http://www.lubicom.com/marketing_blog en 1@lubicom.com Copyright 2010 2010-05-04T14:49:00-05:00 http://www.lubicom.com/marketing_blog/eye_on_the_recession_a_spate_of_mergers_acquisitions/ http://www.lubicom.com/marketing_blog/eye_on_the_recession_a_spate_of_mergers_acquisitions/#When:14:49:00Z In the past few days, there seemed to be a significant surge in the number of high-profile mergers and acquisitions, raising the question of how much of an effect the recession had on these developments. To be sure, M & A’s occur during more stable economic periods as well, but a closer look suggests that the current economic climate is having a direct effect on the mergers and acquisitions now in the news. The on-again off-again proposed merger between Continental and United, two of America’s largest airline carriers, may be a good example of a recession related deal. Surging fuel prices, a decline in business travel and mounting debt forced Continental to look for a way to stabilize the company. On the other hand, the acquisition of Palm by Hewlett-Packard probably would have occurred in a more stable economic climate as well. Palm had simply lost its competitive edge to a new generation of smart phones, namely Blackberry. While most of us focus on the “big-name” mergers and acquisitions, economists say that they have increased dramatically amongst mid-sized and even smaller firms during the past few months. Typically a merger affords both companies the opportunity to create a new entity that is more efficient, cost-effective and ultimately profitable. The same is true for an acquisition when a floundering company is acquired by a healthier entity. There is most definitely a connection between some of the mergers taking place nowadays and the recession. In 2008, after the housing crash and the collapse of many of the nation’s largest financial institutions, there was no discussion of mergers for such icons as Lehman. It was simply curtains for those companies. For the banks that failed, the FDIC made sure that they were taken over by other banks. The story is quite different for businesses that managed to stay afloat during the recession, albeit in a weakened state. Many accumulated debt in the belief that the turnaround was just around the corner. They were betting that the recession would be short-lived and that they would soon revert back to profitability. But that did not happen and worse, some economists were predicting permanent changes in consumer habits that all but sealed the fate of many troubled businesses. I recently tried to convince two food importers that it would be in their best interest to merge. One business was fairly successful with a staff of a half dozen people but was not growing. The other was a husband and wife team working out of their basement that found it hard to keep up with their business. While the husband traveled to secure new products, the wife managed the home front. The couple felt that it was time to move out of the basement and consider renting space and hiring a clerical person. Upon closer examination, it seemed that both companies were not only importing some of the same lines; they pitched the same accounts. But here’s where egos got in the way. The couple could not fathom an arrangement where they would give up their independence. The other company was convinced that the couple would simply “steal” their accounts and then go on their own again. It is some of these human aspects of companies that often prevent mergers that make sense from happening. This is true in even the large mergers when two well-paid CEO’s with huge egos bud heads in negotiations for a merger. Even the question of who ultimately becomes the CEO of the merged company can become the impediment to a deal. Sometimes it becomes a focal point in the negotiations, especially when a Board of Directors feels that the acquired company has the better CEO. In the Continental-United deal, the new entity will go under the United name but the Continental CEO will preside over the newly merged company. Tapping into some of the best personnel in each of the merging companies is one of the major advantages of a merger. Many merged companies not only capitalized on the large pool of talent that often comes along with a merger, they actually found the right team to take them on the road to profitability and beyond. The recession forced many companies to look at their long-term prospects of success. While many believe that they could weather the storm on their own, others began looking for strategic partners to help them devise long-term solutions. This may seem like a process that needs to take place periodically in the life of a business, but it is far more urgent in a recession since the prospects of raising capital are not that clear. What is clear is that signs of recovery not withstanding, there is a growing trend towards mergers and acquisitions and that many are directly related to the recession.  2010-05-04T14:49:00-05:00 http://www.lubicom.com/marketing_blog/saying_youre_sorry_in_marketing/ http://www.lubicom.com/marketing_blog/saying_youre_sorry_in_marketing/#When:14:01:00Z The marketing media has recently focused a great deal of attention on mistakes and not just any mistakes, miscalculations that cost millions of dollars and often the very existence of a brand. This begs the question of what to do when you realize that a mistake was made. The way Toyota handled its recent debacle with stuck accelerators and SUV’s flipping over is certainly not the way to say you’re sorry. Some marketers say that it isn’t necessary to say sorry if the actions of the company speak for themselves. In other words, if word gets out that the problem was promptly corrected, so why draw additional attention to the problem. Others say that apologizing for a mistake is necessary irrespective of how the misstep is being handled. Twenty-five years ago the coveted Coca Cola Co. made a monumental mistake in trying to get customers to change to New Coke. Competitor Pepsi successfully got people to believe that the new product was launched so that Coke tastes like Pepsi. That is true, especially since Coke believed that customers wanted a sweeter soft drink. The public rebelled and before long the company said it was sorry, not in words, but in launching Coca-Cola