The Day That Wal-Mart Dropped the Smiley Face

subject atomic number 18a I The Day That Wal-Mart Dropped the Smiley Face Retail giant wal-mart annually spends close to a half cardinal dollars on advertising, so the partys decision in the first month of 2005 to run full-page ads in more than than 100 newspapers was not really surprising. What was surprising was the copy in those ads, which said nothing about low-priced toasters or new music CDs. Instead, the ads featured a photo of workers in their blue-blooded Wal-Mart smocks and a letter from Wal-Mart CEO Lee Scott.Scotts letter was blunt and to the point When special interest groups and critics spread misinformation about Wal-Mart, the public deserves to hear the truth. Every adept is empower to their own opinions about our compevery, but they argon not entitled to bump off up their facts. Not the sort of message valet de chambrey would expect from a company whose television ads often feature a yellow smiley-face flying around a Wal-Mart store lowering prices. b arl y it is a clear sign that Wal-Mart believes it send a like a shotion no longer afford to ignore several societal trends that threaten the companys success and profitability.Wal-Mart is the largest and most successful retailer in the world. It employs more hatful than any other private company in the United States ( close 1. 2 unrivalled million million) and has world-wide sales of over a quarter trillion dollars, more than iv cadences that of its ne arest enemy. The foundation of this impressive record is the companys ability to keep it promise of node-friendly service and low prices. But with success induces upkeep and not all of it good. Several lawsuits claim Wal-Mart shorts overtime pay and one lawsuit claimed female employees face discrimination in pay and promotions.Wal-Marts expansion plans keep up also run into trouble, as some cities and states, citing concerns ranging from low final payment, inadequate benefits, environmental damage, and harm to local economie s, pull in passed laws to make it difficult or impossible for Wal-Mart to build its giant superstores. In response to past criticisms of its diversity policies, Wal-Mart created company-wide postings of promotional opportunities, created a new position for a director of diversity, and slashed the bonuses of managers who betray to achieve diversity hiring targets.Scott himself stands to lose $600,000 from his annual bonus if Wal-Mart does not meet diversity goals. Recent years have also seen the CEO spend more time meeting with investors, community groups and the media. But in recent years Wal-Mart has begun to use advertising as a way of wooing criticisms that the company is not a good employer. At first, lots of this advertising was soft-sell emphasizing happy Wal-Mart employees. The new causal authorization is clearly more direct The copy seeks to address misperceptions about employee wages and benefits, noting that full-time company employees are paid an average of $ 9. 8 substantially higher than what is required by federal law (%5. 15). The copy also notes that a majority of Wal-Mart employees said benefits were important to them when they chose to take a job at the retailer. Complementing the ads is a PR oppose in select cities victimization employees and press conferences. In Tampa, Florida, for example, employee Michael Martin told reporters, Im making more afterwards working 4 years at Wal-Mart than I did after nine years at Winn-Dixie. Martin, a department manager, remark, I left Winn-Dixie because I couldnt get a promotion.Here I got one after six months. why is the company using a new approach? For too long, others have had free rein to say things about our company that tho are not true, said lee side Scott, president and chief executive office. Our associates Wal-Mart speak for employees are tired of it and weve decided to draw our own line in the sand. It is too soon to know if the discharge go out succeed, although some are already skeptical. According to retail commercializeing consultant Jordan Zimmerman, aggressive mage campaigns the likes of Wal-Marts are rare and costly.And ads that directly address the companys critics will not likely replace the companys regular advertising (including the smiley face), which is not scheduled to change any time soon. But the new ads do constitute a small change in the nature of the dialogue Wal-Mart has with consumers and society. Only tie will tell if they serve Wal-Mart to stay on top. Questions 1. What is Wal-Mart doing with its latest campaign? What are the difficulties involved in such an effort? 2. A recent Advertising Age article noted that Wal-mart customers are less likely to read newspapers and more likely to watch television than the population as a whole.Why, then did Wal-mart choose newspapers for its new campaign? 