Marketing Management

General Motors announced the new Chevy Bolt will drive 238 miles without a charge.  Tesla has always been the leader when it comes to battery powered vehicles, but that appears there is competition on the horizon.  As the world see’s batteries and technology begin to take over the auto industry the electric vehicle will soon gain more popularity as the fear of range anxiety goes away for the drivers. There are more and more electric powered stations at grocery stores and gas stations along with other shops, malls and restaurants.

Technology and the electric battery in the car is very new to the auto industry. The technology is primarily driven by the Cellular and GPS capabilities in the vehicles and its only been in the past 10 years where the internet found its way into the vehicle of the consumer. The internet has been used in other vehicles such an police, emergency, business small and large fleet, along with others.  The internet and the electric battery are transforming the vehicle. As for the battery powered technology Tesla has primarily lead the industry with cutting edge technology that is now enjoying it’s 5th birthday since the first Tesla Model S hit the road. The Model 3 has  a premium battery that gives the vehicle over 300 mile range without a charge.

There are other benefits in purchasing electric vehicles, such as federal rebates up to 20%. The Chevy Bolt will be priced at close to 30K after the 7.5K rebate from the federal government.

The 228 mile range is determined by the  Environmental Protection Agency’s testing cycle for electric cars. The cars are tested in both city and highway’s.  General Motors and other auto manufacturers are committed to the electric car to comply with federal fuel economy standards.

The marketing for the Chevy Bolt began a year ago with the anticipated launch of the Bolt, and now the marketing will capitalize on the long range capabilities and other rich technology features.

Fun Facts: Current Range for electric vehicles:

• Chevy Bolt – 238 Miles
• Tesla Model 3 – 215
• BMW i3 – 114
• Nissan Leaf SV – 107
• Fiat 500e – 84
• Volkswagen e-Golf – 83
• Ford Focus electric – 76

 

 

As Apple prepares to launch the iPhone 7, and inventory for the phones hit the retail stores Samsung is scrambling to pull inventory for the Note 7 out of the retail stores.  As one manufacturer executes to perfection to make sure the big launch of the iPhone 7 is captured the other has a nightmare on their hands with a handful of bad publicity and market share that can easily move from Samsung to Apple during a huge launch for both companies.  And a product launch for the Note 7 could not of happened at a worst time,  right before Q4 and the Holiday Season.

Samsung released a statement on Tuesday September 13th informing the public that a software update will be available shortly that will only allow the new Samsung Note 7 battery to charge to 60% max.  Who wants a phone that will only charge to 60%. Not only has the Samsung put a recall out for the Note 7, but the fix for the problem is a 60% battery charge?  No thanks!

What set off the alarm for Samsung’s Note 7?  There were several cases around the country where the Note 7 would catch on fire from the battery overheating during charging and in one case a family came home to a house that was also caught on fire due to the Note 7 battery.

Apple, the only thing on fire for you is your hot iPhone 7 sales and your stock price. Product execution and delivery is a key ingredient along with great marketing when it comes to successful product launches. Samsung is dealing with the opposite; a manufacturers flaw, bad execution, marketing dollars wasted and a 14% stock decline since the incident.

 

http://www.nbcnews.com/tech/tech-news/galaxy-note-7-everything-we-know-about-samsung-s-too-n647901

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Recently I saw an Edward Jones commercial, showing a young woman video chatting with her dad and his financial advisor.  The young woman completed her first week of…work I assume, and the group was preparing to discuss her financial goals.  Namely, how to pay back her dad (haha).

In the same week that I saw the commercial, I read an article about 5 investment myths.  One of the myths is that you have to have a lot of money to invest.  Which is not true, ergo, a myth.

From the commercial, it looks like the young woman lives in a decent sized apartment in a city (expensive).  The Edward Jones building is likely in a skyscraper (expensive and intimidating).  I happen to invest with Edward Jones, and sometimes there’s a homeless man escaping the rain right outside the door to the small, first floor office.  Come to think of it, it’s the only floor in that building.  This office is in Tacoma, Washington…lots of wetness in those parts.  Anyways, this commercial doesn’t do anything to debunk the myth that you have to have a lot of money to invest.  Or that it’s something you can do by your own accord.  Student loans are high and not everyone, me for instance, was raised with the knowledge of investing.  The amount of debt people have coming out of college in absurd.  While investment companies may prefer to promote to the wealthy, they are missing a large opportunity to get young investors started early.  With large student loan debt, will come vast amounts of educated individuals looking to make decent money (hopefully).  I don’t understand why investment companies are not A) trying to debunk the myth that you have to have a lot of money to invest, and B) promoting their services to students, moving back in with their parents while they start their careers.  I’m pretty sure the percentage of the latter is greater than the percent of graduates who have it all figured out.  Additionally, since her dad is in the office, she was obviously raised understanding the benefits of investing.

