Unfortunately, there are accidents in life. Cars collide. Homes flood. People break bones. Insurance lessens the impact of such events, but what about damage to pizza? Well, Domino’s now offers protection for even that unexpected occurrence.
The nation’s pizza deliver leader is very good at getting its products from its stores to our doors, but it seems less confident about our ability to do the same. For that reason, the company recently introduced “carryout insurance.”
Domino’s now promises: “If damage occurs to your carryout order after you leave the store, just bring it back and we’ll remake it for free.” The firm lists a few reasonable provisos: The order must be uneaten, with nothing missing, in its original packaging, and accompanied by a receipt. The firm also offers examples of accidents that qualify for a claim like slipping and falling, "my kid sat on it," and "a stranger sneezed on it." In other words, it seems like the company will cover just about any claim consumers make.
How much does the pizza insurance cost? According to Domino’s it’s “free for all customers.” Some may be thinking, “But, there are no free [pizza] lunches,”—customers must be paying for the insurance indirectly. That may be true; however, Domino’s doesn’t appear to have increased its prices. The company needs to be careful that the costs of its pies stay in-line with those of Papa John’s and Pizza Hut in the highly competitive pizza market.
It’s also likely that pizza insurance claims haven’t taken a significant bite out of the firm’s bottom-line, which raises a key question, “Do people really need pizza insurance?”
Let’s say that someone spends $30 on a pizza pickup order, then drops it while taking it out of their car. The accident may ruin their day, but it probably wouldn’t pose any significant financial hardship. People who can afford to spend $30 on takeout food generally can afford to lose $30 worth of takeout food.
Contrast that loss to a serious car accident, a home fire, or the death of a family’s primary breadwinner. Those events could prove financially devastating, if not insured.
Such scenarios remind me of advice my dad once gave me: Insure the big things that could break you; don’t bother to insure littler things like electronics and lawn mowers. Even though they may be somewhat costly to replace, it’s worth the risk because replacement wouldn’t be financial catastrophic. I also liked the line my Dad said to salespeople who tried to pressure him to insure small items: “All your talk of insurance is making me wonder about the quality of this product and whether I should be buying it.”
My father’s insurance advice is similar to that of Todd Erkis, a professor of finance and risk management at Saint Joseph’s University, who says that “Insurance is key to protecting yourself against financial ruin.” Consistent with that view, Erkis suggests that new college graduates should buy just four types of insurance in order to hedge against possible financial hardship: health, long-term disability, renter’s, and car insurance.
Writing for Mint Life, Nicholas Pell adds just two other types of insurance to buy: home owner’s, which is analogous to renter’s, and life insurance. New college graduates often don’t have dependents and, therefore, don’t really need life insurance, but those who do should use insurance to protect their survivors from poverty.
All this to say, people don’t need pizza insurance, even if it’s “free.” So, what is Domino’s doing? In the very crowded market for restaurant pizza, Domino’s is probably trying to gain a little bit of perceptual separation from its closest competitors. Papa John’s and Pizza Hut don’t offer carryout insurance, which makes Domino’s distinct.
However, while Domino’s may have created a difference, the insurance doesn't deliver any real competitive advantage. Again, people don’t need the insurance, so it probably won’t sway many purchase decisions. Furthermore, who ever thinks they might drop their pizzas? In sum, the insurance just doesn’t offer any measurable improvement to Domino ’s value proposition.
Still, Domino’s has savvy marketers. The company wouldn’t be so successful if it didn’t. The firm’s marketing team probably intends carryout insurance as more of a promotional strategy than a product enhancement. In other words, it doesn’t matter if the insurance causes people to buy more pizzas, as long as publicity and word-of-mouth about the unusual offering helps keep Domino’s top-of-mind. That added exposure, in turn, should lead to more pizza purchases.
But would the firm really go to such lengths just for promotion? It's done so before.
Prior to carryout insurance, the company’s “Paving for Pizza” campaign represented a similar strategy. Domino’s promised to patch potholes around the country so the road hazards wouldn’t wreck pizza deliveries. Of course, a company as far-flung as Domino’s could never repair enough roads to actually make a significant delivery difference in most of its locations. However, the notion of a pizza company patching roads was so novel it captured press attention, as well as created some community goodwill. In short, the program seemed to be a very effective, albeit unconventional, means of pizza promotion.
Will carryout insurance, work as well for Domino’s? I doubt it. Despite the fact that I’m writing about it now and you’re reading about it, I don’t believe the company’s newest ploy will capture the interest or hearts of people like the paving program did.
There’s nothing wrong with Domino’s promising extra protection for pizzas; in fact, it’s a nice extra benefit, if anyone ever needs it. However, that lack of real consumer value, teamed with minimal promotional impact, places carryout insurance in the box of “Simple-Minded Marketing.”
Eric, a friend of mine who happens to be a CPA, realized he was running low on string for his grass trimmer, so he went shopping where he’d purchased the product before—Amazon. Finding what seemed like a good price ($18.94) for the same 3-pack of spools he bought a few years earlier, he placed the item in his cart. Then he discovered something that might make all of us question the prices we pay for products.
Eric decided to check the price for the same Amazon item, using a different web browser—one he had never used before to order from Amazon. Entering the website, he navigated anonymously to the item page, where his suspicion was confirmed: The price he saw was just $16.89, i.e., $2.05 lower than the price for the same item he had placed in his shopping cart minutes before.
Although most of us haven’t been so clever as to catch an ecommerce giant in apparent pricing hypocrisy, many of us probably have wondered whether Amazon and other online retailers were somehow taking advantage of us through increasingly-sophisticated pricing strategies. Responses to Eric’s Facebook post about the incident confirmed such concerns:
“I wonder if the price is also because you're a logged in Prime user in one and they compensate for some of the free shipping.”