Classic, essentially bringing back the original taste. Sometimes saying you’re sorry comes when a company redirects its marketing, realizing that they may not have connected with the customer. Many companies launch their advertising and then sit back and wait for the returns. Trouble is that companies may wake up too late that their marketing has either created a yawn or in fact. Palm, which at one time was the leader in hand-held devices, is struggling to stay alive. It tried last year to make a comeback with the Pre. A prominent marketing publication said that “the advertising was flawed in that it didn’t create an overall image for Palm, nor did it hammer home the products’ features.” Today, Palm is to trying to right itself (a subtle way of saying sorry) by teaming at long last with Verizon and addressing some of the flaws in its original message. A client who had raised a considerable amount of money from investors couldn’t find the right words to say he was sorry for some bad decisions. Instead, he blamed many external factors for his debacle. In an attempt to turn things around, he sought nearly $1 million for a short-term marketing campaign. But his new advertising never acknowledged his earlier mistakes and the customer was unforgiving. Whether Toyota or Tylenol, crisis management always calls for contrition but sometimes the message gives the impression that every effort is being made to make sure that they are not too sorry. One marketer compared this to the apology a child might give for hitting another child. “I’ll say I’m sorry but he called me a name.” Here’s the way one marketing professional put it: “Think of a true failure (Bud’s “Drinkability” campaign comes to mind) and the client marketers, agencies and consultants responsible don’t come close to admitting it before blaming one another, losing budget, or getting consumer reaction that’s so overwhelmingly negative that silver-lining analyses will no longer cover it up. We usually don’t stop driving until someone peels our fingers off the steering wheel.” What is perhaps most interesting is that if said properly, saying you’re sorry can work wonders. While the public might be unforgiving to someone who tries to rationalize mistakes, they are quite prepared to cut more slack for someone who is truly sorry. And saying sorry alone is not enough. It is important that assurances be given that the same mistake will not be made again. When is Toyota going to tell the public how they restructured their quality control so that the mistakes that were made are not repeated? And when will Toyota actually utter the phrase “We are truly sorry”? I am not sure what exactly Ford told the world when its ill-fated Edsel failed. I am almost positive that it did not include a line like this: “Our marketing people and engineering team totally miscalculated that you, our cherished customer, will like the Edsel. We are truly sorry for this mistake and pledge that we will in the future gauge your attitudes before producing a new car.” The letter might further say that the company has established a new consumer research division to directly touch base with customers. You might say that the same would be true for Coke. All they simply needed to say was that they were sorry about their failed thinking that the customer wanted a sweeter soft drink and that they would never make such a mistake again. It seems that some believe that good marketing means never having to say you’re sorry. But the fact is that it is the worst type of marketing. 2010-04-26T14:01:00-05:00 http://www.lubicom.com/marketing_blog/eye_on_the_recession_preparing_for_the_recovery/ http://www.lubicom.com/marketing_blog/eye_on_the_recession_preparing_for_the_recovery/#When:14:03:00Z The whispers about a possible economic recovery are growing louder with some economists flatly saying that the recovery is already here. They base it on what appears to be a significant up tick in consumer spending and word that some industries, including hi-tech have begun hiring again. More significantly, it appears that even those consumers that took it on the chin during the recession have settled into a new reality and are no longer expecting the bottom to fall out. And then there is Wall Street, which has made a spectacular recovery. Ironically, the one chain that seemed to have done well during the recession, Wal-Mart, appeared to have a down quarter while rivals like Target, Costco, and Trader Joe’s were all reporting increased sales. What this seems to indicate, economists say, is that many consumers may be slowly returning to pre-recession buying habits and are not necessarily buying cheaper non-brand items from Wal-Mart. There are indications that Wal-Mart will change its strategy by lowering prices in many categories and perhaps not offering as much of a variety of brands that are clearly not winners. If a recovery is indeed on the horizon, there may be some opportunities for people affected by the recession. For example, a job counselor told a radio audience recently that it would be wise to resubmit resumes to companies that a year ago said they were not hiring. The rationale is that there are indications that the same companies that were laying off people 12-18 months ago were beginning to hire again. The counselor even suggested a phone call to former employers, just to indicate your availability. He said: “There is no shame in telling a former boss that you are still available, especially since he is the reason that you are around.” There are, in fact, indications that some firms are rehiring former employees because they are already trained and know a great deal about the company and the trade. In a way, the same may be true for businesses that lost customers due to the recession. There is nothing wrong with checking in on old customers who just may be ready to resume doing business. In fact, a popular business newsletter suggested early on in the recession that businesses not loose contact with their customer base, even those that have left. They suggested sending out a periodic newsletter, information on special promotions, and, of course, holiday greetings. Larry, a broker for a high end printing company, lost more than half of his customers in the past year and a half. Most of them have moved to less costly printing companies. His