IMKTG REPORT January 7 2003

al berrios & co. IMKTG REPORT 01.07.03: Experiences, Kids, Airlines; more…

THIS WEEK'S CONTENTS ARE:
[1] JUST SAY IT: Whistleblowers
[2] BRANDSTRATEGY: The Art & Science of Experiences
[3] CONSUMERFOCUS: The Kids of the Internet
[4] MEDIA: Broadband: Fast Access + Interactivity are the Gospel in 2003
[5] MANAGEMENT: al berrios & co. Recommendation For Hub & Spoke Airliners
[6] Corrections

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[1] JUST SAY IT: Whistleblowers

>> "Read a book." - Mayor Michael Bloomberg, when asked about his administration's position on rising New York City cable bills during his weekly radio address.

Good morning execs,

Thanks for coming back. 2003 has a lot in store for us all, and hopefully, you will allow al berrios & co. to help you through it. As promised, our archives are being updated. Take a look, let me know what you think so far: www.alberrios.com/c. As the year moves forward, expect al berrios & co. to launch several initiatives aimed at enhancing your insight into consumers, from more consumer studies, to executive panels, to interviews of industry thinkers (and fellow readers), and deeper, consumer-centric analyses of your favorite brands. All these developments will be featured in these REPORTS, with improved editorial, guest writers, and of course, the witty commentary from yours truly that has probably offended half your fellow readers. That said, my staff and I wish you an enlightening and prosperous 2003. Enjoy the rest.

Everyone's doing it. It's whistleblowing and frustrated execs all over the country with loads of zealousness and little to no respect for management are looking extra closely at corporate initiatives for scrupulous deals that they can "blow the lid off of" as platforms from which to launch a successful "consulting" career. Thanks again Watkins, Rowley, and Cooper. No really, thanks ladies. "Assets Reported In Bankruptcies Hit Yearly Record", meaning thanks to whistleblowers, we not only got rid of crappy managers, but brought hundreds of billions of dollars of cheap assets into the market for value hunters that can make better use of them. But are whistleblowers true champions of consumers? It's difficult to get past the thousands of unemployed people, devastated regional economies resulting from lost wages, and increasing consumer prices occurring throughout various industries as a result of decreased competition and decreased corporate spending, but in the long run, with better management keeping ethics and fairness at the top of their priority list, consumers should be the beneficiaries, as consumer value supercedes selfishness and greed. Well, ideally, at least.

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[2] BRANDSTRATEGY: The Art & Science of Experiences

Does an experience affect a consumer's decision to buy your brand? Seems fairly easy, but from email campaigns to retail merchandising, consumer experiences with brands are still largely trial and error because brands have difficulty gauging consumer perceptions and reactions to the brand and a company's attempt to sell it. Due to positive experiences, "35% of retailers posted revenue increases of 50% or more compared with the same period last year… and 61% posted gains of 25% or more."

BOTTOM LINE: Experience that result in numbers like these have several elements. Design (including performance, which is the #1 factor attributable to a brand's credibility), available information about a brand (where I would include how a brand responded to consumer inquiries, whether through a sales force or website. 60% of online adults, whose opinions changed, ended up switching brands at purchase [as a direct result of] exposure to online information about products), and community (which is one of a brand's most attractive qualities and is "the degree to which consumers identify with other brand users"). Now that you have the ammo, get the weapon - al berrios & co. has dedicated resources to gauge consumers' every thought and behavior to make your trials more successful and less error-prone.

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[3] CONSUMERFOCUS: The Kids of the Internet

Continue >>

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[4] MEDIA: Broadband: Fast Access + Interactivity are the Gospel in 2003

You've read the same articles I have, you've seen the same trends I've seen, but I've put it all together, because maybe you haven't realized all the aspects involved. Broadband, leads to iTV/DTV (interactive or digital television), which leads to VOD/PPV (video on demand or pay per view), which leads to SMS (short messaging service, which is text messages on your wireless handheld, widely used by television programs in other parts of the world to encourage viewer interaction with their programs in real time), which leads to PVR/DVD (personal video recorders, a step up from VCRs, which then allows viewers to control when they watch their favorite content and [recordable] digital video discs, which have usurped VHS in sales to totally dominate the content ownership market with lower prices, greater quality, and convenience), which leads to interactive experiences with consumers' favorite brands. All these digital advances require new hardware, hence the big HDTV (high definition television, capable of displaying digital signals from broadcasters in their optimal state) wave fast approaching, largely in part because the FCC thinks we need it more than because consumers want it (and largely against the wishes of the broadcasters and cable operators that have to make billions in technology investments without immediate competitive need) and the Wi-Fi tsunami (wireless fidelity, made to connect all your appliances without wires in your homes and perceived to be the next area of unprecedented consumer demand - we'll see.) And with all of these methods to easily manipulate content per consumer, piracy and infringement issues are demanding more and more time (and go-nowhere solutions) from content owners. As technology pushes forward, (to consumers' delights? Regardless of discretionary income? Without plain-English operating instructions?) the content for all that technology is getting left behind. Who knew that consumers wanted fast access and the ability to interact with their fellow consumers and their favorite brands? You knew, but you didn't want to believe it, as that would mean losing your control to the consumer.

