Category: Big Business

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Brand Unawareness, Part 2

“Gentlemen, our target market is. . . young people who don’t bother paying their bills!”

Apparently, those free-spending youths don’t care much for paying their cell-phone bills. A court motion filed on June 4 explains that Amp’d “experienced an unprecedented growth of subscribers” between November, 2006, and February after running ads on MTV about the wireless phone company’s lineup of mobile music and video content.

Collecting payments from these subscribers proved to be a challenge, however. “Approximately 90% of the debtor’s customers were on 18-month service contracts,” according to the filing. “The debtor began to find a host of credit and collections problems (that) contributed ultimately to a liquidity crisis.” By May, the number of nonpaying customers reached 80,000. That’s nearly half of Amp’d’s current customer base of 175,000 subscribers.

Funnily enough, the writer doesn’t quite the grok the contradiction in the following statement:

Here’s why Verizon may want to pick up Amp’d on the cheap: Amp’d has been exceptionally successful in getting its subscribers to use data services, which are expected to become the wireless industry’s growth engine in the coming years. In the first quarter of 2007, Amp’d users downloaded twice as many videos, songs, and games as in the fourth quarter of 2006.

Which sounds great, except their customers didn’t bother paying their bills!

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No horse in this race

Here’s a neat article about how wine overtook beer in America:

Meanwhile, the American middle classes have fast become connoisseurs of everything — coffee, ’80s Japanese garage-rock bands, environmentalist toilet paper. Now, Americans who want the exclusivity that connoisseurship offers but didn’t want to seem like snobs can have it both ways. Beer’s approachability became less of a virtue. Ironically, in the ultimate about-face, craft-brew drinkers lifted the language of wine. (Tasting notes for a pale ale from the Web site BeerAdvocate: “Nose is floral, like orange blossoms, with some citric rind and soft apple.”)

As someone who refers to himself as a “gin snob” (among other examples of my snobbishness), I can see what he means.

So, are you more of a wine drinker or a beer drinker? (excluded from this question: my teetotaling family and my recovering alcoholic exes)

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Publish and perish

Here’s an article about how Perseus Books Group is closing down two of its imprints: Carroll & Graf and Thunder’s Mouth Press. The further away I get from my indie-publishing days, the less I can understand how any of them stay afloat. This passage summed up how I tried to see things back then:

“When you see the book world conglomeratizing, it can only mean less diversity of voices,” said Johnny Temple, publisher of Akashic Books, a Brooklyn-based imprint distributed by Perseus. “When I sign up a book, it matters more that I love it than that I’ve identified a good marketing niche for it. That’s the real essence of independent publishing — it’s not a deal, it’s supposed to be a labor of love.”

Then I lost the love.

I hope the founders of those presses got a decent purchase price when they joined up with Avalon Publishing (which was later acquired by Perseus), but I have a feeling that I can see where the “labor of love” part collided with the “good marketing niche” part:

“At Carroll & Graf, we bridged the gap between small, lesser-known presses and the larger houses when it comes to gay literature,” said Don Weise, a senior editor who is losing his job. “In the four years that I’ve been here, I’ve acquired more than 100 books, and no one has ever told me no, I couldn’t do that. In the book world, that’s unheard of.”

I probably would’ve moved his attribution, along with the “senior editor who is losing his job” part to the end of the paragraph, to make my point.

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Regulatory Overkill?

[Excerpted from this month’s From the Editor column at my magazine.]

In last June’s From the Editor page, I wrote about a scandal involving Chinese “innovation,” namely a rip-off that literally involved scraping a western company’s name off of cell-phone chips and painting a Chinese company’s name on them. I received some guff for that editorial, and have been told at numerous conferences in the past year that China will dominate the 21st century, because the world is bowl-shaped or flat or somesuch.

I maintain that the country’s poverty-level population (800 million), out-of-balance birthrates (in the 1990s, some provinces peaked at 32 male births to one female, thanks to advances in portable sonograms), and catastrophic environmental record are going to yield so much unrest as to counter its “economic miracle.” Those of you who’ve had the misfortune of listening to me expound on this subject know that I believe China’s one-party dictatorship makes it impossible for the nation to truly accommodate itself to the western world; instead, it does a passable impression of capitalism. But when it breaks down, it breaks down critically.