“I’ve worked with some sellers on Amazon. They are a beast to deal with and it can really wreck a small business. And there is nothing the business owner can really do to combat their practices. They are the 8 million pound gorilla in the room.”
“I read [your post] out loud to my daughters, I thought it was so significant.”
“The exact same thing happened to me just recently. I was going to protest the increase in price over a year's time. What can we do?”
Frustration over similar experiences may lead to accusations of “price discrimination,” i.e., when a seller changes the price of the same product for different consumers. Generally speaking, it’s not fair to charge people different prices for the same item, but there are some seemingly legitimate exceptions, for example:
Quantity discounts: Buying a 36-pack of bottled water should be cheaper per bottle than buying a single bottle of the same water.
Good credit ratings: Individuals with better credit scores deserve lower interest rates on loans compared to those with weaker credit ratings.
New customers: The risk of trying a new business or products may warrant giving a discount to first-time buyers.
In reality, none of the preceding truly represents price discrimination because people can, if they choose, put themselves in the more favorable pricing position. For instance, they could: buy more bottles of water and store them, follow sound financial practices to improve their credit scores, or assume the risk of purchasing from a new company.
If Eric’s experience falls into any of these three categories, it might represent the last one. Perhaps because of his lack of history with the second web browser, Amazon pegged his subsequent shopping visit as that of a new customer and wanted to offer him an extra incentive for making a first-time purchase.
That explanation may be right, but it has some flaws, namely that companies tend to clearly communicate when they’re offering discounts for new customers; otherwise, loyal customers may locate the discrepancy, as Eric did, question the companies’ motives, and even become resentful: “I’ve given them my business for all these years; if anyone deserves a discount, I do.”
Chances are, Amazon wasn’t practicing any form of price discrimination. It’s more likely that Eric’s experience was a result of the strategy that many online retailers increasingly apply: dynamic pricing.
Dynamic pricing involves changing prices continually, based on prevailing market conditions, which includes factors such as consumer demand, purchase intent, and competitors’ prices, as well as company goals for customer acquisition, retention, and brand-switching.
If you’re thinking that dynamic pricing is a new phenomenon, you’re partially right. Sellers have lowered and raised product prices on the spot for millennia, based on factors as simple as weather conditions and buyers’ apparent interest.
Over the past 30 years or so, airlines probably have been the most common users of dynamic pricing, as they’ve perpetually adjusted prices to keep flights at or near capacity. To a lesser extent, those selling hotel rooms and tickets to popular entertainment events have done the same. Frequent historic fluctuations in gasoline prices also suggest dynamic pricing.
However, recent advances in digital technologies have really enabled dynamic pricing to thrive. For instance, from 2008 to 2010, the average time between regular price changes was 6.7 months. In the time period from 2014 to 2017, that average fell to 3.7 months.
Today, to implement far-reaching price change is no more difficult than a few computer key strokes, and it’s as easy as allowing a third-party software program, like an algorithmic repricer, determine when to make price adjustments and how big they should be.
Although Amazon, which reportedly makes millions of prices changes a day, is probably the greatest single user of dynamic pricing, it is far from the only retailer employing the strategy. Walmart, the biggest retailer in the world, has taken a remarkable step away from its long-standing ‘everyday low pricing’ strategy and embraced repricing software for its online sales.
Most other e-tailers are following suit. In fact, some predict that within 5-10 years, dynamic pricing will become so fine-tuned that “everything you buy will be based on personalized offers.”
So far this discussion has been about what has happened and will continue to happen with dynamic pricing. However, at the core of Eric’s experience is an ethical question: Should Amazon or anyone be pricing products this way? Or, as Nick Saunders, director of GlobalData Retail has said, just because something is technologically feasible “doesn’t mean it’s socially desirable.”
On one hand, it does seem like dynamic pricing puts purchasers at an added disadvantage. Companies already have a natural information-advantage over consumers since “knowledge is power” and every business knows more about its products and its industry than does the average consumer.
What’s more, sellers have always known more than buyers about when prices will change, so with dynamic pricing dramatically increasing the frequency of those deviations, consumers experience even more uncertainty while sellers gain greater leverage.
But, the digital age also has been a significant boon to consumers. For much of human history, sellers only had to compete on price with competitors physically close to them. Sears, Roebuck & Co. and other catalog retailers changed that situation somewhat. The Internet and ecommerce have turned traditional retail on its head.
Now people sitting in their living rooms use shopping bots to search products from retailers around the world, while shoppers in brick-and-mortar stores pull out their smartphones and ask for price matches in checkout aisles.
In addition, dynamic pricing itself has produced some benefits for consumers. As described above, the strategy does favor individual sellers in specific transactions; however, the fact that all sellers can easily alter their prices means they must compete more against each other on price.
In short, buyers and sellers both enjoy advantages in the digital age with dynamic pricing—a phenomenon that Eric recognizes, as he astutely reflects:
“This [experience] strikes me as another example of the free market and competition driving markets and pricing. As much as I might not like it, in my opinion Amazon as the seller has every right to offer its goods to me, their customer, at whatever price point they desire. And I, in turn, have every right to buy it or not!”
“Furthermore, there are times when I might willingly pay a higher price from Amazon because of other factors such as shipping speed or knowing that Amazon customer service is incredible for dealing with product issues or returns. From Amazon’s perspective, if they do the hard work of building loyalty with me, their customer, then it’s their privilege to offer me goods at a price point which might, at times, be higher than necessary.”
“The risk they take is that if I conclude that Amazon is no longer competitively priced, they might experience a decline in my loyalty. Which undoubtedly is another data point Amazon tracks about me! If they sense my purchasing loyalty is deteriorating, I suspect their pricing algorithms will work to win back my loyalty!”
Although I haven’t asked Eric directly, I think we both agree that frequent price changes don’t necessarily mean price discrimination. In fact, dynamic pricing can be an example of “Mindful Marketing.”
