IMKTG REPORT January 14 2003

al berrios & co. IMKTG REPORT 01.14.03: CEOs, Culture, News, more…

THIS WEEK'S CONTENTS ARE:
[1] JUST SAY IT: Chief Executive Office: Not What It Used To Be
[2] BRANDSTRATEGY: Customer Service Sucks!
[3] CONSUMERFOCUS: The Simplification of Culture
[4] MEDIA: Frequency, Reach, Metrics, and al berrios -ville
[5] MANAGEMENT: The Future of News Content

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[1] JUST SAY IT: Chief Executive Office: Not What It Used To Be

>> "There is no adequate pop cultural backlash against the marketplace's excesses of the past few years, so everyone's looking to the past to give us something purer, more innovative and less marketing department driven." - Maureen Tkacik, staff reporter of The Wall Street Journal.

Good morning execs,

It finally happened - Steve Case quit. Bummer. Tommy Mattola quit. CNN's Walter Isaacson quit. Trent Lott quit. Don't be surprised when Eisner (Disney) and Weil (Citigroup) quit (soon), too. Is anything sacred? Obviously not. But why not? What happened? We are living in an age that returns power back to the consumer, the shareholder, the constituent. It is now impossible for a chief executive to hide behind subordinates, sugar-coated reports, and faceless focus groups. An executive needs to have a bottom-up view of what Joe Q. Public wants in order to keep his job. Two examples that come to mind is P&G's Lafley, and Marriott's Bill Marriott, both of which spend an enormous amount of time talking to customers and the employees that deal with them. As you'll read below, keeping employees happy is key to keeping customers happy. Understanding consumer trends in culture and media are important, when you hear it directly from them, not your ad agency. (When you choose your professional services based on the lowest bid, they're "vendors" selling you everything you're willing to buy, not "partners" helping you solve problems you actually have.) al berrios & co. doesn't sugar-coat. Our independence allows us to keep our ears to the ground, not on the bottom line. For reliable, credible, and unbiased insight and recommendations on your most pressing issue, you can reach me directly at (917) 744 - 6579.

This week we continue to discuss what to look for in 2003 by covering the state of customer service, media, the simplification of culture and news content. Last week, we reviewed whistleblowing, broadband, and monitoring your kids' online activities. And then major publications did too. Enjoy it here first.

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[2] BRANDSTRATEGY: Customer Service Sucks!

I absolutely dread going to Sears or Fleet. At Sears, I've purchased a stove and garage door opener, and in both instances, the service I received was absolutely terrible. It was clear to me that management didn't care enough about me to want me to spend in their store. At Fleet, a simple change of address is an unavoidable maze of personnel and technology - it's no wonder their stock is down. With all their ads proclaiming all my needs can be met, the only real need I have isn't - customer service. I'm looking for efficient, friendly service. And when I have a problem, I'm looking for honest answers and alternative solutions. I'm not the only one with these experiences. Airline complaints, for example, have been up 9% for 2002, even though government figures show the opposite: "The Department of Transportation, which compiles those statistics, says it believes incidents are underreported, in part because many travelers still don't know how or where to file complaints."

BOTTOM LINE: Why is one of the oldest and most commonsense offerings by brands still one of the most difficult to achieve? Several factors have been attributed to the decline in customer service, including 1) state of anxiety over massive industry-wide lay-offs, creating a feeling of no job security, 2) reduced staff increases burden for remaining, 3) compensation levels aren't suitable to meet increased pressures 4) customer demand is increasing in certain industries, even though personnel isn't. Fixing this isn't a matter of investing more in inventory or the customer, but investing more in your current staff, which translates into better treatment of customers, and ultimately improved experiences, and as we discussed last week, it's all about experiences. An al berrios & co. Analysis of Consumer Value is discovering that customer service is a key component of satisfaction, an element of value, and a reason to spend. Because customer service involves a person's time, it is important to not waste that time. That time can easily be spent at your competitor. Although this REPORT emphasizes listening and responding to consumers, the strategy being discussed here is listening and responding to your sales staff. They are the frontlines of your marketing communications. And if they're unhappy, they will make your consumers unhappy. From fast food to airlines, there's no reason why you should have minimum-wage, untrained, and overworked sales people dealing with your most important asset - the customer.

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[3] CONSUMERFOCUS: The Simplification of Culture

In our 12.17.02 REPORT, our analysis of fashion's retro direction highlighted an obvious trend in consumer tastes. But it's not just fashion - notice how every major search engine looks like Google, with their simple interface and instant gratification? New magazines have launched to simplify shopping, cooking, and your home. From architecture to shoes, American culture has changed, yet marketers don't seem to want to sell to this simpler lifestyle because the strategy has always been upgrading technology - they don't want to lose their technological edge (or profit margins.) In an email interview with Maureen Tkacik, a Staff Reporter of The Wall Street Journal who covers cultural trends, I asked if [a] return to classic apparel is a lifestyle phenomenon or a generational phenomenon: "I think it's a generational phenomenon. Not a lot feels new nowadays to kids; there is no adequate pop cultural backlash against the marketplace's excesses of the past few years, so everyone's looking to the past to give us something purer, more innovative and less marketing department driven. From Elvis to Jam Master Jay to Leonard Skyn[y]rd to Guns and Roses and Nirvana, every musical once-great seems to be benefiting, as have the accompanying sartorial choices." In her opinion, the piece of clothing [serving as] the biggest indicator of these retro changes is "shoes. I went to a movie the other night and the cool kids were all wearing either Converse Chuck Taylors or Air Force 1s; the semi-cool kids were sporting Pumas. It might have been 1983."

