary rather than permanent change in behavior unless competition is high and the products in the category don't have many differentiating factors other than price).
  • Promotion: You can change the affect a product has on consumers through pairing the product with a desired stimulus or put out appealing advertisements. You can put out advertising or materials that make the product or its attributes a compliment the target consumer's beliefs. You can attempt to re-educate a consumer.
  • A Combination of the Above: In an extreme case, some people would say the solution is to "brand, brand, brand." In other words, change multiple "P's"...update your image, release new information, redesign the product's packing, etc.

Now back to the "Sweet Surprise" campaign. The situation facing the Corn Refiners Association is unusual. The issue consumers have is with the product itself. The CRA can't add something to the product to make it more appealing - it is what it is. They also can't sponsor a study proving HFCS is completely safe because first, consumers won't listen to the results (CRA study = self-serving agenda) and second, consumers know corn syrup is not all-natural, it's chemically processed. Further, the CRA isn't able to change the consumer's ideals - you won't be successful in making processed/artificial the new ideal for food when the trend is going towards healthy, organic, natural, etc. Nor will you be able to make a consumer put "being healthy" lower on their list of priorities. Finally, corn syrup faces a non-compensatory consumer strategy. Lars Perner from the Marshall School of Business at USC quotes: “A compensatory decision involves the consumer “trading off” good and bad attributes of a product…Occasionally, a decision will involve a non-compensatory strategy. For example, a parent may reject all soft drinks that contain artificial sweeteners. Here, other good features such as taste and low calories cannot overcome this one “non-negotiable” attribute.”

Based on the television ads, the strategy the Corn Refiners Association has decided to pursue is to attempt to re-educate consumers. However, with all of the negatives mentioned above, what do you think they should do? Maybe it's time for the CRA to come up with a new product to market that actually benefits consumers (Innovation people! Give the people something they do want...consumer tastes have changed!) and give up on the stale, sweetener of yesteryear that is leaving a bad taste in consumers' mouths.

Wednesday, October 15, 2008

Making Mud Pies: Mudslinging's Impact on Brands and Consumers

Photo: Brand Week

It’s crunch time in the U.S. presidential race and (to no surprise) we find ourselves being exposed to a plethora of political mudslinging. Since big bucks are involved (in 2006, most of the $164M spent on political advertising went towards attacks on the competition (USA Today)), I have often wondered whether or not these ads actually achieve the intended results. Notre Dame Marketing Professor Joel E. Urbany conducted research after the 2004 election and showed political mudslinging could work - to an extent. One article quotes his research: “Negative advertising, in spite of the fact that we don’t like it...can shift opinion...14% percent of those surveyed changed their minds about their favored candidate after watching negative ads.” Additionally, John Geer a political science professor at Vanderbilt University wrote a 2006 book (In Defense of Negativity) about how attack ads actually help the democratic process and can make campaigns more focused and productive. However, in a USA Today article, Ray Seidelman, a professor at Sarah Lawrence College said: "Negative ads only work in two situations — when you are incredibly desperate or when you're incredibly close to the end.” And ND's Urbany has said he is now reconsidering his 2004 study based on the fact that this year the number of negative political ads outnumber the positive ones (he wonders if they will actually have a reverse effect).

Although typically we think of mudslinging when it comes to politics, brands have also used attack ads over the years to try to bring more business their way (or prevent people from purchasing competitors' products). Some of the culprits? Mega brands Miller vs. Anheuser-Busch, Pepsi Co. vs. Coca-Cola, Progresso vs. Campbell’s, Apple vs. Microsoft, and Arby’s vs. McDonald’s and Burger King. Some examples? How about Progresso claiming Campbell's was a child’s brand - a battle that has recently evolved into Campbell's ads attacking Progresso's ingredients (photo above). Then there are "classic" blind taste test ads between Pepsi and Coke. In 2006, many of you may recall Arby’s claiming they used 100% chicken in their sandwiches unlike McDonald’s and Burger King (who only used 70%). And what about the never-ending "I'm a Mac" vs. "I'm a PC" saga? Or who can forget the continual battle of the brewers? Even right now, when some of us may have thought the "low-carb" fad was over, there's an ad for MGD Light 64 that shows someone asking for a Michelob Ultra "64" and the server pouring out half of the bottle of beer. Yes, attack ads have become a staple in modern day advertising. But what do experts say about this practice? What is the impression you’re creating on the consumer? And are you doing your brand image - one that you've spent a lot of time building up - a disservice by resorting to negative advertising? Although there could be a legal/libel risk in bashing your competitor, could you also make your brand less appealing to consumers?

Just last month, David Dunne, a professor of Marketing and Advertising at Toronto’s Rotman School of Management wrote an article about attack ads. He states: “Attack ads work in politics because political campaigns are different from advertising soap or shampoo. Voter psychology, timing and competition make it inevitable that one or both sides will use negative ads during a campaign.” The key idea here is that in political campaigns, people are more likely to distrust politicians and thus believe bad things about them, and that compressed timing works to an advantage. “In business, advertising campaigns are designed to build brand equity over time.” The WSJ reports: "Attack ads, when they get too intense, can confuse consumers. Several years ago, an ad war between SABMiller's Miller Brewing (now MillerCoors) and Anheuser-Busch got so heated that it was hard to keep track of which ad was for which brewer..." And just today, Brand Week posted an article noting expert opinions on the increase in business-related attack ads. They reported this tactic could actually hurt the brands involved and put entire product categories at risk: "If I'm a consumer, all of a sudden, I might say, 'Canned soup might be convenient, but I know it's not as wholesome as soup I might buy at a Whole Foods or gourmet shop,'" said Paul Kurnit, a marketing professor at Pace University, New York." CEO of the Wisner Marketing Group, Jim Wisner stated: "Private labels tend to get a boost when big brands engage in a category battle."
But even with these risks, attack ads are on the rise. A couple of weeks ago the Wall Street Journal reported: "The National Advertising Division of the Council of Better Business Bureaus, which acts as the ad police, is fielding many more complaints from marketers who believe they are the victim of misleading comparison ads...September also saw complaints jump about 50 percent from last year..." They also wrote that Russ Klein (president of global marketing strategy at Burger King), said "over the next 12 months, the company's customers are going to get a "richer dose" of competitive ads than they have in the past 12." I'm not sure this is the direction companies should be taking.