Eric Wenger is managing partner at RKL, LLP in Lancaster, PA.
Cutthroat Kitchen, The Amazing Race, The Voice—television viewership is one sign that our culture loves competition. However, adult obsessions often trickle down to the littlest in society: Now children are the main participants in contest programs like American Ninja Warrior Junior, which prompts the question: Is marketing making kids too competitive?
It’s been 19 years since CBS’s Survivor kicked off the ‘recent’ reality TV craze, which American Idol and other competition-based programs helped explode. If one considers gameshows, then people first watched competition television in 1938 with Spelling Bee and in 1941 with Truth or Consequences.
It could help at the onset to clarify concepts. Not all “reality TV” involves competition per se, e.g., Keeping up with the Kardashians. Likewise, there’s a broad range of competition TV, some of which is more real/organic, like Deadliest Catch, while other shows are more scripted, e.g., Family Feud.
For many years, adults have been the primary participants in these programs, but more recently that focus has shifted to series showcasing much younger competitors, for instance:
This list is by no means comprehensive; there are many other kid-focused, competition-based television series, not to mention dozens featuring adult competitors, which begs the question: Are these shows telling children that life is all about winning?
Take even a brief look at plants and animals of the natural world and it’s easy to understand the old adages eat or be eaten and only the strongest survive. Life is competitive. However, we’re human beings. Aren’t we above winning at any cost? Shouldn’t we value cooperation over competition?
In her U.S. News & World Report article “How Toxic Competition Is Ruining Our Kids – and What to Do About It,” Katie Hurley identifies four outcomes of over-the-top competitiveness for children: fractured friendships, stress, burnout, and missing out on part of their childhood.
Kids are naturally wired to want to win. Anyone who’s played games with children, whether it’s checkers or chess, knows that you don’t have to tell them to dislike losing. In fact, many kids, even very young ones, loath defeat so much that they have a hard time dealing with not winning: Some throw tantrums or storm out of the room and sulk.
Is kid-focused competition TV fueling that destructive fire? Are these shows encouraging the next generation to exalt winning above all?
First, it’s important to support that competition is fundamentally a good thing. Yes, all life needs to be competitive to survive, but beyond perpetuating existence, competition teaches things like responding to adversity, avoiding complacency, and valuing hard work. And, when participating in a group, competition also can teach teamwork and communication.
It’s natural to think of competition in connection to sports, but the preceding benefits, as well as others, often accrue to individuals who engage in all types of competition, including academic ones.
The last three years, I’ve had the opportunity to involve teams of marketing students in a regional marketing plan competition. First, there’s a wealth of learning that occurs in the preparation process, getting ready to compete. Second, the knowledge that you’re competing against other schools, encourages everyone to ‘up their game.’ Third, you can learn from your competitors: seeing what they do well and emulating those best practices.
Whether it’s academics or sports, competition also is just plain fun, part of which is undoubtedly from the adrenaline rush—you’re on stage, being tested, while others watch. There’s also the pure ‘love of the game.’
Growing up, my favorite sport was basketball. Although, I enjoyed shooting around by myself, there was nothing like playing a game against others. In fact, besides playing on our high school team, I often arranged pick-up games with my peers. There were plenty of times I didn’t win, and I certainly didn’t like losing, but having the opportunity to play was always more important than the outcome. Win or lose, I could congratulate my opponents, telling them “good game” and suggesting “let’s play again sometime.”
Continuing with sports examples, it’s unlikely that just watching competition, live or on TV, does much to make a person more competitive. For instance, there are plenty of older sports spectators sitting on couches who may be passionate about their favorite teams, but they don’t exhibit any signs of becoming more competitive.
On the other hand, younger people are probably more prone to watch competitions they enjoy and want to participate in them, provided they have the requisite skills. It’s really what happens after joining ‘the game’ that makes a person more or less competitive.
In the same “Toxic Competition” article referenced above, Hurley describes how most often super-competitive kids are products of overzealous parents, pushing their offspring too hard to achieve. Most of us who have been around kids’ sports or similar competitive endeavors can relate: It’s really not the kids who are too competitive; it’s their parents.
I haven’t seen all of the kid-focused competition TV programs listed above, but I have watched some of them. From what I’ve witnessed, the shows model healthy competition, e.g., the children are not placed under inordinate amounts of stress, they are frequently praised for their efforts, and any criticism they receive is constructive. The shows also present positive reactions to the outcomes, highlighting both humble winners and gracious losers.
Like most human behaviors, there are probably many factors that contribute to kids’ competitiveness. It’s unlikely, though, that competition TV causes children to espouse winning at any cost. Rather, most of these programs model healthy competition for kids. As such, the shows also represent “Mindful Marketing.”
When you walk into a Walmart this month, you won’t see someone who’s been a fixture at the front of its stores for decades—the greeter. The world’s largest retailer’s decision to eliminate the iconic position quickly drew harsh criticism, which seemed to take the company by surprise and has made many wonder: Was Walmart right to send loyal employees into unemployment?
In mid-February this year, the big box retailer informed employees that effective April 26, the greeter role would be replaced by an expanded “customer host” position, requiring a greater range of job skills and physical demands like being able “to lift 25-pound (11-kilogram) packages, climb ladders and stand for long periods.”
Those who have worked in organizations for any significant time know it’s not unusual for positions to be added, deleted, and changed. What’s different about Walmart’s move is that its 1.5 million U.S. associates make it the nation’s largest private employer, and many of those who have filled the greeter role have been people with disabilities.
Given that unique employment impact, it’s understandable that many have not liked the change. Fred Wirth, whose son Joe uses a wheelchair and who worked as a Walmart greeter before losing his job, claimed the company’s plan was “just a systematic way of getting rid of all the disabled people.”
Could Wirth’s claim be true? Is the world’s largest retailer intentionally trying to displace workers with disabilities?