BOTTOM LINE: It's no secret that consumers demand innovation, but when consumers haven't been around long enough to remember the past, technically, retro is innovative. But what makes this a cultural shift is the demand from older consumers as well, to resume a way of life similar to the way they lived as kids. Based on an al berrios & co. analysis of publicly available consumer data on this subject, the average age of consumers demanding simplicity is around 38 years old. After that, it seems that the majority of consumers are not demanding retro as much as their younger counterparts. You don't have to be a historian to analyze the rationale for this mentality, but you do have to let go of those old marketing precepts about what you think works and adopt a "demand-side" approach to your product innovations.

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[4] MEDIA: Frequency, Reach, Metrics, and al berrios -ville

The more involved (and longer) you make your message to your target audience, the greater the risk that a negative perception will be associated with your brand. The clearer (and shorter) the message, your risk is reduced. The trick, of course, is in repetition. The more you repeat long messages (45-60 seconds), your risk increases again. And the more you repeat short messages (15-30 seconds), the lower your risk. Here's the trickier part: the shorter the message, the greater the possibility that your target audience will only remember the worst message, yet the longer the message, and you improve the possibility that your audience will remember a positive message (because you have an opportunity to say more about your brand). Add to this media clutter, ineffective measuring methodologies, and advanced technology that allows audiences to skip ads, and things get a lot more complicated. So, with this in mind, should you increase frequency, reach, involvement, or delivery of your message?

BOTTOM LINE: Effective ads share a common characteristic, such as similar backgrounds, logo, tag lines, which greatly improve positive association of the same brand in multiple executions of a message, whether the reach was incidental or planned. So whether you decide to name a town after your brand, place your brand on a cop car, in a cab seat, on a pool cue, or on a newspaper vending box, as long as you maintain similar features consistent, the likelihood of your audience remembering your brand improves, even though delivery methods like these are only short-time delivery methods. Are you concerned with overlapping and redundancy in your media? Don't be - that's part of the process in getting your audience to come in contact with your message. Although consumer involvement with most media has become increasingly difficult to measure (Nielsen and Arbitron experience annual increases in costs and decreases in audience participation for their panels), it is reasonable to assume that your efforts, whether wide or narrow, do influence your audience. Whether that influence is positive or negative depends on innovative creative as well as a strategic combination of delivery formats and frequency of messages. (And no, you don't need several hundred million dollars to influence your audience. Precision media strategy with a limited budget can have the same affect on your audience with al berrios & co. managing your efforts.)

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[5] MANAGEMENT: The Future of News Content

On Monday, January 13, 2003, I attended a discussion with a distinguished panel of broadcast, print, and internet news industry executives. The panelists included: Mahesh Krishnamurti, Publisher and Chief Financial Officer, Worth Media; John Houseman, Executive Producer, WB11 (WPIX-TV) News at Ten; Alex Witt, anchor, MSNBC; Deroy Murdock, Syndicated Columnist, Scripps-Howard News Service; Anthony Duignan-Cabrera, Managing Editor, Space.com. The general consensus seemed to be a lack of sufficient news-gathering resources related to a general management approach of cutting costs. If four people can do the job of 8, why spend more? Quality suffers, but that's ok - when quality is poor (and entertainment value high), ratings increase. When quality is high (and information value high), ratings decrease. That's not to say that quality information repels viewers in all cases - on the contrary, "niche [content] is the future of news" according to Alex Witt, and your viewers will remain loyal if you stick to what you know. But in a highly competitive environment, where one can argue that news content is oversupplied, should news producers cater to the lowest denominator, watering down their mission and content and censoring in support of sponsors, all for the sake of ratings, or should they trim back coverage for highly focused content that carves out a small, yet high-quality, niche?

BOTTOM LINE: The general consensus was that there had to be a delicate balance between information and entertainment, to build and hold onto an audience, then give them the information they want. But the question remained - what sort of information do viewers want? News service report the who's, what's, when's and where's, but rarely the why's or how's. Attributable to any number of reasons, it was clear that the panelists thought their industry could go a little further in offering all sides of a story, regardless of who gets offended. In the end, it's all about a "good story", according to John Houseman (and interestingly enough, the great display/graphics used to present that story, according to Deroy Murdock) and if a news service can't deliver at least that, then it will suffer in the long run. As for focusing on niche content, it appeared to remain a cable necessity, not network, although al berrios & co. would recommend greater niche experimentation amongst network news to fine tune their audience to justify incremental increases in prices for their ad time.

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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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