3. Analyze this Wal-Mart campaign and explain its habit referring to the discussion in this chapter of the roles and functions of adve rtising. What is its primary purpose? Do you think it will be effective at accomplishing that purpose? Case II toy dogota Goes after Tuners Young people with limited incomes often look for a great fill in on a new car. unitary way to save money is to forgo options and upgrades, like a sunroof or a CD player. But when Toyota introduced its funky Scion brand, it considered offering a recitation without something most people assume comes standard paint.Although they ultimately decided against the idea, at one point Toyotas plan was to sell the brand with just gray primer. Toyota wasnt really targeting people so cheap they wouldnt spend money on paint. Just the opposite the car company was going after a group with money to burn, called tuners. Tuners are young car buyers who live to customize hteir cars. The trend really began among young Asian Americans, who typically bough t tawdry Asian import cars and then spent thousands of dollars customizing them. The hobby has spread to o ther young people, so that to twenty-four hours Asian Americans are a minority of tuners.But Japanese brands remain the cars of choice among those dedicated to creating a work of art on wheels. Explaining the idea of a no paint option, Jim Farley, Scion general manager, says, As much as possible, we want to give them tuners a black canvas. What does a tuner do with his car? He (or she women make up almost 20 part of the tuner subculture) might take a basic Honda, add a large and loud exhaust system, paint the intake manifolds, and add ride-lowering springs. Other customary add-ons are technologies that increase vehicle speed, like turbochargers, superchargers, and nitrous kits.And there are some serious bucks involved. The Specialty Equipment Market Association estimates that auto after-market spending (spending on car accessories after the original car purchase) increased from $295 million in 1997 to 2. 3 $billion in 2002. The motivation? You build a car for yourself, says one day install on Acura RSX Type-S engine into his Honda Civic. The satisfaction is in making it your own and knowing that nix will ever have something thats the same. The measure of money tuners spend is reason enough to attract the attention of marketers.GM hoped to interest tuners in its Saturn Ion, Chevrolet Cavalier, and Pontiac Sunfire when it when it launched a Tuner Tour of 10 National tropic Rod Association races. GM allowed young car enthusiasts to play games and enter contests for prizes, as it in turn collected proposes and e-mail addresses. GMs focus on relationship marketing makes sense because tuners dont watch a lot of TV. Both Mitsubishi and Ford believe the best way to setting them is with product placements in movies (Mitsubishi bought air time in the popular for (2 Fast 2 Furious).But even companies selling products unrelated to cars are interested in the tuner lifestyle. Pepsi has hired tuners to customize some of its promotional vehicles. Which brings us f ull circle back to Scion, Toyotas goal is to make the new car an immediate hit with tuners. So rather than spend a great deal of money on network television, Toyota decided to patron a 22-minute movie On the D. L. The movie is a comical docudrama that tells the story of a pair of musicians move to obtain their first drivers licenses. The stars are musicians trying to obtain their first drivers licenses.The stars are musicians from youth-oriented bands Ahmir Questlove Thompson, from the Roots, and DJ King Britt, who played for the Digable Planets. The film premiered at the Tribeca film festival, after which segments were shared on peer-to-peer networks such as Kaazaa. Toyota hopes that enthusiasts will download the segments and share them with friends. Questions 1. Why are tuners so attractive to marketers, even after accounting for their spending power? 2. Evaluate Toyotas strategy of targeting tuners with the Scion campaign.What are the difficulties for a large company in marketi ng effectively to a youth-oriented subculture? What techniques do you think companies like Toyota are using to try to understand their market? 3. Explain how tuner campaigns, such as those by GM and Toyota, work. Analyze these campaigns using the Facets Model to identify the effects they are designed to achieve. How would you determine if these campaigns are effective? Case III Starbucks Makes TV Less Intrusive Starbucks coffee is now sold in grocery stores but how many people transact it?To get that message out, the well known coffee house chain needed to reach its customers nationwide with that message. Television commercials would be the obvious way to reach those people, but Starbucks management knew that their customers are not big fans of television commercials and resent the interruption of their favorite program. Thats why starbucks has been such an infrequent advertiser on TV. Its on-air promotional activities have been limited primarily to radio and its only previous use of TV had been support announcements on public TV. That was the problem facing Starcoms MediaVest group.The agency utilize a creative solution It recommended a partnership with the Bravo cable network. Bravo would run four Independent Film broadcast (IFC) movies on Friday nights for a month and Starbucks would buy all the commercial time surrounding the movie airings. The MediaVest team knew that Bravos IFC Friday night films would be a good way to reach the stakeholder audience because research had described that customer base as people who are up on the latest trends, like to attend live performances of the