Green Marketing

In a recently announced action, Enterprise Rent-A-Car decided that they would begin renting hybrid automobiles to customers and would open "Green Branches" where nearly 60% of the fleet would by hybrid automobiles.

Green marketing is an extremely powerful and pervasive tool in todays marketplace. The environment is increasingly becoming an important issue to many consumers and companies, and we watch the effects of global warming on our climate and many of our natural resources. Because of this, many companies, including companies that deal primarily in the automotive industry are deciding to "go green" and introduce environmentally friendly initiatives.

In many ways, this is a very similar marketing strategy to cause marketing. Many companies use cause marketing to align their organizations with causes such as reducing breast cancer, AIDS awarness, etc. With green initiatives, companies are trying to align themselves with a more global cause, environmental protection. While green initiatives and cause marketing differ in that with green initiatives companies are generally not forming an alliance with a specific group or organization, it attempts to affect the consumers in a similar manner. By convincing the consumer that they believe in a cause (environmentalism) that is important to the consumer, they believe that they are more likely to gain business from that consumer.

According to the article:

"Those who are looking for a value in terms of dollar for dollar will absolutely not get hybrids," said Brian Chee, the head automotive analyst at MyRide.com. But he said there's a growing market that's willing to shell out an extra $40 for the hybrids during quick vacations.

That statement alone helps to show why green initiatives are so powerful. Simply having these cars, which would provide minimal cost savings for the consumer over such a short period of time, could gain the company an extra $40 per rental.

Starbucks

A company once thought of as being on the cutting edge of the coffee industry is taking a step back, to handle increased competition from unlikely rivals.

Recently, companies like McDonalds have noticed how much customers seem to enjoy "high profile" coffee blends such as the ones that they are used to buying from places like Starbucks. In response to this, McDonalds released their own premium blend of coffee, as did places like Dunkin' Donuts. This has spelled trouble for Starbucks. Whereas they used to be perceived as expensive but high quality, seeing the cheap high quality alternatives from places like Dunkin and McDonalds has started to erode their market share. People are choosing the convenience and price of places like McDonalds and Dunkin over the high quality, expensive coffee at Starbucks.

Faced with this competition, Starbucks recently announced that they would be adding a new blend, called "Pike Place Roast," that more closely mimics the McDonalds and Dunkin offerings. This, they hope, will bring back some of their customers that they have recently lost in the coffee wars to McDonalds and Dunkin. Interestingly, though, is going to be how customers will perceive the coffee blend being sold at Starbucks, and whether it will actually help their business. In the past, Starbucks blends have been considered a bit bitter and strong by their customers, but customers began to see this as a sign of quality. The Pike Place Roast is lighter in flavor, mimicking cheaper blends of coffee, which I believe will begin to erode Starbucks' image as the highest quality establishment. In the end, this could be a very risky move for the company, and one that could hurt their brand and long term profit potential.

Sonic: America's Drive-In

I was faced with an interesting situation today, which sheds light on a very interesting marketing issue that we have been studying. The setting is Sonic, at the Pittsburgh Mills out on Rt. 28. Sonic is a reasonably good fast food restaurant, serving burgers, chicken sandwiches, and delicious drinks in a "drive-in" motif. I have been to Sonic restaurants all around the country, and truly, the biggest reason to go to Sonic is the drinks. They offer fantastic fountain drinks, including my personal favorite, cherry limeade.

So here's the situation. I'm at Sonic, and I have made my order - this time, it was a breakfast burrito, an order of tater tots, mozzarella sticks, and my favorite, a cherry limeade. After making the order, I sit down to eat and begin enjoying what is normally pretty good food and a delicious fountain drink. Everything was fine, more or less, aside from the jalepenos that they put on my breakfast burrito. I finished up my cherry limeade, and look to one of the servers at the restaurant, and tell them that I would like a refill. "We don't do refills," she exclaims. Now, this was a huge surprise to me. I have been to Sonics all around the country - I'd estimate this was my 15th visit to a Sonic restaurant - and the free refills on the drinks is one of the primary reasons I go there.