We all know the big thing currently on consumers' minds is the economy. Since people are feeling down in the dumps about money, I highly doubt a bunch of negative ads are going to encourage them to up their spending. To me, most of these negative ads say "I'm a tattletale" -or- "I'm a big bully." Who ever likes someone like that? I think what consumers want to hear right now instead is "I'm a bargain" or "I'm someone you can trust." For example, a better execution of the Campbell's campaign would be to not even mention the competition. Why? Campbell's claims "consumers are reading food labels 60 percent more than they did a year ago (WSJ)." Through ads solely focusing on Campbell's and their ingredients, they should be able to convince health-conscious individuals to buy their product without leaving a muddy taste in consumers' mouths and possibly degrading their wholesome brand image.

Monday, October 6, 2008

What's YOUR Priority?: The USPS and its conflicting messages

A few days ago I wrote an entry on customer deception - about how some brands were relying on short-sizing to keep product prices constant and help preserve their bottom line. Continuing on this theme, I came across a blog discussing how the US Postal Service is yet another brand deceiving consumers to help out their financial state. Bruce Watson from Walletpop talks about what he calls a scam by the Postal Service. He writes: “In an effort to combat its budget deficit of over $1 billion, the United States Postal Service is, allegedly, trying to upsell its premium services while hiding its less expensive options. According to an anonymous source, the USPS has instructed its employees to stop offering inexpensive shipping; whenever customers come in with anything larger than a letter, employees are supposed to ask if they want Express Mail guaranteed overnight delivery or Priority Mail. If the customer asks about cheaper options, the employee is then allowed to discuss First Class, Parcel Post, or Media Mail. The key element here is that the customer has to mention the cheaper options, as the counterperson can't.”

What I find interesting about Bruce's entry is the fact that just this week, the USPS announced their 5 year strategic plan called “
Vision 2013.” Vision 2013 "
rests on three major strategies: 1) Focus on what matters most to customers. 2) Leverage our strengths to create customer value and profits to invest in continued improvement. 3) Embrace change in the way we respond to emerging customer needs and a rapidly evolving business environment.” Regarding focusing on what matters to customers, the USPS plans to build on trusted relationships, communicate effectively, start with customer needs, and provide excellent customer experiences. In their words, “being "good enough" is not sufficient to increase customer loyalty and gain new business.”

Although it has a long and enduring brand heritage, it's no secret the United States Postal Service does not have the most sterling reputation. In January of 2006, Brand Channel wrote an article criticizing the brand ("USPS - Return to Sender") stating "presently, a country's postal service is a necessary evil." They noted that "...the brand image of the postal service is largely shaped by its customers' visits to the local post office, and occasional undelivered or late mail." And based on their documented experience (a visit to a Post Office in NYC near Columbia), the brand image was definitely not a positive one.
Since the USPS obviously needs to take some drastic measures to help improve their brand, Vision 2013, seems like it should be a way to help turn around this "brand gone bad." However, I wonder when exactly this 5-year-plan is slated to be kicked into high gear - now or later? If the rumors circulating the internet are true, being deceptive about your product offerings isn’t really a good start. Communicating effectively? Building on trusted relationships? People are going to think this is a joke. Well, then again, maybe it is...and if so, the joke's on us.

Saturday, September 27, 2008

Let's Be (dis)Honest: How Short-Sizing Can Impact Your Brand

De*cep"tion\, n. [F. d['e]ception, L. deceptio, fr. decipere, deceptum. See
1. The act of deceiving or misleading. --South.
2. The state of being deceived or misled.
3. That which deceives or is intended to deceive; false representation; artifice; cheat; fraud.

Usage: Deception usually refers to the act, and deceit to the habit of the mind;
hence we speak of a person as skilled in deception and addicted to deceit. The practice of deceit springs altogether from design, and that of the worst kind; but a deception does not always imply aim and intention. It may be undesigned or accidental. An imposition is an act of deception practiced upon some one to his annoyance or injury; a fraud implies the use of stratagem, with a view to some unlawful gain or advantage.
Webster's Revised Unabridged Dictionary. MICRA, Inc. 30 Sep. 2008.>.

Today I decided to talk about something that has been all over the media lately. Consumer deception. In regards to marketing, deceiving the customer is not generally viewed as a healthy practice, or something that gives you any sort of competitive advantage in the marketplace. So why is it many major companies use deception on a regular basis (whether or not they acknowledge they are doing it)? And why would these companies resort to such measures that could have a negative impact on their brand's reputation?

The answer is (surprise, surprise) M O N E Y. Most companies have regular, focused efforts towards cost cutting to help improve their bottom line and keep them competitive in the market place. Although this is a common exercise, in times of economic hardship and rising raw material costs, an organization may struggle to find creative ways to reduce costs without impacting their customers. Since the bottom line becomes the primary focus for survival, when all of the "good" ideas are used up, a company is forced to move on to the “tough choices.” I worked at an automotive company for seven years and am very familiar with the concept of cost reductions – and the fact some decisions are very difficult to make when keeping the end consumer in mind. For example, did you know leather seats in most vehicles aren’t 100% leather? If you have ever see the phrase “leather seating surfaces” or “leather trimmed” or “leather appointed” in regards to seats, that pretty much means the places your back and bottom touch on the seat will be leather, but the backs, lower trim and possibly sides of the seat are made out of vinyl. Through reducing the amount of leather in a seat, the manufacturer is able to save a ton of cost while still providing a durable seat that “appears” to be 100% leather. Is this deception? Definitely. The key here is in the way the seats are described to the customer. The wording doesn't clearly call out that synthetic materials are also used in the seats.