Let’s take China’s role in exporting chemicals, a major economic driver. Those exports have made plenty of news lately, after

  1. an ingredient (or two) used by Chinese livestock-food suppliers to falsify protein tests led to the deaths of a number of pets in the U.S., and
  2. a counterfeit ingredient in cough syrup supplied by a Chinese company poisoned at least 100 people n Panama.

These problems don’t only plague China’s exports; the same ingredients have led to deaths within China, too. Perhaps we should envision these as growing pains, a result of China’s crash course in modernizing the SFDA and bringing its drug supply under regulation. If anything, that would mark these events as symptoms of the country’s attempt to join the international community.

That reading might be a valid one, given that the toxic ingredient in the cough syrup happened to be diethylene glycol. After all, the Food, Drug and Cosmetic Act was passed in the U.S. in 1938 after the use of diethylene glycol in “Elixir Sulfanilimide” led to the deaths of more than 100 Americans.

Seventy years ago, there was no requirement for tox-tests for drug formulations. The manufacturer’s lab tested for flavor, appearance and smell, but not toxicity. So this elixir shipped, and the death followed. At the time, the agency was simply fortunate that the product was called an “elixir.” According to an FDA article, if it had been called a “solution” instead, “FDA would have had no legal authority to ensure the recovery of the drug and many more people probably would have died.” As it was, agents had to fan out across the country to help in the recall of the elixir. All told, 234 out of 240 gallons of the toxic product were recovered.

Following the diethylene glycol disaster, the FDA was given greater authority to regulate drugs, and evolved into the agency we know today, for better and worse.

Nowadays, we hold congressional hearings about tougher standards for Advisory Committees. Concerned about conflicts of interest, our representatives debate regulations stipulating that no one who is an expert enough about a subject to get paid for it should be responsible for evaluating it. (Hey, it’s my reductio and I’ll ad absurdam if I want to.)

As it turns out, China — and that one-party system of theirs — has also developed new regulations to deter conflicts of interest. In their case, a court recently ordered the execution of the former head of the SFDA.

In May, Zheng Xiaoyu was convicted of taking more than $832,000 in bribes in cash and gifts during his tenure. According to a state newspaper, “Under his watch, six types of medicine approved were fake and pharmaceutical companies got away with using false documents to apply for approvals.” Oh, and an antibiotic produced under not-so-aseptic conditions looks to have killed at least 10 Chinese patients.

The government has already taken the occasion of the sentencing to announce a new food-recall system; we’ll see how it overhauls the drug process. I’m all for creative destruction, but I’m hoping it won’t take too many more of these episodes before we see China adopt some semblance of global standards. I’m not optimistic about this, of course.

Fortunately for Mr. Xiaoyu, if the method of execution is lethal injection, then there’s always a chance he’ll come out of this experience just fine.

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Style and not

Over the weekend, I read a neat article about the differences between Apple stores and Sony Style stores. One of the funniest comments came after the writer noticed the huge disparity in foot traffic (a lot more people were in the Apple store) in the two stores in a Palo Alto mall:

Last week, I shared these impressions with Dennis Syracuse, senior vice president for Sony Retail, who assured me that Sony’s stores drew an average of 350,000 visitors annually per store. Mr. Syracuse rejected the idea that his store concept could be compared to Apple’s. His stores were conceived, he said, as a “fashion boutique for women and children” that incidentally happened to carry electronics instead of clothing.

We happen to have both stores (it’s actually a mini Apple store, a narrower version of the full-sized stores) in a nearby megamegamall, so I stopped in on both of them while running an errand after work (I took a half-day today; no need to dive right back into the pool, after a stressful couple of weeks and a nice long weekend). At 2:30 p.m. on a Tuesday, what did I find?