take home pay, based largely on commissions, was half of what it was just three years ago, causing enormous hardships at home. His wife, caring for two small children, returned to her job as a schoolteacher. Larry, always the creative type, continued to send his customers regular “cute” e-mails with updates about his family and always made sure to briefly discuss a job that he was handling. Every few months he would pick up the phone to call his former customers “just to say hello.” In the last few weeks, Larry’s persistence began to pay off as some of his old customers suddenly began placing orders again. “I never gave them a chance, even for one moment, to consider an alternative vendor to our quality,” said Larry. When his company realized that there appeared to be life again, they lowered prices by more than 20%, which turned out to be an important catalyst in bringing back nearly 30% of the customers he had lost. If we are indeed on the threshold of a recovery, is there a way to prepare? I counseled a “discouraged” worker to dust off his resume and to attempt once again to reach out to prospects that he had last touched base with two years ago. Discouraged, because this gentleman has not actively looked for a job in more than a year and a half. It appears that a young woman who was laid off about eight months ago did not loose out when she e-mailed her old boss periodically just inquiring about how the business was doing. She politely wrote in one of her e-mails: “Believe it or not, I still have an emotional attachment to the company and am just wondering if things have improved.” The response she recently received was that they were interested in talking to her about perhaps returning part-time. Businesses too are carefully planning their own recovery with selecting new products and services that are more in tune with the times. One fashion chain store that was a favorite with older women has recently moved to recraft their image for a younger clientele. A coffee chain came up with a promotion offering a discount for a second cup of coffee. Most economists do not believe that the recession will get worse. They are encouraged by what they see on Wall Street, on Main Street and on Every Street. One business publication openly wondered whether some people are so mired in a recession mentality that they will miss the recovery. Hopefully, you will not be one of them! 2010-04-19T14:03:00-05:00 http://www.lubicom.com/marketing_blog/marketing_and_sales_perfect_together/ http://www.lubicom.com/marketing_blog/marketing_and_sales_perfect_together/#When:14:22:00Z It occurred to me that some businesses may actually be making a choice of sales over marketing. They believe that marketing may be too abstract, certainly when compared to sales that have a more immediate result. Hire a salesman, the reasoning goes, and you will soon count the successful “hits.” Invest in marketing and you may end up throwing “bad” money after “bad” money. This is particularly true when a company works with limited funds. A food company client looking to boost sales was engaged in just such an exercise. The president of the company was being pulled from both sides. A senior marketing consultant opined that his company would be far better off investing in long term branding and marketing while a fiscal adviser retorted that he “always had time to risk money in marketing.” In an ideal situation, there should never be a situation where a choice has to be made. Sales are a function of marketing and a company seeking to build a profile or brand a product needs both sales and marketing. A veteran salesman in the fashion industry shared some of his experiences with sales and marketing. In his view, the two are inseparable. He couldn’t fathom selling products that were not properly branded or marketed. An insurance salesman made it clear that selling products that were properly marketed can make all the difference between success and failure. To sell products that are not known means that the salesman will not only have to make a pitch for the sale but will also have to educate the potential customer about the product or service. The insurance salesman says that a sales call for a non-branded product can add as much as a half hour, cutting into the number of pitches, potential sales, and ultimately commissions. On the other hand, with a well marketed product, the sales pitch comes down to highlighting some specific features like cost or service. The customer may already be convinced about quality, integrity, and benefits of buying the product or service, which makes a huge difference. The same holds true for fundraising professionals who without branding have to sell an institution or cause, but when properly marketed it comes down to the pitch for money. One fundraiser told me that if the prospective donor does not know anything about the cause, “I first have to sell myself and then go on to sell the institution I represent.” What the fundraiser said about selling himself is what makes the challenge of relying purely on sales even more daunting. Not only does the salesman have to make a case for the product, he must also establish his own integrity. The best marketing and sales efforts need to always be in sync with one another. The effective salesman requires well crafted materials that will help in the sales effort. The fundraising professional needs great descriptive material to properly sell the institution or cause. The food company client had no intention of investing in marketing materials even as he decided that hiring a salesman would take precedent over a marketing program. He seriously believed that the salesman would use his experience and what he called “gift for gab” to win him many accounts. But the salesman soon realized that in a changing world that was increasingly focused on marketing and technology, even the best salespeople needed to somehow take advantage of marketing opportunities. This was particularly true in the highly competitive food industry. The insurance salesman actually had some additional insights into the synergy between marketing and sales. In working for one of the large insurance companies, he had the advantage of having the marketing done for him. He pointed out that “knowing that I will have all the marketing support I need