IMKTG REPORT February 25 2003

al berrios & co. IMKTG REPORT 02.25.03: Toys, Reevaluating Your HR

THIS WEEK'S CONTENTS ARE:
new name & function >> [1] UPDATES: Executive Summary of REPORT
[**] BRANDSTRATEGY + CONSUMERFOCUS: Analysis of Toy Industry's Survival
[4] MEDIA: Invasive Media
[5] MANAGEMENT: Re-Evaluating Your Entry Level HR Strategies
[6] Events REPORT: American International Toy Fair 2003 (100th anniversary)
[7] Opinion REPORT: Pfizer Shames Ad Agencies

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[1] UPDATES: Executive Summary of REPORT

>> "I've been here for 2 and half years and it's my first dot com experience and being in the dept that I'm in, I always get the first scoop in news and I feel like I'm part of the action, like I can make or break the company." - source: full time employee, iVillage.com

Good morning execs,

First I'd like to announce that our informal Prediction concerning the effects of the storm last week occurred, with Federated Dept. Stores blaming the storm for weaker than expected sales and FOX recording their largest audience in history with the last episode of "Joe Millionaire" the night of the storm. Keep reading for further facts-based Predictions from al berrios & co.

Since we launched our Opinions REPORT last month (extra Opinion REPORT below and next Opinion in next week's IMKTG REPORT), this section no longer needed to be called "JUST SAY IT". Due to our expanding and in-depth coverage and reporting, this section will now serve to offer you an executive summary of the REPORT, as well as internal al berrios & co. updates.

For the first time since launching this new format, I am combining two sections due to the amount of coverage I undertook to write it up. Aside from gathering the opinions of industry experts, our REPORT on the Toy Industry highlights companies with innovative brands. You will find it informative, even if you're already familiar with the industry.

Today, we also launch our first in a series of human resource strategies, where we discuss human resource from the frontlines, not the executive suite. And as we'll show you, things aren't what they appear to be when it comes to business morale and unity.

And finally, I'm covering the American International Toy Fair that occurred last week below in our recently launched Events REPORT. It'll be like you were there.

Enjoy the REPORT.

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[**] BRANDSTRATEGY + CONSUMERFOCUS: Analysis of Toy Industry's Survival

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[4] MEDIA: Invasive Media

You may or may not have heard of a U.K. agency selling college student foreheads as media? Widely reported about two weeks ago, it's a concept not that different from the idea of simply paying consumers to be loyal to your brand. Reactions have varied, but even the "forehead owners" agree they mainly do what they do for the money. Enter telemarketing, internet pop-up ads, email spam, unsolicited junk mail, and fraudulent weight loss late night infomercials. Not all are widely considered to be the most effective channels to generate positive awareness for brands, especially when the ultimate target, the consumer, generally disapproves of their valuable time being wasted by these channels. However, they persist because regardless of the nature of the brand awareness, consumer response is always high, whether intentional or accidental. Supposedly, as consumers become increasingly annoyed, and more accustomed to what was a novelty, response to these media should decrease. However, one would have expected that the novelty of the telephone would have worn off by now, and yet, it's just now that a national Do-Not-Call list idea has seriously gained momentum with marketers and consumers. (I personally get up to 7 unsolicited telemarketing calls per day, even on weekends.)

BOTTOM LINE: If it's as easy as paying us to use their brands, why do companies continue to pursue media strategies that increase their consumer risk (introduced by al berrios & co. two weeks ago here)? The real question is whether short-term response is more valuable than long-term customer retention? Let's face it, most times, a campaign that utilizes these forms of media doesn't acquire new customers, since many new customers aren't aware they're participating in a sales pitch at all. That's not to say that these tactics aren't effective when used appropriately. What makes them invasive isn't the tactic, but the approach, that has altered consumers to automatically react negatively before even evaluating an interaction. Chances are, if you're using these tactics, you probably don't have the budget or scale to alter consumer behavior to your advantage, so al berrios & co. suggests building, caring for, and managing your own list of prospects or customers. Attract them with your marketing, retain them with these tactics, not vice versa.