Deception is an embarrassing practice that companies have grown to rely upon. And it’s definitely not something that helps obtain or retain customers. So how often do we as consumers have the “wool pulled over our eyes?” More often than we might think. The automotive leather seats an... just one example. Another? In 2006, there was debate in the meat packaging industry over the use of carbon monoxide to help keep meat look bright red. Consumers were upset thinking this practice was going to "trick" them in to purchasing meat that wasn’t as fresh as it appeared. Recently, we have been reading and watching news reports talking about food companies short-sizing products to help protect their bottom line as the cost to produce products continues to increase. Andrew Martin of the New York Times reported (“Ate a Whole Pint? Check Again”) about a study Consumer Reports had done on this practice. "The magazine surveyed consumers in July and found that 75 percent had noticed that packages were smaller and that 71 percent believed that the main reason for the change was to hide price increases from consumers.”

Short-sizing isn’t a new phenomenom. In January of 2001 (yes, almost 8 years ago), Greg Winter wrote an article entitled “What Keeps a Bottom Line Healthy? Weight Loss.” In it, he discussed how Frito Lay had been putting fewer chips in a bag to help cut costs – i.e. conducting "weight-outs." He stated “It is a subtle way of earning more from everyday products without scaring off price-conscious shoppers, and it is quite legal as long as the package accurately describes what is inside.” But even if the box says how many ounces it contains, is the practice really ethical? Currently, when looking at some short-sized products placed side-by-side to their former model, you can't immediately discern a difference. An Apple Jacks box, for example, is the same height and width but is thinner on the sides and Skippy Peanut Butter looks the same unless you turn over the jar and compare the indentations at the bottom.

The sad thing is not only are these companies being deceptive in their short-sizing, but they aren’t even admitting they are doing something wrong. In fact, many claim these actions have been demanded by the customer. Back in June of this year, ABC 7 News in Arlington, VA conducted an investigation on products that had been short-sized. Kris Van Cleave reported on the following statements from companies. Karen May from Tropicana said the new 89 oz (ilo 96 oz) juice container “makes it easier for any consumer, especially children, to pour a glass of juice.” James Malone, spokesman for Georgia Pacific in regards to Brawny reducing the number of paper towel sheets from 110 to 88 per roll said “It’s a thicker towel…what the research showed us is they (the customer) needed to use fewer sheets per task.” A couple of weeks ago, CNN Money ran a story called the “Incredible Shrinking Cereal BoxThey reported “many food companies say their customers accept, and appreciate, the choices they must make to maintain a quality product in the current economic environment." In March, Brandweek quoted Paul Chibe of Wrigley’s with saying that customers wouldn’t mind smaller sized packages of gum because "To them the value goes up because they're getting a better tasting product in a better package. Price is not the way the consumer is looking at this.”

Not too long ago, I remember purchasing cereal that advertised “20% More Free!” at the top of the box. With the latest weight-outs that have been occurring, I wonder why these food companies haven’t been advertising “Now – with 25% less!” OK – I don’t wonder…that’s not something you want to advertise. So if you don’t want to advertise it (or want a bunch of people blasting it all over the web, on the news, etc. when they find out), why do it? Unless you’re talking about a waist-line, most consumers do not think of shrinkage as a good thing. This is America where portion sizes at restaurants are often enormous, fast food meals can be super-sized, and people buy food in bulk at places like Sam’s Club and Costco. So is this practice of short-sizing good for business? Carol Tucker Foreman of the Consumer Federation of America once stated ''If you want to keep faith with the customers, be honest with them.'' As marketers we know sometimes we tend to s t r e t c h the truth. We know that sometimes our ads contain fantasy and dreams, glitter and make-up. We airbrush out flaws. Why? Nothing really looks as good as we want it to and to the customer (we think) bigger, more, flashier is better, right? But is some of this deception harmful to our brands? The answer is a definite “yes.”

Walletpop quoted Harry Balzer of the Consumer Research Firm NPD Group. "People typically spend 10 percent of their income on food and that won't change, he said, so instead they're looking for deals, eating less or changing brands.” So if we think customers may start to switch brands, we panic. We can’t up the price on the current box (we think). So we choose to put less in or change the package so it holds less and see if the customer notices. But when consumers find out about this practice they may feel cheated and start thinking your brand is dishonest. Maybe this isn't the only thing you're hiding from them. Could your plant conditions be unsanitary? Maybe those natural ingredients you list on the box aren’t actually so natural. We know that due to the internet, consumers are now more educated than ever and aren't afraid to share their reviews of products/companies with everyone. So it will be interesting to see, as more and more of these short-sizing actions occur, which consumers will actually bite and which ones will bite back.

Tuesday, September 16, 2008

When Your Brand is a Teenager - Literally

Alright, so I admit part of this blog entry will border on something you would find on celebrity blogger Perez Hilton's website. But today I wanted to remind fellow "marketeers" of the risk of building a brand tied to an actual person – especially if that person is a teen who is growing up in front of the public eye. Prime example? Disney’s billion-dollar “Hannah Montana” brand.

Sure, many of us business types would love to have the golden touch as it appears Disney has had over the years. They are, first and foremost, very in-tune with their target market(s) and seem to have a knack for taking unknown actors/actresses and turning them into “the next big thing.” Not only this, but they are very good at copying successful models. For example, Disney tends to use a very similar franchise model for popular shows, expanding a lead-character's brand into clothing lines, dolls, DVD releases, novels, bedroom sets, perfumes, board and video games, soundtracks and even McDonald's Happy Meal toys. They've used this model for such characters as Lizzie McGuire, Raven Baxter and now Hannah Montana.

So what's the deal with Hannah Montana? For those of you who don’t have kids and don’t know much about the show, here’s a brief background. Debuting on the Disney Channel on March 24, 2006, Miley Cyrus, the daughter of Billy Ray Cyrus (who also plays her dad on the show) plays the role of Miley Stewart a.k.a. Hannah Montana. Miley lives a double-life, as a teenager (Stewart) and as a rock-star (Montana). If you've ever watched the show, it's definitely not geared towards adults (I'll admit I watched it once just to see what they hype was about and think most adults would find the characters and story lines annoying). But to kids, the allure of being able to change from a normal teenager into someone who is popular and cool is very appealing. In 2006, the show attracted 4 million viewers per episode, growing to 4.4 million viewers per episode in Season 2. Its popularity drove Disney to release Hannah Montana branded products (clothing, jewelry, apparel, dolls, greeting cards, iPod accessories, etc.) in December 2006. And in 2007, Hannah Montana went on tour in the United States, with Disney morphing her from a make-believe TV star into a real-life pop who caused concert venues all over the U.S. to sell-out and tickets to go for over $2500. Hannah's self-titled CD went triple-platinum.

