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Thursday, August 29, 2013

Umbrella Brands and The Future


Back in 1994, Anglo-Dutch consumer products giant Unilever was about to celebrate its 75th anniversary. Prior to that time, Unilever did not have a huge presence with consumers. Like Procter & Gamble, the giant of consumer goods companies, Unilever let their individual products do the talking.

By 1995, all of that had changed. A Unilever logo was stamped of every package that the company sold. Take a look today. If you have Ben & Jerry’s, Breyers, Dove Soap, Lipton, Skippy, Suave, Vaseline, or Hellman’s in the house, you will find the Unilever logo prominently displayed. One person told me it was a way to lure potential investors to their shares. To me, that, at best, is a minor reason. It may be a way to rally the troops across the giant company who work for assorted brands and have their loyalties there. Unilever also culled their product list from 1600 to 400 at the same time so nervous employees needed some encouragement.

This concept where many products either possess or are easily identified as having the same name is known as an Umbrella brand (a few still call it a family brand). Great examples are Johnson & Johnson in baby care products and Colgate in dental care. Food king Nestle is also using their name on a wide variety of packaging.

Why do it? Well, promotion becomes less expensive and easier for products that fall under the umbrella branding. Also, it helps to launch new products as much of the public has already readily accepted the brand image of other entries with the same name. The seven pillars of Integrated Marketing Communications (IMC) can work more smoothly which is the entire point of an IMC program (pillars are Advertising, Promotion, Public Relations, Personal Selling, Database Marketing, Direct Response Marketing, and Publicity). New products are easy to identify by customers. When traveling, this is very helpful as the packaging and umbrella name helps you make a fast decision regardless of the culture you are in. So, umbrella marketing is much easier for the target market to understand.

Is there a downside? Different brands vary in quality and negative publicity for one entry can pull the whole roster of brands down a bit. You are truly only as strong as the weakest link in a chain to trot out a true but old cliche.

For the most part, this sounds great. Great for companies, for sure, as marketing costs almost have to decline over time and the advertising efficiencies will be significant as well. Where does this leave ad agencies and the legacy media such as TV, Radio and magazines? They have to be hurt by it. Talk to an old hand in TV. Right now, some 50% of package goods money spent is on promotion. Their TV spending, especially in spot TV markets, is way down from 15 years ago in many, many categories. As umbrella brands grow, the situation may get tighter. And, agencies don’t make as much money grinding out coupons for a “family of brands” as they would for producing and placing TV spots.

From a business standpoint, it also means that the big players will likely get bigger. By leveraging their brand via the umbrella approach, they can introduce many new products at a very attractive cost. For an upstart with no name identification, the cost of entry may be too great and the new brand could never launch.

Interesting, as Unilever and others implemented the umbrella, the historical leader in brand building, Procter & Gamble (P&G) did not. They like the independence of their brands and have nearly two dozen with a billion dollars in sales each. How many consumers know that Tide, Gillette, Pampers, Dawn, and Ivory all come from the same Cincinnati based company? A few of us in advertising and marketing do as do their shareholders. Yet, virtually no one refers to P&G brands as they do with Colgate or Johnson & Johnson.

During the recent Olympics, P&G ran some beautiful two minute spots thanking Moms around the world for helping their sons and daughters become Olympians. Some said this was the opening salvo in a campaign to embrace the umbrella concept. Others complained that because the P&G name did not show up until the end of each execution, they failed at branding. Since then, I have seen no evidence that they are abandoning their long term approach of building strong independent brands.

Look for more umbrella branding in the years to come as line extensions among major players accelerate and companies get even more ruthless about cutting marketing expenses. Some, such as P&G, may remain apart from the trend and still thrive.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

Wednesday, August 21, 2013

What Business Are You In?


Recently I was cleaning out some boxes in my attic. I stumbled across one that I had not opened in decades. It contained my notes, a few textbooks, and some articles that I had copied during my MBA program at Boston College some 40 years ago. When I saw one of the articles, I stopped dead in my tracks, laughed, and reread it immediately. The article was by Theodore Levitt, from The Harvard Business Review (HBR) in 1960 and was entitled “Marketing Myopia.”