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[5] MANAGEMENT: Re-Evaluating Your Entry Level HR Strategies

"In almost every one of our businesses, there are 15% to 20% of the people who add 80% of the value in terms of their efforts and experience." - Henry M. Paulson, chairman and chief executive officer, Goldman Sachs Group Inc.

"I have heard that in any society, organization or group, 14 percent of the people do the work, and the other 86 percent go along for the ride. Obviously, that figure is approximate and, in some places, it could vary to lower or much higher levels. But I think it's safe to say that in most places, a small minority of the people involved do[es] most of the work." - Deroy Murdock, New York commentator, syndicated columnist with the Scripps Howard News Service, and a senior fellow with the Atlas Economic Research Foundation in Fairfax, Virginia

"I am a happy employee in a great job at a company I care deeply about." Peter Chernin, President, News Corp., IMKTG REPORT 09.24.02

"There [is] no employee relations at agencies since hiring and firing [work] on client terms. A tie to a client is the only skill you need to work." - Al Berrios, Opinion REPORT, Feb 4, 2003

"I've been here for 2 and half years and it's my first dot com experience and being in the dept that I'm in, I always get the first scoop in news and I feel like I'm part of the action, like I can make or break the company." - full time employee, iVillage.com

"There are big quarterly meetings to share information and upper [management] gives a big general 'Thank You' to the teams that make FP Brands' toys great. *BUT* no matter how successful we are, a lot of new hires are temps given a (promise? hope? mirage?) of future employment that never comes. And when its time to celebrate the success of the team, these people are not allowed to take part in the celebration or the perks. Its sad to see them get so disrespected; so disowned after being proud and hardworking through the years." - temp employee, Fisher Price, Mattel

"I've been at JPMC for nearly half a year now. One of the greatest things about this bank is its diversity. Every nationality and ethnicity is represented in this workforce. However, as is the case with every large global corporation, bureaucracy rules every department. Every process for every job must be documented, down to the most minute detail, to the point of [documenting] the documentation. Among the red tape is endless internal bickering. Beneath the surface of the 'one firm, one team' strategy, departments and lines of businesses continue [to] compete through performance numbers and refuse to share data. The team is constantly probed for feedback, but this feedback disappears into a black hole, as if asking for feedback is a way for management to fool themselves into thinking progress is being made." - data analyst, J.P. Morgan Chase

BOTTOM LINE: Where does the system break down, that some employees become brand advocates while others simply work for the paycheck? Countless policies, incentives, benefits, evaluations don't work, and seldom discover the transition point when a new and motivated employee becomes a disgruntled liability. The solution: involvement. In almost every study and analysis conducted at al berrios & co., at other firms, or at academic institutions the obvious solution is to involve your employee more in the real status of the company, stuff that you wouldn't normally disclose to the public. This fulfills the natural human desire to be in the know first, to gossip, to know more than the next person and keeps employees satisfied in understanding their particular contribution to the rest of the organization, regardless of size. Fancy titles are thought to instill this same emotion, but it only serves to deepen bureaucracy, not motivate a workforce. Why does involvement work better than monetary bonuses? Think of your employees like people, not just assets to do with whatever you want. As people, they enjoy interacting with other people and building relationships. These relationships can evolve into communities that nurture and teach themselves. They have common goals and feel great when they meet those goals together. This interaction in the workforce is referred to as "Social Capital" by Professor Peter Cappelli, George W. Taylor Professor of Management, The Wharton School and Director of the Center for Human Resources, in his argument on whether firing and re-hiring is better or worse than retraining. Ultimately, Prof. Cappelli believes in retraining, since happy workers reflects in overall business and stock performance. But if you've ever hired and worked with more than 5 people, then you know this to be true already - that a close-knit team works better than a strangers. But does too much "social capital" reduce productivity? And isn't an inbred culture detrimental to innovation? Although Prof. Cappelli doesn't answer these questions, I'm sure you've encountered situations where there's more gossiping going on than work. So attaining that optimal mix of productivity and performance lies in a mix of incentives awarding group innovation and performance. A team of McKinsey & Co. consultants argue that since most incentives are pay-for-performance based (i.e. stock options), they promote individualistic behavior and a tendency to only work on what your pay is based. However, by minimizing dependence on pay-for-performance to levels equal to innovation incentives, workers are able to deliver both. But does this hold true in a retail environment, where paying minimum wage is a long-established law to becoming profitable? McKinsey offers ideas on commission-based retail environments, but doesn't provide ideas on how "non-commission-based" retailers can motivate their workforce and innovate on things like customer service and distribution. In next week's analysis, al berrios & co. will present to you our ideas on how "non-commission-based" retailers can motivate and innovate with their sales force.