As teenagers grow up, they start experimenting with their own image, interests, etc. Resultantly, tying a brand to a person, specifically a teen, makes it very difficult to keep control over brand image. Hannah Montana is a perfect example of this struggle. Over the past year, there have been several "scandals" involving Miley Cyrus. The first consisted of scantily clad (i.e. Miley wearing only underwear) photos posted on MySpace (later rumored to have been fakes). Then Miley posed for Vanity Fair wearing a bed sheet wrapped around her partially naked torso, outraging parents of fans. Disney had Miley issue a public apology and according to Page Six, a high ranking Disney employee was overheard saying: "You won't be seeing her for a while…The company is keeping her away from events and wants her to keep a very low profile for the next four to six months. They're trying to keep her contained." In an ABC News radio interview mentioned by the New York Post, Hilary Duff (a.k.a. Lizzie McGuire) was quoted as saying, "It's not something that I would choose to do, but if she did them, that's fine. I don't know how her fans would feel about it, but maybe they won't mind." But the point goes back to – this is definitely the risk for a company when banking their brand on a person.

Though Disney has relied on teen-based brands in the past (Raven-Symoné’s Raven Baxter and Hillary Duff’s Lizzie McGuire), a brand image being "scandalized" hasn't really been an issue. Why not? Perhaps it's because the teens playing some of Disney's other successful characters were wise...they knew the business of a brand image, what it means to be a role model and what it takes to appease fans (and their parents).
We look at Raven-Symone who at the age of 3 played the role of Olivia on “The Cosby Show.” She then moved on to “Hangin’ With Mr. Cooper” and then to Disney’s smash “That’s So Raven,” a kids show that ran for an almost-unheard-of 4 seasons. Her Raven Baxter character was even spun off - Raven became the lead singer of Disney's hightly successful "Cheetah Girls." Raven-Symoné is now 22 and enjoying a successful career post-Disney which includes a slew of music, TV and movie credits. Throughout her career she has led a pretty low-key life, avoiding the spotlight/gossip headlines and keeps her personal life what it should be – personal. Hilary Duff follows a similar mantra. In an OK! Magazine interview she states: "Everybody makes mistakes, but I just don't think it's for everybody to watch. It comes down to that I want people to focus on my work and I want to have my life completely separate from that."

So back to Miley Cyrus. As of late, Disney appears to have another Hannah Montana brand preservation issue on their hands. Miley, (who recently turned 16), is rumored to be dating Justin Gaston. An aspiring singer who appears as Taylor Hicks' love interest in her "Love Story" video, Gaston is 20 and an underwear model. (I'm guessing the fact that he's 20 and appears in photos half naked won't sit well with parents of teenage girls. What do you think?)

Sure kids need some guidance (so some of this brand image control should belong to Miley's parents). But as we all know, teenagers don’t like to listen - and tend to do the opposite of what we want – especially in cases of dating. So if you were Disney, what would you do? Would you work to hype up the next best thing and hope for the best (i.e. hope these new protegees are more like Hilary and Raven)? Or cling on to the successful Hannah Montana empire for a couple more years, teaching Miley (and her parents) about brand image sustainability (i.e. how she should learn to keep her personal life more personal)? My bet's on the former rather than the latter...

Tuesday, September 9, 2008

Picking a Buyer for Your Brand - The LÄRABAR Story

Let's say you own a small yet growing brand but unfortunately lack the resources and infrastructure required to help the brand become more mainstream. However, you've recently been approached by a large manufacturer who has offered to purchase your company. This manufacturer will be able to take your brand to the next level. Should this be a no-brainer decision? What do you do?

In this entry I decided to briefly talk about a few major things a brand owner needs to consider when deciding whether or not to sell its name/products to a larger company. A perfect example of such a case is Humm Foods, makers of LÄRABAR and founded in 2003 by Lara Merriken. LÄRABAR had been pursued by several larger manufacturers in the past. However, in June of this year, Merriken finally agreed to sell the company to Minnesota-based General Mills (Merriken will remain on board as LÄRABAR's Creative Director). I happened to stumble across an interview from July with Merriken on, a site managed by Dhrumil Purohit and home to raw foods enthusiasts.

For those of you not familiar with LÄRABAR, it is one of the few snack bars out there only consisting of a couple of ingredients. For example, the Cashew Cookie bar contains only dehydrated dates and cashews. Each type of LÄRABAR is made up of simple ingredients (dried fruit, nuts, spices), are a good source of fiber, provide omega-6 fatty acids, and contain no added sugar or preservatives. They are sold as single serving, healthy snack bars.

When the sale of Humm to General Mills was announced, many members of the raw foods community seemed concerned that the product, brand, etc. might change and took this announcement as very bad news. However, in reading the interview with Merriken, I thought this was a perfect example of well-thought out decision-making in considering what impact the sale could have on her brand and its products. Merriken took into consideration three
major factors (amongst other things) when deciding to sell her company/brand:
  • What is your brands' vision? Will selling to this company help your brand achieve its vision? - In the case of LÄRABAR, the brands' vision is to help enrich lives by giving people access to wholesome foods. General Mills helps LÄRABAR achieve this by providing them with a wider distribution base and the ability to increase production.
  • What are your brand's values? Does the company interested in purchasing your brand hold the same values? - Merriken states that General Mills "really 'got it' and 'got us.'" In other words, General Mills holds similar values regarding natural, organic, and healthy food offerings through their Small Planet Foods division which has been around for almost 10 years. (General Mills also has expertise in reaching consumers and changing to meet their needs/wants based on the fact it has managed to stay in business since the 1800's).
  • Will selling your brand change its image? - Since General Mills does not plan to change LÄRABAR's ingredients, name, etc. in any way and Merriken and her 25 employees will be joining General Mills with Merriken holding the Creative Director role for the division, there is little risk of LÄRABAR losing its strong brand image.

