Archive for May, 2008

Price fixe fill-up at the gas station

Thursday, May 29th, 2008

With gas prices surpassing a whopping $4.00 per gallon, millions of Americans are collecting the pennies in their couches for their “drive to work” funds. Cash-strapped Americans are canceling summer vacation plans, looking for jobs closer to home and changing their consumer and purchasing behavior as they desperately attempt to save money in order to be able to fill their tanks. But in the backs of everyone’s minds is a lingering question—just how much more expensive is gas going to get?


As a way to help Americans pay for gas, Chrysler, is offering Americans the opportunity to improve their luck at the pumps. Through their new “Let’s Refuel America” program, the company is offering a set price of $2.99 per gallon for the next three years with the purchase of a Dodge, Chrysler, or Jeep vehicle (select vehicles qualify). The strategy has led to an increase in sales and additional car manufacturers are quickly following suit. American Suzuki is offering zero percent financing and three months of free gas with the purchase of a 2007 or 2008 vehicle.

Just a few years back, $2.99 for gas seemed obscene. Now, it seems like a bargain and some cash-strapped Americans stuck in a car buying decision are jumping at the offer. This is a great marketing strategy in theory, but the reality is that when you do the math, this won’t save consumers that much money over the long haul. Due to the economic fallout, the rising cost of gas, and the emphasis on global warming (all of which are extremely important to consumers), car sales are at record lows. In fact, for the past five months, Toyota, which many believed was immune to the effects of a sour economy, has not only reported falling sales, but its inventory of unsold cars and trucks is larger than ever before. Something does need to be done to boost car sales and help get our economy back on its feet—but Chrysler and Suzuki are looking at it the wrong way.

Yes, this strategy does promise to alleviate a customer pain point. Everywhere you turn from the media to bloggers to your friends, family and neighbors, people are feeling pain at the pump. But is the promise of fixed gas rates so compelling that it’s worth footing the extra cash each month towards the increased car and insurance payments that generally come with buying or leasing a new car? Plus, in today’s environmentally-aware world, will consumers really be interested in a Dodge Ram which gets 15 miles per gallon—even if they get a cheaper gas rate?

Jeeps, Chryslers and Dodges generally don’t get good gas mileage and in an economic downturn, it’s the cost of gas per mile driven that matters more than the cost of gas per gallon. According to TheStreet.com, at $4.03 per gallon of gas, a Dodge Ram costs $0.27 per mile to drive. That adds up—and not in savings. That’s more money on gas per year and more damage to the environment. Chrysler and Suzuki would be better off touting better fuel efficiency, lower emissions and cash rebates to interested buyers—rather than desperately trying to get cars off the lot that aren’t saving consumers money or helping to save the environment.

Perez…At it Again

Tuesday, May 27th, 2008

Perez Hilton and I have a love/hate relationship. When I first immersed myself in “Hollywood’s Most Hated Site” about two years ago, I found myself instantly addicted to the one-stop site for all the celebrity gossip my heart could desire. Perez Hilton’s candid updates on my favorite celebrities’ lives amused me and even though none of his blogs affected or pertained to my life, it wasn’t long before I needed my daily Perez fix.


Fast-forward to the present, and the self-proclaimed “Queen of all Media” has become a full-fledged brand—and quite an egotistical one. Gone are the days when I logged on to read raw, undiluted celebrity gossip from his site. Now, I’m forced to sort through Perez’s “worthwhile causes,” his latest personal style update, and news on his upcoming clothing line. I’m in favor of helping charities, but it’s a stretch when a blogger feigns “support” by flexing his muscles to illustrate the influence he thinks he has on his readers.

And since when is a 30-year-old blogger, who has made his name by bashing celebrities and doodling on their photographs, considered a worthwhile guest on national news networks? A few months ago, CNN’s Showbiz Tonight actually brought Hilton on air to discuss Britney Spears’ latest psychiatric lock-down. Yes, you read correctly.

It’s no wonder that foreign countries question America’s priorities when they see what our media headlines have been reduced to. By allowing a narcissistic blogger access to mainstream media, we are dumbing down our culture, one celebrity hookup at a time.

Don’t get me wrong, I want to know the reason for the latest Lohan family feud and whose heart John Mayer is breaking now, but I want Perez to stay where he belongs—on my computer screen.

Come on America, it is time to think outside the blog.

Under Review: MLB’s Ban on Instant Replay

Friday, May 23rd, 2008

Question: What’s a 53-year old technology that Major League Baseball doesn’t use?

Answer: Instant replay.

Sadly, that’s not a joke. Instant replay is rampant in professional sports. The NFL, NBA and NHL have it. It’s at cricket, rugby and tennis matches. Even NASCAR uses it, though sparingly. It’s almost impossible to believe that after 50-plus years, instant replay still hasn’t found its way into America’s favorite pastime, MLB.

And it isn’t for lack of need. In a bizarre string of events over six days and in three different ballparks, umpires (incorrectly) ruled four times that a home run was not a home run. The would-be-homers are getting a lot of press. See here, here, here and, for hundreds of more hits, here.

Alex Rodriguez, Geovany Soto, Ben Francisco and Carlos Delgado were the four batters who hit the phantom home-runs. It would have been Carlos Delgado’s sixth home run of the year, and given his abysmal start to the season, he really needed it. Everyone who saw the replay knew it was a home run.

