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Customer Manufacturing Update |  |
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Dear Mitchell,
Welcome to the February 2006 Customer
Manufacturing Update. If you have friends or colleagues who would appreciate receiving this e-zine, feel free to forward a copy to them using the "Forward e-mail" link at the bottom of the e-zine.
Advertising is a highly effective method for spending money fast. (Certain of last weekend's Super Bowl ads proved that once again.) No matter the size of your company, or the size of your budget, advertising can be an expensive proposition. Unless, of course you consider what happens without effective advertising ... namely, nothing. This month's white paper looks at how to improve the likelihood that you will have effective advertising, regardless of your budget, or the type of advertising media you use.
Last year in February we wrote our first Super Bowl ad article for a Customer Manufacturing Update. We thought we would do it again this year. As we said last year, because of its visibility, history of advertising significance, and the nature of people desiring to express an opinion (us included), much is made of these advertisements. Countless pundits chime in with their views on the merits, or lack thereof of these 30-second extravaganzas. Again this year the folks at godaddy.com found a way to get a lot for their money. While their ad really said nothing, the publicity they generated by being censored 14 times before their ad was accepted, and the ad itself are likely to have driven traffic to their website, which was undoubtedly their goal. So, good for them. They set their advertising priorities and made it happen. Super Bowl ads are a unique situation. It's really the only time that Americans get together for the purpose of watching ads. This creates:
There is a difference between a good TV ad and a good Super Bowl ad. Comedy and story lines (think of the baby Clydesdale) do much better in the Super Bowl advertising environment than in a low-involvement, low attention home-viewing environment. No one tapes or Tivos this game and zaps the commercials later. As they say, and as we discuss in this month's white paper, at the end of day you have to decide what the purpose of your ad is, and then create something that does that. Then you can ask two questions:
If you can say yes to both, good for you. If not, then the question is: what are you going to do about it?
One of our favorite companies disappointed this month. Not because they lost money for the first time in their history, but because they are afraid they can't raise prices enough to fix it. We're talking about Jet Blue. In our mind one of the most differentiatied airlines in the sky. And yet, they don't believe they can compete if they don't match price with their undifferentiated competitors. We find this unbelievable. However, the CEO of Jet Blue was quoted as saying that with fuel prices where they are, Jet Blue would need to charge $10 more per seat to break even. $10? That's it? And you don't believe your customers are willing to pay you $10 more for the value-add of Jet Blue? Maybe we're wrong and there is no value-add. But then again, we keep looking at what is being bought, and the airline industry, like most commodity oriented industries, focuses on what they are selling, which is almost always a commodity.
That was the headline of an LA Times article about Abercrombie & Fitch that appeared in January. This teen clothing retailer, that had seen a downturn in sales since 2000, turned it around in 2005. However, the focus of the article was on something even more interesting in our opinion. Most pundits today opine (we think this is an odd word, but it does fit here) that everything is becoming a commodity, and you need to get used to it by cutting your costs and your prices. Somebody forgot to tell Abercrombie and Fitch. It is de riguer in the retail trade (in the U.S.) to have post-Christmas sales to move out the remaining merchandise. In reality, it has become expected to have pre-Christmas sales as well. Shoppers appear to have been "trained" by the retail trade to wait for the inevitable sale. Again, somebody forgot to tell Abercrombie and Fitch. Post Christmas (and pre-Christmas too) Abercrombie and Fitch did not have a clearance sale. Their sales gains year over year during the Christmas season approached 30%. When you have what people want to buy, you don't have to put in "on sale," just have it "for sale." As we have said for years, if you continue to look at what you sell, most things are commodities. If you look at what the customer is buying, most everything does not need to be a commodity. For more on understanding what the customer is buying versus what you are selling, read for the first time, or re- read ...
We appreciate any feedback you can provide to help us make sure these Updates give you value each month. Feel free to respond to this e-mail with any comments or suggestions for future topics or ways we can make these Customer Manufacturing Updates more valuable to you.
Thank you for your interest, and if we can provide
any
additional assistance in sales, marketing, strategy, or
innovation to help you increase your sales,
let us know.
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