Excerpts from the "We Like it Raw" interview are listed below (for the full interview, click here); A press release related to the sale of Humm to General Mills can be found here.


Dhrumil: LÄRABAR is the most successful raw food bar. Your products are in so many stores and you have such a wide reach. So why did you sell?

Lara: I started LÄRABAR because I’m passionate about healthy eating and how it can enrich everyone’s life—not just the lives of those deep-rooted in the raw and natural foods communities. I believe the whole world, people from all walks of life, should have access to wholesome foods. There is no better company on the planet than General Mills to broaden the access to LÄRABAR worldwide. We feel proud about the job we’ve done growing our business, and we’re equally proud that General Mills has recognized the magic of LÄRABAR and, through its tremendous resources, wants to take us to a higher level and a greater reach that we could have never achieved on our own. Reaching people is what it’s all about. Natural, organic and raw food should not be a luxury for only a certain group of people. At LÄRABAR, we’re committed to sharing knowledge about positive food choices, improving not only the lives of people who enjoy our products, but also the lives of farmers who grow the quality ingredients that go into our products. That commitment will never change.

D: A few vocal voices in the community have raised questions about General Mills specifically. They feel that their products are not in alignment with the raw food movement and by selling the company to them you're "selling out." What does General Mills bring to the table that empowers the mission of LÄRABAR. Why go to General Mills or why did they come to you? Did you ever consider going to other companies?
L: LÄRABAR, over the years, has caught the eye of a number of large companies. But it was General Mills who really “got it” and “got us.” In the end, the caliber and integrity of its people really won us over. It’s impressive to consider that General Mills has been around since the 1800’s, and you don’t stick around that long without understanding and, more important, respecting the ever-changing needs of your consumers. In 1999, General Mills launched a new division of its company called “Small Planet Foods,” dedicated to natural and organic foods. You probably have seen its brands in grocery stores: Muir Glen and Cascadian Farm. LÄRABAR will be part of Small Planet Foods, and we’re thrilled to help expand more natural and organic food offerings available in stores.

D: Did you ever have any concerns that selling to a public company like General Mills would jeopardize the LÄRABAR product line?
L: No concerns whatsoever. I believe “stewardship” is a better word than “ownership” in describing the involvement of General Mills with LÄRABAR. This is my baby, and I would not have turned it over to just anyone.

D: This is the first major sale of a primarily raw food company to a larger public food company. You and your team are paving the way and a lot of people don't know whether they should be happy or concerned because this is all so new. Do you see this as a growing trend? Do you see more mainstream companies wanting to get involved in raw food products? Is this good for the overall health of the country.
L: Consumer awareness about the importance of good food choices really began to grow about a decade ago when retailers—both natural and conventional—started understanding and catering to the wave of the future. And what a great thing! I’m humbled to know that LÄRABAR is truly making a difference in the quality of people’s lives; the more people, the better. Is this a growing trend with other companies? I hope so!

Wednesday, August 27, 2008

A Question in Mixology - Should you tie politics to your brand name?

The brand-impact question of the day...Is mixing politics with your brand name a good idea?

Example #1: The world’s largest producer of frozen potato products, McCain Foods, is making an attempt to steal market share in the U.S. from Heinz’s Ore Ida (the current National leader). How do they plan to accomplish this? Through a new, politically themed ad campaign: “Why McCain should be in the White House.” Although most people may be reached by the campaign through print ads, the home-base for the campaign is McCain's website. Below are some "direct-quote" snapshots:

Whether you are a democrat or republican, we hope you are hungry because we’re about to change the way you think about McCain.

McCain Deals with the Big Issues

  • Defense – McCain potatoes will protect mealtime from the axis of ‘evil-doers’ –namely boredom and repetition.
  • Environment – Deliciously different McCain Potatoes means a clean plate, free of leftovers that compromise the fragile ecosystem of the dining table.
  • Economy - When you buy more McCain Potatoes, it creates more jobs. For us. What did you expect? Another stimulus check?
  • Energy - We’re not afraid to tell big oil “enough is enough.” That’s why every variety of McCain Potatoes is 0g trans fat.
  • Education - With McCain Potatoes, there will be no fry left behind. We promise.
    Democracy - McCain promises to stand up against all dic-taters and produce only good, honest potatoes.
  • Ethics - McCain will stand up for right vs. wrong. And serving the same old, boring potatoes is just plain wrong.
  • Faith - If you insist on waiting for some other brand of potatoes to wow you, we suggest praying.
    Immigration - Anyone who wishes to migrate from their current brand to McCain Potatoes can do so freely, and without any red tape.

Blue Vs Red: Why you should go for the blue bag

  • We believe everyone has the right to better potatoes. Don’t sit idly by while the other guy keeps rehashing the same old spuds.
  • We stand up against big oil. Every McCain potato product is 0g trans fat, and requires zero offshore drilling.
  • We don’t believe in business as usual. With so many unique flavors and cuts, McCain is clearly the anti-establishment.
  • We believe in America’s youth. With so many fun products for kids, there will be no fry left behind.
  • We’ll never, ever go negative. One look at McCain Smiles and you’ll know we’re not mudslingers.
    We believe in family values.
  • There’s no sense living in America if you have to pay an arm and a leg for good frozen potatoes. We believe in cuts for everyone.
  • Tax cuts are great, but crinkle cuts and wedges are so much tastier.

Join McCain Potatoes in our campaign for change! We have a big challenge ahead of us, and we can’t do it without you. Sign up now to get the latest campaign updates delivered right to your inbox, including press coverage, fun photos, hilarious videos, new product info and more. It’s quick, it’s free and it’s easy.

Example 2: In another case of tying a brand to politics, just today, Ad ran an article about Captain Morgan entering the presidential race. Ad Age states "the Captain's economic message calls for five-day weekends, and he's ambivalent about global warming because he wants to 'ensure the party stays hot, hot, hot.'...The alcohol behemoth is the official wine and spirits company of the Republican National Convention and the preferred wine and spirits company of the Democratic National Convention." In a campaign I believe is similar to something they ran in 2000, Captain Morgan is "putting the party back in politics." Besides Captain and his "entourage" attending key events, the main points of contact are a Facebook page and YouTube videos.