enabled me to focus on the quality of my sales efforts.” It is extremely important that when a company has both a marketing program and a sales effort that the two work hand in hand. Eli, a salesman for medical equipment, used materials that were developed by the parent company. Over time, he found that the materials did not exactly fill his needs and he began to develop his own material on his Apple computer. When the company learned of his actions, he was sharply reprimanded for deviating from “the look we project throughout the country.” Eli fired back, pointing out that the materials did not address common questions of doctors and other personnel. He pointed out that competing materials were far more concise and had better graphics. Fortunate for Eli, the bosses listened and eventuality consulted with him prior to developing new materials. In the final analysis, anything that helps move a product from manufacturer to end user is part of marketing and that obviously includes sales. 2010-04-13T14:22:00-05:00 http://www.lubicom.com/marketing_blog/eye_on_the_recession_second_income/ http://www.lubicom.com/marketing_blog/eye_on_the_recession_second_income/#When:15:26:00Z A column I wrote in this space several weeks ago generated an unprecedented response. The subject was the competition between younger and older people for the same scarce jobs. Much of the feedback that I received revolved around personal experiences of people who felt that they were unfairly victimized because of their age. Several were young people who wondered how you can get a job that calls for experience without getting the experience. There seemed to be a common thread that related to the hardships many families face as a result of the recession, ranging from layoffs to business failures. Many of the people seemed to find the answer in a “second” income. Americans have long become accustomed to the concept of two incomes in a family but increasingly more spouses have pitched in with some kind of income producing venture that helps the family bottom line. Without getting into the social implications for society, I heard of a number of stories that may be worth sharing. David, a 31-year old father of three, lost his job as a production manager for a trade publication. After six months of job-hunting, he was still not any closer to a job. A job counselor advised him to take some courses in sales with the idea that there were many sales jobs available. It turned out that the compensation for most of the offers was based on commission with little or no fixed salaries. Eve, David’s stay-at-home wife had started to dabble in a home-based graphics business focusing on a specific industry. She called the money her business made “spending money” and had little time to either plan or actually expand the business. It was at this point that David came up with what he called “an insane idea” to try to build up his wife’s business. He had after all invested the time in the sales training. That was eight months ago. David indeed developed the business, is no longer looking for a job, and the couple is now seriously considering a move to a nearby office building and hiring a clerical person. Joe, a manager in a small machinery parts business, was having increased difficulty in paying bills. At 30, his two children were in pre-school and the cost of tuition alone was “choking” him.  His wife worked part-time at the office of a local dentist but he was increasingly worried about his job. His boss had already notified the staff that sales were off by about 20%. That’s when an idea hit him. Perhaps he could work out some arrangement with his boss to sell the parts on-line. Thankfully, his boss dismissed the idea and agreed to share in the profits provided that Joe made the investment. He did, and left his job devoting his energy to his new successful business. For many people, a “second income” means taking on another job. A local yeshiva recently hired a Jr. Accountant for Sundays to do journal entries and prepare reports for the accountants. A restaurant hired a mashgiach (kosher supervisor) to replace their full-time mashgiach during weekends. The challenges of producing enough income for a household are ever-present but so much greater in a recession. It requires a bit of creativity and “out-of-the-box” thinking like David and Joe, whose answers were right in front of their noses. I recently read about a company that sells amenity kits to hotels and corporations on the West Coast. The gist of the story in an in-flight magazine was that the company had gone “green” and was selling the hotels products that were environmentally sound. There was one line in the article that caught my eye. It spoke about the nephew of the boss who had been laid off from a computer consulting job and decided to expand the business to the Central states with great success. Al, a self-employed real estate broker had fallen on hard times. At 57, he was having difficulty finding a full-time job and his wife who had worked most of her life suffered from crippling arthritis. Here briefly is his story, in his own words: “I was at the point where I was ready to accept the fact that I would have to rely on benefits just to get by when I took stock of my experience. I realized that I knew many building managers and owners and that they would occasionally ask me for a good repairman. I hired two handymen that were looking for work and started to call and visit all my contacts. In the last four months, I have been averaging $30,000 a month in repairs, enough to pay my bills. I still, here and there, make some money on brokerage.” A second income, whether for self or a spouse, is obviously not for everyone. Many people’s life circumstances prevent them from even considering a second income, but for those who can entertain the idea, it is a good way to beat the recession. There are many people whose careers were launched in a down economic climate because they had an idea that worked out. 2010-03-26T15:26:00-05:00 http://www.lubicom.com/marketing_blog/the_new_optics_in_marketing/ http://www.lubicom.com/marketing_blog/the_new_optics_in_marketing/#When:16:24:00Z Ever so often a new term emerges in marketing that becomes an operative concept in the field. There was a time when “spin” dominated the marketing