About a month ago, my friend asked if she should do a Roth or Traditional 401(k) with her company.  I asked my financial advisor and, not only did he provide me his opinion (he said Traditional), he also told me that if my friends were interested in investing, the initial “commitment” he would ask for is $50 a month with intentions to increase that amount per year!  Not everyone does this, but doesn’t it make sense?  Get educated, career driven people to invest early, and over time you’ll have a good volume of clients making and investing decent amounts of money.

Another issue in this equation is getting my friends to reach out to my financial advisor, or any financial advisor.  Starting the journey through the unknown is scary, and it’s much easier to avoid it.  However, if the advertisements related more to this demographic, the process of investing might not be so intimidating.

Video: https://www.ispot.tv/ad/Anov/edward-jones-first-week

Myths article: http://finance.yahoo.com/news/5-common-costly-investing-myths-040000557.html;_ylt=AwrBEiTVwwlU2iAAB8eTmYlQ.

Chipotle Faces Yet Another PR Fiasco

By Nicholas Van Zandt

On August 31, 2016 it was reported in BuzzFeed that nearly 10,000 current and former employees of Chipotle had filed a new lawsuit against the burrito chain restaurant claiming that they were being required to perform unpaid work after their shifts had ended.  The suit alleges that Chipotle had violated federal labor laws by regularly failing to pay their staff for the hours that they worked.  This comes after Chipotle had already settled a similar lawsuit with former employees in 2015.

As the article points out, the announcement of this suit is another significant blow to the company’s reputation after it was revealed in 2015 that a number of Chipotle stores had caused food-borne illness outbreaks leading to a nationwide temporary shutdown.  This alone caused a 26.5% decline in sales in the first six months of 2016.

Plaintiffs have also alleged that Chipotle would promote employees to higher positions to avoid having to pay them overtime wages, however those employees claimed that there was no real difference in the work they were doing from their previous titles of crew member.

Recognizing the already tarnished reputation following the food illnesses, Chipotle for its part has been making efforts to improve its image among current and future employees.  In early August 2016 the chain announced that it was partnering with Guild Education to pay their employees up to $5,815 a year in tuition reimbursement which as part of the partnership agreement will allow them to pay as little as $250 a year in tuition.  They also offer health and dental benefits and paid time leave and vacation even for their hourly employees, benefits that are not available among their many competitors in the fast food industry.

 

References

Joanna Szabo, “Chipotle Workers File Wage and Hour Class Action Lawsuit,” TopClass Actions, August 19, 2015, Accessed on September 13, 2016, Available at: https://topclassactions.com/lawsuit-settlements/lawsuit-news/93469-chipotle-workers-file-wage-and-hour-class-action-lawsuit/

Venessa Wong, “Almost 10,000 Workers have Joined a Lawsuit Against Chipotle,” August 31, 2016, Accesssed on September 13, 2016, Available at: https://www.buzzfeed.com/venessawong/almost-10000-workers-joined-lawsuit-against-chipotle?utm_term=.mwxQNGRqE#.vajgONbMQ

Wells Fargo and the Repeating Cycle

By Nicholas Van Zandt

Wells Fargo, the nation’s biggest bank, is currently suffering from what may be this year’s greatest public relations crisis.  Recent news has announced that the bank fired 5300 employees and is paying $185 million in fines and $5 million in restitution as part of a giant cross-selling scam they were running on their customers.

As Cheryl Conner from Inc. points out, Wells Fargo did meet most of the four criteria of accountability in such instances, which includes:

1. Acknowledgement of the full role in the problem
2. Acceptance and acknowledgement of all consequences
3. Actions of restitution
4. Plan of action and commitment to ensure the problem never happens again.

It is true, Wells Fargo admitted their fault, fired who they claimed were responsible, and paid a fine.  Problem solved right?  Not quite.  In fact, this episode is yet another near replica of the standard PR playbook for when Wall Street commits fraud on the American consumer.  As it typically goes, have your lawyers write up your “apology” letter where you accept culpability (after you have exhausted all efforts to quash the lawsuit), pay a small fine that barely registers as pocket change compared to annual profits, hold a round of public firings of your expendable line employees that were more likely than not just following orders from their higher ups, and if you do need to remove an executive, be sure to provide them with a golden parachute larger that most Americans will see in a lifetime.