Some of you may have heard of Levitt. He is widely credited with coining the term “globalization” in 1983.  Actually, if you dig a bit, the New York Times was using it in 1944 but a more accurate description may be that he popularized the term in an HBR piece entitled “Globalization of Markets.” Current writers on global business, such as Tom Friedman, owe a debt to him.

The other thing that he is famous for is the article “Marketing Myopia.” The basic thrust of the article was that businesses had a better chance of succeeding if they would zero in on meeting their customers needs rather than on selling products. Also, he felt that many told themselves that they were in a “growth” industry which lead to complacency.

The article according to some business historians marked a watershed moment. Many said that this was the beginning of the modern marketing movement. Most businesses, according to Levitt, did not really understand what business that they were really in. The paper had some wonderful examples of such confusion and others chimed in as a million copies of the article were distributed throughout the business world. Movies did not prepare and react properly to TV growth because they felt that they were in the motion picture business. No, they were in the entertainment business and should have embraced TV when it was in its infancy. Warner Brothers got it eventually and then other studios followed suit.

Oil companies morphed into energy companies as a result of Levitt’s trailblazing. He said profoundly,  "People do not actually buy gasoline. What they buy is the right to keep driving their cars.”

Railroads were a great example and I quote at length “the railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today (1960) not because that need was filled by others (cars, trucks, airplanes, and even telephones).......They let others take customers away from them because they assumed themselves to be in the railroad business rather than the transportation business.”

All these examples showed that they were product oriented rather than customer oriented. Did people get it? Some did and some did not. Think of the giants of recent years. No one is more laser focused on the customer than Jeff Bezos of Amazon. And, how about the late Steve Jobs. He did not design the laptop or the smartphone--he made them easy to use for the everyday person. The focus was 100% on the consumer.

This may seem obvious in 2013 but it was revolutionary stuff in 1960! Back then the emphasis was mass production of products and lowering unit costs. Levitt went on to make an important distinction that many ad agencies today still do not understand.

He stressed that selling is not marketing. “Selling concerns itself with the tricks and techniques of getting people to exchange their cash for your product. It is not concerned with the values that the exchange is all about. And, it does not, as marketing invariably does, view the entire business process as consisting of a tightly integrated effort to discover, create, arouse, and satisfy customer needs.”

Customer-creating satisfactions were his key to marketing success and it had to permeate an entire organization. The best marketers do this be it Amazon, L.L. Bean, Apple, Procter & Gamble, ESPN, or Harley Davidson.

Mid sized and small ad agencies like to produce good advertising. That is fine but long term the trend is away from it (see Media Realism, The Slow Death of Advertising, 5/13/13). WPP Chief Sir Martin Sorrell, said that a full third of their billing is digital rather than conventional and some clients are clamoring for a 50% allocation to digital. That leaves the mid-sized players in a tight spot unless they shift gears and relentlessly focus on the ultimate consumer. Levitt used the hackneyed example of buggy whip manufacturers to make this point. When the automobile came on stream, no amount of improved product development was going to save the industry. Had it considered itself a transportation firm, maybe they could have produced tires or fan belts as those industries emerged from the car explosion.

People who still talk nearly exclusively of making great TV and radio spots (and believe me, they still exist) need to get real. The pace of change is rapid and they need to adapt or go the way of the buggy whip manufacturers.

As Levitt put is so well in 1960, “The best way for a firm to be lucky is to make its own luck.”

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

Friday, August 16, 2013

Leadership


Leadership is usually defined as organizing a group of people toward a common purpose. What qualities do you need to be a leader? Well, business is full of intangibles but after decades of observation, I would say that nothing is as intangible as leadership.

Back in the 1990’s some CEO’s had achieved almost rock start status. Today, perhaps only 83 year old Warren Buffett still maintains that status. It is interesting to observe that there has been clear progress in production techniques, marketing, strategy and usually finance in recent decades but leadership still appears no better than average in most companies.