profession, although it was often thought of in a derogatory way. Putting a spin on something was not necessarily thought of positively. Spin was looked at my many as a defensive measure and not as a positive marketing concept. Now “optics” is the new boy on the marketing block. It is being used to describe the appearance for something. Talmudic students should have no difficulty in recognizing the new term. The chazal teach us that appearance can be every bit as problematic as the real thing. We are not permitted to drink almond milk in the same setting as meat because of “maaris ayin,” which essentially is optics, or the way that it would appear to the naked eye. Since almond milk looks every bit like cow’s milk, the casual observer would deduce that the person consuming the milk was mixing milk and meat. So is optics like spin? No. There is a basic difference between spin and optics and I am almost certain that it is being discussed in marketing and public relations classes throughout the country. If Toyota wanted to spin what happened with their presumed stuck gas pedals, they could concoct a story like the mats need to fit snugly under the pedal or they could affect the pedals. Every part of the strategy now focuses on the mats, with expert testimony, studies, testimonials, letters from the president, and even expensive media advertising. I am sure that the media would routinely refer to this as the “company’s spin” on events. Spin is used by politicians as a way of explaining an unpopular position or even personal behavior. The concept of Optics was recently covered in an essay by Ben Zimmer (March 4th) in the New York Times Magazine. Here are the examples he used: “When President Obama responded to the failed airliner bombing while on vacation in his native state of Hawaii, some Republicans claimed it was “bad optics.” “Hawaii to many Americans seems like a foreign place,” the Republican strategist Kevin Madden told CNN. “And I think those images, the optics, hurt President Obama very badly.” A month later, the shoe was on the other foot when the Republican National Committee held its winter meeting in, yes, Hawaii. Then it was the party’s chairman, Michael Steele, who had to answer questions about the “optics” of gathering the party faithful at a beachfront resort in Waikiki.” Optics can be the new spin, which essentially says that “it doesn’t matter what we say; it’s how it will look.” Thus, for professionals managing a crisis, the imperative would be “optics” and not spin. But marketers say that optics can also be part of a strategic plan from the outset. They say that it need not be a remedy like spin. It can be a well conceived plan to market or publicize something that will be viewed a certain way by the public. In fact, how it will be viewed is the most important element. Back to Toyota, instead of blaming anyone like the stuck pedals, the company announces a new master safety program that will not only prevent the repeat of the stuck pedals but will be a revolutionary new safety program. Imagine a built-in computer program that warns drivers when any part of the system is not working properly. Great optics since it shows that Toyota does care about the safety of its customers. A social service organization that served thousands of disadvantaged clients was having difficulty raising funds to pay for expenses not covered by government grants. Somehow the agency was not getting its message across that it was indeed serving some of the most disadvantaged clients, helping many poor and indigent and that it needed the extra money to cover amenities that government did not pay for. As plans were made to hold an auction as part of a fundraiser, the public relations consultant was looking for the optics that would tug the hearts and hopefully the purse strings of the donors.  The decision was made to post many photos of clients being served around the room and to have at least two of the clients join the auctioneer. The concept of optics is still very much in its infancy although marketers were always conscious about perception. The difference is that instead of being integrated into a general marketing concept or even in spin, now there is a term that focuses on how it appears to the eyes of the customer, client or the public. If this is all somewhat confusing, think of optics this way.  Marketers are at long last thinking about how you see things and not how they would like you to see things. 2010-03-22T16:24:00-05:00 http://www.lubicom.com/marketing_blog/eye_on_the_recession_are_consumers_taking_back_what_they_gave_up/ http://www.lubicom.com/marketing_blog/eye_on_the_recession_are_consumers_taking_back_what_they_gave_up/#When:21:19:00Z It is commonly accepted that the first to suffer when a recession hits is luxury items. The housing market which fueled the economy in the ‘90’s was amongst the first to be hit. It took with it a slew of other industries, including construction, finance, and real estate. The automobile industry was next and then came fashion, furniture, travel, and even food. Consumption of red meat, for example, fell by about 3%, some of it due to health concerns, but much of it directly related to the recession. I recently read about a middle-class family of five with a gross income of $88,000. While the husband had a job as a deputy foreman in a paper manufacturing plant, his wife held a part-time job as a registrar in a local college. Both husband and wife learned early on that there would be no raises this year and a bonus of $3500 that the husband received in 2008 would not be forthcoming. They had planned to purchase a mini-van to replace their gas guzzling large American car and they were long overdue for a paint job. When the recession hit, they scrapped both plans. Some economists speculated that consumers spent about 20% less in a recession than they do during the good times, mostly on luxury items. The cumulative effect on the economy is, of course, what makes a recession so devastating. It obviously takes its toll on retail and rising unemployment. Many of them subscribe to the “domino theory” of where one industry after the next is affected. Many industries seemed to be well prepared to deal with the loss of business. Airlines cut back on flights, offering travelers fewer seats while raising prices on some premium seats like business class. Hotels shut down restaurants, closed floors and even cut back on newspaper delivery. Retailers resorted to their usual mix of promotions and discounts. Looking back, there is no questions that those that were proactive and introduced some cost-saving measures as well as special incentives to consumers were able to mitigate the change in consumer habits.  