Category: + Fairness

Peloton's Psychological Problems

12/13/2019

by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

“If my husband gave me a Peloton for Christmas, I’d give him divorce papers.” Such raw emotion has typified reactions to the spin cycle maker’s “Gift that Gives Back” commercial. People are permitted their opinions about the ad, and Peloton is entitled to explain its position, but a few principles from psychology might help both sides see how the cycle commercial could have avoided such a controversial turn.

Many reactions to the spot suggest that ‘no husband should surprise his wife with a piece of exercise equipment,’ regardless of her body-type. That’s a valid point; however, before dismissing Peloton’s ad as complete incompetence, Abraham Maslow’s classic hierarchy of needs may remind us that there is often more than one reason for riding a stationary bike:

Physiological Needs: Exercise doesn’t satisfy hunger or thirst; in fact, burning calories increases those needs. Similarly, anyone ‘spinning’ isn’t resting; however, exercise can lead to better sleep. That connection proves true for many, as it did recently for me: After walking around New York City one day with family for hours, I enjoyed one of my best night’s sleep in months.

Safety Needs: Exercise doesn’t immediately make us safe; however, cardiovascular fitness is an investment in long-term health, which connects to the second level of Maslow’s hierarchy. Many viewers of Peloton’s ad have bemoaned that “Grace in Boston,” an already slim woman, even needs to exercise, but they’re missing the point that working out isn’t just about losing weight. Thin people also reap health benefits from aerobic activity.

Social Needs: In one tweet about the ad, a Peloton user mentioned that she appreciates the bonding that comes with working out with others. People don’t need to be physically present to build relationships. Social benefits can also accrue when interacting in the virtual realm, which apparently happens for at least some Peloton users.

Self-Esteem Needs: All of us want to feel good about how we look and the kind of person we are. Sticking to an exercise regimen can bolster both of those self-concepts. Most viewers of Peloton’s ad don’t notice any physical change in Grace, but perhaps she experiences something intangible, like feeling more self-disciplined or self-confident.

Self-Actualization Needs: There aren’t many products that can legitimately claim to help people reach their full potential in some significant area of life, but a piece of exercise equipment used seriously might produce such top-level benefits, partly like the way basic training transforms marines. We don’t know exactly what Grace meant by the statement, “A year ago, I didn’t realize how much this would change me,” but if it wasn’t physical change, maybe a year of Pelton transformed her mentally or emotionally.

The five levels of Maslow’s hierarchy offer consumers useful lenses for processing the controversial commercial. A psychological principle can also teach Peloton an important lesson, summed up in one sentence: “Perception is reality.”

We perceive when a stimulus crosses our senses, we attend to it, and we make an interpretation, for example: “The big dog bounding toward me looks dangerous.” Sometimes our interpretations are correct; other times they’re wrong. However, whether they’re accurate or not, our perceptions determine our reactions.

As thousands of social media posts have suggested, people perceived things to be true of Peloton’s ad that the company apparently didn’t intend, for instance:

that Grace was initially overweight
that she wanted to become even thinner
that her husband pressured her to use the bike

Peloton can argue that these interpretations are incorrect, but ultimately the court of public opinion rules based on objective judgment of cues in the ad, prevailing social norms, and the broader cultural context, because perception is reality.

Some may suggest it was Peloton’s plan to cause a controversy that would capture publicity. If so, the company probably didn’t anticipate a 14% stock price decline in three days. Consumers can use Maslow to better understand what the cycle maker likely intended, but more importantly, companies like Peloton can learn to more effectively pretest their ads so corporate perceptions better align with consumer reality and don’t spin into “Mindless Marketing.”

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Marketing Giving

11/29/2019

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by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

Black Friday, Small Business Saturday, Cyber Monday . . . the biggest shopping season of the year can excite even the most apathetic shopper. Some, however, would have us believe that we should do something different with our money, instead of buying things for ourselves or others. But, isn’t shopping a key to holiday happiness?

Over the last few years, you’ve probably heard of an initiative that seems contrary to the capitalism often associated with holiday shopping. In contrast to the plethora of promotion persuading us to buy more, “GivingTuesday” boldly encourages people to give to others. The day targeted for philanthropy is typically the Tuesday after Thanksgiving; this year it’s December 3.

