Brick-and-mortar retailers like Target, Wal-Mart, and Best Buy have been struggling to find ways to stay relevant in the new Amazon age. After trying to make incremental changes to stem losses, these retail giants are now realizing they have to make fundamental changes to their marketing and business strategies if they want to survive. CNN Money recently reviewed Target’s efforts, and results, in this article. After disappointing holiday sales in 2016, Target allocated $7 billion to modify their marketing mix. The article outlines changes made in every one of the 4 P’s and is a great example of how marketers need to consider all aspects of their marketing mix to create an effective marketing strategy.
Marketing Exclusivity and Status
Luxury goods can facilitate good discussions when talking about consumers and their buying behavior. If you’re looking for a current topic to use when talking with your students, consider the new Lamborghini Aventador SVJ. The new luxury sports car is faster and pricier ($518,000) than the base Aventador model. Only 900 of the new model will be produced which can add to the status achieved by owners of the car (and can further influence purchasing decisions). You might also use this in a discussion about segmentation or marketing strategy. Who would be the target market for this car? How can Lamborghini effectively target that market and what might their marketing mix look like?
The Exaggerated Death of Retail
Amazon is a retail juggernaut. Last year the company was responsible for 5% of total US retail sales (online and offline). Their growth and expansion seems unstoppable at the same time that we see other iconic retailers (Sears, JC Penney, Radio Shack, Payless Shoes, etc.) struggling to stay alive. Given the convenience and potential for cost savings it’s easy to say that the future of retail is online and brick-and-mortar establishments are a thing of the past but this FastCompany article,”The Future Of Retail In The Age Of Amazon“, offers a different perspective. Fair warning – this is a fairly lengthy article but it provides a number of good discussion topics.
The article starts by discussing the decline in traditional malls but talks about investments being made by the Mall of America to attract younger buyers. While online shopping has certainly contributed to traditional store closures, the article also claims over-expansion and lack of investment are significant contributors to decline as well. Even with all of the well publicized store closings there was still a net increase of 4000 stores in 2017 and a higher increase expected this year. The article spotlights Target and talks about some of the investments they’re making to move back to partnered custom products and emphasize visual merchandising in their store design. Much of the article alludes to the idea that a focus on the shopping experience can provide a unique value proposition that allows traditional retail to differentiate itself from online retail.
Students do a surprising amount of traditional retail shopping and you can get some good discussions started when asking them to articulate why they choose to buy in-store as opposed to buying online.
Negative Brand Association
Brands partner with other brands all the time for various reasons. One motivator is to help improve your brand preference. By associating with another brand that your customers view positively, you hope customers will, over time, associate the two brands together and thereby provide a halo benefit. One example would be the NFL’s partnership with the Susan G Komen foundation. Another motivator for partnership can be customer acquisition. An example here would be AARP’s partnership with Consumer Cellular. This partnership provides AARP with a selling point to prospective customers (join and gain access to these discounts) and it provides Consumer Cellular with a customer acquisition channel.
However, in all partnerships you need to be cognizant of the risk to your brand if your partner’s brand becomes tarnished in any way. Recently that became an issue for a number of businesses that had a partnership/association with the National Rifle Association. Companies like Bass Pro Shops, United Airlines, Delta, Cabelas, Hertz, and others have/had some form of partnership with the NRA that weren’t heavily marketed but the brand association was there. Following the school shooting that took place at the Marjory Stoneman Douglas High School in Florida, students and other activists brought visibility to those relationships. Facing public scrutiny, some of those partners have chosen to end their association with the NRA while others have reaffirmed their support. This article from Inc. talks about some of the companies that have severed ties and this article from Newsweek talks about those that have chosen to stand by the partnership.
While this particular topic may be politically charged, you can hold a discussion on the concept of partnerships and the risks and rewards of brand association. How should companies make decisions about choosing the appropriate partner and how should they evaluate that relationship when the brand status of one partner changes? How do corporate values factor into that decision?
Social Media’s Fight for Younger Members
Facebook started as a platform for college students and quickly became popular with teenagers as well. As the platform went through the adoption curve it started to pick up older users. As the Facebook demographic shifted, so too did it’s appeal to the younger audience that helped establish its dominance. This USA Today article, “Facebook losing young users even faster to Snapchat, eMarketer says“, talks about some of the challenges currently facing Facebook and how Snapchat is now growing its user base faster than Facebook. Better privacy control, faster viewing, and limited permanence are some of the factors that are driving 12-17 teenagers toward Snapchat and away from Facebook. 6 years ago Facebook recognized the threat and acquired Instagram as a means of continued access to teenagers but Snapchat is now getting new users even faster than Instagram.
The consequences of this change can be significant for Facebook. Their business model relies on advertising and if they can capture users early in life it is much easier (and cheaper) to retain those users rather than trying to switch users off of competing platforms. Should Facebook modify their platform to cater to younger viewers? What would they have to do? Could they be successful with a redesign or is their present brand identity too strong for younger viewers to consider using them? Can they succeed if they stay focused on an older demographic?