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!