Anyways, I try asking a few other workers if they would get me a refill, to see if I can skirt the system a little bit, but it doesn't work. Eventually, without my asking, the manager comes out and says "someone was asking about our refill policy?" I speak up, and explain to him that in all of my visits to Sonic, I had never been to one that doesn't offer free refills, and was clearly a bit upset by this. He continues to explain their policy, and how they're not allowed to do it because of a rule from the Allegheny Health Department (which I found curious, considering I have received free refills many times in Allegheny County), and eventually gives in and gets me a free refill.

Thinking about this from a marketing perspective, though, it raises a very interesting issue. I came into Sonic on this fateful Sunday with a perception about the restaurant - that I would be able to get a free refill. Now, despite the fact that my perception was wrong, it was very important that Sonic could handle it. Sonic is, in this case, in the business of managing customers perceptions of their chain and what they offer. No matter what a customer is expecting, if their expectations are not met, it is unlikely that they will come back. Had the manager not refilled my drink at the end of our argument, there is absolutely no chance I ever would have eaten there again. In order to better handle the perceptions of the customers, Sonic should post their policy on refills, which is clearly not in line with other restaurants in the chain, for customers to see. That way, after customers order, they will not have a perception that is different from the reality of the real situation. By doing this, they will create happier customers, and customers who are more likely to come back.

Uggs and Self-Concept

Following my teams presentation on Uggs, I got to thinking about why people really do make purchases after all. What really motivates people to buy? I think in a high percentage of fashion purchases, people make them based on a few dimensions of their self-concept. The two dimensions that I'm going to discuss are the Private Self and the Social Self. I will try to discuss this within the framework of Uggs, for simplicities sake.

The Private Self refers to how one sees them self. In terms of the Private Self, the purchase of a pair of Uggs is certainly a big issue. If the purchaser believes that the Uggs are in style, and fashionable, their purchase of Uggs indicates a lot about them. Since Uggs are in style and fashionable, if the purchaser buys them, it means that the purchaser is in style/fashionable. Since the purchaser likely thinks highly of their own sense of style and fashion, the purchase is a reflection of their Private Self.

If this is a widely held view, that Uggs are fashionable and in style, then it will cause others to see the purchaser of Uggs as being in style or fashionable. This is part of the Social Self, another aspect of self-concept.

This is not a process that is limited to the purchase of Uggs. In fact, it's not limited to womens apparel or even to clothing. Many purchases are motivated by this self-concept theory. While people purchase a big-screen TV because it's enjoyable to watch, another main reason for purchase is to show it off to their friends - part of their Social Self. Same goes with cars, or hair-styles, or nearly anything else people purchase. Even people who dress poorly, or wear ratty clothes, or have messy hair, use that as an element of their self concept and how they see themselves. It's easy to fall into the trap of believing that only women and fashion items are purchased for reasons of self-concept and perception, but in the end, it is a motivator for nearly all purchases.

Google

In November, I made a relatively courageous prediction. While Google was seemingly at the top of the world, and everyong was more or less enamored by anything and everything Google, I decided that they couldn't keep it up. They had too much positivity coming their way. Too much goodwill. Too much hype. And all of this without the underlying revenue to keep it up. In talks with a number of my friends who are "finance types," I told them that if I were an investor, I would short-sell Google in anticipation of their stock dropping significantly.

Turns out, I was right. While nobody in the world had anything bad to say about Google, I saw something in their business model that didn't seem to fit. Their business model was based on the idea that online advertising was the key to revenue. Everyone seemed to fall into this trap - Yahoo, Microsoft, and pretty much every other big online service provider decided that their ability to advertise successfully for clients was the key to their success. Keep in mind, this business model is successful...but it is becoming less successful each and every day.

Google's paid click through rates have been getting lower. Fewer people are clicking on their "targeted advertisements," and this could lead to some substantial problems for their business. In reality, though, this is not particularly surprising. Throughout the years, consumers have become less and less likely to be affected by traditional forms of advertisement on television, radio, and print mediums. Because of this, companies will often resort to newer, flashier forms of advertisement such as viral marketing and marketing stunts to get the attention of consumers. I would suspect that over the next few years, the strength of targeted online advertising will erode just as the strength of traditional advertising has eroded, and it will cause companies such as Google to adapt their methods and business models or else face significant problems in the future.

Information Search Process at PrincetonOne

I work at an executive recruiting (headhunting) firm called PrincetonOne. In our industry, the information search process is of the utmost importance, and is one of the greatest determinants of whether or not you will be successful in the industry.

