Tuesday, August 24, 2010

Retro advertising

Ads are both a reflection of the culture and impact culture. The latter gives justification (for some) why there ought to be laws and regulations on advertisers. Today's regulations include everything from fines for misleading claims - to regulations on the diversity of models appearing in catalogs - to when, where, and how certain products can be promoted. If you ever don't think the world has changed, take a look at some of these vintage ads. They speak for themselves.

What is so interesting about the ads above is that both cocaine and heroine are branded products. Of course the products were legal back then. In 1885, Parke-Davis sold cocaine in various forms, including a cigarette version, powdered format, and a mixture for vein injection. (Of course, the mixture came bundled with a needle). The ads promised that its cocaine products would “supply the place of food, make the coward brave, the silent eloquent and ... render the sufferer insensitive to pain.” (Wiki) I'm pretty sure their claims are not false advertising but it is amusing to look at the ads of a product that is so known to be so dangerous and illegal now. Furthermore, check out the price of cocaine in the ad presented above. If the size of a "cocaine tablet" was 500 mgrams at today's value at $110/gram, that's $55 to "fix" a toothache. (A typical $10 bottle of aspirin contains 100 35g tablets so if the cocaine tablets were sold in 100s, it would be $3850 a bottle). If cocaine was still an ingredient in Coca-cola, the price of Coca Cola would either be a lot higher (pardon the bad drug pun) or the ingredient would have been removed due to cost. Even at Columbia's $2 per gram price, it is by comparison, about 3000 times as expensive as sugar. Sugar is about .06 cents per gram. (Please stay away from drugs :-) )

Who's your brand daddy of this ad? Chase and Sanborn in 1952.

CREEPY. Arguably, this ad is no more distasteful (or immoral) than the Calvin Klein 1995 campaign- or many of the 2010 American Apparel ads.

Thorazine was the first drug developed to specifically combat antipsychotic behaviors. It was marketed by Smith, Klein and French Labs which is still in business under the name of Glaxo Smith Klein.

If you ever think that times haven't changed, look at this 1979 ad for Pakistan International Airlines. Pardon another bad pun, but this ad just wouldn't fly post 9-11.

Good old Santa likes a Coca-Cola and a good cigarette. If this ad ran today, how loud would the outcry be from the anti-tobacco lobby? Heck, even when James Bond lights up, there are some very vocal upset people. Considering James is dodging bullets everyday, smoking is not his biggest problem - or most probable cause of death.

Thursday, August 12, 2010

A Tribute to Consumer Choice. Boardwalk ice cream's 56 flavors

Its summer time and I miss my BCom and MBA students. So tonight, I’m going to start off with a multiple choice question. Here goes:

According to a recent poll, which of the following is the more preferred way Canadians like to cool off on a hot summer day?
a) A dip in a pool or lake
b) Hanging out in an air conditioned mall
c) Having an ice cream

If you answered “c”, you got yourself an “A”. So on this hot summer’s night, I’m going to make a content-light entry on the ice cream cone business – in particular, consumer choice at ice cream scoop shops.

Earlier tonight, I visited The Boardwalk on Clear Lake ice cream scoop shop in Riding Mountain National Park. This independently owned scoop shop is located on lake front property of a touristic town of Wasagaming, Manitoba. The location is indeed picturesque but the offering is a tribute to consumer choice. This scoop shop offers 56 different hard ice cream flavors on top of a bunch of soft ice cream flavors and dips and gelatos. (I always liked Baskin Robbins "31 flavor" offering and its marketing of the offering which is cleverly
infused in the brand's logo.) But to put the Boardwalk's 56 flavors in perspective, let's do some stats. With 56 flavors, there are 3080 unique combinations of regular double scoop cones that can be ordered before having to repeat an order. In other words, you could eat different 2 flavor-scoop-ice-cream-cones every day for 34 years of summer before ever having to eat the same combination of scoops again. Of course, you still wouldn’t have touched the gelato or the soft ice cream flavors (and their many dips). That's a lot of choice.

But this raises an interesting marketing question. Why are there so many flavors of ice cream available at scoop shops? You would be hard-pressed to find another category that has such a plethora of flavors (save for chocolate bar confectionary). But, ice cream distribution is far more complex than distribution for any packaged good. For one, ice cream has to remain within a narrow temperature band for its entire distribution - from manufacturer to transit- to scoop shop. In addition, this distribution has to be done on some of the hottest, humid days of the year. And there are still more complexities. Due to the nature of the frozen good, regional production is required which makes huge scale more challenging. (By contrast, all LifeSavers sold around North America are manufacturer in one Montreal location.) Furthermore, the ice cream business is heavily consolidated by a few large international brands (Nestle, Unilever, Breyers, for example) so we can rule out multiple flavors coming from a bunch of competing brands.