To answer that question, it’s helpful to understand the legal context for any such agenda. Title I of the American’s with Disabilities Act “prohibits covered employers from discriminating against people with disabilities in all employment-related activities, including hiring, pay, benefits, firing and promotions.”
Organizations aren’t expected to employ people who cannot perform the functions of a job. However, firms are required to provide “reasonable accommodation” for individuals with disabilities. For instance, a company could modify the height of a service desk in order to allow an individual in a wheelchair to more comfortably interact with customers.
To its credit, Walmart has tried to transition disabled greeters into different positions and otherwise accommodate them. It began to do so in 2015, when it started a pilot program that introduced the customer host position, who not only greets customers but also keeps the entrances safe and clean, assists with returns, and checks receipts as needed. During this program, the company claims it was able to help 80% of affected associates find new positions, many involving promotions.
Greg Foran, president and CEO of Walmart's U.S. stores, says that it’s the company’s goal to offer “appropriate accommodations that will enable these associates to continue in other roles with their store.” For instance, the company was able to offer jobs in self-checkout to three longtime greeters, all of whom have cerebral palsy.
Unfortunately, not every former greeter could be reasonably accommodated or had skills that would readily translate to other work. For these reasons, Walmart has extended the 60 day transition period in order to allow extra time for greeters with disabilities to find other jobs within the company.
Besides what seems to be a good faith effort to continue to employ individuals with disabilities, it’s worth noting that Walmart historically has been one of few employers to actively hire people with disabilities. It’s easy to criticize Walmart for its recent move away from greeters, but how many associates with disabilities do we see working in Target or most other retailers?
It’s also important to recognize retail’s great state of flux. The sector has become extremely competitive, largely due to e-commerce and online giant Amazon, which has helped precipitate store closings for some of the greatest retailers ever, e.g., Sears, Kmart, and Toys R Us.
Furthermore, when consumers do shop in-store, they are increasingly greeted by touchscreen kiosks and self-checkouts, not people. The grocery store where our family shops has a robot, rather than a person, roaming the floors to look for spills and dropped products.
Most of these technological advancements are driven by firms’ desires for greater efficiency and effectiveness. There also are times for most of us when it’s just easier to deal with a machine than a person. Nothing against bank tellers, but most people probably prefer to get cash from an ATM and to have funds deposited electronically into their accounts.
In the digital age, most people also probably don’t care about being greeted as soon as they enter a big box retailer. For some, it may even be a turn-off.
One of the greatest gifts any of us can be given is a job, but employment should be more than biding time to get a paycheck. Work should be meaningful to the person doing it, as well as to the company paying for it and to others ‘consuming’ it. The position of Walmart store greeter once served a more useful purpose, but it has outlived its useful life.
You probably wouldn’t want to sit or stand in the same place, day after day, repeating over and over, “Welcome to Walmart” to largely apathetic passersby. I wouldn’t. Most people, including individuals with disabilities, are capable of much more.
Even certain advocates for the disabled have applauded Walmart’s efforts to transition greeters to other positions. For instance, senior disability specialist at National Disability Rights Network Cheryl-Bates-Harris says, “Walmart is now opening the door to actually help individuals realize their full employment potential.”
So, it’s very unlikely that Walmart is intentionally trying to displace disabled workers. More likely, it wants to remain viable in a fiercely competitive retail arena, which will, in turn, allow it to continue to employ millions of people, including those with disabilities.
Sometimes organizations need to make tough decisions that negatively impact certain people in the short-run. However, offering meaningful work that provides valuable service to others in the long-run equals “Mindful Marketing.”
As I chatted with prospective students and their parents at a luncheon in our college’s cafeteria, I suspected that something wasn’t going well for one of the families. While others talked and laughed around the table, one mom seemed distracted, checking her phone and whispering with her daughter. Then suddenly she stood up, apologized for needing to make a call, and walked quickly from the room, leaving us to wonder what was wrong.
Sometime later, she returned to the table with a look of relief. After others left, she told me what had happened. Her own mother, a senior citizen, had received a ‘distressed’ phone call from someone claiming to be her grandson, who said he was sick and needed money. Confused but ready to act, the grandmother called and left messages for her son and for her daughter, the mom at our table, who fortunately was able to explain to her mother that someone was trying to trick her.
I told the mom I was very sorry to hear what had happened and was glad she was able to intervene. I also said I could empathize because the same thing had happened to my mother just a couple of years before! Then the real irony of the situation hit me. Here was a family, attending a luncheon to talk with a professor about marketing, all while they became the victims of a ‘telemarketing scam.’ How could their college visit and any interest in marketing be redeemed?
People do some terrible things under the auspices of “marketing.” Granted, most people are probably quick to differentiate this type of telephone scam from any legitimate business; still, these calls and others involving more or less manipulation form a continuum that many likely lump together as telemarketing. Allow me to paint a picture of that spectrum as I see it, then I’ll return to the targeting the older consumers.
On one end of the scale, call it the left, are calls like the one described above, or worse. Some extremely ruthless individuals conduct “virtual kidnappings” in which they contact victims by phone or social media messaging and pretend they have abducted one of their loved ones in order to collect a ransom. Kidnapping is illegal and considered immoral by most rational people, so it’s nonsensical to support it as legitimate business or valid telemarketing. The practice also involves blatant deception and coercion in that the perpetrators lie to their victims and exert pressure to try to force them to act.
On the opposite, or right, end of the continuum are examples like this one: Your bank calls to ask if you’d be interested in a home equity loan or a great rate on a certificate of deposit, etc. You may or may not appreciate such calls, but you do know your bank is a legitimate business that can follow through fairly on its offerings. Furthermore, if product descriptions are accurate and you don’t feel forced to accept them, there is no deception or coercion.