As a sales-based role, the search for information - whether that information be new clients, candidates, or industry trends - is ongoing. Knowing what jobs are out there, what candidates are looking for jobs, and whether the long-term prospects of the industry you focus on are good is crucial to success within the recruiting world. Below, I will describe the information search process when looking for a candidate for a specific position. I will use a position I was trying to fill with Americo Insurance as the backdrop for this.

I was looking for someone to fill an Underwriting Manager position within Americo Insurance Company in Kansas City, MO. In order to fill this position, I started with a number of consideration sets of where I could find people, and they generally fell into two categories: geographic locations and experience level. I wanted people from the midwest territory, so that they wouldn't be opposed to relocating. I searched for people in Kansas, Oklahoma, Missouri, Iowa, and Nebraska. I was also mainly looking for people who already had management experience, so I focused my search on people who were currently Underwriting Managers or who had past experience in management. Finally, I was looking for people with a good background in the technical aspects of underwriting.

After making hundreds of calls to candidates that I thought fit the previously described considerations, I stumbled upon a candidate that fit the build perfectly. He had strong experience as an underwriter, had been managing a team for a number of years, and was located in the Kansas City area. What's better, his company was closing down in June, so he was motivated to make a move soon. Currently, he is still in the interview process, but he is an excellent fit that was found as a result of the information search that I used.

Personal Information Search

Monday:
Location - Strip District
11:30am - sitting at work, starting to think about where I will go to lunch. I have four potential places in mind: Penn Ave Fish Company, Big Mama's House of Soul, Chicken Latino, and Prestogeorge
11:50am - I decide that I'm going to go to Big Mama's House of Soul
11:58am - Right before leaving, I look outside and notice that it's raining, so I audible and decide to go to Penn Ave Fish Company, the closest restaurant to my office
12:02pm - I walk outside, and begin going to the Penn Ave Fish Company. As I'm walking, I notice the rain stopping, and change my choice again, deciding that I will go to Big Mama's
12:10pm - Arrive at Big Mama's. Restaurant is packed, and I won't be able to get my food quickly. I leave and go to Prestogeorge, which is close to Big Mama's
12:15pm - Arrive at Prestogeorge, and walk up the counter. I have two usual orders: Braunschweiger Club and Pastrami and Egg Club. It feels like a Braunschweiger day, so I put in my order
12:30pm - Arrive back at the office, and eat my sandwich. I feel a bit sad that I didn't get Big Mama's, but I'm happy with my choice overall.
Location - Oakland
6:34pm - Finish up a take-home test that's due today, and start thinking about dinner. I have two options in my head: Sushi or Hot Wings
6:38pm - Arrive home from the computer lab, and make my decision to go to Quaker Steak and Lube and grab an order of wings

Tuesday:
Location - Oakland
10:50am - Before class, start thinking about whether I want to grab something to drink before entering. I decide against it, and enter my 11:00am class.
12:15pm - Go to my usual Tuesday/Thursday lunch at Market Central with a number of friends. Although it's probably not worth the money spent on it, the company makes it worth it.
3:15pm - Purchase two lemon-lime Gatorades for practice, which begins at 3:30. I make the purchase from the Sutherland coffee cart at Sutherland Hall, which is nearby to our practice facility
5:45pm - Go to Sutherland's dining hall for dinner before my night class.
11:03pm - Entered Fuel&Fuddle for halfprice

Nearly all of these decisions are either Nominal or Limited decision processes. In the case of deciding where I was going to go for lunch on Monday, it was a Limited decision process, where I evaluated a number of different alternatives and made a decision between them. Despite being upset that I didn't get Big Mama's for lunch that day, I was still quite happy with my Braunschweiger Club, and there was little to no post-purchase dissonance.

Other decisions, such as where to eat lunch or dinner on Tuesday and where to purchase my Gatorade from, where both nominal decisions. I evaluated no alternatives in any of those purchases. I always eat lunch at Market Central on Tuesdays, no matter what. There are no alternatives. I always purchase two yellow gatorades before practice, and do not consider anything to be an alternative. For 11:00 halfprice, the only place I ever go is Fuel&Fuddle, so there was no alternative evaluation there either, making it a nominal decision also.