RELATED ARTICLES:
<< Love Your Customers? Then Love Your Service Reps
>> Re-Evaluating Your Entry Level HR Strategy: II
>> Re-Evaluating Your Entry Level HR Strategies: Unions & EEOC
>> Re-Evaluating Your Entry Level HR Strategies: State of Education

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[6] Events REPORT: American International Toy Fair 2003 (100th anniversary)

Occurring right in the middle of the worst blizzard of the decade, and concurrent with the Magic (fashion and apparel) show in Vegas, the Toy Fair held it's own pretty well, dominating Javitz in New York from Sunday through Wednesday. Even on Wednesday, exhibitors were upbeat and more than willing to share their insight into their market and industry. Although attendance suffered, it was still impressive, with 1,500 exhibitors and over 20,000 attendees. I arrived early Wednesday morning expecting a contact to arrange for an invitation (strictly industry-only allowed), but when I got to the booth to request it, it apparently wasn't there, and my contact's company wasn't even registered. So on goes the Al Berrios-wit, as I attempt to parlay my way past an obviously unimpressed-by-coolness older fellow. After a 15-minute exchange, I convinced the very reasonable attendant that I was actually a brand design consultant for a certain toy manufacturer. I'm in! I immediately headed for the free literature then plotted my course throughout the expansive floor. A quick walk across and two discussions felt like 10 minutes, but was actually 60, and I hadn't even visited the four other exhibition floors within Javitz. Clearly, I didn't budget my time properly, and after several more discussions and a serious aisle-to-aisle walk of each exhibition floor, I decided to simply save time and pick up press kits for some of the most interesting companies (since 1,500 press kits simply won't do.) After locating the press center, I was immediately stopped and practically thrown out of the "ultra-exclusive" press area, where only members of the press were allowed to sit, hang out, and have a good time surrounded by countless press kits. Naturally, this situation didn't agree with me, so on went the Al-wit again. This time, it was directed at an attendant that appeared to know everyone and worked this gig for at least 20 years. In a round-about question & answer, I arrived at the key to getting access to the area - I needed proof of my "press" status in the form of a publication I write for. Well, if you're reading this, then you know I've already got that - the IMKTG REPORT. Upon showing her the website, I was granted access AND a press pass, making yours truly an official member of "the media". Ooooooo. I picked up at least 70 lbs of collateral (yes, carried it by hand on public transportation), regrouped, then headed back to the office to call it a day. The fresh analysis of the toy industry, as discussed above, is the result of this day.

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[7] Opinion REPORT: Pfizer Shames Ad Agencies

If you haven't read, Pfizer wants to re-organize their agency compensation so that they cut costs. In this effort, they have requested their various agencies for information like how much they pay their staff, how much they pay their outside contractors, and authority to hire people on their accounts. This sort of arrangement has typically been the case I've been admonishing for the last two years (since it became more evident), however, to request it in writing is a spit in the face to all advertising professionals. It epitomizes that lack of respect companies have for their advertising agencies. I continue to blame the agency for this deterioration in professionalism, because if clients have been allowed to get away with this, then something like Pfizer's moves last week was bound to happen. To advertising agency executives, follow Deutch's response by quitting accounts that insult your intelligence. I'm not a big fan of the notorious Deutch arrogance, since I've always considered arrogance as a common substitute for intelligence when it comes to marketers, however, as an industry that undeniably has an effect on a company's sales, advertising should consider this insult as a challenge of your abilities, and face it united.

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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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