GivingTuesday’s website describes the initiative, which began in 2012, as “a global generosity movement” that “inspires hundreds of millions of people to give, collaborate, and celebrate generosity,” “unleashing the power of people and organizations to transform their communities and the world.”

Those are admirable and far-reaching claims, but is it really possible to market giving?

For many people, marketing is inextricably linked to buying and selling products, so much so that ‘marketing giving’ seems like an oxymoron, along the lines of jumbo shrimp and civil war. If people give their money, they’re not spending it, which may seem antithetical to marketing.

However, marketing concepts can be applied to virtually any endeavor. Besides marketing physical goods, like food, and intangible services, like haircuts, organizations and individuals can market ideas like “Don’t drink and drive” and mindsets like “Do well in school.”

So, there’s no reason that giving can’t be marketed, but effective marketing must include more than just a simple message like “give!” Most of us have seen similar appeals in social media and elsewhere. GivingTuesday, however, has created what many would consider to be a full-fledged marketing plan, incorporating each of the iconic Four Ps:

- Product: Unlike receiving something tangible in return when one shops, GivingTuesday promises intrinsic rewards like satisfaction from providing greater dignity and opportunity for others and helping to build “a more just and generous world.”

- Price: The cost of GivingTuesday is up to the organization and individual. While some might give millions, the average online gift is $105.55, but money isn’t the only thing that can be given. Participants also can donate goods or volunteer their time to serve others.

- Place: As the previous P implied, GivingTuesday can occur virtually anywhere in the physical world or in the virtual realm in a variety of ways. Meanwhile, having a specific date, the first Tuesday after Thanksgiving, helps build consistency, as well as create some sense of urgency, which is often needed in order to encourage consumers to act.

- Promotion: “GivingTuesday” is a memorable moniker that likely builds brand recognition and supports understanding of the initiative through paid and earned media. GivingTuesday’s website also offers a variety of helpful resources for organizations and individuals inclined to participate, e.g., “Ideas and Case Studies” and a “GivingTuesday Toolkit.”

Those are strong inputs, but what matters ultimately for marketing are outcomes, and at least one person believes GivingTuesday isn’t effective for many organizations.

In an article in the Fundraising Authority, Joe Garecht praises GivingTuesday as “a noble effort,” yet he discourages nonprofits from participating in the initiative, particularly small and mid-sized ones. His rationale includes reasons such as an overabundance of organizations asking for gifts at the same time and the encouragement of one-time “spot giving” versus building long-term donor relationships.

Garecht raises some valid concerns, particularly related to potential return on investment; however, if his two arguments mentioned above were applied to organizations marketing traditional products, companies wouldn’t participate in the holiday shopping season because: 1) their promotions would be lost among those of other companies advertising at the same time, and 2) first-time transactions wouldn’t lead to future purchases. Clearly that rationale doesn’t apply to most for-profit firms during the holidays, and it probably isn’t relevant for many nonprofits either.

Instead, GivingTuesday appears to be an initiative that keeps gaining momentum. Among nonprofit participants who seem to find the program productive are World Vision, the American Red Cross, and St. Jude. All together, GivingTuesday saw 3.6 million gifts given in 2018, including $400 million online. In the U.S. alone, GivingTuesday has raised over $1 billion since 2012.

In his 1789 sermon titled “The Use of Money,” English cleric and theologian John Wesley famously urged listeners to “earn all you can, save all you can, and give all you can.” In a 21st century sense, Wesley was ‘marketing’ giving. Marketers today have many more tools at their disposal, yet any tactics that encourage organizations or individuals to give of their money or time to help others in need can be considered “Mindful Marketing.”

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Pay to Pray

11/16/2019

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by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

“The best things in life are free,” for instance, an evening with family, a walk on a sunny morning, a conversation with a friend. For many people, going to God is another 'free'dom they cherish. Why, then, does one religion appear to be putting a paywall between its people and God?

The Catholic Church recently surprised many of its parishioners and others by introducing an eRosary, “a wearable device connected to a mobile app that's activated by making the sign of the cross.” While paying homage to traditional rosary bracelets, the new product’s black agate and hematite beads, paired with a “carefully finished” gunmetal-color cross, make the modern version appear very ‘apple-esque.’