arts, are apt to see a movie during the weekend it opens, and generally are interested in cutting edge things.Mediavest calls this customer the attuned explorer. Even though Starbucks bought all the commercial time, the MediaVest team recommended letting the movies run uninterrupted. Starbucks advertising message was delivered in supporting Bravo promotions of the movies dur ing each week ahead(p) up to the Friday night telecast. About 40 seconds of each 60-second p redirect examination spot showed scenes from the movie and 20 seconds promoted Starbucks s the movie sponsor. Other promotional activities were also utilize in support of the campaign.One month in the beginning the movies aired, a $1 off coupon for a bag of Starbucks drinking chocolate was sent to 3 million targeted consumers around the country, along with a viewer guide introducing the Starbucks-sponsored independent movie festival. Starbucks billboards also come alonged during the movie month coinciding with the independent film industrys annual telecast, which aired on both Bravo and IC. The innovative Bravo partnership wound up not only increasing sales of Starbucks Coffee by 15 percent for the month the campaign ran, but also increased viewership on Bravo by 33 percent.These results led the campaign to be named a Media Plan of the year by Adweek magazine. Questions 1. What was the p roblem Starbucks wanted to overcome in order to effectively advertise that its coffee brand was available in supermarkets? 2. How did the partnership work? Is there anything you could recommend that would extend the reach of this campaign? Case IV Wpps Owner-a British Knight with Every (Marketing) Weapon at His Disposal To the uniformed, nothing about Martin Sorrell or his company, the WPP group, may be quite what it seems.Although he was awarded a knighthood, Sir Martin is anything but a reserved aristocrat. And while WPP is one of the four largest agency holding companies in the world, the initials actually stand for Wire & Plastic products, the British company Sorrell used to gobble up some of the worlds most famous advertising agencies. The roster of agencies now under the WPPs wing includes industry leaders Ogivly and Mother, Burson-Marsteller, Hill & knowlton, young & Rubicam, and J. Walter Thompson, to name just a few.Large conglomerates like WPP made frequent headlines in th e 1990s, a period of great consolidation in the advertising industry. Faced with harsh economic and traffic realities, individual advertising agencies chose to give up independent existence in order to become parts of large communication companies that offered clients all the tools for an integrated campaign, including advertising, direct marketing, public relations, and sales promotion. In the new millennium, dealing with one (or several) of the four large holding companies, WPP Group (England), Interpublic(U.S), Publicis Groups (France), and Omnicom (U. S), is the way the worlds biggest advertisers do business. darn each of the conglomerates is led by a charismatic and dynamic individual, none appears to have an edge on Sorrell, who was described in a recent chance article as confident, witty, and a tod arrogant, talking rapidly about the future of advertising and the challenges of keeping fractious clients and ad agencies happy. Fortune also noted that In an industry populated by shameless schmoozers, the 59-year-old Sorrell is in a league of his own. These characteristics have served Sorrell well, In 2004 he squared off against rival Publicis Groups and its CEO, Maurice Levy, in pursuit of one of the last great independent agencies, grizzly Advertising, New York. During the battle Advertising Age opined that Publicis had a big advantage because Levy and Grey chair Edward Meyer were friends and had spoken about merging in the past. In addition, both Grey and Publicis created ads for consumer giant procter & disclose, while WPP agency Ogilvy & Mather counted P&Gs competitor Unilever among its most important clients. It is customary for agencies not to work for competing accounts. ) A Unilever spokesperson, asked for his thoughts about the possibility of working with an agency that created ads for his most important rival, suggested that In the past, weve not seen it to be such a good idea. But nobody familiar with Martin Sorrell was surprised when at t he end of the day he convinced Grey to sign with WPP and persuaded Procter & Gamble to stay as well. Unlike many of his peers, Sorrell has never written a word of copy, nor has he ever penciled a print design or directed a broadcast commercial.Sorrells talents are organizational and strategic although he is an expert in the world of finance, Sir Martin cautions, I may be a bean counter, but Im not an accountant. To drive home the point he posed for WPPs annual report surrounded by lima and pinto beans. So how does Martin Sorrell continue to win in the high-stakes agency world? His vision, developed years before most of his rivals caught on, that twenty-first-century clients would want a complete calling card of marketing communication services, all of which work synergistically, is one important reason for his success.Tenacity, energy, focus, and a willingness to do whatever is needed to win are also traits that come