Occupying the middle of the spectrum are a variety of other phone calls with different degrees of deception or coercion. For instance, at our home we regularly receive calls “about our electric bill.” The voicemail messages are vague enough to make me wonder if they’re from our current utility provider, wanting to correct some kind of billing mistake. However, I realize it’s actually some other company, hoping to gain our business.
Those types of calls are probably not coercive, i.e., if I ever spoke with one of their representatives, I could freely choose whether or not to make a switch. The initial calls, however, are deceptive and, therefore, unethical, which is not a good way to begin a business relationship or any other relationship.
Also in the middle of the scale are calls that say your computer’s software is out of date or it memory is running low, etc. Most of us recognize that those claims are untrue and there’s no way such outsiders could know if they were. So, most people see through the deception, ignore the coercion, and dismiss the calls as scams. However, not everyone does.
Not as technologically savvy as those in the younger generations, many older folks are unsure if the supposed computer issues are real or how serious they may be. So, their relative lack of knowledge makes them more easily deceived. Furthermore, concern that something bad may happen to their computer can coerce them to take unneeded action. Fortunately, however, many senior citizens will first call one of their children, grandchildren, or other trusted individual and ask their advice.
Any of us can be duped about products/services that we don’t know well. For older individuals, there’s the added challenge of declining mental and physical faculties. Their minds often aren’t as sharp as they once were. They may not process information as quickly or remember as many details, both of which can negatively affect their decision making.
In addition, declining physical skills further complicate decreased cognitive capabilities. As we age, our vision and hearing decline, which can prevent us from doing things like reading small print on product packages or catching every word a phone caller says. For these reasons older people are particularly vulnerable to illegitimate forms of telemarketing.
That last sentence and my earlier bank example point to my opinion that, despite the many bad examples, there are legitimate forms of telemarketing, namely ones that provide a fair value to consumers, that use honest communication, and that allow freedom in response, all while respecting individuals’ home lives. For instance, someone in need of extra money may appreciate a phone call from their bank informing or reminding them that it offers a good rate on home equity loans.
In contrast, telemarketing that’s fraudulent is against the law. Title 18 of U.S. Code § 1343 identifies such illegal activity as wire fraud, which involves any interstate or foreign commerce that uses electronic communication to gain “money or property by false or fraudulent pretenses, representations, or promises.” Using the phone to scam people is a “common example” of wire fraud. Those found guilty of wire fraud are subject to fines as high as $1 million and up to 30 years in prison.
However, fraudulent telemarketing is not just illegal, it’s also unethical. It’s deceptive to mislead others about who’s calling and the nature of the call. Similarly, it’s coercive to play on people’s emotions and/or to apply unnecessary time pressure in order to force quick action. It’s especially abhorrent to do those things to individuals who are more vulnerable to such tactics.
So, how did this professor try to help marketing save face with a family and young person considering a career in the field? I explained that such occurrences of coercion and deceit don't represent marketing's core tenet of mutually beneficial exchange. At the same time, such examples are good reminders that those of us in marketing need to work harder to distance such illegitimate behavior from proper practice of the discipline.
I also mentioned Mindful Marketing and the possibility of writing a piece related to the incident for the blog. We talked about more typical college visit items afterward, but as the family was leaving, the mom’s attention returned to the telemarketing scam, and she suggested it would be good if I’d write about those issues.
When Gallup presents its annual research about the honesty and ethical standards of various professions, telemarketers typically rank near the bottom of the results. There are legitimate forms of telemarketing, but phone scams aimed at our moms, grandmas, and other older people certainly aren’t among them. Given that these practices hurt those targeted and can land the perpetrators in jail, such schemes make it easy to call them “Mindless Marketing.”
It was shocking to hear the news: TV’s beloved “Aunt Becky” charged with fraud in “the biggest college admissions scam ever prosecuted in the U.S.” Most people understand that a business model based on bribery is wrong, but there’s another angle to this story that's relevant to each of us, as marketers of ourselves.
To summarize the scandal, Lori Loughlin, who played Rebecca Donaldson-Katsopolis on the classic ABC sitcom Full House and the Netflix sequel Fuller House, and starred in the Hallmark's When the Heart Calls, was one of fifty people implicated in the admissions scandal that also netted actress Felicity Huffman, known for her role in ABC’s Desperate Housewives. The mastermind of the manipulation was Rick Singer, CEO of The Key, which promised to help “the wealthiest families in the US” get their children into some of the country’s most prestigious colleges.
Many tutors, SAT prep courses, and other admissions aids honestly and legally help students improve their chances of acceptance to their preferred colleges. So, how did Singer run afoul of the law? He allegedly helped his clients’ children cheat on ACT and SAT tests, and he bribed college athletic department personnel so they would claim that certain students were recruits for their teams, even when some never played the sport in question.
However, perhaps the most devious thing Singer did was create “The Key Worldwide Foundation,” which was supposedly a charity that funded programs for underprivileged children in the U.S. and abroad. In reality, the Foundation served as a front for money-laundering, or a way for the wealthy to pay Singer who then channeled bribes to accomplices on college campus that included USC, Yale, and New York University, among other prestigious schools.
As someone who works in higher education, has one child who recently graduated from college, and has another who is currently making his college decision, the admissions scandal hit close to home. However, the scandal is even more unsettling to me as a marketer.
No, I’m not just talking about what Singer did. His bad decisions to build a business based on cheating and bribery and to operate a fake foundation were certainly appalling and surprising. What was even more amazing to me was the apparent ease in which he secured willing parties to the schemes, not just from the general population but from those representing high society and higher education—people who stereotypically ‘should know better.’