Many have heard of people praying with rosary beads, but if you’re not familiar with Catholicism, here’s a quick primer. The Holy Rosary, or Dominican Rosary, is a very important prayer for Catholics that is arranged in sets of prayers called decades. Holding a rosary bracelet or chain in one’s hand and feeling each individual bead helps followers recite the prayer’s Hail Marys and other specific petitions in the proper sequence.

The Rosary is a central part of many Catholics’ spiritual lives, as praying it guards against trials and temptations and serves as a buffer against all types of evil. Pope John Paul II declared that the Rosary was “among the finest and most praiseworthy traditions of Christian contemplation.”

The Vatican’s eRosary offers much more functionality than just feeling beads with one’s fingers. Working with an app, the digitally-designed bracelet lets users choose the specific rosary they would like to recite (e.g., standard or thematic), then charts the devotee’s prayer progress and tracks completion with “the guide of special audiovisual contents.”

The Vatican suggests the device serves as “a meeting point between technology and spirituality” that “unites daily life and prayer,” helps one “pray deeply,” and unites people around the challenges that confront humanity and the mission of the Church.

The eRosary also touches the physical realm, acting as a “personal health assistant” by recording fitness data and providing wellness information. In doing so, the device encourages people to live healthier lives.

However, wearable technology can’t just do things; it also needs to look good on those wearing it. Fortunately, the eRosary marries form and function. The Pope’s Worldwide Prayer Network suggests that the device lies where “simplicity meets elegance” thanks to its stylish black and silver colors and its “simple lines and curves.”

So, why is the Vatican marketing a ‘faith-based fashionable Fitbit’? Engadget suggests the Catholic Church is “hoping to attract tech-savvy youngsters.” It’s true that Gen Zs increasing expect digitally connected experiences. Also, any organization that wants to stay in existence must remain relevant to the next generation of ‘consumers.’

Still, we’re talking about the Church and faith. Doesn’t technology distract from meaningful spiritual experiences? Or, perhaps even more important, is it right for the Catholic Church, which has about 1.28 billion adherents, many in countries with low per capita income, to sell a product that costs 99€ (about $110) on Amazon?

First, it’s helpful to remember that technology influencing faith isn’t just a recent phenomenon; it’s interface dates back as least many hundreds of years. In 1452, Johannes Gutenberg printed 180 copies of the now famous Gutenberg Bible. In many ways, the use of moveable type technology to mass print the Bible and other religious books democratized Christianity and formed the foundation for a revolution in the Church.

Over the years, other new technologies also have impacted people’s spiritual lives in, often in positive ways. For instance, radio and television have allowed people to share religious information with others thousands of miles away. Advances in construction have enabled the building of larger and more functional places of worship. And, automobiles are what many people use to travel to those worship centers.

However, when one arrives at a church, synagogue, or mosque, there’s usually not a fee at the door. The notion is that religion should be free to all. ‘Growing closer to God shouldn’t be based on one’s ability to pay.’

Fortunately, there’s nothing to stop even the poorest person from offering prayers of petition and gratitude to the Divine. And, if people are mobile, they might walk or share a ride with other believers to a place of worship where they can venerate God and learn together for free.

Some religions also make copies of their key texts available to others for free. For instance, Wycliffe Bible Translators, a nonprofit mission organization, has translated the Bible into hundreds of different languages since its founding in 1942. Likewise, the Gideons International gives away thousands of Bibles a year in most of the world’s countries.

Then, how do eRosaries, iPhones with Bible apps, and other faith-related merchandise fit with the notion that religion should be free? All of the items that cost money to aid reverence are optional. They may be helpful to those who can afford them, but they’re not essential for a relationship with God.

A useful metaphor might be a social medium like LinkedIn. Some people who have needs for more advanced features pay for LinkedIn Premium. In contrast, for many years I’ve used the free version of the platform, which meets all of my professional networking needs and more. Just as I’m not precluded from enjoying LinkedIn because I don’t pay, people who don’t buy eRosaries or similar religious products are not prevented from relationships with God.

It is possible to live without digital devices. Also, sometimes when we have them, we let them get in the way of fruitful living. Used properly, however, it’s not hard to see how technology can benefit religious practice, much as it enhances other areas of life. It’s great to be able to share prayer requests via email, send text messages of encouragement to others, study the Bible on an iPad, and listen to podcasts of sermons online.