(Undersized) Apple store: 19 customers, and 7 or 8 floor staff

Sony Style store: 5 customers (3 of whom were under the age of 12), and 5 floor staff

Now, the Sony store is located among high-end stores, while the Apple store is flanked by Banana Republic and a Nine West, but it was difficult to understand Mr. Syracuse’s vision of a “fashion boutique”. This Sony store was just as overloaded with products and “stuff” as the one Mr. Stross describes in his article: laptops, ebooks, Playstation gear, TVs, stereos, home theaters, and more. According to its own site:

The stores feature several hands-on demonstration areas, including HDTV display walls equipped with high-definition TV sets and DVD players, and a digital imaging gallery with a selection of camcorders, photo printers and digital still cameras as well as VAIO PCs to exhibit connectivity.

As product mix goes, it was a mess: a very well-organized mess, but still a mess insofar as there was nothing linking the products but a Sony logo. Or, as Mr. Stross writes:

But Sony’s offerings have not impressed retail consultants with whom I spoke. Willard Ander, a senior partner at McMillan Doolittle in Chicago, was unsparing in his assessment: “Sony doesn’t get retail. The stores are not energized and not shop-able.” Apple stores extend an “emotional connection” to their customers that Sony’s do not, Mr. Ander said. The absence of such a connection, he said, was a common failing of manufacturers who venture into retail on their own.

In addition to this baffling array of electronics, I think another big problem with the Sony Style setup is that, while the Mac store sells hardware (and accessories), the Sony store splits its focus between hardware and software. That is, it featured numerous product displays and posters for Sony’s music and movies. So the Sony store shows off CDs and DVDs of Sony artists, but I don’t believe there’s brand/label/studio awareness when it comes to most music and movies (Pixar notwithstanding).

In contrast, the Apple store treats content (software) as something the user can go pursue: a poster for the iTunes movie store shows many different properties, but doesn’t limit itself to, say, Disney videos. The store is selling its users the opportunity to pick from a universe of movies and music, not those of one label/studio.

On top of that, there’s plenty to be said for the airy brightness of an Apple store. The floor design, even in a mini-version, is open and easy to navigate. It isn’t selling as much as a Sony store, and it doesn’t have to.

This afternoon, I came across another Apple retail article: this one’s about Dell’s attempts at recapturing market share, including a stab at retail, despite its roots in direct sales. Unfortunately, it sounds a lot like Catherine Keener’s character’s store, We Sell Your Stuff On Ebay, in The 40-Year-Old Virgin:

Earlier this year, Dell opened its first retail store in the NorthPark Center in Dallas, right across the mall from an Apple store. Inexplicably, the Dell store carries no inventory. Customers can check out the goods, but can’t actually buy them in the store. This is the main reason cited for the failure of Gateway’s chain of stores, which shuttered in 2004.

The article also explains that, since design is now important in the PC biz, Dell’s gonna get some designin’ on! It felt a lot like a “let’s buy some innovation!” initiative, and that trick (just about) never works. Usually, it involves overpaying for people who had One Good Idea, and telling them to “be creative.” I’ve seen it.

I don’t mean to blow sunshine up Steve Jobs’ ass, but it is pretty amazing that Apple has managed to make retail work in a field where a lot of other companies have tanked.

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Best Invasion of Privacy

Last week, my Sirius radio went kaput, the result of a frayed wire from the antenna. I was faced with two choices: buy a new antenna ($40) or get a new radio ($139-$149). (The third choice, listening to terrestrial radio, was no option at all.) Given that the existing radio was pretty old and clunky, and had no car-kit (it was sitting a mass of wires above the dashboard), I figured I’d get a new radio.

My first stop was the Radio Shack near my office. It had such misleading price labels that even the clerk who helped me couldn’t understand why the unit was ringing up at $149 instead of the $119 on the display. A manager explained that the tiny letters “MIR” on the wall display meant there was a $30 Mail-In-Rebate, which would get the price down to $119 eventually. I laughed at the manager and left the store.

That evening, I stopped at Best Buy and found the radio, which was listed at $139, with no rebate. The cashier asked me for my phone number. I said, “No, thanks.”

She repeated her question. I told her that I wasn’t going to give Best Buy my phone number. She said that she couldn’t process the transaction without it. “That’s too bad,” I said, and walked for the exit.

The security guard told me to have a good evening. I said, “It would’ve been better if I’d been allowed to buy something just now.” She looked puzzled, and I said, “Can you get me a manager, please?”

She called one over, and I explained what had transpired: “I tried to buy a Sirius unit, and your cashier refused to process it without my phone number.”