In addition to accomplished actresses Loughlin and Huffman, alleged scandal participants include an array of elite professionals from business, academia, and other fields. Some of the specific individuals implicated, along with their current or former positions, are:
Why would so many smart and talented people risk their reputations and/or careers to associate with Singer. The motives were likely mixed. Of course, many of the participants were parents who may have been willing to do anything to see their children succeed. Those who accepted bribes, probably wanted the money. Some may have felt pressure to assist for the good of their institution. Maybe some saw or heard of others doing similar things and rationalized ‘there’s safety in numbers.’
Whatever the motive, I doubt that many of the participants, if any, seriously thought that they would get caught. If they did, they probably wouldn’t have participated. Instead, they operated under the delusion that what could be hidden from public view didn’t matter.
That misconception is one of the biggest fallacies of marketing, in general, and personal branding, specifically. In an article I wrote a couple of years ago, I aimed to debunk that myth by suggesting that a personal brand consists of three elements: character, competencies, and communication. I likened the first two components to the layers of a cake and the last one to its icing.
Some individuals erroneously act as if they can overcome flawed character and inferior skills by spreading on a thick layer of overly flattering or even disingenuous communication. Besides being dishonest, this approach only works for so long. Eventually cracks in ‘the cake’ show through the communication. Unfortunately for them and others impacted by their indiscretions, those involved in the college admissions scandal seemed to subscribe to this hollow approach to personal branding.
As I was writing this blog post, my wife shared with me some very sad news. A good friend of ours from early in our marriage had passed away suddenly at home, at the age of 58. Mark Sneff was someone who built his personal brand the right way. Even as he developed his competencies to rise to the top of the HR profession, his character exuded integrity. Mark also was uniquely gifted at communicating “the truth in love”: He could offer an honest critique that felt like a high compliment.
As the outpouring of fond remembrances on his LinkedIn page suggests, Mark was a widely loved individual who many held in high regard. I’m not sure he thought much about personal branding. I am very confident, though, that he never would have resorted to a ruse to advance the educations or careers of his two children, who he loved greatly. Interestingly, Mark was the first person I ever invited to speak to my college classes.
It’s so nice to know people who ‘market themselves’ the right way. The recent college admissions scandal should be a reminder that it only take a moment to destroy a personal brand that took decades to build. Unfortunately, that fact means that Loughlin and all who participated in Singer’s schemes, not only injured themselves and others, they’re also guilty of “Mindless Marketing.”
I enjoy each day without something that many take for granted—eyesight. To safely navigate a sight-friendly word, a blind person develops other aptitudes, like a keener sense of hearing, and learns to use technology, such as a smartphone with GPS. Now one company has developed a hi-tech version of a tool blind folks have used forever—the cane. The thought of a ‘smart cane’ is intriguing, but is it Mindful Marketing?
A few years ago, members of Turkey’s Young Guru Academy (YGA), a nonprofit organization aimed at assisting disadvantaged members of society, began to develop WeWALK, a smart cane that uses ultrasonic sensors, microphones, and speakers to help individuals with visual impairments “see obstacles.” More specifically, a WeWALK hardware unit attaches to the handle of a blind person's cane, allowing him/her to more easily navigate outdoor environments.
Despite its recent start, the company has rapidly gained a social media following on Facebook, Twitter, and YouTube. The firm also has been featured on CNN International, NowThis, Forbes, Dr. Oz, and certain New York City television outlets.
What features and benefits does WeWALK offer that have spurred its rapid rise? The following list summarizes key parts of the new product’s value proposition:
I applaud the idea and the innovation behind WeWALK and appreciate several of its strengths. For instance, overhead obstacle detection is a feature that I would find helpful. Oftentimes when I go hiking, or even when I am just walking down the sidewalk in a residential area, I never know when I am going to encounter an overhead object like a tree branch or some low-hanging sign.
In addition, the ability to connect to a smartphone via Bluetooth could save time and provide convenience by not having to hold a phone in one hand and a cane in the other. Allowing a free hand is a plus.
However, WeWALK also has some significant limitations. First, it does not attach to all types of canes that blind people use. I personally prefer a light-weight, rigid, National Federation of the Blind white cane with a metal tip, but WeWALK does not currently attach to this type of cane. Most of the canes that the device attaches to are much heavier and bulkier in nature. However, AppleVis does say that the firm has a goal of attaching to every popular cane in the world.
Another concern is how well the product can withstand the elements. Due to it being an outdoor product filled with many electronic components, one must be aware of rain during all seasons, as well as winter snow and summer heat. A useful addition to the product would be a protective case of some sort that would not muffle the sound from the speaker.
Speaking of the speaker, I would be interested in knowing how much volume can be produced. Outdoor environments can be quite noisy, due to traffic, construction, and other noises that may prevent the user from being able to hear its audio feedback while holding the cane at arm’s length.
It’s also worth noting that a five-hour battery life may not be enough to get someone through an entire day of traveling, especially while on vacation or otherwise being a tourist. Maybe this deficiency could be remedied by charging through an extra external battery that the user could carry in his or her backpack or purse. However, that power supplement would mean a rather long cord attaching the battery to the device, as well as extra weight.
One also must acknowledge the limitations inherent in any GPS product for the Blind. A GPS won’t tell a pedestrian when it’s safe to cross the street, the path to take through construction, nor will GPS directly lead the user across a large parking lot. Just about any blind person who is an experienced traveler would say that possessing strong mobility skills and knowing how to travel safely is essential before attempting to use any GPS product.
Just as when driving a car, a GPS will tell the driver how to get to the desired destination most of the time, but it does not know the rules of the road. It does not tell the driver to stop at a stop sign or obey the speed limit. Thus, I would not recommend this product to a blind person who does not possess adequate cane travel skills in the first place or who is fearful of traveling in unfamiliar environments.
Beyond the preceding limitations, a big turn-off for me is some of the language used on the firm’s about page. The first line says “WeWALK is the world's most revolutionary smart cane developed for the visually impaired people.” Using the word “the” before “visually impaired people” is a rather patronizing way of describing the target market, just as it is insensitive to use “the” before the name of a racial group. Furthermore, I don’t believe “blind” is a negative word, and I feel it’s fine to use “blind” when describing people who are not completely blind.