Because I’m not Catholic, I’ve never experienced confirmation, gone to confession, or prayed the Rosary. It appears, though, that an eRosary can help those participating in one of Catholicism’s central religious practices. For people of faith, digital devices that enrich their spiritual lives and bring them into closer relationship with God and others, seem to be “Mindful Marketing.”

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Companies that Want to Make Us Mad

9/21/2019

30 Comments

by Keith Quesenberry, Associate Professor of Marketing, Messiah College

Some people have a real knack for ‘pushing our buttons.’ They’re good at taking us to the point of frustration, then backing off just before we unravel. Now some companies are perfecting this tactic with the help of data analytics.

A friend recently shared with me his exasperation in dealing with one of the big Internet-TV-phone providers. For many months, his home Wi-Fi was having significant problems, which the provider finally sent a technician to fix, but only after many futile and often infuriating phone calls.

When the contract ended, my friend considered all his options, including giving the current provider a chance to keep his business. After several more frustrating phone calls, however, the best the provider would offer was a price about $20/month higher than he had been paying and than “new customers” could get.

So, he cancelled his account and switched to another company. Only then did the original provider call him with a competitive price and a plea, “Please come back to us,” but it was too late.

Unfortunately for it, the company passed the point of no return. Some other firms, however, have found how to step right up to that loss line without crossing it. Their secret is ‘big data.’

According to a recent Wall Street Journal (WSJ) article, certain companies now use data analytics and artificial intelligence (AI) to determine “how far a customer can be pushed until their heads explode.” The practice gauges how angry a customer can get right before they leave a business, then uses that knowledge to guide customer service and other marketing practices.

At first glance, such tactics may seem questionable, but could it be that these companies are on to something and consumers just need to consider ‘the bigger picture,’ beyond their immediate ire? Although these organizations might minimize customer support, maybe the cost savings and efficiencies they find will lead to lower prices or benefit customers in other ways.

Some question the ethics of AI, particularly whether it will take people’s jobs, but AI used properly can improve marketers’ performance and better serve customers. “How AI Can Improve Your Job Not Steal It” highlights these benefits, including the automation of time-consuming manual processes. Marketers also can use AI for data analysis, personalization, optimization, testing, digital asset management, automated campaigns and offers, content creation, and programmatic ad buying.

“How AT&T Uses Machine Learning to Better Serve Customers” describes how the communication giant uses AI in customer service to make predictions and provide intelligence to managers in near real-time that helps them answer questions like: “Were my customers happy or not?” “If I put them on hold did that make them unhappy?” and “Did my agent solve their problem the first time?”

In a recent post on AT&T’s technology blog, the firm explains how it’s using AI to improve experiences for customers, such as by building 5G, optimizing network traffic and speed, fighting robocalls, and making sure technicians arrive on time. AT&T adds that it uses AI to personalize customer interactions and “to enable friction-free, always available, customer powered problem-solving solutions.”

But, do systems that push consumers to the brink of breakdown solve problems or create them? In those tenuous cases, AT&T’s customers probably aren’t experiencing the standards set out in the firm’s AI Guiding Principles, which suggest that the technology should be: 1) By people, for people, 2) Accessible and shared, and 3) Secure and ethical.

These new analytics systems track things such as how long a customer will wait for a human to answer the phone and how many ads they will listen to before hanging up. AI can analyze behavior, personalities and tone of voice to determine what each person will tolerate. One expert, Mark Shaefer, author of Marketing Rebellion: The Most Human Company Wins, calls this use of AI “the worst marketing tactic ever.”

The WSJ shares a story similar to the unfortunate personal experience mentioned above. An AT&T customer had to make six calls and spend four hours on the phone to get the company to change her plan. Only when she asked to have her number transferred to Verizon did AT&T honor her original request.

So, what’s the bottom-line? Data analytics and AI certainly can make customer service more efficient and effective, which should mean better company performance and increased income that can benefit both shareholders and employees.

However, even if a company can ‘get away with it,’ using these tools to push people to anger isn’t strong support for societal values like fairness and respect. There’s enough anger in the world and angst in people’s lives. We don’t need companies intentionally adding more.