Politics

I would be remiss to create this journal with no mention of the current political primary that's being so valiantly fought out between the two remaining Democratic challengers, Barack Obama and Hilary Clinton. Politics, though usually seen as something in the public realm, is truly the purest marketing business available, where "spin" is the name of the game, and understanding how your customers (voters) will perceive any action or word from the candidate. Thinking about this, I'm reminded of a wonderful (and hilarious) video where Jon Stewart talks about how this situation with politics - the spin, and the pundits, and the arguing - is hurting America. It was on the CNN show Crossfire during the 2004 Presidential campaign, and I will warn, it is quite long:



I've been watching very intently as the campaign has been progressing, because it has been very interesting to see the way perceptions shift after every primary. Indeed, in the beginning of the primary season, it was assumed that the Democratic primary would be more of a coronation for Hilary, rather than a voting process. As the clear front-runner from the beginning, it was assumed that everyone else was really just playing for second place. That all changed, however, with the Iowa Caucus, the first event of the primary season. Barack Obama pulled off the unlikely upset, with John Edwards in second and Hilary a distant third. All of a sudden, people began believing that maybe Hilary's win wasn't such a given, and a young senator from Illinois may have a fighting chance. Throughout the month of January and through Super Tuesday, perceptions kept shifting, all to now, when Obama has strung together a number of wins in a row. At this point, it now seems like Obama can't lose and Clinton can't win. I've noticed that, in debates, Obama seems to have claimed an impressive moral high ground over Clinton whenever she tries to play "political tricks" on him. This was particularly evident when Clinton attempted to accuse Obama of plagarism for using the words of a political friend. People saw right through this attempt by Clinton, and went so far as to boo her during a debate when she decided to bring this up. Never before have I seen a situation where one candidate truly holds such a strong high ground over another candidate, and this is truly something that is 100% related to how the candidates are perceived. This can also be seen in a debate before the Ohio/Texas primaries, when the audience boos Clinton after making mention of a supposed conspiracy against her:



At the current time, Obama is perceived as the candidate who is above the influence of politics. People see him as someone who yearns for change, and has the intelligence and skills to pull if off.
People see Clinton as part of the political machine, someone who uses buzzwords and political tricks to attempt to shift support from her enemies.

In order to win the campaign, Clinton will clearly have to begin to shift this perception and change the way that people view her.

Learning

I've recently been thinking about starting a new business, and have been thinking specifically about how customers learn to do different things. It's my strong belief that consumers are largely creatures of habit. If you want to go buy groceries, you have a specific path that you follow. For some people, it means looking in your fridge, writing down a list, and heading off to Giant Eagle to pick up the things you need. For others, it means hopping in the car right away, going to Costco, stocking up, then heading to Shop'n'Save to pick up everything that they didn't have at Costco. For others still, it means heading to the local produce shop, picking up your vegetables, then going to the butcher and picking up your meat, then heading to CVS to pick up anything that was missed.

In short, most customers have their habit, and changing that habit to fit a new business model is an extremely complicated and difficult proposition. Luckily for us, however, it is possible to change the consumers habits that they have learned over many years. This was shown very recently by the dot-com boom. Granted, many dot-coms were here and gone so quickly that we don't even remember them at this time, but the rise of the dot-coms that have stuck around has totally shifted the way many companies do business. I will highlight a few of these.

Insurance
Shopping for term life insurance used to be a complicated process. You had to visit agents, have meetings with them, get individual quotes, and then compare them. This was time consuming, so most consumers simply went to one agent and took whatever price they were told. Here's the thing, though. A $50,000, 10-year term policy from Nationwide is exactly identical to a $50,000, 10-year term policy from New York Life. Or Aflac. Or MetLife. So this was an issue. Customers had virtually no way to compare price, which should be the main factor in their decision, on identical "commodity" products. This is where the internet changed everything. The internet brought about websites that brought together pricing information from all of the major insurers, and forced them to start competing on price in order to get business. This reduced the price of life insurance dramatically, and gave consumers a greater ability to be well informed about their purchases.

A similar effect has been seen in a number of other insurance markets, and in markets for cars and many other products. Now, comparing prices on almost any product is simple.

