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Brand Winners... And Losers: Social Networking and Coach
Brand Winners… | And Losers |
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The Marketing Doctor says:
Winner: Social Networking
Loser: Coach
Without further ado, this week’s winner and loser:
The Winner:
Social Networking. In a way, you might say I’m only re-crowning a known winner, but recently I have done some more direct, hands-on “research” and am more impressed than ever with social networking. I have been posting to IncBizNet for some time, but with my recent work on Fox’s Strategy Room, I branched out into Facebook.
Now I’ve been a Facebook person for a while now, but I had never really rolled up my sleeves and taken the time to see what it could really do. I was on vacation in Florida and finally read Facebook Marketing by Steven Holzner. The book (here’s the Amazon link) convinced me to give Facebook the old college try.
Before I knew it, I was requesting friends of friends, being asked by my friends to become their friends, joining groups, becoming a fan and letting my friends (now over 200 —not bad for two weeks) know what I would be talking about, and where I would be saying it. I have a new and even stronger sense of enthusiasm about this new media and all its possibilities. I’ll keep you posted (especially if you’re on Facebook).
Social Networking is also our winner because of the increasing reality of the Internet’s scope and its influence on all forms of media, promotion and especially advertising. This week, for example, The New York Times made the unprecedented step of selling ad space on its front page. This is monumental.
Ad space had been banished from the front pages of most newspapers earlier in the twentieth century by the folks in editorial. But with declining circulation, plummeting ad rates and the huge competitive force of the Internet, The New York Times had to do something to help plug its balance sheet.
This reality is more evidence of what I have been talking about lo these many months: namely that marketing is the new advertising. No longer can one single ad buy or any other single tactic work. A combination of marketing methods is needed. What we’ll probably see next for The New York Times is an increasing use of direct promotion, Internet promotion, public relations and innovative social networking to help make their news, feature and analytical content pay. They might even consider the sponsorship of certain sections and bureaus. Hey, everything’s on the table if it’s a question of survival in a very troubled economy.
Social Networking will continue to exert a bigger and bigger influence on traditional newspaper and magazine forms, whether in print or online, and it will also affect the way television develops.
Why?
Internet television is rapidly approaching. There are brave statements by the traditional TV folks that their advertising bottom lines are still pretty strong, but I would love to have them explain how it is that those cheesy infomercial type ads are making it onto the exclusive (and presumably pricey) evening news spots.
Fact is, soon many of us will be getting our video content through our computers, or through some other interface that seamlessly blends TV and computer. Here again, social networking will be a winner because whatever the interface, it will need to make room for the powerful social networking force and social networking will in turn shape the viewing experience.
It’s still too early to determine exactly how social networking will function as a marketing tool, but one thing is clear: never before have so many of us— professional marketers and others— had such access to such specific Target Markets with such ease and at such a low cost.
The future will not be dominated by “Interruption Marketing” (i.e., viewer forced to sit through an ad) and other single, one-trick-pony approaches, but by social marketing, where the interaction and the content plays a key role in driving the sales.
The Loser:
Coach. Not the TV show, but the bag company. I’m not attacking the brand here, or even its general approach to marketing.
No, Coach wins this week’s loser title for one simple reason: the retailer forgot that it was in the most competitive retail environment since World War II, and that this means price and value have got to be brought into the equation.
What were they thinking? Who were they listening to?
Instead of adapting to the current market conditions, Coach decided to avoid promotions, maintaining “our retail prices” and “protecting our brand proposition” (according to CEO Lew Frankfort, as reported by Reuters; see that article here).
I’m not sure what a brand “proposition” is (my guess is that either Reuters or Frankfort got it wrong and meant “position”), but what I do know is that “proposition” or “position” aside, Coach’s inflexible marketing stance probably led to the big loss it announced this past week.
Consumers in a heavily marked-down retail world were simply not going to visit a store that had full-priced products and didn’t offer any markdowns.
The lesson here is that no retailer is immune to the price/value marketing reality of our current environment. And I mean no one. Sure Coach is high end, but believe me there are players in the customized, hyper-personalized stratosphere of high end, and even these guys make deals to make a sale.
Flexibility with price is part of your marketing tool kit and an important way of acknowledging and meeting the needs of your Target Market. If sales drop off like they did with Coach, it indicates that you’re not meeting the needs of your Target Market.
And if Frankfort & co. were concerned about compromising their brand, they should have done focus groups with their customers to find out just what would have motivated these customers to purchase Coach products without cheapening the perception of the brand. (I’m assuming they didn’t do these focus groups, or at least didn’t do them the right way).
The idea that discounting somehow immediately cheapens the perception of a brand is ridiculous. After all, a perceived good deal will actually make your customers happy and encourage them to come back. No deal at all, on the other hand, will generate no sales.
And remember, it’s always easier when you keep marketing and branding in mind.
TODAY'S TANTILLO TAKEAWAY -
Flexibility with price is part of your marketing tool kit. Use it.
Let's play devil's advocate for a moment: take your text about Coach and replace it with Apple. 'Apple decided to avoid promotions, maintaining “our retail prices” and “protecting our brand proposition”.... Sure Apple is high end, but believe me there are players in the customized, hyper-personalized stratosphere of high end computers, music players and phones, and even these guys make deals to make a sale.'
Not only does Apple charge full retail, they enforce a strict no-discounting policy to their resellers. You can't save more than a few dollars on any Apple computer, and they may cost 2x or more than a comparable PC.
So why is Apple able to maintain high prices and fat margins when all other computer vendors do heavy discounts? And Apple is growing their sales at a time when sales of other computers are flat or declining.
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