There is no question that a motivating leader is very valuable but as times change and business conditions evolve, perhaps a different skill set is needed as well relative to what worked in the past. If you look at treatises on leadership, they invariably mention the following as necessary attributes: Technical competence, ability to absorb concepts, size up talent well, have a proven track record in their field, people skills, sound judgement and strong character. It is hard to argue with that list but going forward the last few may be the most important. These skills are what industrial psychologists often refer to as “soft skills.” Those who have soft skills can bring passion and significance to the work which helps to retain great employees who may be highly sought after by other companies.

 One thing that is prominent today in discussion of leadership really mystifies me. Today, leaders are said to really need to be “authentic.” If you want people to trust you and follow you, you need to be yourself. People should not have to worry about what you are thinking. Did you know that managers and executives can now go to weekend seminars on authenticity training? Forgive me, but how does one learn to be authentic in a weekend? No one has been able to isolate or distill charisma which allows a leader to get their team to follow them to hell and back.

There is no question that there are different styles of successful leadership. Canadian researcher, academic and management guru Patricia Pitcher boiled it down to three major types:

Artists--they are imaginative, visionary, inspiring, emotional and entrepreneurial
Craftsmen--steady, sensible, predictable and very trustworthy.
Technocrats--cerebral, detail oriented, uncompromising and hard-headed.

Each type of leader is ideal for certain situations. Looking at this it became very clear to me why most ad agency mergers or buyouts fail or have huge issues. The first type of leader, the artist, would be ideal for a boutique agency and help grow it. If the company survived he would have to at some point bring in a craftsman, to manage the growing enterprise. Should the artist sell to a technocrat who runs a holding company there is going to be an enormous clash of cultures.  The technocrat may be a low grade financier rather than a visionary so his bottom-line fixation can drive the imaginative artist nuts. Also, the artist has not taken orders from anyone in 25 years and will not like his or her expense report questioned.

At the same time, the Technocrat becomes the indispensable man during hard times. If a retrenching or downsizing has to occur, the Technocrat will do what has to be done and not look back.


So leadership is not simply charisma. If someone can refine some type of leadership theory it will easily be the key development in business operations of our new century.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

Monday, August 12, 2013

Jeff Bezos and The Washington Post


Last week the media world was rocked by the sale of two major newspapers. John Henry, the principal owner of the Boston Red Sox bought the Boston Globe from the New York Times. And, a bigger surprise was when Jeff Bezos, the founder of Amazon, purchased The Washington Post for $250 million. Amazingly, in a city such as Washington where leaks are rampant, the deal was kept under wraps.

Many people have weighed in on the Post sale in the press and I have heard from friends and readers with wildly different point of view on the subject.

Here are some comments plus my spin on it:

“Bezos is a multi-billionaire and he thinks it would be fun to own the Washington Post.”--when I first saw this and then heard it all I could think of was a wonderful scene from Orson Welles film masterpiece, “Citizen Kane.” Young Charles Foster Kane bought the New York Inquirer and he sent a telegram to his narrow minded guardian ending with “I think it would be fun to run a newspaper.” Well, Jeff Bezos, in my opinion, did not purchase the Post just because it would be fun. Look at his impressive track record and he probably has some plan of where to take the paper. Also, keep in mind that Bezos PERSONALLY purchased the Post. It will not be a division of Amazon.
“Bezos bought the paper to have a platform for his own political views.” I doubt it. He has promised editorial independence and I believe him. Also, he appears to be libertarian leaning with a liberal approach to social issues and a conservative stance on fiscal issues. That does not jibe at all with the current Post editorial positions.
“Bezos will make the Post profitable quickly.” All major market newspapers are struggling financially but he cannot turn the ship around immediately. My best friend made a very perceptive comment about Bezos. She said, “look at what he has done over the last 20 years. Sometimes he lost money on certain Amazon ventures but he stuck to them and succeeded over the long pull. He may get results but not immediately.” Well said! He has been both a patient and brilliant retailer.
“Bezos will make the change to 100% digital immediately.” Maybe but maybe not. He will certainly improve the Post’s digital product which is not nearly as effective as The New York Times or Wall Street Journal’s online offerings.
“The Post is not relevant in Washington as it once was. Online entries such as Politico or The Huffington Post are where insiders go for news.” There is some truth here. Today, the Post, for all its past glory, seems like a legacy media entry. He may be able to bring them in to 2013 pretty quickly.