“I —-ed it up. I’m the one who thought it was a —- foul ball. I saw it on the replay. I’m the one who —-ed it up so you can put that in your paper,” said home plate umpire for the Mets vs. Yankees game, Bob Davidson. “Bolts and nuts, I —-ed up. You’ve just got to move on. No one feels worse about it than I do.”

It’s only a matter of time before MLB releases its long-established hold on “the good ol’ days.” At this point, that’s all the holdout can be. It’s not about fear of slowing down the game. It’s not about lack of technology. And it isn’t about disagreement (this past off-season, general managers voted 25 to 5 in favor of using instant replay).

But, soon, MLB is going to find it has a PR nightmare on its hands. The league took (and continues to take) a hit from the steroid scandals. And to counter the negative attitude of fans, the league should get out in front of this issue and institute instant replay immediately. Baseball has long been admired as a sport showcasing American values. Fairness and honesty—both exemplified by reviewing a play and making the accurate call—are values we can all stand behind.

GMs, coaches, players and fans want instant replay. What are you waiting for, Bud?

You Want Trans Fat-Free Fries with That?

Thursday, May 22nd, 2008

First, Kentucky Fried Chicken became KFC to reduce the negative impact of the word “fried,” and while the Colonel may have been rolling over in his imaginary grave, the general public didn’t seem to think much of it. A few years later, however, the fast food chain went trans fat free, and people started to take notice. Wendy’s, Taco Bell and other fast food chains started announcing plans to switch from highly-criticized frying practices and “trans fat free” became as standard as free ketchup. While doctors weren’t quite prescribing a #6 combo a day, the fast food industry seemed to gain a bit of goodwill for adopting healthier – albeit more expensive – practices.

McDonald’s, however, wasn’t able to jump on the healthy fast food bandwagon so easily. Although it had announced early on it would be changing its processes, the fast food giant faltered repeatedly, drawing widespread criticism and threats of lawsuits. McDonald’s blamed its failures on overwhelming cost and the challenges of converting such a huge system of stores — oh yeah, and reluctance to change the taste of its fries.


What’s so bad about trans fat anyway?

On Wednesday, however, CEO Jim Skinner announced that the company had been using trans fat free oil to cook its fries, chicken, Filet-O-Fish and other menu items for months without issue or consumer complaint. And much to the chagrin of all high school freshmen whose dreams of becoming star linemen rested on their 20 McNugget-a-day weight gain program, it had been secretly helping its customers get juussst a little healthier.

When you think about it, it’s a great communications strategy. Consider the brand barriers McDonald’s faced: 1. It had lost credibility with industry critics, 2. The trans fat story is SOOOO October 2006, and 3. When it comes to Mickey D’s fries, consumers mostly care how fast they get them and that they’re hot and salty – not how healthy they are.

With its sneaky strategy, McDonald’s has proven it can do it healthier and still do it right. What’s more, in a market environment in which even blue-chip companies are suffering, the company is actually doing something that costs them more money, sacrificing bigger margins for better customer health. Kudos to its marketing peeps for making the most of a challenging situation, and as long as McDonald’s doesn’t do away with the big straws, the company’s all right with me.

Want a New Phone? Head to Dior

Tuesday, May 20th, 2008

Today’s Wall Street Journal reported that French luxury-goods company, Christian Dior, is launching its new line of mobile phones. Yes, you read that right. Now you can buy a Dior cell phone. And this is not the first high-fashion luxury designer to make the leap from couture to cell phones. Dior is following in the footsteps of Prada, Giorgio Armani and Dolce & Gabbana each of which has turned their luxury phones into considerable business. But, you won’t find these phones in the U.S. – in fact, you won’t even find them in Europe. While the phones will work globally (except for Japan and Korea), they will only be available in emerging markets like China and Russia where consumers are hungry for big brands and cell phones are not viewed as disposable commodities. 

 

The Dior phone will feature a slim clamshell design, complete with crystals along the top cover. The phone comes with all the regular features of a cell phone – touchscreen, camera, ringtones – but offers one addition: a remote control. Called the “My Dior,” the remote is for women who don’t want to rummage through their big designer bags to find their phones. The My Dior clips to the outside of a bag for easier access. Through Bluetooth technology, it communicates with the main phone, so users can perform basic functions with it, such as placing and answering calls. But at $5,000 a pop, will consumers actually buy this phone? Dior’s phone is significantly pricier than that of its rivals. Prada and D&G’s phones are priced at a much lower, though still unreasonable, $600.

So, why cell phones? In light of the grim economy and declining retail sales, luxury fashion houses are looking for additional ways to boost sales and make money. But are they sacrificing the brand in exchange for retail gain? This is risky business. As branding experts, we advise our clients to choose line extensions that support and strengthen the brand. Choosing a new product or extension with the intention of increasing short term growth or sales, almost always is a detriment to the brand’s reputation. When consumers think of Dior they think of high-end luxury fashion. They don’t think of cell phones – nor should they. Line extensions like these can risk cheapening the brand name, causing it to lose its exclusivity and distinctiveness. These designers should stick to what they know – and that’s couture, not phones.