Campaign Analysis:
So...back to the question of the day. Should you tie your brand to politics? And if so, which is the better execution - Captain Morgan's -or- McCain Foods?
McCain Foods
Let’s start with the McCain campaign. Sure, it’s a clever play on current events and an overall more creative advertising campaign. However, in my opinion, tying your brand to a political candidate is probably not the best idea for long-term brand appeal. Why? Sometimes advertising does not send the intended message. The problem here is that the brand name is too closely tied to a political figure and some ads are using an impersonator of the political figure (McCain foods plans to run video clips and a national media tour featuring professional impersonator Frank Caliendo as John McCain). Why is this an issue? Although McCain Foods is not owned by Arizona Senator John McCain, some consumers may wonder. Also, McCain could lose appeal if John McCain loses the presidential race –or- even if he becomes President. Sure there is significant name recognition that has been built up by the John McCain for President campaign. However, recognition does not mean customers will buy your product. Another reason this is a risky move for McCain Foods is due to the consumer they are intending to target. Yesterday, David Shipley from the Telegraph-Journal quoted Mike Grossman, managing partner of SCC/Grossman, the firm handling the PR portion of McCain Food’s campaign. Grossman states, "Our brand positioning is designed to surprise and delight today's active mom…She's not home watching television. She's juggling lots of things, probably a job, certainly community interests and at the same time she feels like she needs to do something special at the dinner table to surprise and delight her kids." Identifying the target customer (busy mom, probably ages 30-45), it's essential McCain Foods knows how she feels about Senator John McCain before launching this ad. According to polls by Fox News, Lifetime Television (Every Woman Counts Campaign), ABC News/Washington Post and EMILY'S List , women currently prefer Obama over McCain.
  • Fox News (late July) - Reported Obama is winning among women under 40 by 13 points.
  • EMILY'S List (early August) - Regarding women voters, "Obama leads Senator McCain by an incredible 30 points among Gen Y, 11 points among Seniors, 8 points among Gen X and 6 points among Boomers."
  • Lifetime (early August): "More than half the female electorate (53%) hold mostly positive views of Obama...Women like Obama largely because of his personal attributes (35%), such as his intelligence, youth, speaking ability, honesty and energy....31% hold unfavorable views (of McCain)....Obama also holds an advantage among Independent women, who favor him by a twelve point margin (42% for Obama)."
  • ABC News/Washington Post (late August) - Obama has a 55-37 percent lead among women .

Although on the McCain Foods website, in small, almost-camoflaged, white font they do list a disclaimer ("Disclaimer: McCain Foods is Not Affiliated with John McCain For President," the disclaimer isn't prominent enough for most readers to notice. Yet another reason the company is taking a risk of a misinterpreted message. (If the reader clicks on the disclaimer a box pops up and states: "U.S. Senator John McCain is the presumptive Republicannominee for president. We are McCain Foods, the world’s largest producer of frozen potatoes and manufacturer of other quality food products. We share the same name as Senator McCain, but the connection ends there. Founded in 1957, McCain Foods is privately-held by a Canadian family that is not connected by commerce, kinship or any other way to the U.S. senator from Arizona. If you see Senator McCain associated with our brand or products, rest assured that it is just an election year marketing spoof and nothing else. Thanks for paying attention. We’re in the business of selling potatoes, not participating in politics. And the only endorsements we’re prepared to make this election season are for the products we produce. Vote for change. Go for the blue bag: McCain Potatoes.")

Captain Morgan

Next, let's look at the Captain Morgan's campaign. Although it doesn't garner marks in creativity (repeat of previous campaign?), the brand is continuing to convey a consistant message - i.e. offering up a campaign that matches the brand image (a promise of fun times, having a "little Captain in you", etc.). Besides this, Captain Morgan's campaign doesn't tie itself to a political candidate (i.e. people won't question whether or not the company/brand is making a political statement/ recommendation), and the company knows no one will really believe "The Captain" is actually running for president. The campaign is humorous, matches the intended audience's interests (uses Facebook and YouTube, promotes partying/a good time, etc.).

Final Conclusions

After looking at these ad campaigns, we are provided with one example of how mixing politics and brand name could be fun/effective and another that could be very degrading to the brand image. On Friday, the McCain Foods campaign kicks off nationally with a print ad in USA Today. So, "Soccer Moms," who will you be voting for? Do you have a "little Captain in you?"

Thursday, August 21, 2008

On Thin Air - Destroying Airline Brands Across the U.S.

OK...just a word of warning...this is going to be a long one.

The U.S. Airline Industry...a lesson in what to do if:

  • You don’t want a sustainable competitive advantage

  • You say "screw brand power"

  • You don't think consumer loyalty is important

Plan to nickel and dime your customers? Say goodbye to a positive brand image. In a survey conducted by the University of Michigan in early 2008, U.S. airline companies were found to have a 62% approval rating – the lowest given by consumers since the terrorist attacks on September 11, 2001. reported on the survey results stating “some airlines received survey scores in the low 50’s, which makes them less popular than the IRS.” J.D. Power and Associates also rolled out a study – The North American Airline Satisfaction Study - in 2007. The top airline according to the report was Continental, scoring a below-average 704 out of 1000 or, in grading terms, a C-. I’m sure any consumer who has flown recently is certainly not surprised.

For fun, I conducted a simple Google Search based on the key phrase “Airlines Suck.” There were >9000 search results. It’s no secret customers feel like the airlines – service providers if you would still call them that - are at war with them. And they’re not happy. But although everyone’s talking and complaining, no one seems to provide the airlines with an answer of how to fix this problem. Additionally, airlines aren’t exactly asking for help or realizing how badly their brand power has dissolved. Airlines have become brands we hate. So what’s the deal? Can any domestic U.S. airline turn itself around to become a brand we love and gain our loyalty? As a frequent traveler, I know if there was one airline that treated me like they cared and like a human being, I would probably pick them over the others, even if I had to pay a little more in the base ticket price.

