There were two fascinating items this week from the world of coffee. The first is a study from New York's Mindset Media, reported on by QSR Magazine. Their task was to find similarities between latte drinkers.
If you're standing in line for your $4 latte wondering what you have in common with the person behind you, the first thing that comes to mind would probably be income. This and other demographic traits (age, gender, family status) are often the first places researchers go when trying to assess their audience. It's the easiest research to do.
But Mindset Media dug deeper to find psychographic similarities. Their research reveals that latte drinkers have four things in common, the most striking being their openness to new things. Rounding out the top four are leadership, superiority and creativity.
Now onto the next news in the world of coffee which, as we've come to expect, is brought to us by Starbucks. The pioneer of the global mass market coffee craze is now the maker of...ready?...a soluble coffee named Via.
Think Taster's Choice only, according to CEO Howard Shultz, it mimics the flavor of Starbucks coffee.
First of all, really?
Second of all, Starbucks coffee of late tastes burned. So which coffee does it taste like: the old version when their stock was climbing and they had customers or the new version when their company is taking drastic measures to find their core.
What Starbucks doesn't know it was always selling was the experience of being there, with good products as the point of entry.
Now enter the Mindset Media research. Latte drinkers, Starbucks' customer base, is prone to "openness," so perhaps they will give Via a try. But they're also prone to "superiority," a trait which won't bode well for soluble coffee of any quality level.
It is no coincidence in my mind that Starbucks' customers stopped gracing their doors the minute they brought in automated latte machines, removing the barista's ability to control the quality of the espresso and somehow adding a burned aroma to the joint.
I happen to be "open," but the "creativity" of burned espresso or the "superiority" I can't feel drinking soluble coffee has made me a "leader" in eschewing Starbucks for losing its soul.
All this is making me thirsty for some tea.
Saturday, February 21, 2009
Friday, January 23, 2009
Someone Turned the Quality Dial
Have you noticed that the quality of things has changed? It's like someone turned an enormous quality dial to the left. I have examples although I won't mention brand names to protect unsuspecting brand managers.
We go through many gallons of milk at our house. One gallon had a spot on the handle where the plastic was so thin that I had to gingerly pour the milk from an awkward position on the handle, lest I punch through the defective area. Once we'd used enough milk so the level was below the handle, it indeed did puncture. Catastrophe averted, but irritation created.
Every year I make photo books, holiday cards and thank you notes of images taken from my pretty high quality digital camera. But this year I wasn't thrilled with the quality. Everything printed just a bit muddy. Not to the point as to warrant my returning these family gifts and leaving them with nothing to open under the Christmas tree, but muddy nonetheless. Like someone forgot to clean the equipment.
Even simple things like the fisharee tickets we always purchase to support my home town weren't perforated this year. We had to cut the raffle number portion with a scissors.
And when it comes to food, portion sizes seem to be constricting too. There's just a bit fewer chunks of cheese in the packet, a little less meat in the mix. Let's not even talk about the increased number of times I've picked up a paper grocery bag and the handle rips off (and please don't berate me because I keep forgetting to put canvas bags in my car; my intentions are sound). Now that I've run across it a few times, I'm noticing it everywhere.
These are meager examples. And the quality difference is obviously not so great that I'm writing letters to corporate boards and posting brand names on consumer advocacy blogs. It's difficult to know if these examples are strategic decisions to shave costs or if quality control departments have seen budget cuts.
But here's the important thing: I am a customer and I have noticed. And if I have, so have others.
Quality changes aren't invisible. When quality is diminished, even slightly, brand image becomes tarnished. Although quality adjustments are endemic in this economic climate, what will you do when things pick back up again? How will you restore your quality image to your customer base?
If brand managers are consciously changing the quality of the goods they market, they must ask themselves: what is the risk of losing a customer because she punctures the defective plastic and, burdened with a huge milk mess, vows never to buy that brand again?
We go through many gallons of milk at our house. One gallon had a spot on the handle where the plastic was so thin that I had to gingerly pour the milk from an awkward position on the handle, lest I punch through the defective area. Once we'd used enough milk so the level was below the handle, it indeed did puncture. Catastrophe averted, but irritation created.
Every year I make photo books, holiday cards and thank you notes of images taken from my pretty high quality digital camera. But this year I wasn't thrilled with the quality. Everything printed just a bit muddy. Not to the point as to warrant my returning these family gifts and leaving them with nothing to open under the Christmas tree, but muddy nonetheless. Like someone forgot to clean the equipment.
Even simple things like the fisharee tickets we always purchase to support my home town weren't perforated this year. We had to cut the raffle number portion with a scissors.