First of all, the statement they issued:

“Wells Fargo reached these agreements consistent with our commitment to customers in the interest of putting this matter behind us.  Wells Fargo is committed to putting our customers’ interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request”

This statement is a great example of admitting fault while not really admitting anything at all.  Phrases like “in the interest of putting this matter behind us” sounds as though the pain they are feeling from getting caught is a great burden to them and they just want to move on from all the fuss.  I reminds us of how BP CEO said of the Deepwater Horizon oil spill—one of the largest environmental disasters in history where 11 people lost their lives—that “there’s no one who wants this over more than I do.  I would like my life back.”  They also chose wording like “we regret and take responsibility for any instances where customers may have received a product that they did not request” and entirely leaving out that they were not just mistakenly giving the wrong products to people, they were deliberately committing fraud on a massive scale by opening accounts and credit cards in their customers’ names, charging them fees for these fake accounts and impacting their credit scores.

Second, “those who were responsible” included thousands of non executive employees who were almost certainly not the ultimate authority on whether or not this behavior was acceptable.  The person who was the ultimate authority is Carrie Tolstedt, the executive in charge of the business unit where this behavior was occurring.  She was not fired, but left the company in what the bank described as a “personal decision to retire after 27 years with the bank”.  Even as the bank was in the process of settling the lawsuit related to this fraud that occurred in her division, the Wells Fargo CEO actually said in the announcement of her departure that she “had been one of the banks most important leaders and was a standard-bearer of our culture”.  Oh, and what Wall Street banking scam would be complete without a giant golden parachute for offending executives.  Tolstedt left with both high praise and a $124.6 million dollar payout.  This is actually more than 60 Americans with a college degree will earn in a lifetime.

Third is the fine they paid.  $185 million may sound like a lot, and it is to the average person, but to Wells Fargo who pulled in $36.1 billion in pre-tax profits in 2015 it is a drop in the bucket.  In other words, Wells Fargo can make this amount back in less than two days in just the profits they make.  However, if you were to take it out of their revenues, it would only take 19 hours.

So, after they have issued their apology letter about how they want to put this all behind them, they paid their fine equating to 0.5% of last year’s profits, and they have punished the wrong doers by firing the low level employees and paying their boss $124.6 million, the next step in this repeating cycle is Congressional outrage.  The U.S. Senate will now likely haul the Wells Fargo CEO before a committee, berate him for about eight hours to let the whole world know how angry they are at this scandal.  Then, they will do absolutely nothing to stop this from happening again and in no time at all we will watch the cycle unfold once more.

References:

Cheryl Snapp Conner, “PR Lessons from Well Fargo’s Double Serving of Crow”, Sep 10, 2016, Available at: http://www.inc.com/cheryl-snapp-conner/pr-lessons-from-wells-fargos-double-serving-of-crow.html, Accessed Sep 11, 2016.

Robert Longley, “Lifetime Earnings Soar with Education,” About.com, July 7, 2016, Available at: http://usgovinfo.about.com/od/moneymatters/a/edandearnings.htm, Accessed Sep 11, 2016.

Stephen Gandel, “Wells Fargo Exec Who Headed Phony Accounts Unit Collected $125 million” Fortune, Sep 12, 2016, Available at: http://fortune.com/2016/09/12/wells-fargo-cfpb-carrie-tolstedt/?xid=soc_socialflow_twitter_FORTUNE, Accessed Sep 12, 2016.

“2015 Annual Report”, Wells Fargo, Available at: https://www.wellsfargo.com/about/investor-relations/annual-reports/, Accessed Sep 12, 2016.

Benjamin Snyder, “Tony Hayward’s Greatest Hits”, Fortune, June 10, 2010, Available at: http://archive.fortune.com/2010/06/10/news/companies/tony_hayward_quotes.fortune/index.htm, Accessed Sep 12, 2016.

Last week, an online ad dropped that took the internet by storm.  This ad was for a mattress store, it featured 9/11 imagery, two towers of mattresses falling over, and then one of the employees saying they would never forget.  The ad drew criticism instantly as being in poor taste.  The owner of the store claimed he had no knowledge of the ads, and declared that the store would be closed, and that 30% of any sales this weekend would be donated to the 9/11 foundation.

A similar, though vaguely less offensive, yet still tacky, product display in Florida also garnered media attention.  It prominently featured two stacks of sodas shaped in the towers in front of a wall of soda shaped like the American Flag.  This display strategy was apparently put forward by Coke and approved by the supermarket.

This brought to mind the idea of Shock Advertising.  To me this raises the question of where the line is drawn between acceptable and unacceptable shock advertising.  Is there ever a tasteful way for companies to evoke tragedies?  Should they bother trying?  Or is evoking them at all going too far, even for a shock advertising strategy?