to mind. All these are illustrated in the story of Sorrells driv e to land Korean giant Samsung when the company put its advertising up for review in the spring of 2004. Samsung spends almost $400 million each year supporting its brands, which is reason enough for agencies to salivate for the account. Sorrell believes that the company holds even greater appeal because of his account that advertising growth in the twenty-first century will come disproportionately from Asia. So Sorrell did whatever he could to attract Samsungs attention.Like any savvy agency head, he assigned his best people to generate creative ideas to pitch to Samsung executives. But unlike most agency heads, he didnt stop there. After discovering that a Samsung-financed museum was having a grand opening in Seoul, Sorrell jumped on a plane and ended up being the only agency person there. Samsung executives found themselves receiving emails from Sorrell at all time of the day and night. Peter Stringham, marketing director of HSBC, a company that Sorrell landed after several year s of trying, commented, Martin can be quite persistent. He was there from the first meeting to the last.Hed pitched to us a couple of times before and not gotten the account, but hed had his eye on it for years. Needless to say, in the fall of 2004, Samsung announced it was awarding its account to WPP. In the new millennium, British knights may not wear armor, carry a crest, or rescue damsels in distress. But Sir Martin Sorrell knows how to triumph in the competitive world of advertising agencies. Questions 1. Why do large clients like Samsung wish to work with giant holding companies like WPP instead of with smaller agencies? 2. What qualities help Sorrell to be successful?Why are these qualities so important for his companys success? 3. Explain how Martin Sorrell wins clients and builds positive agency-client relationships. How does he see the agencys role in marketing? Case V Boycott This A recent ad for a Nike hiking apparel used copy that was probably mean to be humorous. Th e copy suggested that Nikes shoe could help the use avoid turning into a drooling, misshapen non-extreme-trail-running husk of my former self, forced to roam the earth in a motorized wheelchair with my name embossed on one of those cute little license plates you get at carnivals. Marcie Roth, an advocacy director for the National Council on Independent Living, didnt find it funny. Nike is trying to be sensationalist, and theyre doing it on the backs of the disabled, thundered Roth, adding, We wont tolerate it. Nike apologized and immediately pulled the ad. But Roth announced that her group was interested in more than just an apology, because the disabled, in Roths words, had been dissed. Nike was asked to include disabled actors in its ads and hire a greater number of disabled workers.Otherwise, suggested Roth, Nike could expect a boycott. Boycotts are certainly one way for consumers to let advertisers know when theyve gone too far. While some advertisers, notably Benetton, deligh t in creating controversy, that vast majority try to avoid the outcast attention and possible loss of sales that a boycott might bring. Armed with this knowledge, consumers and interest groups regularly threaten boycotts and there are several web sites that track the dozens of product boycotts that re occurring at any given time. Recently the Web site Ethical Consumer listed boycott of Adidas (for allegedly using kangaroo spit out in the manufacture of some boots), Air France (for allegedly transporting primates), Bayer (for allegedly supporting policies favoring the use of genetically modified crops), and even entire nations (Israel, China, Morocco, and Turkey). Although Ethical Consumers rationales for supporting boycotts appear motivated by left-leaning or progressive concerns, conservative groups use them too.The American Family Association, based in Tupelo, Mississippi, has sent tens of thousands of e-mails threatening boycotts to advertisers Geico, Best Buy, founding Looke r, and Finish Line. The AFA is not upset with the ads placed by these companies, but rather with the program in which the ads appear South Park. The AFA claims its e-mail campaigns caused Lowes, Tyson, ConAgra, and Kelloggs to stop placing ads in ABCs surprise hit Desperate Housewives. Some companies resist boycott pressures. Proctor & Gamble ignored AFA pressure to stop its support for gay-friendly order in Cincinnati.Subway Vice President Chris Carroll said his company ignored imperil boycotts caused by the companys decision to run ads in a documentary that was unflattering to Democratic presidential nominee John Kerry. And then theres Pepsi. In 2003 the brand signed hip-hop artist Ludacris to appear in a fun-oriented campaign, but outspoken cable show host Bill OReilly immediately ripped Pepsi and urged all responsible Americans to fight back and penalize Pepsi for using a man who degrades women, who encourages substance abuse, and does all the things that hurtthe poor in our s ociety.Im calling for all Americans to say, Hey, Pepsi, Im not drinking your stuff. You want to hang around with Ludacris, you do that, Im not hanging around with you. A Pepsi representative appearing on OReillys show denied that the artists