It’s great that more organizations are leveraging the latest technological trends to help power customer service, but using those tools to manage human emotions and manipulate people to madness should be seen as “Single-Minded Marketing.”

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Who's to Blame for Opioid Abuse?

9/8/2019

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by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

‘It’s hard to protect people from themselves.’ That saying resonates with everyone from EMTs who wish motorists would wear seatbelts, to parents who demand that their kids “Stop climbing on that!” So, who’s responsible when a significant portion of the population harms itself with prescription painkillers?

If you’ve been following the news, you’ve heard of America’s troubling opioid epidemic, which unfortunately has seen:

Misuse among 21-29% of those who are prescribed opioids for chronic pain
Use disorders in 8-12% of those who take the drugs
Transition to heroin for 4-6% of those who misuse prescription opioids
More than 130 people a day dying from opioid-related drug overdoses

What are opioids? They’re types of drugs that come naturally from the opium poppy plant that are often used to reduce pain. They also “can make some people feel relaxed, happy or ‘high,’ and can be addictive.”

The most common prescription opioids are Vicodin and OxyContin. Fentanyl is a synthetic opioid, “50 to 100 times more potent than morphine,” that’s often used to treat pain from advanced cancer. Then there’s heroin, “an illegal, highly addictive drug processed from morphine.

Recently, the name often heard in the same sentence as opioid epidemic is Purdue Pharma, the Stamford, Connecticut-based company that makes OxyContin, the brand name for oxycodone hydrochloride. The drug’s position at the center of the opioid crisis has made Purdue Pharma the focus of frequent legal scrutiny.

Used to “help relieve severe ongoing pain (such as due to cancer),” OxyContin should be a ‘medication of last resort.” In other words, if people suffering from very serious illness cannot find relief from anything else, OxyContin can be used to mitigate their pain.

Sufferers of significant, relentless pain, however, are not the ones driving the opioid epidemic. The problem stems, instead, from those who don’t need the drug but take it to get high and, if they don’t end up overdosing, often become addicted.

Should Purdue Pharma be accountable for this abuse by illegitimate users? More broadly, to what extent is any company culpable when consumers don’t use its products as intended. Are organizations responsible for protecting people from themselves?

Since the advent of mass-production, there have been continual examples of consumers injuring themselves by misusing products, often despite clear warnings from manufacturers, e.g., “Don’t stand on the top of this stepladder”; “Don’t put this plastic bag over your head.”

One of the most recent examples of widespread abuse was called the Tide Pod Challenge, which involved mainly teens videoing themselves chewing on the small detergent sacs and posting clips of their reactions on social media. Tragically, several people died as a result of ingesting the liquid.

Procter & Gamble (P&G), the maker of Tide, responded to its product’s misuse by offering advice on Twitter to those affected by the Challenge and by asking YouTube and Facebook to remove Tide Pod Challenge posts. P&G also produced a television commercial with former New England Patriots tight-end Rob Gronkowski urging viewers not to eat Tide Pods. All of these efforts were in addition to the company coating the Pods with a bitter-tasting substance in order to discourage children from biting into them.

P&G hasn’t stopped making Tide Pods, and as far as I know, the company hasn’t assumed responsibility for the Challenge-related injuries and fatalities. Is the firm wrong for failing to take those actions? No. The Tide Pod Challenge is an example of consumers' blatant product misuse, despite the company’s multifaceted, good-faith efforts to avoid it.

The same cannot be said, however, about Purdue Pharma and OxyContin. Here’s why the two cases of consumer abuse are very different:

In contrast to the Tide Pod Challenge, which was a short-lived ‘fad,’ Purdue Pharma knew for decades about OxyContin abuse but avoided addressing it. A New York Times piece details the timeline, beginning in the late 1990s, when the company concealed its knowledge that the medication was being stolen and sold illegally to abusers. Meanwhile, the firm promoted the exact opposite—that OxyContin was less prone to abuse than other prescription opioids.

Although serious, there never was an “epidemic” of Tide Pod misuse; cases were relatively isolated. As the earlier opioid statistics suggested, however, opioid abuse has been shockingly widespread. For instance, during the early 2000s, prescription drug distributors “sent enough pain pills to West Virginia over a five-year period to supply every man, woman and child there with 433 of them.”