“That’s not our policy, sir. That’s policy from Sirius.”

“You are full of shit and your store just lost a $140 purchase,” I told her, before walking out.

That night, I looked up the unit on Circuit City’s website: $149 with a $30 rebate. I called a local store, and asked a rep if they had it in stock. He said they did. Then I asked, “If I come in there to buy it, and I don’t give you a phone number or zip code or anything, is that going to block my purchase?”

“Excuse me?”

“If I don’t want to give out my phone number, are you still able to process the transaction?”

“Sure! We ask for your phone number to help you out,” he said. “If you have a problem with the product and lose the receipt, we can look it up with your phone number.”

“But it’s not mandatory?”

“No.”

I described the episode at Best Buy, and he said, “Seriously? They wouldn’t let you buy it?”

“Nope. So if you’re being straight with me, your store just got my business.”

“Great!”

* * *

All of which leads to a couple of thoughts:

Radio Shack has not shaken my belief that it’s actually a massive cocaine-money-laundering front.

Best Buy’s marketing & data-mining policies are bad news.

Circuit City may be going out of business within a year, but I’ll give them a shot. Also, my laziness has paid off, since they just dropped the price for the unit to $129 today (in addition that $30 rebate).

I really should’ve just bought that Sirius unit on Amazon when mine first broke. It would’ve been a lot less stressful, with a transparent and low price ($118).

Sure, Amazon already has all my buying info, but I figure my purchases there are so chaotic that they’ll never assemble a useful marketing profile for me.

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Ten years down the road

This weekend marked my 10-year anniversary at my company. Our standard celebration calls for the anniversaree (?) to bring in bagels for the office, so I hit the Bagel Train this morning and treated my coworkers to some magic.

Since our lives consist of milestones, this anniversary led me to reflect on my workplace and The Workplace, and how this morning’s Montaigne post was about the inconsistency of our lives, but here I am, 10 years from being hired as an associate editor on a magazine called Happi. The irony, of course, being that I was a depressive at 26 years old. Oh, and that my editor and I were voted most likely to take a sniper rifle to the rooftop.

But that was 10 years ago. We’re both still here, much more at ease with who and where we are. I’ve grown up a ton in that span, but I remain pretty childish about some things.

In general, I don’t like to write about the goings-on at work. I find it interminable when people tell stories about their offices, because those tales are so wrapped up in an intimate knowledge of the people and processes in place. So, if I provide a pretty scant take on what goes on from day to day at work, that doesn’t mean there isn’t a lot to do; it just means that it can be esoteric and would likely bore you.

That doesn’t explain why I persist with those Montaigne posts, but hey.

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Just Half-Ass It

I was sitting in Boston’s South Station for an hour or so last week, and I found myself  transfixed by Reebok’s new ad Run Easy campaign. Huge banners hung above the doors of the train station, bearing slogans that I found a little perplexing:

Run to the beat of your own drummer. Run Easy.

Conversation is fuel. Run Easy.

Enjoy the ride. Run Easy.

Why Hit the Wall? It hurts. Run Easy.

Why run till you can’t walk? Run Easy.

What are you Just Doing? Run Easy.

Congratulations. You can’t stand up. Run Easy.

A 10-minute mile is just as far as a 6-minute mile. Run Easy.

Did you beat your best time or just yourself? Run Easy.

There were a couple of Boston-specific banners:

Big Dig has set the pace. Run Easy Boston.

The British aren’t coming. The British aren’t coming. Run Easy Boston.

As I said, I was transfixed. Isn’t there a reason all sports-related marketing is aspirational? I can understand trying to subvert standard advertising tropes — those Sublymonal ads can be pretty funny — but this just goes beyond the pale. Sure, you don’t want to tell people that they’ll win the Boston Marathon if they buy your sneakers, but telling them that it’s okay to slack off?

In addition to these “Run Easy”s, each banner featured Reebok’s tagline beneath its logo: I Am What I Am. Now, I appreciate coming up with a slogan that puts us all in mind of the Torah and/or the greatest performance-enhancing-substance-abuser next to Barry Bonds, but in tandem with this campaign, it comes off as “Eh. Why bother? Running isn’t going to make me any better.”