BOTTOM LINE: Now the good(?) news: you've got three years to catch up, during which time you can start understanding the mind-bending media choices available to consumers from their point of view, not yours. During this time, you can also start understanding concepts like "replacement cycles", basically, at which point in the life of a consumer's life does (s)he typically upgrade their current "technology solution". During this time, you can start understanding the value consumers associate to your medium compared to other medium, in a future media environment. During this time, you can start understanding how convergence (remember that term from 2000? Yup, it's happening, that's what we're talking about here,) will affect consumer's media habits. During this time, you can figure out how to market yourself in this new media environment, and which audience is the best for you to reach. And finally, during this time, you can also start figuring out how your company will make money in the middle of this consumer revolution in how they use your content and brand(s). Thank goodness you can call us for these answers. You already have lots of other stuff to worry about anyway.

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[5] MANAGEMENT: al berrios & co. Recommendation For Hub & Spoke Airliners

How easy is it to change the airline industry - rework labor agreements, refinance fleet debt, upgrade technology and distribution, focus on price, or service, or even more amenities. Right? Wrong. The dominant strategy seems to be to emulate low-cost regional carriers like jetBlue and Southwest, since it costs the big hub and spoke operators twice as much to fly passengers 500 miles as it does the lower cost operators. But from most literature out there, everyone seems to be forgetting the greatest advantage that the hub and spoke players offer passengers over regional carriers - their international, major city, long distance routes. These big guys are set up the way they are because consumers wanted to travel greater and greater distances. But due to the success of regional carriers exploiting business from consumers that want to travel shorter distances, the larger carriers have forgotten their unique selling proposition - that they can carry consumers farther than the little guys.

BOTTOM LINE: It's apparent that the larger carriers are greedy, unwilling to cede the short-distance travel market or specific consumer segments to the regional carriers. (In their defense, long-distance tourist travel is slow with terrorism concerns.) But when consumers need to travel abroad, they can only go to the larger carriers. Plenty of mileage grants plenty of points and that's what's made their loyalty programs so successful. al berrios & co. proposes that airlines stop thinking operationally and financially and totally alter their positioning to reflect consumer needs, not theirs. The positioning should be one where big carriers are the only solution for long-distance travel (more than for short distances), at fair prices (not discounted and with the understanding that flying has gradually become more of a commodity to be sought out for the cheapest price), with plenty of amenities (which airlines would charge for, not give for free) targeted to middle- to high-profit-margin travelers (as opposed to the low-profit masses the hub and spoke system is currently designed for) and differentiating themselves from each other with their routes. After a significant change to schedules, workforce size, and fleet composition, we believe that an idea like this is what's ultimately going to keep them operating, even though it may be a significantly smaller, yet more competitive, size. Some carriers have realized this, finally offering larger, sleeping-capable passenger accommodations, however the costs are still prohibitive to the average consumer, making these concepts slow to catch on.

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[6] Correction: In 12/17/02's REPORT, I incorrectly stated that copywriter Jon Mindell "guid[ed] other talented copywriters to come up with campaigns like the 'Aflac' duck at Kaplan Thaler Group." He has co-written and supervised Gillette's Right Guard copy featuring athletes in the mid-90s. For P&G, he worked on Folgers coffee, and wrote, among other spots, the "Irish Dance Morning" commercial. Sorry about that Jon.

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Disclaimer: The recommendations, commentary and opinions published herein are based on public information sometimes referenced via hyperlinks. Any similarities or likeness to any ideas or commentary from any other sources not referenced is purely coincidental. al berrios & co. cannot control any results occurring from advice obtained from this publication nor any opinion(s) conveyed by any reader of this publication.

(c) 2001-2005. All Rights Reserved. al berrios & company, inc. Published by al berrios & co. This Report may not be reproduced or redistributed in any form without written permission from al berrios & co., subject to penalty.

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