Unlike Tide Pods, OxyContin is highly addictive. Probably no one who did the Tide Pod Challenge wanted to try it again, but those who start using OxyContin often can’t stop.

Despite the added exposure it brought the brand and the additional revenue it produced, all evidence supports that P&G did not want anyone eating Tide Pods. On the other hand, the New York Times suggests that Purdue Pharma, essentially encouraged abuse of its product by claiming that the company “planted the seeds of the opioid epidemic through its aggressive marketing of OxyContin.”

As I’ve read and heard about the opioid epidemic, I’ve wondered about the responsibility of doctors who liberally prescribed the drugs and of the consumers who misused the medication. I now understand that these persons share responsibility with at least one company that knowingly fueled the crisis. Purdue Pharma’s profiting from the nation’s opioid pain is a clear case of “Single-Minded Marketing.”

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Do You Believe in Better Business?

8/23/2019

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by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

Does the word business carry positive or negative connotations for you? My associations are affirmative ones, but for many people business carries significant baggage, perhaps from personal experience or from things they’ve read or heard. Those impressions may be changing, though, thanks to a bold pronouncement by leaders of some of the world’s largest companies.

On August 19, 2019, 181 CEOs of the Business Roundtable, a Washington D.C.-based nonprofit comprised of “chief executive officers of America’s leading companies,” issued a Statement on the Purpose of a Corporation.

That news may not sound startling, but what is surprising is the new Statement’s focus on serving “all Americans”—an abrupt departure from what most people associate with business: making money for shareholders. The new Roundtable Statement, in contrast, details the executives’ commitment to serving the needs of all corporate stakeholders by doing things like:

Delivering value to customers
Investing in employees
Dealing fairly and ethically with suppliers
Supporting communities

The men and women who endorsed the new Statement aren’t just any execs. They’re the heads of many of the world’s largest and most successful corporations, for instance:

Jeff Bezos, Founder and Chief Executive Officer of Amazon
Tim Cook, CEO of Apple
Brian Moynihan, Chairman of the Board and CEO of Bank of America
James Hackett, President and CEO of Ford Motor Company
David Solomon, Chairman and CEO of The Goldman Sachs Group
Marilyn Hewson, Chair, President, and CEO of Lockheed Martin
Lisa Davis, CEO of Siemens Corporation USA
Doug McMillon, President and CEO of Walmart, Inc.

Several signatories supplemented the statement with their personal thoughts, for instance, Jamie Dimon, CEO of JPMorgan Chase & Co. and Chair of the Business Roundtable said:
“Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans.”

Similarly, Alex Gorsky, CEO and Chair of Johnson & Johnson added:
“This new statement better reflects the way corporations can and should operate today.” “It affirms the essential role corporations can play in improving our society when CEOs are truly committed to meeting the needs of all stakeholders.”

Those are nice sentiments. Unfortunately, though, they fly in the face of what many have accused business of doing for decades if not millennia—profiting at any cost. Moreover, some champions of capitalism have openly embraced that calloused approach to commerce, perhaps none more famously than economist Milton Friedman. In a September 13, 1970 New York Times article, among other places, Friedman argued that business’s only social responsibility was to increase profit, i.e., to maximize shareholders’ return on investment.

Beyond Friedman’s free markets manifesto, public cynicism about business has gained momentum thanks to a seemingly never-ending series of moral lapses and money grabs by certain businesspeople and companies such as Bernie Madoff, Enron, Arthur Andersen, Bear Stearns, Martha Stewart, Barclays, WorldCom, and Volkswagen.

It’s no surprise, therefore, that some are very critical of the new Business Roundtable Statement. One such cynic is business columnist David Lazarus, who in a recent Los Angeles Times article maintained that the edict is nothing more than “corporate propaganda” put forth by conscience-stricken executives trying to save face amid growing business backlash. Furthermore, Lazarus argues that the statement is conspicuously light on specifics, such as how exactly the companies purport to make all stakeholders their priority or what they might do to address the gross asymmetry in executive pay.

Lazarus is not the only one skeptical of the Roundtable Statement. For his article, he interviewed several others who share his beliefs, including Kenneth Osgood, a history professor at Colorado School of Mines, who said “It seems pretty obvious that CEOs are trying to head off growing public pressure on a number of fronts, including how much they’re paid and taxing the rich.”

