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Happy New Year's Everyone!

It has been a challenging year on many fronts for so many people I know. Rather than wax philosophic about this past year and the one to come, I will merely leave you all with the wise words of Mary J. Blige:

We don't need, don't need, no haters
Just try to love one another
We just want y'all have a good time
No more drama in your life
Work real hard to make a dime
If you got beef, your problem, not mine
Leave all that BS outside
We're gonna celebrate all night
Let's have fun, tonight, no fights
Turn the Dre track way up high
Making you dance all night and I
Got some real heat for ya this time

Happiness, love, health and success to all in 2010.

Falling Prey to Tigers. . . Why are We So Gullible?

"What’s striking instead is the exceptional, Enron-sized gap between this golfer’s public image as a paragon of businesslike discipline and focus and the maniacally reckless life we now know he led. What’s equally striking, if not shocking, is that the American establishment and news media — all of it, not just golf writers or celebrity tabloids — fell for the Woods myth as hard as any fan and actively helped sustain and enhance it.



People wanted to believe what they wanted to believe. Tiger’s off-the-links elusiveness was no more questioned than Enron’s impenetrable balance sheets, with their “special-purpose entities” named after “Star Wars” characters. Fortune magazine named Enron as America’s “most innovative company” six years in a row."

--Frank Rich, New York Times, Dec. 20, 2009

 

"A man hears what he wants to hear and disregards the rest."

--Paul Simon, "The Boxer", 1968

 
Frank Rich's [unusually apolitical] editorial in the New York Times makes an interesting point: this past decade has been marked by our falling for egregious and sometime ludicrous hustles time and time again. In the first ten years of the 2000s, we have become a nation of suckers and patsies--your humble author very much included.
 
I went to University of Georgia to get my MBA in 2001 with the goal of graduating and getting a job at Enron because [hold your laughter please] they were widely heralded as innovators in non-fossil energy. But wait, it gets better....As the first questions about Enron's earnings began to arise, my Accounting professor at the time, who had been head of the Financial Accounting Standards Board throughout the 1990s, explained to our class how the market had over-penalized Enron for its accounting error(s) and that he had bought a bunch of stock that morning to take advantage of the market's overcorrection. Within a month, the stock had cratered. Within three months, my professor was testifying to the Senate Banking Committee about the ruse that Enron had accomplished.
 
While fooling me is no mean feat, fooling my Accounting professor is another matter--he not only knew the rules, he wrote a lot of them. Which brings me back to Tiger. The level of shock and attention this is receiving is a combination of three things:
 
1. His fame.
2. The spectacular nature with which this story broke--from his wife smashing the windshield with a golf club, to the endless parade of porn stars and cocktail waitresses that have come forward.
3. Our preconceived notion of what his personal life was like.
Yet, if you have ever been around celebrities or even read the tabloids for any period of time, you know that Woods' infidelities were the rule for athletes and celebrities, not the exception. There is something within us that made us want to assume things about Woods' life despite our really only knowing one thing for certain about the man: he can knock the snot out of a golf ball.  And while that singular certitude has no bearing on his personal life, we somehow translated his excellence in one thing to mean he maintained excellence in all things.

The same way we wanted to believe in Tiger is the same way we want to believe that politicians, pundits,  celebrities, advisors and other figures in our life are not serving their self interests. The fact of the matter is that it is the exceptional and rare person who is not serving his own self interest. The entire study of economics is based on that fact. Yet, the only people we can all agree deserve to be viewed with a skeptical eye are are:

1. Politicians from the party that you don't vote for
2. Auto mechanics

The next few articles will focus on the likely factors contributing to our "suckertude" as a nation, including:

1. Conditioning: The principal in psychology that people generally believe what they are prepared to believe, rather than the most convincing array of facts and figures at a time
2. Trust: how it happens and why
3. Gullibility: what makes a person more likely to buy into fraud?

As we have found out over the last decade and beyond, these issues factor not only into marketing, but how we as individuals and organizations interact with and treat one another.

When Marketing in a Recession Works. . . And When It Doesn't

The last piece on recession marketing for a little bit will focus on some work by Raji Srinivasan at University of Texas on determinants of effective recession marketing.

Dr. Srinivasan begins with a historical context of great marketing dividends paid during recessions and even the Great Depression, including:

• Brands that made a marketing big push and took market leadership during the Great Depression: Camel, Chevrolet, Ivory Soap and Crisco
• Brands that experienced wildly successful marketing campaigns in the recession of 89-91: Saturn, DeBeers and Intel, featuring an excellent quote from an Intel executive: "you don't save your way through a recession."

