Marketing Doctor John Tantillo’s Winner and Loser of The Week: Skype and The Ivy League

Brand Winner… And Loser…


  

Marketing Doctor John Tantillo’s Winner and Loser of The Week

Winner:  Skype


Loser:  The Ivy League

                                                

WINNER: 

 

Finally, Microsoft has done something really right.  The company’s purchase of Skype for 8.5 billion dollars, its largest acquisition ever, is the kind of bold risk that many condemn at the time under the category “They Overpaid” but later come to see as the staggering, history-making opposite.

Make no mistake, Skype is no MySpace, the high flyer of the social network craze that never paid off as an investment.  Skype might not be making a profit but its brand is deeply established.  When we want to chat by “video” (basically whenever we want to talk via our computers) we use the new verb “Skype.”

Of course, just because a company name is part of the language doesn’t mean the brand is bullet proof (e.g., Johnson & Johnson still sell Band-Aids but so can anyone), but no brand is ever bullet proof.  Skype is much more than its name, Skype is its functionality and almost universal presence.   People are wowed by Facebook’s 500 million registered users (of which maybe half are active?).  Skype has over 600 million registered and at any given time, twenty-four hours a day, you can hop online and see that tens of millions of them are active. 

When we analyze Skype what matters the most is three inter-related things: 1) the wide-range of its users and 2) the ease and simplicity of using it and 3) the need it supplies.

Bottom line, its users don’t just comprise a certain demo- or psycho-graphic, they represent everyone from teens to grandmothers.  Why?  That’s where #2 and #3 come together.  Not everyone wants to be a social networker or sees the point in either a MySpace or Facebook page, but almost everyone has someone to communicate with somewhere in the world and if given the choice they want to be able to do this for as cheap as possible as long as it isn’t too complicated.  Skype delivers on both counts. 

Fact is, Skype is the telephone service of the Internet age, arguably the first Internet service that is really for the mass market in the way the telephone was.

Sure there are competitors, Google Voice and Apple’s FaceTime, but Skype has an enormous lead and Skype already has two established features that should be the envy of any Internet company: 1) they have a platform that could readily be used for advertising and promotion and 2) they already have a system in place to charge people (i.e., Skype Credit and Skype subscription services) that enable them to make money by charging people some of the lowest prices anywhere for dialing land and mobile phones.

Hats off to Microsoft.  My only advice to the company: keep Skype separate and remember what has made it a success in the first place.  Too much change to the service, especially pricing and how the Skype interface works, could be fatal.

LOSER: 

In branding you really cannot have your cake and eat it too.

(A branding aside, Ferrari announced a family car this past week.  Wow.  What a mistake.  Sure, family driving is a nice, rich market, but family driving is not what Ferrari is all about.  Brand extensions that contradict your core characteristics dilute the brand.  This is known as the trading-down strategy and it’s inherently risky because your traditional target market can be quickly alienated.  End of story.)

The Ivy League is our loser of the week for precisely this reason. 

These select schools have built their reputations over literally hundreds of years by being just that: select.

They can rightly be accused of being elitist, but it is being elitist that supports their enduring appeal.

Recently, though, some of the schools in the Ivy League seem to have been practicing some below-the-belt marketing aimed at broadening their audience and making the schools –as if this were even necessary— look even more exclusive.  How?  By reaching out with promotional materials and invitations to apply to students who didn’t stand a snowball’s chance in hell of getting accepted.  This plumps the numbers so that an even smaller percentage of people actually get accepted (this year, for example, a record 6.2 percent of applicants were accepted at Harvard).

Folks, this is really the worst kind of marketing.  Not only does it leave a terrible taste in the mouth of thousands who find themselves rightfully disillusioned at a very sensitive time of their lives, but it also sends a message that these highly esteemed institutions have stooped to cynical and predatory marketing gimmicks –the kind of stunts that give marketing a bad name.

Fact is, this isn’t marketing at all because it violates one of the cornerstone rules of marketing: don’t raise false expectations in your Target Market.  Don’t pretend to be able to deliver something that you cannot.  Promotions that do this are doomed to fail.  They might not seem to fail right away (e.g., Harvard and others get significant spikes in the number of applicants), but they corrode brand equity.  Like Ferrari you can’t be exclusive and simultaneously not-exclusive.

But the Ivy League isn’t just some luxury or status brand, it is an institutional brand that is meant to express high academic and, dare-I-say-it?, ethical and cultural values.  Tactics like this are even more damaging for institutional brands.

The good news for the Ivy League is this: if they abandon these cheap tactics soon, the damage shouldn’t be permanent.  After all, it takes generations to build up profound institutional brands like these and they won’t be diminished overnight.  The only question is: will these tactics stop?  When distinguished college admissions counselors are calling Harvard’s tactics “not honorable” and “misleading,” they better.

And, remember, it’s always easier when you keep marketing and branding in mind. 

 

 

TODAY’S TANTILLO TAKEAWAY –

Marketing without an understanding of the brand behind the campaign is just a tactic at a fire sale. 

 

 

 

 

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