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May 29, 2012#

Warning to Facebook: Tread Slowly with Advertisers

Much has been made of General Motor’s decision to discontinue advertising on Facebook (just days before it went public), citing poor ROI.  It also didn’t get what it wanted:  GM’s request to run bigger, higher impact ad units, including taking over an entire page, was politely, though firmly, rejected by Facebook.
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March 16, 2011#

Is Groupon Killing Brands?

The social coupon craze has reached fever pitch.  Clearly it’s a boon for consumers.  But is it really good for businesses as well, particularly with regard to building and maintaining brand value?

As a short-term business investment, Groupon appears to financially payout more often than not.  A survey of 150 businesses that ran Groupon promotions between June 2009 and August 2010, found that the promotion was profitable for 66% and unprofitable for 32% of respondents.  It’s also fairly easy to determine your likely payout mathematically.

But if marketing is defined as increasing perceived consumer value in service of increasing sales at a profit, we need to look beyond Groupon’s short-term sales impact, and ask how it might be influencing perceived brand value.

On this matter, we have serious concerns.  Groupon, and its ilk, unfortunately is training people to expect a coupon on most anything.  And that means that unless people find a deal, they’re less likely to buy at full price, preferring to wait until the next coupon cycle.  This applies to current customers who are used to paying full price, and new customers who would now never dream of paying full price.  The result:  More and more people will be trained to only buy on deal, which, of course, diminishes the perceived value of a brand both short and long-term.

Sometimes what’s good for consumers is not so good for businesses or brands. Until the recent crises in Japan, disinflation has been a boon for consumers who benefited from lower prices on most everyday products, but clearly it has not been good for businesses as they watched their profits dwindle.  Similarly, Groupon offers consumers valuable discounted values, but companies may be sacrificing their perceived brand value in the process.

Let the seller beware.

February 15, 2010#

Why Toyota Will Survive and Thrive Once Again

Much has been written and speculated about the crisis at Toyota due to its foot pedal malfunction, and its slow and underwhelming public response to the problem.

Despite the magnitude of the crisis, we suspect that Toyota will come out on top in the long run – stronger as a company and a brand. 

Here’s why:

1.  Although every company’s defective product crisis is different, just two years after it recalled 6.5 million tires, and was the poster child for crisis MIS-management, Bridgestone returned to profitability and infused its brand with renewed vitality.  

2.  While no one likes recalls, consumers know that they do happen to all automotive companies.    Toyota has built up enormous brand equity in the areas of quality and reliability.   While these equities will be temporarily strained, overtime, as the company reinvests in product quality and safety and marketing, they will return.  Consumers have short memories.

3.  Toyota has a huge war chest of $24 billion in cash.  Investing some of this back into product quality and image improvement marketing will go a long way. 

4.  The company is learning, albeit slowly, how to be more open and forthcoming with the public about its performance problems.   Although it hasn’t been easy for them, Toyota has learned the hard way how to admit errors, apologize and rectify the problem.