Airlines are essentially a service company. But lately they seem to have forgotten what service means since they are so focused on their bottom line. Faced with rising fuel prices, airport take-off/landing fees, etc., they are losing money. We have seen multiple mergers and many bankruptcies and as customers, we know that they’re all struggling to keep their heads above water. But the problem is their passengers are struggling too. The U.S. economy, amid the housing crisis, fuel prices, rising unemployment rates, etc, is not exactly a picture of perfection. And since travelers don’t have any other options when it comes to getting to far away places quickly, they are forced to suck it up. Anyone want to try to figure out the confusing matrix that the airlines have created? Can you figure out which ticket price actually ends up being the cheapest?

Who’s Charging What and Why?
A little over a week ago, USA Today ran an article outlining the various fees U.S. airlines are currently charging. Below is a summary of what you can expect to pay...with some charges topping out at $250 on up. Just this morning, CNN Money reported United plans to start charging for meals on select international flights. It's definitely gone beyond the point of being ugly.

As consumers, many people wonder why airlines are all of a sudden charging these fees. Many airlines attribute it to the rising fuel prices that are consuming around 50% of the price of an average ticket. Regarding baggage fees, reports “…most of these transportation vehicles earn profits by transporting both people as well as cargo. Their profitability is dependent on striking an optimal balance.” Delta, for example, announced in July it would start charging $50 for a second checked bag. They claimed it wasn’t an effort to raise money, it was to discourage travelers from bringing a second bag. In other words, the fee is to get passengers to leave bags at home so they can sell more cargo space. One person, known only as “angry passenger,” commented on a message board. “These are passenger planes not cargo. If you want to haul cargo, get out of the passenger business.” I'm sure many passengers these days would say "Amen" to that.

These “a-la-crap” fees as I have heard them called, have become completely out of control. But what are some other non-U.S. airlines doing that have yet to be added to this list? British airline EasyJet has been offering a speedy boarding service allowing passengers to pay extra to be one of the first in line to board the plane – and thus have a larger choice of seats. AIRASIA X, in an announcement that (smartly) hasn’t been made by U.S. carriers, is reportedly considering charging passengers depending on their weight. Oh Lord. Next thing you know they’ll start charging us to use the restroom. Adult diapers anyone?

In the land of U.S. carriers, Southwest appears to be one of the only exceptions to the rule. CEO Gary Kelly stated “To survive, the industry is charging, for everything…and anything. Pillows, blankets, bags, paper, and even conversation with a human being…we still have affordable fares and we don’t nickel and dime our customers. You get free snacks, you get free soft drinks, you get free pillows…you get two free checked bags…and there’s no charge to talk to our wonderful reservation agents.” At least somebody remembers what customers mean to their brand.

Why Are Customers Angry?
Let’s look at some basic human insights to figure out why customers are so angry at U.S. airlines:

  • No one likes to suddenly be charged for something that was always “free” in the past. If it was always in the base price and it isn't really an option the customer "wants" to check the box for, why offer it up as one?
  • When you pay more for something you expect to get more. At a minimum, when you pay for a service, customer service reps who actually smile and act friendly, act concerned if your baggage is “lost,” are helpful when you need booked on a new flight, etc. shouldn’t be that difficult to come by. This is at the minimum...
  • Everyone likes having choices. The key here is in providing desirable choices – not “hold a gun to my head” choices. This is the age of consumer customization and co-creation and people are used to being able to customize their own a positive way. Why are consumers upset about being charged for their first checked bag? If you’re going on a trip for more than a couple of days, you will probably need a razor and more than 3 oz of some of your toiletries. Due to safety regulations, you can’t carry razors on board, liquids are limited, etc. So customers don’t feel like they have a choice – they have to check their bag and they’re being forced to pay for something that’s a safety regulation.
  • Remember the old phrase K-I-S-S? Keep it simple stupid? People don’t like information overload or too many combinations because it confuses them and makes them frustrated and angry. Having too many boxes to check when traveling is already perceived as a hassle? Probably not a good thing for satisfaction.
  • No one likes excess baggage – emotional or physical. Sure some travelers over pack. But some customers don’t want to (or are unable to) carry their suitcase around the airport during layovers, struggle dragging the luggage down the narrow airplane aisle where it constantly catches on seat armrests, or knock people out when trying to lift it over their head into the overhead compartment. For an average-sized woman or the elderly, the overhead bins are not exactly at an ideal height in which to place a 15+ lb suitcase. Telling them they have to pay when it's a physical issue for them makes them feel discriminated against.
  • Having easy access to water is pretty much seen as a given in America. Since you cannot bring your own bottled water/beverage through the security checkpoint and sometimes timing is tight for your flight, you really have no choice for a beverage unless you pull out some cash and hand it over to a flight attendant. Charging people for water, something they could have gotten for free from a water fountain, just because they’re a “captive audience” will surely cause some customer dissatisfaction.

Why You Don’t Hear About Customer Complaints in Airports
The International Herald Tribune quotes Mary Gilly, a professor of marketing at the University of California at Irvine. She states “…passengers have learned that venting their anger at an airline employee means that they may be escorted off the plane by the authorities, Gilly said. "You complain at Starbucks, you get a freebie," she said, "If you throw a fit at an airport, you could be picked up by the TSA.” No one wants to get kicked off an airplane or escorted out of the airport in handcuffs, especially when they’re in a hurry to get somewhere. So airlines, it isn't that we all are OK with your fees, we're just afraid of being "that person" who gets kicked out.

Competitive Advantage Anyone?
Anyone who has taken a basic course in business knows what competitive advantage means – earn revenues higher than costs. This competitive advantage can be achieved through cost or differentiation. In other words, offer the same services/products at lower cost or offer unique services/products. But what happens when you compete solely on price and you don’t have any differentiating factors? You can enter price wars and run the risk of pricing yourself out of business. You also haven’t come up with a business model that offers a sustainable competitive advantage – i.e. something that cannot be duplicated by your competition.

My first question is who is working in finance and marketing for these companies? Don’t they realize the importance of brand and how to optimize profits without turning off your key revenue driver – your customers? I’ve written about how customers these days value customizing their experience, but what the airlines are currently doing is not really the right translation! Mary Gilly states: "I think the airlines are being pretty disingenuous calling it 'à la carte pricing.' Please. This is not a Chinese menu."