And when it comes to food, portion sizes seem to be constricting too. There's just a bit fewer chunks of cheese in the packet, a little less meat in the mix. Let's not even talk about the increased number of times I've picked up a paper grocery bag and the handle rips off (and please don't berate me because I keep forgetting to put canvas bags in my car; my intentions are sound). Now that I've run across it a few times, I'm noticing it everywhere.
These are meager examples. And the quality difference is obviously not so great that I'm writing letters to corporate boards and posting brand names on consumer advocacy blogs. It's difficult to know if these examples are strategic decisions to shave costs or if quality control departments have seen budget cuts.
But here's the important thing: I am a customer and I have noticed. And if I have, so have others.
Quality changes aren't invisible. When quality is diminished, even slightly, brand image becomes tarnished. Although quality adjustments are endemic in this economic climate, what will you do when things pick back up again? How will you restore your quality image to your customer base?
If brand managers are consciously changing the quality of the goods they market, they must ask themselves: what is the risk of losing a customer because she punctures the defective plastic and, burdened with a huge milk mess, vows never to buy that brand again?
Wednesday, December 3, 2008
Lesson from a Recession
What good is a recession without learning a lesson?
This one being deeper and probably longer than most others, it will teach us a few unique things that we have either never heard before or have forgotten through the blubber of the last decade.
Consolidation can be a good thing. Applebee's + IHOP. British Airways + Quantas. Northwest + Delta. Bank of America + Countrywide. Morgan Stanley + Wachovia? Yahoo + AOL or MSN? And we still can't rule out future merger news from Detroit. There's been plenty of this type of activity in 2008.
Here's the good news. Mergers can keep a company, its brand and many jobs alive and relevant. The industries that I'm a little surprised to see as relatively merger-free are food retail and foodservice. In a year when food costs have escalated at an alarming rate, with another 3.5-4.5% price increase predicted in 2009 by the Department of Agriculture, mergers would seem like a sensible plan for food companies. Same for consumer electronics.
Humble be the leader. No group has been more lambasted in the last year than the CEO. A groundswell against their gargantuan salaries and bonuses has been forming, but the check of the CEO's arrogance was capped by the ambrosial ranting of Democratic Congressman Gary Ackerman who said, “There's a delicious irony in seeing private luxury jets flying into Washington, DC, and people coming off them with tin cups in their hands.”
Ford's CEO drove to the next Washington hearing.
The lesson is this: you are being watched, CEOs. The more your employees struggle, the more obnoxious your salaries seem. You need to be both transparent and humble henceforth.
The Internet Domination Cometh. A widely fascinating component of the recession is that the Internet, even with recently declining sales and ad revenue, has really served a unique function. It's allowed people to purchase items cheaper than they can find them in stores, served as a gas-free option during the gas crisis (with throngs of free shipping offers) and is responsible for quantum changes at a faster rate than we've seen even in its heydey in the 90's. I wonder if the recession will help the Internet's evolution long-term. Case in point, the growing consumer use and retailer acceptance of online promotion coupon code sites like retailmenot.com is significant and will make the Internet an even more affordable option versus their brick and mortar cousins.
The web has transformed industries (music, movies, software, television) and possibly devastated companies (newspapers, Valassis, Circuit City, perhaps?). It's entirely possible that the Internet will find the recession to be a happy occurrence. Why? Because there are a host of companies with business platforms of questionable relevance who were able to maintain their domination in fat times. But when wallets constrict, consumers choose the most efficient business models. Those increasingly appear to be web-based.
Trends Matter. It has been truly eye-opening to see companies' executives who should know better falter because of consumer trends that they should have seen coming.
Wasn't there a research report, an alternative business model or a management plan among one of the big three auto makers that would have foretold plummeting sales during a gas price spike? And another model that would have predicted this summer's gas prices in the first place? How about the same for the airline industry? Wouldn't credit card companies and banks have hedged their business against a credit squeeze? How about mortgage companies understanding that their adjustable rate mortgage packages to sub-prime lenders maybe not would but at least could cause problems down the road, and a plan put in place to shore up these risks? Would they have offered these slick ARMs had they actually done a risk assessment? Were all these guys asleep at the wheel?
Where was the risk management in all these companies' business models?
I'm happy to report a new trend: many business schools are ramping up their offerings in risk management courses so that the next generation of business leaders won't have any excuses.
This one being deeper and probably longer than most others, it will teach us a few unique things that we have either never heard before or have forgotten through the blubber of the last decade.
Consolidation can be a good thing. Applebee's + IHOP. British Airways + Quantas. Northwest + Delta. Bank of America + Countrywide. Morgan Stanley + Wachovia? Yahoo + AOL or MSN? And we still can't rule out future merger news from Detroit. There's been plenty of this type of activity in 2008.