They also do a nice summary of other, recession marketing research which includes these findings:

1. Firms increasingly focus on marketing for cutbacks during a recession. The recession of 2001-2003 saw the largest cutback in advertising budgets since before the Great Depression. (This, despite substantial evidence that companies should do the opposite. Marketers, ironically, need to market their impact better.)
2. In recessions, market leaders profit from marketing investments and suffer from marketing reductions.

Lastly, Srinivasan's own research finds that firms which are historically aggressive marketers in both good times and bad tend to reap a larger reward proportionally got marketing in a recession than the market laggards. The author points to these companies likely having stronger marketing assets (brand name, recognizable images and messaging, a more experienced & elite marketing team) PLUS the fact that advertising costs less and fewer competitors advertise during a recession, so they get more bang for the buck.

While he identifies these interesting dynamics in recession marketing, questions still remain: do the leaders continue to grow in a downturn due to marketing acumen or because of a thinning of the competitive herd? And, in a threatening environment, do buyers place a premium on company stability over an individual product's appeal?

Please email me with any thoughts or put in the comments below. For the next series of articles, I will be heading to the tabloids for inspiration.

The Ghosts (and Lessons) of Recessions Past: 1990-91

The economic notion of "creative destruction" is an interesting and useful one that states the constant change within society and economies creates new opportunities. (example: the Internet is dismantling newspapers, but it is also providing opportunities for people like Matt Drudge, Arianna Huffington and so on.). And with shifts in economies--good or bad--comes hope for innovation and opportunity.

That said, it's still cold comfort when you are wrestling with a nasty recession and trying to make payroll, cover your bills and survive.

The 1991 recession. . . You should see the photo of the current recession.

A 1997 article by John Pearce of Villanova University and Steven Michael of George Mason which published the results of a study of effective marketing strategies from smaller, entrpreneurial firms durring the recession of 1990-91. The study focused on small, entrepreneurial companies' marketing strategies before and during a recession and how they affected the firms' profitability during the downturn.

Alright, since you asked, here is a picture of the current recession.

Besides being recessions, what do the 1991 recession and current recession have in common? Well, the root causes were similar--collateralized debt (read: real estate deals and the secondary market for the debt underwriting those deals going in the toilet). And, the projections for the recovery from this recession are similar in nature to the 1991 recession. That is, a slow recovery with little-to-no job growth for the first year or two of the recovery. Ahhhhhhhh, good times.

Otherwise, the '91 recession was a gentle kiss on the cheek compared to the repeated-crotch-kick-with-steel-toed-boots that this recession has been and continues to be. Without further ado, here's what the research found:

Why They Did It: There is surprisingly little research in recession strategies in business, but what there is typically focusses on "retrenchment" and "turnaround strategies"--two terms that mean slashing & burning overhead wherever possible, particularly in marketing. This survey was designed to test those theories as well as provide a specific focus on smaller, more entreprenurial companies which typically have the hardest time surviving downturns.

What They Did & How They Did It: They issued surveys to senior executives from 451 public companies (primarily in manufacturing) with sales of $10-100 Million and accounted for less that 0.5% of their respective markets. They ended up using 114 of the surveys that came back to them. The survey focused on recession strategies including:

1. Marketing Efficiency: Attempting to consolidate functions of product development under a smaller team.
2. Streamlining Value Chain: Dropping distributors
3. Retrench into Core Business: Dropping underperforming products and geographic markets to get "more bang for the buck"
4. Expand Into New Markets: the opposite of "Retrenching"

 The Results

"Sur-veyyyyy SAID..."

The key findings of the study were:

• Marketing related to core business is "the major determinant of profitability in good times and bad."
• Expansion in good times offers no assurances for durability during recessions
• Expansions that do pay off? Sales force and advertising increases pay dividends in any economic cycle.
• Retrenchment is generally a mistake. Most executive reported that the cost cuts in marketing hurt them.

So, when your boss or client starts to sing the "we have to cut back, beginning with marketing", please point them to this study as well as others covered on this blog.

Have a great weekend everybody!

The Next 12 Months of Tiger Woods' Life. . . PR 101

I am going to depart from my usual format to comment on what Tiger Woods will--or at least should--do over the next 12 months. Is the Woods story critical the study or practice of marketing? Not necessarily, but my wife has told me she is sick of discussing the story with me. So, to feed my addiction to this story, I am hoping there are people out there who share my fascination with this spectacular meltdown of what was once a global brand. This meltdown was further accentuated by news today that El Tigre has been linked to a Canadian doctor currently under investigation for dealing in illegal performance enhancing drugs.

Without further ado, here is what I would advise Tiger if he were my client:

1. Click Here for good advice from Jim Carey. Good PR does not require that he and his wife reconcile. What is does require is that Tiger try and put together a stable environment. If his wife divorces him--as harsh  as that may be--most people can relate to that. But, to lead an out-of-control life that continues to inflict pain on his wife and children will not be acceptable to the public. Find resolution and stability.