Online Shopping
Most people traditionally made large purchases in "Big Box" stores such as Sears. Teaching customers to start making purchases online, using their credit cards, and allowing that merchandise to be delivered directly to their house, was a large learning process that had to completely change the way people thought about shopping. There were many obstacles, such as confusing ordering processes and the perceived insecurity of using a credit card online. After combating these hurdles, though, people found online shopping to be a useful, convenient way to get many of the things they normally had to go to the store to buy. While this was a process that took some time for customers to learn and become comfortable with, the online shopping world is now growing larger every day and will become more and more pervasive in the future.

Price changes Product

Interesting development over the last few years with the Beer market. Most people have their consideration sets pretty much set in stone when it comes to beer, and these consideration sets are almost entirely based on price. There are two main categories I will discuss. The first is the low-priced domestic beers:

• Natural Light
• Pabst Blue Ribbon
• Milwaukee's Best
• Keystone Light

Then, there are the high priced domestic beers:

• Coors light
• Bud Light
• Miller Light

Now, some will tell you that the high priced beers taste better than the low priced beers, but in the end, they are all very similar. Pabst Blue Ribbon realized this, and decided that they wanted to re-position their product into the high priced beer segment. This was an interesting strategy, and one that figured to make a lot of loyal PBR drinkers quite angry. It also brings up an interesting marketing issue: how does the price of a product affect a customers perception of a product?

Interesting question. Unfortuntately, I don't have any data to suggest this, but I'd be willing to bet that 90% of people would rate Coors Light, Bud Light, and Miller Light ahead of all of the low-priced alternatives in a taste test where they knew the brands. I'd also be willing to bet that if the same taste test was done blindly, they would only rate the higher priced brands better about 50% of the time. This is clearly what PBR figured out. They realized that they could reposition their brand, charge more for it, and do all of this without having to change their product at all. Indeed, they could make customers perceive that their brand tastes better and is of a higher quality by just increasing the price of it.

This is a phenomenon that is not limited to beer. Many generic products in grocery stores are exactly the same as their brand name counterparts, and some are even manufactured by the same companies, but many consumers swear that the brand name simply tastes better. In automobiles, there is an assumption that the more expensive car is the better car. While these assumptions are sometimes true, they are not universally true, and show how prices of items affect the perceptions of the products by consumers.

Winning and Losing

Reading Forbes Magazine's online sections about the business of sports the other day really got me to thinking about how exactly sports teams create value. It's easy to make the assumption that value in a sports team is created by championships, and there are certainly some examples of this being the case (think the New York Yankees). But really, what makes a team valuable and successful? In the NHL, the most valuable team and the most profitable team is the Toronto Maple Leafs, who haven't won a Stanley Cup in over 40 years.

So what makes them successful? Many different aspects go into making it a successful enterprise, but a great deal of the value is tied up in the brand. The owner of the Maple Leafs understands this perhaps better than any other NHL owner, and as well as some of the best owners in sports. He leverages his brand for everything. He has luxury condominiums and hotels in a square nearby to the arena named after the team. He has created offshoot products such as his own digital television station. He created a state of the art arena. He also sold stock in the team, such that the people of Ontario have a stake in the running of their favorite brand.

All of these savvy moves have created a very powerful brand for the owner of the Toronto Maple Leafs. In short, branding in sports is vitally important to the generation of value for a professional sports franchise.

Webkinz and Beanie Babies

Recently, in class and team discussion, the topic of Webkinz came up. Webkinz are a toy that I knew nothing about before discussing them in class, but the discussion made me realize how similar they were to a toy that was popular during my younger days. Beanie Babies were all the rage during my elementary school years, and they shared many similar aspects to Webkinz (minus the web aspect). Both "retire" certain toys to encourage them to be sold on the secondary market, and also to encourage people to snatch up the toys while they're still around. Both are meant to be collected by people. And both appeal to both kids as toys and adults as collectibles.

This really makes me think about what a brilliant marketing strategies both companies employ. By making certain items more rare than other items, it makes consumers almost compete to get them, and creates a huge sense of pride in the customers that are able to land the rare or retired items. Both also follow many of the things discussed in class. I recall that the back when Beanie Babies were big, word-of-mouth advertising was a huge aspect of their marketing. It was so big that when a store would get a new shipment with rare Beanie Babies, people would hear this through the grapevine so quickly that all of the good ones would be snatched up by whenever you made it to the store.

