Sunday, March 23, 2008

Peddling nostalgia

You may not readily admit to it, but we all are suckers for nostalgia. Perhaps, we differ in our degree of jonesing for objects of yesteryears that evoke personal memories but one look around is enough to realize how much effort and money is being poured into peddling nostalgia. Take, for instance, the launch campaign for the American Express spinoff, Ameriprise Financial, employing unmistakable psychedelic imagery reminescent of the high '60s and 70's . While one may question the judgment behind such drug inspired visuals, there is absolutely no mistaking Ameriprise's intention of courting leading-edge baby boomers, fast approaching their retirement age. Thankfully, Ameriprise softened their approach in subsequent campaigns featuring Dennis Hopper. The underlying theme in these campaigns, however, continue Ameriprise's strategy of employing nostalgia to better peddle their investment services. Care is obviously needed to handle the double-edged sword of nostalgia: for it can evoke strong positive as well as negative responses.

My plan for this post was not to analyze Ameriprise's strategy but rather to look at missed opportunities elsewhere in the world in hopes of gaining new insights. In India, two personal care brands reigned supreme in the '70s - Binaca and Forhan's. Coveted as they were, these brands have a long and sordid history of changing several hands over the past four decades. Binanca, once owned by the multinational giant Reckitt Benckiser via its acquisition from Ciba-Geigy, was eventually sold to an Indian CPG company, Dabur, which apparently gave up looking for the right buyer after years of search. Dabur is still selling toothbrushes under the brand.

Forhan's, orginally developed in New York, gained fame during the Great Depression and eventually found its way into Wyeth's portfolio when it acquired Geoffrey Manners. Wyeth later sold Forhan's to John Oak Remedies who passed it on to the Anchor Group, which was itself acquired by the Japanese conglomerate, Matsushita.

Photo © Jai Dadlani

Clearly, some still continue to believe in Binanca and Forhan's. Out of sheer nostalgia, perhaps? Sadly, all of this talk about Binaca and Forhan's makes me feel very old, indeed. A negative response, eh? I just need to go out and buy something cool to feel young again. :-)

The story of Binanca and Forhan's is the story of many brands that were once deeply personal (can't get anymore personal than a toothpaste, can you?) and full of vitality end up losing their immense power over just a generation. The owners of Binanca and Forhan's failed to revitalize or relaunch these brands for the new generation while newer, more energetic brands grabbed their market share away. The brand owners simply waited, too long; their only willing segment is on to denture cleaners now. What would you have done to revive such brands?

I look at what Proctor & Gamble has done with Old Spice, a brand it acquired from Shulton, as a great example of how to execute a brand revitalization program. The Old Spice brand, launched in the '30s, is still very strong because P&G made it relevant for the new generation without relying on the nostalgic factor alone. P&G not only revived the brand against a strong ""who wants to use their grandfather's cologne?" sentiment but managed to add several more successful extensions to it. P&G bravely turned that sentiment around to come up with their slogan "If your grandfather hadn’t worn it, you wouldn’t exist.”? So, the next time you peddle nostalgia, just be careful out there. Peace out, man!

Wednesday, March 19, 2008

The iRefurb channel

Unless you just crawled out a cold-war era nuke bunker, you already know that Apple managed to pull off, arguably, one of the most successful product launches in recent memory. Yes, I'm talking about that highly desirable iPhone. I happen to think of the iPhone in its current form as merely a statement of what's possible rather than a fully baked product. But, that's a topic for another post.

I'm sure a lot of marketers out there would love to replicate the iPhone phenomenon for their current employers minus, of course, the stubborn hacker community and their esoteric terminology. PWNed!?! Need I say more? Ok, back to the topic of this post. Focus, people! Let's assume you are the primary marketer tasked to help Steve "walks on water" Jobs achieve his audacious goal of selling 10 million iPhones in CY 2008. What do you do? Well, clearly, you'd have your work cut out for you. The very popularity of a product like iPhone makes it monumentally hard to price discriminate. And, why engage in price discrimination, you ask? Well, why else but to get your greedy little hands on that meaty elastic demand portion of the curve. Did you really think you could meet Steve's lofty goal by simply continuing to sell to early adopters. News flash! They all have their iPhones already. Perhaps, a few would buy the 3G version whenever it's out but you can't count on them to take up the 10 million units you are tasked to push out. Now that we have established the need for price discrimination to effect a substantial increase in unit sales, how would you do it, especially, when word gets around these days in a New York nano-second? Before you answer that question, let's just reflect back on Apple's price-drop fiasco last year and the very angry response from Apple fanboys, a.k.a. early adopters. Is there really no way out? Well, actually, since you ask, there is a way out and Apple has already figured out the secret formula and is exploiting it to the hilt without much market seepage, methinks.

Savvy Apple users amongst us already know that Apple sells refurbished merchandise including iPhones through its online store. I'd like to call these refurbished iPhones, iRefurbs. Why? It's what everyone seems to be doing these days. Stick an "i" in front of any word and suddenly the word is ├╝bercool.

What may not be widely known is that iRefurbs are actually brand new merchandise. Except they come in the nondescript white box you see below; full price gets you the ever so attractive black retail packaging pictured next to it.

Photo taken using my iPhonePhoto from

The pretty black box, essentially, accounts for the whopping $50 difference based on the current price of an 8GB iRefurb. For you pricing gurus, that's a $50 difference between the positive differentiation values for the two EVE® profile market segments. It's pure genius when you consider the infinitesimal cost difference. While this may sound like an insignificant detail, the white box is perhaps Apple's only "credible" defense against a claim of violation of the good ole Robinson-Patman Act. Apple actually uses an entirely different part number to keep track of its iRefurb sales. And, premium credit cards typically don't provide extended warranty coverage on iRefurbs as a matter of policy. While this is all interesting information, our marketer really wants to know how to avoid the dreaded market seepage that inevitably leads to price erosion. Certainly, an eventuality, I'd imagine, unacceptable to both Apple and Wall Street, even if 10 million units were to actually exchange hands in 2008. The key, then, would be to throttle supply through the iRefurb channel intelligently and make purchasing just a tad "difficult" in order to keep any market seepage down to the bare minimum. Apple achieves this by making iRefurbs available at seemingly random times and quantities.

The lesson here for our intrepid marketer is to recognize the immense value of the iRefurb channel and to exploit it in creative ways alongside the more traditional channels. Lest one thinks that Apple alone is playing this game, it's worth mentioning Amazon has setup a dedicated subsidiary, WarehouseDeals, for exactly this purpose. Amazon manages customer returns and slow moving products including movies in the now defunct HD DVD format through its very own "iRefurb" channel. I predict more companies will aggressively adopt this marketing technique, expectedly, with varying levels of success, unless they truly understand the underlying potential to create the perfect price discrimination storm. Long live the iRefurb channel!