Marketing Rules!

In early February, Kroger, one of the nation’s leading supermarket companies, began offering personal finance offerings. According to the Lexington Herald-Leader, “customers can now sign up for a mortgage on a home equity loan, sign up for identity theft protection, purchase pet insurance or get a credit card.”

The chain has recently offered gasoline, DVD rentals, and health clinics. Merchandise offers include toys, furniture, and lawn and garden products.I have a couple of reactions to Kroger’s latest forays.

The Good: Using customer information gathered from frequent buyer cards is an excellent way for a supermarket to expand its offerings from grocery items. Tesco in Great Britain and Costco in the United States are great examples of using consumer information in novel ways.

Also, because of Wal-Mart’s incursion into the grocery industry, supermarkets have to learn how to fight back. One way: to use customer information to sell items (such as financial services) that Wal-Mart might have a tough time imitating. Wal-Mart just recently failed in their efforts to offer more banking services. Also, by selling items such as toys and furniture, supermarkets have less dependence on grocery items as their sole source of bottom line income.

The Bad:

1. Privacy: Supermarkets have to be careful about not using frequent buyer card information without customer permission. Supermarkets must recognize that consumers are starting to take privacy scares to heart. Supermarkets must not give information to third parties without their cardholders’ permission. I don’t know if Kroger will be giving financial information to third parties, but they should only give information with customer approval.

2. Loss of focus: Supermarkets are food experts. They can compete in other areas, but they have to make sure that their food quality or focus does not suffer. If customers lose faith in a supermarket’s food selection or pricing, then they will stop going to that supermarket. All the variety in the world will not save a supermarket with poor food quality or selection.

What are your thoughts?

I enjoyed the premise and execution of “The Truman Show,” the 1998 Jim Carrey film in which an innocent Carrey is the unknowing subject of a 24/7 TV show which an adoring public watches with unabated curiosity.

In the latest version of life imitating art, I woke up with the “Today” show this morning doing a feature on Justin.TV, the brainchild of a San Francisco group of twentysomethings that puts Justin up live up on the web 24/7 for a fascinated group of voyeurs. Technology companies and others are waiting in the wings for the birth of a new expose-your-navel fad to be the next YouTube.

I guess there are marketing possibilities both online and elsewhere (can you imagine a cereal company paying Justin for product placement – why not if he can get on the “Today” show?)

The best thing about this spectacle being on the Internet is that people can decide for themselves whether to watch it. But for me, this sort of spectacle has something distinctly unappealing about it. It is a parody of “reality” TV, which in turn is a parody of real life. It makes me feel a kinship to the Luddites, a social movement which disapprove of advances in technology. To riff on Timothy Leary, it makes me want to tune out, turn off, and, especially, drop out. At this point in my life, a blog is enough public exposure.

Stan Golomb died a few ago but his ideas, energy, enthusiasm, and stubbornness still inspire me. Stan worked with drycleaners for many years, helping them through incentive programs, games, postcard mailings, and innovative marketing techniques to “Find, Capture, and Keep Customers” (the title of one of Stan’s books).

I was reminded of Stan recently while watching Elizabeth Edwards describe how she would continue to campaign with her husband despite stage 4 breast cancer. Stan Golomb battled heart disease much of his adult life (he even had a heart transplant at age 63!) but despite poor health he always made business fun, exciting, and profitable.

Here are a few of the marketing lessons I learned from Stan Golomb:

• If you have a bricks and mortar business, think of your market area the way a farmer thinks of his fields:

1. Calculate your yield (of customers) per acre. Find out how many people live in the neighborhoods surrounding your business and how many of those people are potential customers.

2. Do some test marketing to decide which fields best support your product.

3, Use mapping and demographics to find your best customers and continue to advertise to those customers.

• People love games and gimmicks. For drycleaners, Sam ran “jackpot” programs, “blackjack” programs, and “silver eagle” programs. In the blackjack program, when you went to the drycleaner, you rubbed off a spot on a postcard you received in the mail to see what hand you had. Various hands had different discounts. An 18 received 10% discount, a blackjack a whopping 40% discount.

• Stan counseled drycleaners to collect birthday information on all their customers…and then reward their customers on their birthdays.
Stan constantly would find new ways for his clients (and drycleaners throughout the country signed up for Stan’s programs) to keep in contact with their customers through direct mail and in-store advertising.

The incident that most touched me was a plan Stan concocted for keeping in touch with people after his death. About a week after Stan died, I received a letter. The one line letter said simply, “Thank you for being my friend.” It was signed “Stan Golomb.”

For direct marketers like us, mass media advertising on TV has always seemed mysterious. Why would a marketer pour a lot of money into TV if there is no way of selecting your audience? Isn’t there an alternative way to price TV spots other than the rate cards of networks and cable companies?

The pricing and distribution of TV commercials could change dramatically in the near future, and Google (yes, that Google) could change it.

Google has already changed the marketing paradigm of the Internet. Google’s AdWords (and similar programs by Yahoo and other search engines) have outpaced pop-up and banner advertising in popularity. Firms are spending countless hours figuring out which keywords to bid for to achieve prime placement in Google’s search results advertising space.

Now, Google is seeking to crack the $74 billion TV advertising world with programs that offer “mass personalization.” The Wall Street Journal says that Google is working with a California cable provider to offer commercials that have been sold to advertisers by Google. According to ZDNet, Google is also recruiting software engineers for television applications.

What would a world of Googlized television advertising bring?

• More personalization. Google’s data capabilities may lead to ads being personalized by subscriber demographics. So if your household is in a high income zone or subscribes to the tennis channel, you may see more ads for tennis racquets or tennis vacations than your downscale neighbors.

• More bidding for ads: Google is experimenting with an auction based system for selling its advertising (similar to how it sells AdWords on the Internet). Ad space may go to the highest bidder. An auction system would bring a new element of flexibility (and perhaps more instability) into TV commercial pricing models.

We find these developments exciting. The one downside is that we have to find a way to satisfy people’s notions of privacy while still using demographics to target ads. I don’t want to turn a TV on in the morning and when it’s time for a commercial hear the announcer say,

“Neil, because you have a wife and two children you should seriously consider our accident insurance program.”But I like to play card games, especially bridge. I might not mind a commercial for a duplicate bridge instructional camp to improve my spotty defensive play. It’s a fine line between targeting and intrusion. Let’s hope that Google will get it right.

What do you think of Google jumping into the TV advertising medium? Is this a new advertising arena for direct marketers, or will the coming of Google make more money for Google and less for traditional advertising companies?

Take a look at coca-cola’s web site when you have a chance (http://www.coca-cola.com/).

It may be me, but I think something’s going wrong here. It’s like some deranged 20 something year olds started playing around with web development tools and tried to create a site. The graphics are interesting, but the site doesn’t make any sense.

To give just one small example, when you finally get into the site (which takes a while to enter even on my fast connection), you’re connected to The Coke Show. I clicked on “See the entries” even though I didn’t know what the entries were for. Then I clicked on the mini-challenge, “The Coca-Cola Company Theme Song” and I clicked on “See the entries” again. It first told me I had 54 days to enter my original theme song and then it said 53 days. There were no entries to see. I tried some other categories and they didn’t make much sense either.

I thought it was just me until I showed the site to 10 college students. None of them could make heads or tails of it and all expressed frustration with the site.

Where is Coke going with this. Shouldn’t the #1 brand in the world be able to create a functional website?

For a contrast, visit the www.toyota.com site. A functional site that is anything but dull.