Issue: Hormel has trouble expanding into upscale food
Commentary by: David

Today, Steven Gray at the Wall Street Journal details Hormel’s difficulty expanding its brand into fast-growing niches including healthy and ethnic pre-packaged food. In spite of a solid product and innovative technology, (using high-pressure pasturization instead of preservatives to keep food bacteria free by literally squeezing the bacteria to death) Hormel has struggled to overcome its longtime association with Spam, the difficult-to-characterize almost-meat which is still popular in certain regions and among certain populations in the United States. Adding to Hormel’s troubles is the worry that premium food offerings will alienate core Spam consumers.

It is understandable that Hormel is seeking new markets and new consumers. There may be great reasons for a food manufacturer to diversify and serve more than a narrow slice of the consumers in the grocery store. There may even be operating efficiencies and negotiating advantages to selling more to existing customers (supermarkets and mass merchandisers). There is absolutely no reason, however, to sell these products under the Hormel name, and this advertising blog finds itself somewhat confounded that Hormel would try. Selling premium packaged meats under the Hormel name sounds a lot like bottling wine and slapping a ‘Budweiser’ label on it to us.

Hormel’s problem is simple – its brand will not extend to the new consumers it would like to serve. The solution – creating new brands to narrowly target ethnic food consumers or healthy consumers – should be obvious to any second-year MBA student. But we chose to comment on this issue because it demonstrates a common problem with seat-of-the-pants marketing efforts where most of the brand development work is put behind product and packaging.

Had Hormel spent some time and money carefully considering brand implications of its proposed expansion, it would likely have chosen to build new brands instead of risking the Hormel name. But this kind of work is often lost in the frantic excitement of new product development outside of a handful of disciplined consumer companies like Procter & Gamble. Instead, new product teams choose the seemingly risk-adverse path (using the established brand Hormel to launch new products) to avoid the immediate failure often associated with launching new brands. Instead, these brands end up creating a bigger disaster by endangering the franchises they are built upon as well as failing after launch.

Launching successful new products requires careful brand planning as well as strong product execution. Without the former, the best product in the world will not save the brand – as Hormel has learned.

Brand: Charmin (Procter & Gamble)
Execution: Experiential Marketing
Target: New York Visitors
Rating: *****
Reviewer: David

Description:
Starting yesterday, Procter & Gamble’s Charmin Toilet Tissue is sponsoring free bathrooms in Times Square. The billboard promoting the sponsored restroom says, “You’re in New York. Go in style.” over the brand logo and an arrow pointing to the restroom entrance. There are 20 restrooms including two with disabled access. Each of the restrooms will be hand-cleaned by an attendant after each use. The restrooms will operate until the end of the year and the end of the holiday period.

What Works:
At first glance, the high costs of New York real estate and Times Square billboard advertising might make this experiential marketing tactic (experiential because the restrooms are stocked with Charmin toilet tissue) a risky bet. However the marquis value of Times Square combined with the publicity value of solving a genuine issue for the neighborhood and its millions of tourists (lack of access to clean, free toilets) and the goodwill of consumers makes this a slam dunk from our perspective.

More importantly, it points to an intriguing way for brands to build deeper relationships and more loyalty from their consumers. Find a social problem that fits within your area of expertise. Divert advertising money to solve this problem. Repeat.

At the moment, with temporary and very limited program, Procter & Gamble is just staging the equivalent of a pricey sampling event with good PR for Charmin. But if Procter has a good experience over the next month, the opportunities for the Charmin brand are significant. $100 million spent in advertising against the Charmin brand will boost sales, but only in the short-term. Advertising spending in mature categories with little product news tends to be a zero sum game – someone’s gain is at someone else’s loss and because brand loyalty is relatively low, there is a tremendous danger of promotional activity sparking a price war which hurts everyone’s bottom line.

Charmin as the sponsor of clean, free public toilets in places where they are hard to find nationwide would have a different profile. The brand could find intense loyalty from grateful consumers who have been spared the indignity of pleading with a surly bartender or restaurant owner and parents who might otherwise be cleaning up a bigger mess. It would also be very difficult for other toilet tissue brands to copy Charmin’s move.
What Doesn’t:
As any big-city mayor knows, great execution of public services is everything. If the Charmin bathrooms are really kept spotless and if Procter & Gamble have correctly anticipated demand and manage to avoid excessively long lines, Charmin will benefit greatly from this promotion. Bad execution will hurt the brand and damage its hard-won credibility.

A bigger problem may be the planned closing of the project just after the holiday season. The need that the Charmin restrooms are filling in Manhattan will not disappear as 2006 passes into 2007. Charmin risks consumer alienation by closing these restrooms if they are successful. This advertising blog strongly suggests Charmin rethink this policy and keep the restrooms open long enough at least to judge whether they can have a continued impact on the brand. If the answer is “yes,” Charmin should divert some money from television advertising and expand to other markets and needs.