So why are there so many flavors?

A good starting point is to look at the unique set of purchase dynamics at scoop shops. First, almost all scoop purchases are social. Visit a scoop shop and you’ll see couples on dates, young families out for a treat, seniors enjoying an indulgence etc. In other words, the purchases are made by groups, emotional (hedonic in marketing jargon), pleasure-filled, and perhaps even romantic. The more flavors then, reduces the risk of having a bad date for the boy trying to woo a girl, or for Aunt Edna trying to “wow” her nephews. Add on to that the fact that scoop shops are a destination location which means that consumer want selection. (Think of going to a donut store and finding only 2 types of donuts). Furthermore, the consumers of the scoop cones straddle a very broad and diverse market who have widely varying taste preferences. (According to the Boardwalk management, “Tiger Tiger” and “Bubblegum” are among the most preferred flavours for kids, Maple Walnut for seniors, for example.) Finally, since the scoop shop purchases are heavily consumed only in summer months, there is value for the consumer in variety. For example, if a consumer visits the scoop shop 7 times over a month, he will derive extra pleasure in changing up his/her order from time to time. Plus, she will like to take a bite out of her ice-cream partner’s other-flavored cone too. In sum, scoop shops have a unique purchase dynamic that lead to many varieties being offered in spite of distribution challenges.

Of course, the demand side can only be realized if the “supply side” is feasible as well. Here too, ice cream manufacturing seems to lend itself well to flavour diversity. The same production process that works for vanilla ice cream manufacturing seems to work for other flavour production as well(save for some recipe alterations). And, unlike chocolate bars manufacturing which all has different shapes, weights, and unique packaging requirements, ice cream manufacturing for scoop shops can be done in uniform packaging and sizes. In short, the marginal cost of new varieties is essentially the ingredients and stopping the production line to change recipes.

This takes us to brand. When perusing flavors of ice cream, you'll probably notice brand-centric ice creams like: Smarties, Aero, Caramilk, Coffee Crisp, and Rolo (see "The Kids Did What"). Well developed confectionery brands are relevant and easy-to-extend to ice cream flavors. If a chocolate bar is a treat, then even better is a "chocolate bar ice cream" to cool you down on a hot summer's day. The point is this, easy-to-extend chocolate brands help to crank up the variety of ice cream flavors.

So, tonight’s entry is a little bit more content light. I thoroughly enjoyed my visit to the Boardwalk and reviewing its 56 flavor offering. I can see how some would find the choice overwhelming. But I didn’t. Tonight I intentionally ordered a vanilla. 3079 more combinations to go.

Some fun facts on ice cream:
Best selling Boardwalk flavor: Rolo
Best selling ice cream flavors?
What flavour of ice cream are you?
Bacon Ice Cream?
A cute blog post on brand flavor ice cream.

Sunday, August 1, 2010

Marketing of Fear, Faith, and Fun.

Technically 2010 is not a leap year, but it has been for me.

Last Tuesday, my personal trainer (Marie Pier) and I did our first skydive. We did it at a place in Joliette called Voltige and it was one of the best experiences of my life. As we approached the roar of the prop plane, the guy filming our jump yelled out: “Hey Bob, why did you decide to jump out of a plane today?” I attributed the idea to my trainer (who in turn “blamed” me) but the reality is that sky diving is thrilling experience that is a leap of fear, faith and a fun. There is something appealing and exciting about looking danger in the eye, and spitting at it. It's also a curious thing to understand the sources of growing demand for the "sport".

A bit on the the adrenaline kick.
When you complete a waiver form signing your life away, stare down at the ground from 4kms above the earth from an open plane door, and free fall at 200kms per hour, your juices get going. Indeed, the effects on the body are unmistakable. One study continuously recorded ekg’s of parachuter’s first sky dive and revealed that the average jump heart rate values were 64.5 beats/min 2 weeks prior to the jump, 112.8 beats/min immediately before the jump, 170 beats/min during the jump, and 122.8 beats/min after the jump. (For the nerds out there the mean difference between each phase was statistically significant with p less than 0.001 values.) Another study revealed hyper stress levels of the first time jumper (who is really tandem jump consumer) and a 2009 study measured the impact of the jump on adrenaline. I'm stating the obvious. Common sense tells you that a thrilling activity will shock, rock, and adrenalize the body. But from a consumer point of view it is indeed a curious phenomenon how a segment of the population actively seeks out (perceived) dangerous activities. This entry, however, is not going to focus on consumer behaviors- rather it is going to examine the state of this industry and relate it to a marketing phenomenon. Let’s start with some numbers.

