Tully's Letters

This past weekend saw the launch of Sony's Playstation 3, or PS3 as it's more commonly known. Nintendo also launched their newest gaming console, the Wii.

Crowds began gathering at various retailers such as BestBuy and Walmart, as Wednesday, armed with tents and sleeping bags. The ensuing media coverage, for the most part, did little to explain these electronic gizmos, but rather focused on a segment of the public that, from the outside looking in, looked for the most part, suspect at best.

Most were there to make a quick profit by exploiting their limited availability and putting them up for sale on eBay for thousands of dollars. Additionally, stories focused on physical assaults over these games, armed robberies of consumers waiting through the night for stores to open and riotous behavior once the stores did open.

While the attention that these two brands received as a result of these product launches was overwhelming, what implications may these brands experience based on the type of media attention they received? Will people remember that these games were in demand because of their advancements in technology, or that human behavior sunk to a low?

Some might ask, "What would Elmo say..." Is this the type of brand experience a company wants?

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Like other fast food chains, McDonald's and KFC are trying to maintain their core customer, men between 15 and 35 years old, while pulling in others who are increasingly seeking alternatives to their offerings.

McDonald's Forever Young concept is designed to help draw more customers into their stores and compel them to stay longer. Restaurant remodeling can include meeting rooms for business purposes or big family parties. Recently the company introduced premium coffee at it's stores nationwide. Analysts say that these remodeling strategies are designed to target an aging population with higher discretionary income.

Meanwhile, Kentucky Fried Chicken, or KFC as it is affectionately known, just announced a re-branding for their logo and stores. After dropping 'fried' from its name and logo over a decade ago, the new logo features the coronal against a red background that matches his red apron with the name, "Kentucky Fried Chicken." Store designs will be upgraded over the next year and re-introducing 'fried' into the brand name is an attempt to recall the company's southern roots, and re-energizing it by playing up its southern authenticity.

Will these upmarket branding strategies work in the long run, or is the American public on the fast track to seeking out healthier alternatives to the menu choices available from these fast food behemoths?

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I received a direct mailing today from NewPage, a company that wants me to buy better paper for the direct mail campaigns I produce. Inside are a few interesting statistics, which I am sharing here in case you aren't on their mailing list:

1. In stores, scents can increase sales by up to 350%. Combining aromas with textures and sounds increases customer loyalty by 110%. (In direct mail, I think they're suggesting scratch & sniff) Source: James Murphy, "Concerns grow over marketing's full sensory assault." Medica, June 17, 2005.
   
2. Catalog and retail stores are among the most successful direct mail marketers, with response rates averaging over 7%. Source: The Direct Marketing Association, The DMA 2005 Response Rate Report.
   
3. Dimensional direct mail posts an overall response rate of 3.67%, compared to 2.77% for flat mail. Source: The Direct Marketing Association, The DMA 2005 Response Rate Report.
4. Recipients of catalogs and other direct mail have a combined online purchase rate of 28%. Source: USPS, The Multi-Channel Catalog Study, 2004.
5. 73% of wired households prefer to get information on new products and promotions via direct mail. Source: ICR Research Group, "Connected Households Still Prefer Regular Mail," icrsurvey.com, 2001.
6. Online shoppers who interact with brands using multiple media spend 30% more than those using a single medium. Source: USPS, Mail and the Internet, 2006.
   

Incidentally, the direct mail piece these statistics came in was flat, printed on an ok paper stock, in a self-covered format that resembles my utility bill. It's now in my wastepaper basket. Maybe they should have considered a better paper and a dimensional format.
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There's a great article in the October 15, 2006 issue of the AMA's Marketing News: Doppelgangers: Monitor parodies to measure brand value. Are consumer parodies of brand messaging damaging to a brand, or are they a sign of a brands strength and desirability? The argument for the latter is pretty impressive. Consider the brands that have been parodied widely: Starbucks, Burger King, American Express, The President of the United States... Maybe there's something to this point of view.

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I was searching around the Internet today and ran into this story about how Wal-Mart is experimenting with moving its brand upmarket. My first thought was why they would even try.

Wal-Mart owns the down market. Do they want to be more like Target? Or Costco?? Wal-Mart is the king of mass merchandising. They are all about low prices, no matter what.

Going upmarket is all about specializing, understand that by limiting your market and delivering a better quality brand experience to that specialized market, you can command a higher margin for the effort.

Can Wal-Mart, unlike Sears, successfully go upmarket? For some customers in some locations, possibly. But at what cost to their brand elsewhere?

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