Some Ideas for a More Business Savvy, Customer-Friendly Airline:
But wait!!! Edward Bastian, President and CFO for Delta, says "Airlines need to have a way to recover the cost of their product.” According to a World News investigation, around half the cost of many airline’s flights go to jet fuel alone. So I don’t think any customer would argue with the fact that airlines need to make some money to stay in business. We’re not saying to not charge for things, just do it in a different in the old way.

I know some companies would argue that if it's baked in their ticket price is higher and customers will walk to low-price/discount carriers like AirTran. Sure, you may have some customers who do this. However, right now, customers are so confused by the various fees, etc, and customer service is so bad, selecting an airline is like throwing a dart at a board where everything appears to be in the center. By moving towards some of these actions below, you're starting to separate yourself from the competition. Why else should airlines make the number of "choices" fewer? Most marketing and pricing folks know that when you are trying to figure out what to make "standard" on your product versus what to make into an "option," depends on how much you believe consumers will pay for that item. In other words, if it's something very desirable -and- it isn't something the competition offers as standard, you can guarantee it'll be offered to consumers for an added price. Looking at the airline selections, I don't believe any of these fall into this category. They should be standard.

Now on to the good stuff. For fun, let’s look at a small example, using United Airlines, to see what might help strike a balance between profits and customer satisfaction. These are just a couple of solutions to issues customers currently find the most annoying. So some fast facts:

  • On August 18, The International Herald Tribune reported United believes it can raise $1B in revenue for its various fees.
  • According to International Air Transport Association published figures, in 2007, United had 68.4M scheduled passengers carried. For the sake of simplicity, let’s round down and call that number 68M passengers.
  • United is currently charging $15 for the first checked bag. Thus, if every passenger checks a bag, it’s around $1.02B.
  • Since not everyone checks a bag, to get to the $1B marker, United is banking on people paying some of the "other" fees. I'm going to argue that they could actually earn more revenue by not having as many pick-and-choose options.

On Board Experience
I doubt any airline customer ever thought snacks were really “free.” They just assumed it was baked in to the price of the base ticket. Most people when they’re traveling don’t want to have to get into the overhead compartment or wrestle to get into their back pocket while elbowing the person next to them in order to get money out for a (generally crappy) snack choice. Also, many people these days don’t carry a lot of cash due to how many places now readily accept credit cards. And I’m sure the airline employees, specifically the flight attendants don’t really want to be cashiers. So what to do?

United currently offers a snack on flights at a price of up to $4. On the 20+ flights I’ve been on over the past few months, I have only seen a handful of people paying up for a snack (I generally have one flight each week, one during breakfast hours and one during prime dinner hours). So, for the purpose of this analysis, let’s assume 40% of the people on the flight opt for the snack (I haven’t been able to find a study that actually shows the take rates of snacks on a plane, but it probably would be interesting). Doing the calculation, $4x40%x68M = ~$109M. Not shabby. But, say there was $6 baked in to the price of a basic ticket to help cover snacks and non-alcoholic beverages. That’s $6x100%x68M = $408M. In other words, by going back to the “free snack” option and accounting for it in the base fare price, you’ve almost quadrupled what you would have received for snacks, you’ve reduced labor (flight attendants don’t have to handle money, airlines don’t have to go deposit that cash into the bank), you’ve appeased your customers who still want “free” snacks, and you now have a more accurate estimate of how many snacks you will need per flight.

Another way to enhance the snack experience is to give customers a choice. One of the highlights of flying the now defunct Independence Air is they would pass around a snack basket containing a variety of granola bars and special snack foods. The customer selected what they wanted on their own and due to being able to choose, it was an unexpected surprise and delight.

At the Airport
Baggage Fees
Although airlines may think charging people for their first bag is good thing and believe it may make people pack less, USA Today reported that having more baggage go through security makes the security process longer – and thus results in a higher risk of something getting through security that shouldn’t. As a passenger I also find it a major annoyance as overhead bins become extremely full and flight attendants ask passengers to even bridge-way check their laptop bags. C’mon airline people – if you’re carrying around a laptop with a bunch of important work information on it I am not going to be giving it up to be handled under the plane.

If airlines feel the absolute need to charge for the first bag, it should be included in the upfront price of the ticket. They could then do a program rewarding people utilizing online check-in, making it carry-on baggage only and crediting $15 back to a customer’s credit card when they use this service. It would also help give carriers a better estimate of how much freed up cargo space they may have many hours prior to each flight. I think by doing this, United would get closer to that $1B than by just counting on passengers to automatically check their first bag.


When airports are busy, check-in lines do not move along quickly. Why is this? Generally the airlines have minimal staff behind the counters (another cost-cutting measure). Things run fairly smoothly with the self-check-in kiosks until one person at the front of the line has a question that consumes an agent's time or one agent alone has to walk back and forth between 12 stations pulling out luggage tags and yelling out a customer’s last name and their destination. Sure the kiosk system is a step up from the agent handling everything, but why not take it a step further? Why can’t your luggage tag print out from the kiosk as well? People are intensely concerned their bags getting to the appropriate destination. We hate lost luggage. We're going to make sure we're holding the right destination in our hands. Through moving to this type of system, kiosks can be completely removed from the counter. The counter would then have two lines - one for dropping off baggage and one for issues/problems. This would help the process go along quicker and result in more satisfied customers.

One Final Idea That's Kind of "Out There"
Anyone who has used the internet is familiar with the use of banner ads. Since the airlines really don’t appear to care what happens to their brand names, then the issue of another brand name on their airline or seating area at the airport, etc. does not seem like it would be a major issue for them. As a result, what if the airlines started selling ad space? For example, for a fee, a company could “decorate” the outside of a plane with their image. Or an airline could display ads on the backs of tray tables. Might be an easy way to keep base ticket prices a little lower than the competition. Of course, on second thought...with how low customer approval is for airline brands, it may be a challenge finding companies who actually want their brand name attached to an airlines...

Just my thoughts.