A better way to phrase the webpage phrase may be:
“WeWALK is the world's most revolutionary smart cane developed for blind and visually impaired individuals, allowing for greater independence and mobility through innovative technology,” or
“WeWALK is the world's most revolutionary smart cane, strategically built with the blind in mind, combining the white cane that you have known and loved for decades with ground-breaking technological advancements.”
In any case, the company should seriously rethink this use of language as it moves forward.
Overall, WeWALK is a decent and well-intentioned product that shouldn’t cause any serious harm. Still, at a price of $349, there are plenty of ways in which the product must improve before it can truly compete within the marketplace of technology and other tools targeted for blind and visually impaired individuals. Sometime in the future, WeWALK may be Mindful, but at this point I see the smart cane as “Simple-Minded Marketing.”
The stage for a college basketball game couldn’t get much bigger: two top-ten teams in a packed arena, one of the best rivalries in all of sports, several projected NBA draft picks in the lineup, two hall of fame coaches on the sidelines, the likely NCAA player of the year on the court, and the 44th president of the United States in the stands. Then a piece of footwear malfunctioned, and the stock price of the world’s most iconic sports brand took a dive.
This past Wednesday, #1 Duke hosted #8 North Carolina for one of the most highly-anticipated men’s college basketball games in recent memory. Tickets were selling at Super Bowl-like prices, not just to see the two storied programs clash, but also to witness what was sure to be a marquee performance by one of the most talented and exciting college athletes ever—Duke’s Zion Williamson.
Just an 18 year old, standing 6’ 7” and weighing 285 lbs., Williamson’s unique combination of extraordinary basketball skill and incredible athleticism had captured the attention of all college basketball fans, international news media, and every NBA team, making him the odds-on favorite to be the first choice in the league’s next draft. Then the unimaginable happened.
Just 33 seconds into the game, Williamson received the ball, took a few dripples, planted his foot near the foul line, and fell awkwardly to the floor, while a look of pain raced across his face. As those watching gasped, the cause of the slip quickly became apparent: Williamson’s foot had burst through his Nike sneaker. Camera footage even caught former President Obama, pointing to the court and saying “His shoe broke.”
The story spread like wildfire over traditional and social media, as sports analysts, basketball fans, and others reacted. Many expressed amazement at the occurrence. Rival sneaker maker Puma tweeted snarkily “wouldn’t have happened in the pumas.”
Nike execs were undoubtedly reeling from what must have felt like their worst nightmare: The best known player in college basketball and a likely NBA superstar had just suffered an injury because of their shoe. Not only did the chances of signing Williamson to a future multi-million-dollar endorsement deal drop precipitously, the endless images of the prodigy wreathing in pain with foot popped through the side of his Nikes, was a picture that athletes and other sneaker buyers would not soon forget.
Nike did wish Williamson well: “We are obviously concerned and want to wish Zion a speedy recovery.” The same company spokesman added, “The quality and performance of our products are of utmost importance. While this is an isolated occurrence, we are working to identify the issue.” Still, the day after the blowout, Nike’s stock fell by 1.05%.
Was Nike simply the sufferer of a very unfortunate accident at one of the worst possible moments? Probably not. It seems that Williamson’s shoe blowout could have been predicted and prevented in light of previous player experiences, as well as others’ product reviews.
In 2016, the foot of Orlando Magic’s Aaron Gordon blew through the side of some Nikes when he landed after a dunk. Two years earlier, in the same NBA season, Golden State’s Andrew Bogut, the Spur’s Manu Ginobili, and the Sixer’s Tony Wroten, all experienced major Nike malfunctions.
Of course, one can argue that Williamson and these professional athletes put more strain on a pair of basketball shoes than the average sneaker wearer does, which is probably true. Many average wearers, however, also have experienced quality issues with their Nikes. Some have been frustrated enough to upload their sneaker stories to YouTube, for instance:
Besides these sad stories, others have posted about similar durability issues with their Nike Air LTD’s, their Nike TN’s, and their Nike SB Diamond Dunks.
Four years ago Nike pulled the Lebron 12 from the market on the day of its scheduled release due to quality concerns. About three years ago KicksOneTwo noted ongoing quality control issues with Nike sneakers.
But, Nike’s annual footwear revenue is over $21 billion, which means it sells hundreds of millions of shoes a year, so aren’t there bound to be some production problems? Yes; however, it’s curious that in so many of the defect videos, the problem is the same even for different kinds of Nikes—the shoes just come apart, similar to the way they did for Williamson and for the NBA players mentioned above.
I’ve also had a similar experience with the brand. It had been several years since I’d gone running, when I decided to put on an old pair of Nike running shoes I owned and take a jog around the neighborhood. It wasn’t long into the run when I started to hear an unusual noise and feel a flapping under my feet. I soon realized the soles were falling off my running shoes. Granted, it was an old pair of sneakers. Still, I’ve owned many different styles and brands of athletic shoes over the years, including ones that I’ve worn much harder, but that’s been the only time anything like that has happened to me.
So, maybe Nike does have quality issues that need to be addressed, but some may be wondering what they have to do with the company’s marketing? Well, effective marketing involves much more than what a company says, or communicates.
Every marketing students learns the four P’s of the traditional marketing mix: product, place, promotion, and price. A primary objective of an entire organization, not just its marketing department, should be to ensure that each “P” meets the target market’s needs, as well as the organization’s goals, ultimately creating a mutually beneficial exchange.
However, if a company’s product is deficient in some way, it may overcompensate with another P, often promotion, which reminds me of a metaphor I've used before—baking a cake. Sometimes a cake comes out of the oven with cracks, which can be hidden with a layer of icing. The deeper the cracks, the thicker the icing needed to cover them.