provocative lyrics (one album featured a song called Move Bitch) were relevant to the Pepsi campaign. But the following day Pepsi canceled the campaign. For viewers of a certain age, the entire affair was reminiscent of the controversy that erupted several years earlier when Pepsi canceled ads featuring Madonna after she appeared in a contentious music video.But Pepsis decision did not mark the end of the controversy. After the announcement, Ludacris and the Hip-Hop Summit Action Network, an organization run by his producer, Russell Simmons, threatened their own boycott. Following several days of negotiations, the second boycott was called off. Ludacris would not be a spokesperson for Pepsi, but the soft-drink giant agreed to a deal to make a multi-million-dollar donation over several years to the rappers foundation. Questions 1. What do you think about consumer boycotts?Are they unhealthy attempts to infringe on the speech rights of others? Or are they a healthy sign that consumers can take action against the ethical lapses of advertisers? 2. How should a company respond to the threat of a boycott? Consider the different responses of Nike, Subway, Lowes, Proctor & Gamble, and Pepsi. How well do you think each of these companies reacted to boycott pressure? Did any of the companies hurt their brand because of the way they reacted to boycotts? 3. How would you review advertising ideas that you suspect are controversial and might generate a backlash?Is it ever justified to push the envelope in the areas of good judge and social responsibility? How would you decide if such approaches are effective? Case VI How Advertising Works If It Walks Like the Aflac Duck Youve probably never perceive of the American Family life Assur ance Co. , nor likely to be familiar with its primary service supplemental workplace medical insurance, a type of insurance that is used by people to help cover the many loopholes and deductibles in their primary insurance coverage. Then again, if you are like 90 percent of U. S. onsumers, maybe you have heard of the company. In its advertising it calls itself AFLAC. The four-year AFLAC campaign is the work of Linda Kaplan Thaler, owner of the New York agency that bears her name. Thalers ads are not known for their subtlety. Among her credits are the Toys R Us jingle I dont want to grow up, and the successful campaign for Clairol Herbal Essences, featuring on orgasmic hair-washing experience. The Herbal Essences ads engrave some as funny, others as quite possibly offensive, but sales of the product have skyrocketed to almost $700 million a year.In many shipway Thalers ads hearken back to the 1960s, when it was common to feature sex, schmaltz, chirpy jingles and talking babies and animals, as the New York Times advertising columnist Stewart Elliott puts it. Industry insiders have been known to snipe at Thalers work, and few would describe her campaigns as edgy. But as Maurice Levy, CEO of the giant advertising company Publicis, observes, There are people who do advertising for what I call the advertising for the consumer. She is doing advertising mush more for the consumer. Thaler herself notes, Were doing our job when we find ways to get people to buy things. Thalers AFLAC ads, by almost any measure, are her best. Almost all feature a white duck desperately screaming AFLAC at people who need supplemental insurance. Unfortunately, the ducks audience never quite seems to hear him. Most of the ads contain a fair amount of slapstick, ordinarily at the expense of the duck, whose exasperated-sounding voice originates with former Saturday Night Live cast member Gilbert Gottfried. Hes got the right answer but nobody is listening, and thats a situation that reson ates with people, says Kathleen Spencer, director of AFLACs corporate communications. Theres also just something inherently comical about a duck. The campaign has been enormously successful. Since the ads first began running, brand name awareness has increased from 15 percent to 90 percent. Over the same period year-to-year sales increases have almost doubled. Dan Amos, CEO for AFLAC, believes that our name recognition with our advertising campaign to truly help our company. In 2003 Ad Age named the commercial featuring the duck and the Amazing Kreskin (who hypnotizes a man into thinking he is a chicken) the most-recalled spot in America. But what makes the AFLAC campaign truly remarkable is how little it has cost the company. The duck has a higher Q stigmatise (a measure of a characters familiarity and appeal) than both Ronald McDonald and the Energizer Bunny, but whereas Energizer has spent almost a billion dollars over 15 years on advertising, and McDonalds spends almost $700 m illion every year, AFLACs ad budget is only $45 million a year.There is no denying that Thalers work for AFLAC is a triumph of both effectiveness and value. Questions 1. Some viewers dont like the AFLAC ads. Can an ad still accomplish its intended purposes if people find it annoying? 2. The AFLAC campaign is more than four years old. In your opinion, will the campaign stay effective for the foreseeable future? 3. What makes AFLAC ads so effective? Is it something more than their entertainment value? If so, what else contributes to their success?