On the other hands, those that took a wait-and-see attitude in the hopes that it would be a short recession suffered the consequences. Washington’s attempt to stimulate the economy through the Stimulus Package and the Cash for Clunkers program had an immediate effect in many areas, but as it now turns out short-lived.  The economists who carefully monitored these developments as the recession progressed are now backtracking to see signs of revival. The US Commerce Department said that the retail and food services sales tally for February rose to $355.5 billion, up 0.3% from January and 3.9% from February 2009. Retail sales are watched closely by economists, as the sector makes up 70 percent of the nation’s gross domestic product. They were particularly noteworthy because of the horrendous weather that much of the country had endured this winter. Overall, sector by sector improvements were noted, with the exception of automobile sales which dropped 2.0 percent in February, as sales of vehicles fell to 100,027, an 8.7 percent drop. Gas stations saw sales jump 0.3 percent on higher prices in the month. Restaurants showed a 0.9 percent sales jump, food and beverage stores showed a 1.3 percent improvement, clothing stores up 0.6 percent, general merchandise was up 1.0 percent, sporting goods, book and music stores rose 1.2 percent, home improvement stores were up 0.5 percent and furniture retailers increased sales by 0.7 percent.... Passenger revenue for domestic and international flights rose 1.4 percent in January from the same period in 2009, the Air Transport Association said. The ATA—which represents the largest U.S. airlines—reported airline cargo traffic was up 17 percent in December from the same period in 2008. So is the recession over? When you look at these figures, you can definitely see an upward trend. Perhaps the biggest gain will be in consumer confidence that things are indeed improving. It may very well be that our family that had contemplated a paint job and a new car may be ready to take on at least one of these. In addition to renewed consumer confidence, say economists. There has been a shake-out of sorts in almost every sector. For example, a fewer number of restaurants can conceivably recover some of the lost business from restaurants that have been closed. Airlines with fewer flights may be able to fill more seats at higher prices. The American Automobile Association is predicting an increased in travel this summer, but that may be to fewer hotel rooms. “Recessions in some way,” said one economist, “act like a filter that allows better run-businesses to surface to the top.” The evidence is that he is absolutely right, but it may be a bit premature to declare the end of the recession. What is becoming abundantly clear these days is that many consumers are preparing to take back what they gave up, and that is very good news. 2010-03-15T21:19:00-05:00 http://www.lubicom.com/marketing_blog/how_to_stay_the_leader/ http://www.lubicom.com/marketing_blog/how_to_stay_the_leader/#When:13:50:01Z Marketers have long suggested that the most coveted position in marketing is to be the leader. “Being the leader,” said a noted professor in marketing, “is like being the first man on the moon.” Some leaders were so ensconced in their leadership role that a whole generation used them as the generic term. For example, Scotch Tape or Xerox.  Imagine what it is like to wake up one morning to find out that you have been dethroned from a pedestal of power and prestige. There was a time when Kodak was king, not only in selling the lion’s share of cameras but also virtually dominating the film business. Another brand, Polaroid was the leader when it came to instant photos.  It was only a few years ago that Palm was in the coveted position of being a leader. It was a brand that at one time defined a whole generation of hand held devices that served as phones, contact lists and organizers. It had also become the generic term even for other brands. People said “put in your Palm” even if the device was another name. But then came Blackberry which never looked back. Palm rapidly fell from grace and after many delays finally made an attempt to win back market share with several new products but analysts say that it was a case of too little too late. Still flush with cash from its earlier heydays it invested into two models that it had hoped would at least put it back on track in terms of being competitive, but from all indications that is not to be.  Marketing analysts have long debated the cause and effect for failed leaders. One theory says that being on top often distorts reality. Executives with huge egos believe in their invincibility and then are too slow to recognize change. The heads of Toyota refused to even speak to the media after it was revealed that their cars had serious production problems. It was only after mounting pressure from Congress and the public that the Japanese executives showed up to attempt to defend their safety record and to pledge change. Some leaders fail to make progress on a new generation of demand, especially when competitors do recognize the need for change. So while Kodak was simply perfecting its cameras, a new generation of digital technology passed them by, not to speak of the new cellphone era with its built-in camera technology. The inability of these companies to look into the crystal ball leaves them in a position of passiveness that ultimately leads to their decline. Clearly, Palm lagged behind in its technological development to move on to a new generation of hand held phones and more. It allowed Blackberry not only to win a lion’s share of new customers but even loyal Palm customers. It did not offer its own customers a natural transition to the next generation of Palm. It is interesting to note that of thousands of new patents filed every year with the US Patent Office, only a small percentage of the products ever