Here's the good news. Mergers can keep a company, its brand and many jobs alive and relevant. The industries that I'm a little surprised to see as relatively merger-free are food retail and foodservice. In a year when food costs have escalated at an alarming rate, with another 3.5-4.5% price increase predicted in 2009 by the Department of Agriculture, mergers would seem like a sensible plan for food companies. Same for consumer electronics.
Humble be the leader. No group has been more lambasted in the last year than the CEO. A groundswell against their gargantuan salaries and bonuses has been forming, but the check of the CEO's arrogance was capped by the ambrosial ranting of Democratic Congressman Gary Ackerman who said, “There's a delicious irony in seeing private luxury jets flying into Washington, DC, and people coming off them with tin cups in their hands.”
Ford's CEO drove to the next Washington hearing.
The lesson is this: you are being watched, CEOs. The more your employees struggle, the more obnoxious your salaries seem. You need to be both transparent and humble henceforth.
The Internet Domination Cometh. A widely fascinating component of the recession is that the Internet, even with recently declining sales and ad revenue, has really served a unique function. It's allowed people to purchase items cheaper than they can find them in stores, served as a gas-free option during the gas crisis (with throngs of free shipping offers) and is responsible for quantum changes at a faster rate than we've seen even in its heydey in the 90's. I wonder if the recession will help the Internet's evolution long-term. Case in point, the growing consumer use and retailer acceptance of online promotion coupon code sites like retailmenot.com is significant and will make the Internet an even more affordable option versus their brick and mortar cousins.
The web has transformed industries (music, movies, software, television) and possibly devastated companies (newspapers, Valassis, Circuit City, perhaps?). It's entirely possible that the Internet will find the recession to be a happy occurrence. Why? Because there are a host of companies with business platforms of questionable relevance who were able to maintain their domination in fat times. But when wallets constrict, consumers choose the most efficient business models. Those increasingly appear to be web-based.
Trends Matter. It has been truly eye-opening to see companies' executives who should know better falter because of consumer trends that they should have seen coming.
Wasn't there a research report, an alternative business model or a management plan among one of the big three auto makers that would have foretold plummeting sales during a gas price spike? And another model that would have predicted this summer's gas prices in the first place? How about the same for the airline industry? Wouldn't credit card companies and banks have hedged their business against a credit squeeze? How about mortgage companies understanding that their adjustable rate mortgage packages to sub-prime lenders maybe not would but at least could cause problems down the road, and a plan put in place to shore up these risks? Would they have offered these slick ARMs had they actually done a risk assessment? Were all these guys asleep at the wheel?
Where was the risk management in all these companies' business models?
I'm happy to report a new trend: many business schools are ramping up their offerings in risk management courses so that the next generation of business leaders won't have any excuses.
Wednesday, November 19, 2008
Recession Regression
A keen indicator of how powerful this recession is (officially that's not its name but it will likely be termed that by the National Bureau of Economic Research): Americans are actually starting to save their nickels.
The American savings account has been in freefall, below 1% for many years according to the Bureau of Economic Analysis, until this year when it ticked up to nearly 3%. This is still far below the savings rates of Germany, Japan and other countries who put away as much as 10% of their income.
The most incredible shift in this recession is not the personal savings rate increase, decrease in household income, the collapse of entire industries, mortgage freefall, and job losses associated with that malaise. That's drastic enough. The real kicker of all that is the monumental shift in psychology of the American worker, especially the growing ranks of the American unemployed, toward a more frugal existence. Luxury goods are officially out.
Do you feel yourself pulling back on purchases? Emarketer.com reports that more consumers are abandoning their online shopping carts. The holiday season is supposed to increase an anemic 0.5-1%, not matching the 2.6% inflation rate.
Long-term, if the American mindset remains focused on the savings account instead of the credit card account, we will be in a much better position to weather future storms.
The American savings account has been in freefall, below 1% for many years according to the Bureau of Economic Analysis, until this year when it ticked up to nearly 3%. This is still far below the savings rates of Germany, Japan and other countries who put away as much as 10% of their income.
The most incredible shift in this recession is not the personal savings rate increase, decrease in household income, the collapse of entire industries, mortgage freefall, and job losses associated with that malaise. That's drastic enough. The real kicker of all that is the monumental shift in psychology of the American worker, especially the growing ranks of the American unemployed, toward a more frugal existence. Luxury goods are officially out.
Do you feel yourself pulling back on purchases? Emarketer.com reports that more consumers are abandoning their online shopping carts. The holiday season is supposed to increase an anemic 0.5-1%, not matching the 2.6% inflation rate.
Long-term, if the American mindset remains focused on the savings account instead of the credit card account, we will be in a much better position to weather future storms.
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