Echoing those sentiment was professor of public diplomacy at USC, Nicholas Cull, who said “There seems to be a concern among the CEOs that they’re becoming the bad guys.” “This suggests that the business community is expecting blowback from their policies, and they’re trying to get ahead of it.” Similarly, University of Alabama history professor Margaret Peacock simply called the Roundtable Statement “a clear and pretty heavy-handed attempt to obscure reality.”

Time will tell whether such strong criticism is deserved or if, instead, the signatories’ companies will live up to the commitments. In the meantime, Lazarus and others critical of the Roundtable Statement should consider two key points about business:

1) Business benefits society. Yes, certain businesspeople and companies have made mistakes, but that harm is far outweighed by the positive economic and social impact business has had and continues to have on local communities, nations, and the world.

So many people, including Lazarus, owe their livelihoods to businesses, so many consumers enjoy the products/services firms offer, and so many governments benefit from the tax revenue companies provide.

2) Responsible business strategies and tactics stem from a proper philosophy of business. Just like we wouldn’t expect someone who has a distorted view of relationships to treat others decently, we shouldn't expect businesses to consistently treat stakeholders with respect unless they first make it their mission to do so.

The Business Roundtable Statement isn’t intended to be an A to Z blueprint for how exactly to increase employee compensation or build communities, but what it does propose is a very important prerequisite: an overarching goal that can serve as a guide for all other business activities, including marketing.

No businessperson is perfect, but when they hold each other accountable for positive impact, they’re often able to bring about good that they couldn’t achieve individually. That’s the promise and potential of the Business Roundtable’s new ‘purpose statement,’ which also makes the edict “Mindful Marketing.”

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Reading for Profit

8/9/2019

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by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

How did you earn money as a kid? Maybe you babysat, mowed lawns, or did chores around the house. Did you ever get paid to read? Probably not, but now one creative company rewards kids for reading while they get their haircut.

A haircut is a uniquely intimate interpersonal experience for someone of any age. You sit still for a half hour or more, while a person you may not know very well stands inches away, repeatedly handling your most important body part—your head.

Beyond the physical experience, there’s the social dimension of a haircut. Sitting so close to someone for that amount of time, it’s awkward not to talk. However, even adults can find such chitchat challenging; for kids, it may seem impossible. Most children don’t have advanced conversational skills, and they’re naturally short on life experience and knowledge of topics that tend to be good conversation starters, e.g., current events, food, sports, etc.

Those aren’t the reasons, though, that City Cuts, a barbershop located in Kutztown, PA, pays children to read while they receive haircuts. More comfortable kids may be a side benefit, but it wasn’t the main thing that motivated shop founder and owner Jon Escueta to start the ‘novel’ program.

Escueta immigrated from the Philippines when he was just eight years old. Not knowing any English proved to be a formidable social barrier, but a caring teacher helped him overcome the obstacle by using a book about basketball to encourage him to read.

Escueta, now 32, employs the same strategy in his barbershop, where kids can read aloud a book of their choice to the person cutting their hair, and anyone else within earshot. For every book kids read, they receive $3.

The benefits of reading are well known: greater knowledge, mental stimulation, vocabulary expansion, memory improvement, stronger analytical skills, improved concentration, etc. However, all of those advantages can accrue to readers who sit alone and read silently to themselves. Why, then, doesn’t City Cuts simply let kids borrow books to take home and read on their own time?

The reason is there are also significant benefits that can come from reading aloud in front of others. On her website Tutoring Academy, Sharee Chapman identifies some of those positive outcomes, for instance:
- Improved diction and expression
- Enhanced visual memory and the ability to see images in one’s mind
- Better spelling from sounding out words, detecting syllables, and visually connecting words to sounds
- Great practice for public speaking

It’s the last benefit that aligns most closely with Escueta’s intent and reflects the way his program seems to be working. For example, 8-year-old Connor, whose mother travels 20 minutes to take her two children to the shop, says that reading aloud has really helped him in the classroom. He explains: "It [the reading time] made me speak up," so that "I am always raising my hand to get picked."