make it. Experts say that some of them fail because the time it took to develop the product was time used by a competing product that was already ready with a “new” more advanced product. The ability of a leader to move with the times defines a brand that will stay the leader. Companies like IBM have successfully made the transition, largely as a result of very effective and successful research and development programs. The stress of maintaining a leadership position is ongoing, witness companies like Microsoft who is in a constant battle with Apple to gain the upper hand in technology. Leaders, say marketing experts, are often defined by how they relate to the public. Their ability to be an educator and communicator are important qualities in developing the perception of a leader. Palm may have failed on that account as well. One of the criticisms leveled at Toyota’s executives is that they took their customers for granted and rarely ever took the trouble to communicate with them. Like Kodak, Palm had no reason to believe that they would not stay the leader. It is almost impossible for them to prophesize whether a competitor was planning a product that would simply relegate them to the history books. The only thing that leaders can do is to continue to develop new technology or new products in the hope that their innovation will carry the day. Yes, there is a certain element of luck, but some leaders fail simply because they are not tuned to the desires of the public and as a result lag behind in development programs. It takes good research to understand what product enhancements could get consumers to buy the next generation of products. Palm developed the Trio because people expressed frustration with having to carry more than one device: a Palm organizer and a cellphone or perhaps a beeper. But while it may have addressed that concern, it did not effectively deal with e-mails the way Blackberry did.  Emerging as the leader in any category is difficult enough, but remaining the leader for a prolonged period is even more complicated, as Palm and all those icon brands that preceded it will tell you. 2010-03-08T13:50:01-05:00 http://www.lubicom.com/marketing_blog/eye_on_the_recession_when_the_young_compete_against_older_workers/ http://www.lubicom.com/marketing_blog/eye_on_the_recession_when_the_young_compete_against_older_workers/#When:03:46:00Z A payroll company that was set back somewhat by the recession was looking to hire a manager to sell a new product that it had developed. After an extensive search two leading candidates emerged. One was a 24-year old ambitious young man with little experience, but with a “great deal of fire in his belly” (described as such by the owner). The other was a 52-year old seasoned manager, a victim of cutbacks at a large Wall Street firm. The company had suffered a drop of 20% in business in the past two years. It had lost two major clients and many other clients scaled back as they reduced their labor force. As a result, the company nearly a year ago was forced to reduce its own staff. But for the past six months, business picked up somewhat as the two partner owners tried to figure out how to bounce back. The new product was its answer, but it needed someone to manage the sales of the new products. The two leading candidates were representative of the competition for jobs that are scarce. The younger applicant was looking to anchor himself in a company with a bright future, hoping that he would gain valuable experience. He was willing to toil hard to make a good impression and to get his career underway. The partners were very impressed with him until they met the older candidate. The former Wall Street executive has been looking for a job for over two years. As he put it, the last two years were the most trying of his life, completely upsetting the lifestyle that he and his family were used to for the better part of two decades. After two years, he realized that he was not destined to return to his former status and that compromise was necessary, including taking a drastic reduction in his salary. He desperately needed to work and more importantly he wanted to take some of the pressure off his wife who had taken on another job just to help pay the bills. The partners instantly realized that he was qualified for the job, perhaps even over qualified. He would require no on-job-training. He fully understood the challenge that lie ahead and instantly made the partners feel comfortable. But even at a reduced salary, he would be considerably more expensive than the younger candidate. One of the partners worried that this would not be a long-term position for the seasoned executive. He figured that as soon as something better materialized, he would leave, despite the assurances that he gave that he would be there for the long haul. The choice for the partners was clear but for me it pointed out one of the most worrisome consequences of the recession. There are two groups of people competing for a limited number of jobs. Younger people often find these jobs out of reach since they do not have the experience of the older workers. They are faced with the challenge of gaining experience that they simply cannot get. Older workers (older than the 20ish group), on the other hand, are faced with the recession environment where companies are looking to save money by hiring younger and less expensive workers, albeit at a price of training and perhaps not receiving instant efficiency. They are often challenged by companies to accept a paycheck that is far less than they received previously or that can allow them to live comfortably. One such worker told me that he had accepted a job that paid him 30% of what he was getting at a previous job just so that he “can go to work everyday.” The experience that older workers have provides them with a distinct advantage in that they can often fill a job quickly and efficiently. They are also more flexible in that they can work on projects or take on consulting jobs. An important “selling job” for them is to point out that they can multi-task, which is extremely important to many companies operating in a recession environment. This might help them secure a salary that is more acceptable in terms of their lifestyle. For the younger job seeker the key objective is to go to