Shakira Shakira Shakira: The Numbers Don’t Lie
Numbers are tough to come by in terms of the total number of jumps and who is jumping, but a United States Parachuting Association (USPA) press release shared these headlines: Skydiving Soars in Popularity (July 2007) and Skydiving Soars into 2008. The guts of the releases give us some selective numbers. The total number of skydive jumps in the USA were 3 million in 2007 (highest number recorded) while the number of all sky diving licenses has steadily been increasing over the last few years. To put some historical context around these numbers, 1960 the United States had 3,500 members- in 2010 this number has grown almost ten-fold. The numbers look healthy and if people are investing in licenses (which are not cheap), the future looks robust too.

What's Driving the Diving?
So what is propelling skydiving growth? There are a bunch of factors that can be attributed including: (i) greater safety record of the sky diving due to best-practice learning that has accrued over the last several decades, improvements in equipment technologies, and “safety day”- a day reserved to review safety procedures; (ii) more organized and accessible jump sites; (iii) a growing desire for more thrilling activities. (A big drop in baseball viewership has been attributed due to the slow moving nature of the game). But I am going to focus on a forth important dimension: Social network sites.

Skydiving and other thrill activities (hang gliding, heli-skiing, etc.) are tailor made for social web sites. Less than 6 hours after I jumped, my jump was my profiled on my Facebook page. Of course, my friends who had jumped before me had also done the same thing immediately following their jumps. The social network sites enable you to rapidly share exciting visuals of the experience with your friends, who in turn can get intrigued about doing the activity themselves (See Karl's comment on the image). The images also take off the "I'm going to die" stigma away from the activity. But, it is not just on Facebook or Orukt where the images are shared. A quick search on YouTube for “sky diving” returns more than 136,000 skydiving jump videos- a huge chunk of which are the first time tandem jumps. A quick search for “sky diving” on Flickr.com reveals more than 52,000 photos tagged with the topic. Each effort to post the image/video is designed to share the experience with family and friends. That is a lot of “free exposure” to highly targeted audiences- folks who are invested in their friends' well-being. Furthermore, the images/videos will spark many "you gotta do it" conversations. In short, the Web is helping to do what it does best for marketers- having the customers market the product or service.

While the numbers don’t lie, they certainly don’t tell all of the truth all the time. Here I will argue that social networking sites have made sky diving more of a mainstream activity- which is affecting the extreme sport core. Just like in the late 90s when the core-target market urban kids abandoned Tommy Hilfiger (pronounced with a heavy French accent Hil-fee-gggay) because it grew in suburban mainstreet appeal, the hard-core sky divers are increasingly engaging in new, more daredevil activities like base jumping, bird man / wingsuit activities (I wonder what the car thinks at 0:54). Some of the hard core divers may engage in also sky diving activities like plane to plane jumps or sky surfing. Of course, this is healthy for the overall thrill industry (although not necessarily for all daredevils) as new categories of thrills are emerging and new adrenaline activities are spawned.

Some quirky facts about Sky Diving:

Highest Dive 83,523 ft or about 26 kms. Eugene Andreev. (GuinnessWorldRecords.com)

Longest free-fall: 80,380 ft (24,500 m) from an altitude of (25,457 m). Eugene Andreev. (GuinnessWorldRecords.com) Let's put this in context. Our jump was 13,000 feet. Commercial jets fly around 30,000 feet. At 30,000 feet you need an oxygen to stay alive and it is easily -60C.

Highest Dive Speed 989kms/hour Colonel Joseph Kittinger stepped out of Excelsior III, a helium balloon, at an altitude of 102,800 feet or 31,330 meters.Let's put this in context. He jumped from 17,000 feet more than the highest level a plane has ever flown (85,000 feet). He fell for 4 minutes and 36 seconds and reached speeds of 614 mph or 989 km/h before opening his parachute at 18,000 feet or 5,500 meters for a total falling distance of 84.8000 feet or 25,830 meters. Evidently he used a chute to stabailize his fall so he does not get a Guiness entry, but he does make mackalskionmarketing.blogspot.com adulation.

Highest free-fall w/o a parachute: Vesna Vulovi fell from 33,333 feet without a parachute and survived. According to the Guinness Book of Records, she jumped as a flight attendant after the plane she was on exploded.

Oldest skydiver: 100 years and 60 days: Age of oldest recorded skydiver (GuinnessWorldRecords.com)