What do I think? Well, Jeff Bezos was one of the major “disruptors” of the last 20 years. He changed the way that we shopped and maybe stretching things a bit, he changed the way that we read with Kindle. I know of no one better suited to integrate news content with commerce. He will be willing to try new things that many publishers will not nor will they think of them. Also, he is buying a property that has an expertise at home delivery just as Amazon does.
Can Jeff Bezos save the newspaper industry? Not as we know it. Yet, he can take a venerable property such as the Washington Post and help it survive and maybe prosper in a digital world.

I wish him and The Washington Post all the best.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

Thursday, August 1, 2013

Binge TV Viewing


The trade press is full of stories these days about “Binge TV Viewing.” Most media specialists define binge viewing as “shutting yourself from the outside world and watching an entire season of a TV series or mini-series in a short timeframe.” Some say that binge TV viewing is transforming the way Americans and now the British watch series TV.

A few years back when the term first became prominent the fragmentary research revealed an interesting bi-modal skew to the demographics of binge viewers. It tended to be college students and people over 60. I was personally first introduced to it by a college student, home for the holidays who was watching a few seasons of “The West Wing” over several days. Today, it appears the appeal of binge viewing goes across the entire demographic spectrum.

Netflix has added fuel to the binge TV fire by releasing some excellent original series such as “House of Cards” and “Lilyhammer”. What they did differently from other media properties was releasing all episodes on the same day which some feel almost encourages binge viewing. When you return to  Netflix after an episode or two, the next episode is right there ready to begin your next viewing marathon.

Many people have written to me about how they binge. Some say that when they are sick, they like to pass the unpleasant hours with an absorbing series. A few people get in to it while unemployed. One fellow told me he watched all the existing episodes of “Law & Order” during a two month siege waiting for a job offer. Others say they prefer to watch a series all the way through rather than once a week. Some watch old mini-series--a reader in the Southwest wrote to tell me that he does a “Lonesome Dove” weekend each year where a group of friends come over, eat some Tex-Mex food and watch and discuss the famous western.

Some psychologists say that binge viewing is dangerous as people seem to be dropping out of the mainstream. My students who binge tell me they often do it with a group of 8-10 people who discuss the series at length. For them, it is a fun social event. Popular choices to binge beyond the made for Netlfix entries include “Homeland”, “Boardwalk Empire”, "Treme”, “Breaking Bad” and “Lost”. My local librarian tells me that old Masterpiece theater series are popular with the Social Security set.

Critics say that binge viewing is terrible as it ruins cliffhangers. Well, many of Dickens’ novels were serialized chapter by chapter in British magazines and often a chapter would end on a cliffhanger. It did not seem to hurt readers who years later swallowed the whole novel far more quickly (although as students many of us felt it was a boring slog). Many people say that they enjoy binge viewing as they get to watch on their own schedule. Others claim that they understand better when they binge as they have no time to forget details as they do if they must wait a week for the next episode.

Nielsen is said to be tracking binge viewing and will publish results in the future. That is fine. Whispers are that much of it is done on mobile devices. I am not sure about that especially if the binge event is also a social event.

All the noise about binge viewing (and I am part of it) to me misses the point. The key takeaway is that if you are binge viewing you are largely excluded from advertiser supported TV for a few days to a week. If you binge several times a year, it is as if you took a commercial vacation for a month or two annually.

If binge viewing gets a lot bigger, and it could, this is one more significant attack on advertiser supported TV. If you do not have the opportunity to see commercials when you do a substantial amount of your viewing, TV has to suffer as an effective advertising medium.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com