2. Tear Up The Prenup: Rumors are that the Elin has already retained divorce council. She also allegedly has a prenup saying that she will only get $5 million if she divorces him now. The best money Tiger could spend is to tear up the prenup and give her $100 million Anything less than that and he will be incentivizing her to:

a. drag him into a highly-contested, very public divorce hearing
b. write a book and drop bombs on his image rehab that will begin in 2010.

He is worth over a billion dollars--mostly from endorsements. It's money well spent, especially if it means his endorsements come back.

3. Let the Dust Settle: He appears to be doing this. You don't want to claim to be a changed man when the last three women in the United States who haven't announced a sexual liason with him finally do so. (Plus this steroids story is going to take several months to come out.) As Tiger's counsel, the trick is going to be getting him to admit all the bombs that are out there waiting to drop.

4. Get Your Story Straight: As with any image rehab, you need a believable reason for behaving like a scoundrel. His story should go something like this: Child star pushed into the limelight too early who didn't know how to handle himself once his father passed. . . The pressure of mega-stardom with a lack of structure and a burgeoning sexual addiction culminated in an out-of-control lifestyle that destroyed his life and deeply hurt his beloved family. . . He paid the ultimate price for this by losing his beloved wife Elin. Now that he is receiving treatment for his addiction. . . blah bluh blah blah blah. . and, oh yeah. . . the doctor who gave him performance enhacing drugs was the result of the constant pressure to be the best. . . blah blah. Speaking of the steroid piece, depending on how the investigation is unfolding and the advice of his attorneys, he may want to get a jump on the story and just admit he took some stuff that "in retrospect, probably was not in keeping in the spirit of true competition."

5. Choose Your Venue: Given the gigantic size of this story, he needs the biggest and most credible outlets out there which would mean "60 Minutes." I would say he should do it following the Super Bowl for the biggest audience, but I think it's likely too soon. In the months following, he should do some public initiative for children with his charitable foundation and do a press tour to promote it. That second press tour should focus on women-friendly venues--Oprah and "The View" (assuming Tiger can resist hitting on Liz Hasselback. . . Hiii-yoooooo!).

6. Win: Everyone loves a winner and his winning will help move the Tiger story line from "Girls Gone Wild" to his ability to persevere and overcome. And winning is the thing he does best.

Assuming that there are not other, weirder stories getting ready to come out (which appears to be a BIG assumption), his 60 minutes spot in the Spring combined with a couple tournament wins by Mid-Summer should assure that Tiger, Inc. will be back in full "shill for every product known to man" mode by 2011.

Harvard Business School Tips To Marketing Your Way Through a Recession

I've gotten a lot of good feedback on the blog thus far, but the most common criticism to date is "a weekly post does not a blog make." So, I will try and post more frequently.

Most of my marketing brethren and sistren--particularly in agencies--are fighting a tough battle in convincing their clients to maintain their marketing spend in this dismal climate. And, your client is going to glare at you when you insist that now is precisely the time you must market as much in the past--if not more. The glare is not because what you said is untrue. It's very true. The glare is because the statement:

1. Is self-serving AND
2, Asks the marketing manager to try and make a tricky sale internally.

I will be posting a series of summaries of articles from preeminent researchers making the case for marketing in a downturn to try and arm my brothers and sisters with credible information when they have these meetings with their clients.

Today's article comes from the March 3, 2008 issue of the Harvard Business Review. HBS professor John Quelch wrote an article entitled "Marketing Your Way Through A Recession." The crux of the piece is that companies should market less in a recession, they should market differently. Businesses and markets are dynamic organisms and must adapt to new environments or stimuli. Quelch's tips include:

1. Focus on Research: The goal of market research is to be able to target business more precisely. If you grow any part of your budget, make it research.

2. Modify Advertising Imagery: Riskier times create a need for the feeling of security. "Hearth and home" images play best in a down market.

3. Maintain Marketing Spending: If you are playing one-on-one against Kobe Bryant, do you cut back on your effort? Cutting marketing is cutting your competitive effort--which is exactly the last thing you need to do when more people are competing for less business.

4. Thin Your Portfolio & Adapt: Down markets favor multi-purpose products. Also, thin your product line to focus on the winners.

5. Offer Inventives to Distributors: They will be more sensitive to holding inventory so you need to offer inventives (usually in the form of credit) to keep your product on the shelves.

6. Modify (not necessarily cut) Pricing: Price promotions--bundles, flexible payment terms, frequent short-term discounts--will help bring in the weary buyers.

7. Focus on Market Share: Bad times are good times if you are liquid. Efficient companies should look for strategic acquisitions that will maximize your market share now and when the market rebounds.

More to come on this topic soon. Have a great weekend everybody!