Heck, even I was sucked into this a little bit. OK, maybe that's an understatement. I recently found a website that I created that highlighted many different Beanie Babies, and even had rumors about happenings in the Beanie Baby world. I will warn you, this was created in my Elementary School days and it's quite a horrific sight. Enter at your own risk. Some may call this sad. Yes, it's definitely sad. But it also shows some very impressive marketing on the part of the TY company, and a definite model for how to successfully market a product that is really nothing more than a stuffed animal.

Costco Culture

Walking into Costco on a Saturday afternoon is truly one of my favorite things. I love all of the big screen TVs, samples, and packs of meat that could feed a small army. It makes me think every time, though, what is it about American culture that allows Costco to succeed. America is truly the land of plenty, and we celebrate our wealth every day with super sized McDonalds meals, all-you-can-eat buffets, and of course, Costco sized packs of food. This is all a reflection on how American culture differs from the rest of the world.

Now, some of it is purely logistics. America is, simply put, very spread out. Urban Sprawl is a very American phenomenon - most European cities are much more compact and densely populated. The European culture is such that people will go to the grocery store a couple of times a week. Since everything is so densely populated and people live in very close quarters, there isn't enough room to store food for weeks, so they will purchase only what they need for the next few days. Refrigerators tend to be smaller, kitchens are smaller, and there is less storage space. All of this adds up to places like Costco simply not being needed in Europe. In America, however, the story couldn't be more different. People are much more spread out, and have the storage space to keep food for months. Also, since Americans are generally located further from a store, trips to the store generally occur with lesser frequency than they do in Europe, causing Americans to want to stock up when they do go to the store. That's what makes stores like Costco so powerful in the American society.

Europeans are even blown away by Wal-Marts for their sheer size. They are more used to smaller stores with a more limited selection, rather than the one place with everything. In the end, though, American culture values places like this. Europeans consider this to be overkill, but we like things big, we like knocking out all of our shopping in one trip, and we would rather make one trip to the store per month than three trips per week.

Team Expectation

Live up to all deadlines.
Three strikes policy.
Maintain consistent communication when unable to meet a deadline, etc.

In the UK

The beginning topic of this class is a very interesting one for me, because I just got back from spending a semester living in London. The United Kingdom as a whole, and especially London, is a very interesting place. Its culture is certainly different from that of the United States, but is also very different of mainland Western Europe. In a sense, it almost acts as a middle ground, taking some aspects of American Culture and some aspects of more traditional European culture. The biggest difference in the two cultures, and something that you notice immediately upon stepping onto British soil, is the difference in politics. The UK, and all of Europe, have very different attitudes politically than do Americans. I will highlight some of these main differences below.

"Big Brother"
In America the idea of having security cameras on every corner seems unthinkable. Americans value privacy to a very large extent, and do not like the idea of our society turning into one that is ruled by the proverbial "Big Brother" talked about in George Orwell's novel 1984. In the UK, this view is very different. Granted, they probably don't like the reality suggested in Orwell's novel, but many life activities are subject to surveillance in the UK. On nearly every street corner, there are cameras - what they call "CCTV" - watching your every move. Nothing goes unseen in London.


Guns
The second amendment in the Bill of Rights of our constitution states "A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed." This has consistently been interpreted in the United States as meaning that it is legal for individuals to keep and bear handguns, rifles, and other weapons to use as a protection against the government. In the UK, the laws are quite different. It is, in fact, illegal to own guns, and not even the police officers have guns in the UK. Instead, they just carry extra long knight sticks, that they use to subdue criminals if necessary.

Sport
In the UK, and most of the world, the biggest sport is Football. In America, the biggest sport is also Football...but they mean two entirely different things. It's my belief that Sports are a huge part of culture, and act as a unifying (or divisive) force between people - but their existence alone is extremly important in any culture.











Social Services
In the UK, they have the NHS, which provides free health care to all citizens of the UK. It's a nationalized plan, that is paid for by the government. In the United States, for better or for worse, we have a privatized system whereby individuals pay for their own health care to private companies. While this has certain benefits, such as creating a higher standard of care, it has the drawback of leaving many Americans without health insurance.