an interview prepared. This includes doing the proper research on the company, learning additional skills that will add value to their potential employment, and accepting challenges where the results can be clearly measured. I know of many job applicants who have been offered jobs after successfully completing a project that was important to the company. So, which candidate did the payroll company choose? Not the answer you expected. They hired the younger worker for the full time position and the older applicant as a consultant who would guide the project and train the new hire. The company promised that if the new product succeeded, they would hire the former Wall Street executive to a senior full-time position. A Solomanic solution, except that for the consultant who still has to believe that he will one day be back in a full-time position that affords him the dignity and the compensation he once had. If competition is good for business, it is certainly not a blessing for the many people looking to secure a livelihood. 2010-02-26T03:46:00-05:00 http://www.lubicom.com/marketing_blog/whos_who_in_marketing/ http://www.lubicom.com/marketing_blog/whos_who_in_marketing/#When:16:24:01Z Leafing through a local weekly newspaper, I noticed an ad that read: “It’s 2010; Do You Know Where Your Marketing Is?” It went on to offer “free consulting” on brand image, but appeared to be more of a design firm’s quest for customers to redesign their logos and corporate image in general. On occasion, people turn to me for advice on a professional that could help with them with their marketing, which actually led me to write this column. While marketing has sometimes been defined as the “process of bringing a raw product to the end user,” the actual execution of marketing is not that broad. That is to say that not everyone in the manufacturing pipeline is a marketer. Consider marketing as a manufacturing process that has many workers on the line. There are the people who conceive and develop an idea or product. They are surely in marketing since they have the task of assuring that the product will be successful in the marketplace. They have many tools at their disposal to evaluate the potential success of a product. The next marketing person might be the designer of the product, more specifically its packaging. Once again this is a person who must deal with the presentation of the product. Here too research is essential. What kind of package will attract the attention of the consumer? How will the product look on the shelf? Continuing on this “line” is the person who is responsible for locating the target consumer and then to find the right medium to let the consumer know that there is such a product and most importantly that there is a direct benefit to purchasing this item. There are actually many people on this line. They include graphic artists, media experts, public relations specialists and just about anyone who is responsible for flagging the product to consumers. In some instances there will be a marketing manager with the specific task of managing the marketing program. Many universities offer a degree in marketing management, an important function in many companies and at larger advertising agencies. These agencies will typically have separate departments for many of the marketing functions, including research, creative (concept development and coordination of the creative product), copywriting, graphics and design, media, and traffic. All these disciplines may work as a team with the addition of an account executive that directly interfaces with the client. In addition to some of the functions described above, an integrated marketing campaign will also include public relations, promotions, and of late social marketing. What is interesting in marketing is that it in may resemble an auto assembly line. There are people who put on the right rear door and others who are responsible for the hood, but someone who is not visible may be the key person in putting together the automobile. It is not the engineer or the plant foreman. It is the senior executive whose responsibility is to stay focused on the big picture. The key person in successful marketing and by extension a successful business is the strategic marketer. This is the person that has a broad knowledge of all of the disciplines but most importantly is responsible for the positioning of the product. This is someone who has the ability to forensically analyze the product, to understand consumer behavior, to be fully in tune with the demands of the time, and be able to think down the pike. The strategic marketer must be someone who can function in long term thinking. I recently wrote a business plan for a new product that seemed to have a lot going for it. Looking for investors, the entrepreneur projected revenues and expenses over a period of five years. A savvy potential investor kept focusing on the “external factors” that might impact the product. He meant dealing with such contingencies as a recession that is still around five years hence, an unstable political environment, new technological advances that might effect the product, and perhaps problems with management. A good strategic marketer might be able to factor those contingencies into a long-term plan. Many people who purport to be in marketing may actually be fulfilling a marketing task but are by no means strategic marketers. A good graphic designer might know how to execute a visual presentation to the consumer, but it might not be consistent with the correct positioning of the product. Even an ad agency might not have the handle on the full marketing picture. It is merely the vendor to carry out the advertising part of the marketing plan. Sure a salesman is part of the marketing team, but rarely a strategic marketer. Marketing is so broad a term that it often confuses people. It can become the answer to many business problems if it is strategic. To engage in marketing without a strategic plan is simply to throw bad money after bad money. I have seen it so many times. People decide on a marketing approach that is strategically incorrect, thus burning many dollars. Anyone who is seriously looking at marketing ought to also seriously understand what marketing is and what it is not and that is strategic. 2010-02-22T16:24:01-05:00