It seems that Nike shoes on whole have some “cracks,” which the company has adeptly covered over the years through enticing layers of communication, ranging from highly-produced TV commercials, to prominent team sponsorships, to superstar endorsers.
That’s not to say that Nike’s value proposition is just a façade—not by a long shot. The company generally makes good quality products that serve people well, otherwise it wouldn’t be the world’s most valuable sports brand. Still, a significant number of people probably do buy into Nike more because of the icon’s icing than the consistency of its cake.
I still haven’t seen from Nike a true apology to Williamson for the shoe blowout. Saying that it wishes him well and promising to investigate the issue do not constitute a confession. Perhaps for legal reasons, Nike really hasn’t taken ownership of the incident.
No company or product is perfect; accidents happen. However, even for a company as big as Nike, the reoccurrence of such high-profile product malfunctions should give everyone pause, from the guy wanting to jog around his neighborhood to the next NBA superstar looking to ink a multi-million-dollar shoe deal. Nike will recover from the latest incident, but the injury to Williamson and the damage to the company's brand make what led up to the shoe blowout “Mindless Marketing.”
You’re at a restaurant with friends and order a pepperoni pizza. The waiter brings the pie, which has a single piece of pepperoni in the middle. Your whole table expresses surprise, to which the server replies, “The pizza has pepperoni, so it is a ‘pepperoni pizza.’” Most people would not appreciate that response, yet that appears to be the tack some food marketers are taking in promoting their whole grain products.
You’ve probably noticed the phrase “whole grain” appearing more and more on product packages, ranging from breakfast cereals to bread. What’s your interpretation when you see “whole grain” on the front of a box? It’s reasonable to assume that all of the product’s grain content comes from whole grains, or at least that whole grain is the primary/first ingredient. However, when you turn the box around to read the Food and Drug Administration’s (FDA) required nutrition and ingredient labeling, there’s often an unsettling surprise.
Many products that promote themselves as being made from “whole grain” actually contain very little whole grain. Instead, their primary ingredient is refined flour, “a pulverized version of what may, at some point, have been a whole grain.” Whole grain contains every part of a grain kernel, “the bran, the germ and the endosperm (the inner most part of the kernel),” whereas the process of refining flour often involves “stripping off the outer layer, where the [more nutritious] fiber is located.”
How is this potentially misleading labeling allowed? Many blame lax directives by the FDA, which last issued “draft guidance on whole grain labeling in 2006.” The FDA, which regulates food labeling, continues to allow food manufacturers to print “whole grain” on the front of their packages without any absolute or relative reference information, i.e., how many grams of whole grain the product contains or how much whole grain there is relative to refined flour.
But, does printing “whole grain” on the front of a food package really deceive consumers? Several significant stakeholder groups believe it does. The Academy of Nutrition and Dietetics has advised the FDA to “require firms to disclose either the percentage of whole grains and refined grains on pack, or the grams of both refined and whole grains per serving.” Similarly, the Center for Science in the Public Interest (CSPI), a Washington DC-based consumer advocacy group, has “urged the agency to make whole grain labeling clearer to consumers.”
Whole grain labeling becomes even more confusing when it appears on “hearty-looking, and sometimes artificially colored,” food items like multigrain or wheat bread. Such mismatched visuals are especially misleading for the elderly.
But, as consumers, don’t we bear responsibility for what we place into our grocery carts and eventually into our mouths? All we need to do is turn the package around and read the FDA-mandated list of ingredients to see where whole grain ranks into the mix.
Consumers should be expected to act rationally and make logical interpretations about product labeling. However, according to the Federal Trade Commission (FTC), it’s unfair to subject people to deceptive messages that a “reasonable consumer” would find misleading. Courts have applied this reasonable consumer standard in ruling against those employing whole grain deception.
The most notable litigation likely has involved one of the best-known snack crackers, Cheez-It, the product of one of the world’s leading food manufacturers--Kellogg’s. In December of 2018, a second circuit appeals court ruled against the packaged-goods icon in a class action lawsuit that claimed deceptive labeling on “Whole Grain” Cheez-Its, a relatively new extension to the company’s flourishing cracker line.
Printed on the front of the box, in large letters, is the phrase “WHOLE GRAIN.” Above those words, in a much smaller font, are the words “MADE WITH.” Meanwhile, a very big (4.5” x 4.5”) and unusually dark Cheez-It serves as a background image. Despite those distinct package design elements, which are very different than those of Original Cheez-Its, when one turns both boxes to the side, the nutrition facts for each list “enriched flour,” not whole grain, as the first ingredient.
It’s not surprising, therefore, that the second circuit appeals court agreed with the consumer plaintiffs, issuing a unanimous decision that said the whole grain cracker’s nutrition facts “contradict, rather than confirm, [Kellogg’s] ‘whole grain’ representations on the front of the box.”
Kellogg’s effort to include more whole grain in its crackers is good in that “scores of studies link the amount of whole grain [people consume] to better health.” So, the 8 grams of whole grain found in a serving of Cheez-Its can help get people closer to the target daily intake of 48 grams of whole grains for adults.
The problem, however, is that when the front of a package promotes “WHOLE GRAIN” in large letters, against a dark background, it’s reasonable for consumers to conclude that the product’s principal ingredient is whole grain. People might even presume that the crackers are somehow healthy, which is a hard argument to make for any snack cracker, including Cheez-Its, which have the following daily values: total fat–10%, saturated fat–8%, sodium–10%, and total carbohydrates–6%.
Consumers should read the labels and exercise good judgment for the products they use. However, food marketers also should help people make right choices and not mislead them with mixed messages on product packages. Their continued prevalence on supermarket shelves suggests that Kellogg’s Whole Grain Cheez-Its are a success, but the cracker's first ingredient really is “Single-Minded Marketing.”
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