Branding Bottom Line:
Charmin makes Time Square more friendly. Consumers are grateful.

Issue: Microsoft introduces Zune
Commentary by: David

Yesterday, Microsoft launched Zune. Zune is a music/video player which Microsoft hopes can gain a foothold against the Apple iPod. We saw the Zune in person early last week. It is a slick, attractive little device. It has an impressive screen and easy-to-use controls. It can share songs wirelessly and has integrated software. In short it is impressive. And we believe without doubt that it will fail to dislodge Apple and iPod from its leadership role in this industry.

This is not because iPod has a head start. In fact, the story of the IBM PC itself (and much more recent work on the development of the Internet) confirms that the ‘first mover’ advantage is largely mythical. The difference between Zune and the iPod is deeper – a matter of marketing philosophy. Early reviewers of Zune like Walt Mossberg and Stephen Wildstrom sense this fundamental difference between iPod and Zune without being able to put their fingers directly on it.

So what does Steve Jobs know that Steve Ballmer doesn’t? Jobs understands that it’s not about the big picture – it’s about the details. iPod is a better brand than Zune not because the product strategy behind iPod is better (by embracing sharing, Zune may have the better business model), but because the attention to details is superior. Microsoft as a company believes in bringing innovation to the consumer as soon as possible. This comes with flaws, bugs and glitches, but the company makes a conscious tradeoff between degree of done-ness and time to market. Apple doesn’t release products until it believes it has perfected them to the smallest detail. Such is Apple’s obsession with detail that they have invented new manufacturing processes in order to make working products mirror their idealized concepts in execution.

You could say that this is micromanaging and it undoubtedly is. Did the second-generation iPod Nano really need an aluminum skin? No. Did the iMac need to be sheathed in transparent plastic? Certainly not. And yet it is just these details that make the product original and authentic.

Microsoft follows a different path and that is evident with Zune. The case is elegant, but larger than the iPod. The online store creates an intermediate currency “Microsoft points” which have a strange exchange rate with the dollar and seem to do nothing more than add a level of complexity to the process of purchasing music for the Zune. WiFi sharing works easily, but shared songs expire after three plays. And on and on. While each of these foibles is the result of a well-meaning compromise (the sharing issue is a compromise on protection for copyrighted music, for instance), they are clearly compromises and they compromise the design and usability of the Zune.

What Steve Jobs knows that we don’t is that we care more about the small details than the big issues. We love things that feel right, that reward us with an easy and engaging user experience. We cue on small things to build our opinion about the big issues. Most of all, we like things that work 100% at advertised. Even 99% feels like not half as much.

Brand: Kraft
Execution: Print
Target: Women 25-54
Rating: ****
Reviewer: David

Description:
For the fourth year, Kraft is sponsoring a special holiday issue of People which is being sent to 1mm of People’s 2.3mm subscriber audience (the mid-life women).  The issue will feature ads for Philadelphia Cream Cheese, Chips Ahoy, Jell-O and cinnamon coffee which are embedded with ‘rub and sniff’ technology (the successor to ‘scratch ‘n sniff’) allowing consumers to smell the aroma of fresh cheesecake or coffee.  The new technology apparently prevents the premature release of the scent during the delivery process.  For more see Brian Steinberg’s article in the Wall Street Journal here.

What Works:
In his well-regarded book Brand Sense, Martin Lindstrom reminds us that most marketing activates only two of the five senses – sight and hearing.  Smart marketers with tangible products can use touch, taste and smell to add to the brand experience.  Mercedes, for instance, has patented its ‘new car smell’ which is added to each new Mercedes after production.  Scientists also know that smell is the sense most closely linked to memory, so it makes sense that brands ought to use smell as a marketing tool.  This is woefully difficult with packaged goods products whose scents must often remain hidden through the purchase experience only to emerge in the home.

Kraft has overcome this problem by turning back to a modern update of an old tactic – the scent-impregnated print ad.  In this modern incarnation, the scent is imbued on a portion of the page which can be rubbed to bring it forth.   The scent is also apparently more lifelike and less irritating than older versions – although we have not yet seen this execution in person.

We applaud Kraft for its forward-thinking approach to marketing.  Rub and sniff may be no more than a novelty at the moment, but it has the potential to enrich the advertising experience.  This advertising blog appreciates marketers who find innovative ideas in the past as well as in the future.

What Doesn’t:
It all comes down to execution, and technologies like ‘rub ‘n sniff’ are tricky.  If the odors of the food fail to remind us of home-baked alternatives, the energy spent behind this campaign will have been entirely waisted.

Branding Bottom Line:
Kraft has us nostalgic for hula-hoops and 8 track tapes.

Brand: Scion (Toyota)
Execution: TV, In-Theater, Viral, Web
Target: Young, Hip & Driving
Rating: *****
Reviewer: David