Businessbrokendown.com recommends using shock advertising in cases where it’s important to build awareness and start conversations about controversial topics.  It does not appear to be an effective strategy to move general products of any kind, and appears to be much more trouble than it’s worth, even if the mattress ad had been intentionally offensive.

http://www.nbcdfw.com/news/local/San-Antonio-Mattress-Store-Closes-After-Twin-Towers-Sale-Video-392998291.html

http://www.cnn.com/2016/09/09/us/911-offensive-commercials-trnd/

Shock Advertising: Is It Right For Your Business?

The other day I was listening to a This American Life podcast, episode #591: Get Your Money’s Worth. One of the segments talked about L.L. Bean’s satisfaction guarantee. Apparently, the company will take back any of their products and issue a store credit. The first person that was interviewed returned a pair of 15 year old hiking boots that were worn out. He was issued a store credit, and bought a new pair of boots. This person is a school principal. One customer returned a half-eaten cookie and another returned a few 40 year old shirts. Sure, maybe the cookie was legitimately, unsatisfying, and it took a few bites to figure it out; but is it worth the $5 to return it? The older gentleman, with the 40 year old shirts, would apparently only be satisfied if the shirts lasted FOREVER. As I was getting ready to type that there’s nothing in my closet from 40 years ago, I realized, if there was, it would have be made years before I was even born. So my oldest article of clothing, a long sleeve, threadbare, tennis shirt from high school is about 16 years old.

Anyways, can you imagine being the customer service person receiving these ridiculous returns?! Well, L.L. Bean realizes it’s a difficult job and is careful to make sure the individuals who fill these positions are able to put their personal beliefs and judgements aside. Their faces and tone must remain neutral while used sheets, dog collars, and worn slippers make their way into the return pile.

The company obviously established this guarantee to market the quality of their product, one of the traditional four Ps, this type of marketing worked, and they began to build a loyal customer base. However, due to the way the guarantee is being used, (or rather, taken advantage of) the company is now using one of the modern four Ps, people. The employees don’t shame the individual or place judgement upon them (at least not openly). Customers are treated like any other loyal L.L. Bean customer. After all, one individual said they were going to sell their store credit online so that they can buy oil to heat their house. We all have different needs…and wants.

 

Recently Mylan Pharmaceuticals has come under fire as the most recent pharma company to be accused of wildly over pricing their products. The cost of their EpiPen went from around $100 dollars to approaching $600 in a few short years.
Mylan’s marketing of the EpiPen was equally aggressive and positioned their product in such a way that it was irresponsible for anyone not to have one nearby.
Now that their pricing has come under scrutiny their CEO has basically said its not their fault, and that the pricing of all pharma products is out of control and they were only following the industry trend.
Making people believe that they have to have something and then capitalizing on that fear is persuasive marketing 101, but in my opinion they went to far, and need to own up to the fact that they have been taking advantage.

A brief marketing analysis of why the Ben Hur remake flopped, based on some of the 8 Ps.

In the summer of 2016, Ben-Hur was released.  This movie was a remake of the legendary 1959 movie, Ben-Hur.  It was a tremendous flop for a variety of reasons.  Utilizing some of the 8 Ps of marketing, I’d like to discuss some of them:

Product

To start with, the quality of the remake has been judged by critics as very low.  The Rotten Tomatoes score stands at 26% of the possible 100%.  The audience score is higher, with 66% of those who saw it, liking it, but that is still a relatively poor rating.

The product launched into an already crowded group of remakes and reboots and sequels in summer 2016.  Many of which had disappointed audience.  After facing so many disappointing releases of the summer, launching the movie at this time may have depressed turnout.

Promotion/Place

The movie missed completely with Millennials: Of my group of friends, the only advertising that reached any of them relating to the movie were television ads that ran during the Olympics, which was not viewed by many millennials to begin with, missing a significant portion of the movie going base.  A Variety story confirms that the social media presence for the movie was weak.  Ultimately 94% of the opening audience was above 25.

People

The movie was also marketed heavily to a segment of people based on their religious beliefs, thinking that they would be the segment who would most connect with the movie.  The variety article claims that this did improve the film’s numbers in religious communities some, but that it may have turned off a lot of the non-religious audience.  The outreach to the religious at the last minute also came off as inauthentic, but by that point, the die had already been cast.

Performance

All of this added up to one of the most disappointing box offices in quite some time.  Bringing in only 10 Million in opening weekend of its 100 Million budget.

Sources:

http://variety.com/2016/film/news/ben-hur-box-office-bomb-1201841796/

https://www.rottentomatoes.com/m/ben_hur_2016/

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