However, as much as Escueta may want to help, City Cuts isn’t a charity. Without seeing its financial statements, one can imagine that a small barbershop, located in east-central Pennsylvania, doesn’t make money hand-over-fist. So, how can it afford to pay both its barbers and its customers?

Fortunately, the program has gained considerable community buy-in. City Cut’s customers and others donate both the books for the young readers and the funds to compensate them. Also, this past January, Escueta started a GoFundMe account that has raised over $6,100 toward its $7,000 goal.

So, the reading program seems sustainable, but shouldn’t we be cautious about such corporate influence in children’s lives?

From banks to bakeries, all kinds of businesses want to make inroads with kids, not because children have much money to spend now but because they are the next generation of consumers. Some big players have even used reading programs as a way of reaching kids.

For instance, Pizza Hut’s BOOK IT program has been rewarding kids for reading for the past three decades and still seems to be going strong. Children enrolled in the program receive a certificate for a free one-topping Personal Pan Pizza, a prize, and a sticker for every month they reach their reading goal.

Given that the program is “free,” those rewards for reading seem like a great deal. Of course, most parents don’t drop their kid off at Pizza Hut and say, “Go in and eat your free Pizza,” i.e., one certificate likely draws the entire family into the restaurant for food and drink, resulting in a profitable tab for the company.

Pizza Hut also gains brand exposure in the ‘sacred’ learning environments of schools from BOOK IT-related items on which its logo appears such as posters, flyers, and the award certificates. All that said, it’s reasonably to wonder if the benefits the company receives far outweigh the few pizzas the children earn.

Then again, BOOK IT does get kids to read. Maybe that outcome justifies the corporate influence, but there’s also the risk that kids’ interest in books may begin and end with free food. In other words, the extrinsic, physiological reward of pizza may overshadow the more important intrinsic, intellectual reasons for reading, mentioned above.

City Cut’s reading program, on the other hand, appears to avoid these risks. Unlike pizzas, haircuts are necessities that children typically don’t crave and upon which families rarely overindulge. Similarly, unlike problems inherent with connecting reading to eating, it’s hard to imagine an association between reading and haircuts that could negatively affect kids later in life.

In terms of corporate collateral, it would be naïve to think that City Cuts doesn’t profit from its reading program. Like the mother who drives 20 minutes to take her children to the shop, there are probably other parents who go out of their way to involve their kids in City Cuts’ reading program.

However, whatever increased business City Cuts gains, it deserves. By encouraging children to read aloud, Escueta and his colleagues offer young customers a uniquely valuable, developmental experience while extracting very reasonable value in return.

It’s fine for companies to profit from their philanthropic efforts, provided that the community/company benefits are balanced. City Cut’s reading program seems to strike that right ratio, which makes inspiring confidence in young customers “Mindful Marketing.”

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Pizza Protection

6/29/2019

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by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

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.”

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Dynamic Pricing or Discrimination?

6/14/2019

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by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

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.

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Making Kids Too Competitive?

5/15/2019

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by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

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:

American Ninja Warrior Junior: Athletes in three age groups (9-10, 11-12, 13-14) race through extreme obstacles for a top prize of $15,000.

Chopped Junior: Young ‘chefs’ frantically prepare three courses for a panel of judges, with the chance to win $10,000.

Design Squad: “Contestants design whimsical machines in order to win an Intel college scholarship worth $10,000.”

Food Network Stars Kid: Children cook against each other with the hope of hosting their own cooking show.

Project Runway Junior: Clothing designers age 13 - 17 compete for a “full scholarship to the prestigious FIDM in California; a complete home sewing and crafting studio, plus, the dream machine, all courtesy of Brother; a feature in Seventeen Magazine; and a $25,000 cash prize, to help launch their line.”

So You Think You Can Dance–The Next Generation: Dancers from 8 to 13 years old leap, twirl, and wiggle to win a top prize of $250,000.

The Voice Kids: Young singers compete for prize money worth over $30,000, as well as a trip to Disneyland Paris.

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.”

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Peloton's Psychological Problems

Marketing Giving

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Companies that Want to Make Us Mad

Who's to Blame for Opioid Abuse?

Do You Believe in Better Business?

Reading for Profit

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Dynamic Pricing or Discrimination?

Making Kids Too Competitive?

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