Category: + Fairness

Should Social Responsibility be Selfless?

1/16/2022

by David Hagenbuch - professor of Marketing at Messiah University -
author of Honorable Influence - founder of Mindful Marketing

While people gave gifts to loved ones last month, the world’s largest pizza chain was providing presents to some very surprised recipients—other restaurants. True, “it is more blessed to give than to receive,” but was Domino’s philanthropy actually aimed at putting itself on the receiving side?

As you may have seen in the 60-second spot from its feel-good campaign, Domino’s bought over $100,000 in gift cards from local restaurants and gave them to its own customers.

It doesn’t take much business background to know that the goal of an enterprise is to build market share for itself, not competitors. Even Vickie Corder, one of the restaurant owners who appeared in Domino’s commercial, was astonished by the action: “I can’t believe one restaurant is buying another restaurant’s gift certificates.”

Why would Domino’s want to support its competitors’ sales by buying their gift cards, and even worse, giving them to its own customers, making them less likely to buy Domino’s pizza? Some of the ad text suggests an altruistic reason: “Domino’s wants to help the people and restaurants in our local communities.”

One might take that explanation at face value. After all, the firm did fork over $100,000. However, for a company with annual revenues of $4.37 billion and operating income of $801 million, $100,000 is immaterial. There’s also some understandable skepticism--Why haven’t we heard before of Domino’s feelings of responsibility for other restaurants?

Instead, some of the chain’s social responsibility has looked more like ‘marketing gimmicks,’ such as its “Paving for Pizza” program, aimed at filling potential pizza-delivery-wrecking potholes, and its “carryout insurance,” guaranteeing free replacements for customers who inadvertently fumbled their pies.

The vast majority of people probably never had a poor pizza experience resulting from either of those issues and never will, so it’s realistic to suggest that in both instances Domino’s was making much ado about nothing, positioning for the free publicity that each unconventional campaign elicited. So, is gifting other restaurant’s gift cards just another attempt to gain exposure through oddity?

The gift card campaign certainly seems like it could be another gimmick; yet, there are some notable differences, namely that COVID has put unprecedented pressure on restaurants, causing many to shutter their doors permanently. In fact, Domino’s commercial mentions that “over 110,000 U.S. restaurants have closed since March 2020.”

That to say, unlike the exaggerated ideas of potholes pummeling delivery vehicles and consumers carelessly dropping carryout orders, the pandemic’s negative impact on restaurants has, unfortunately, been very real.

The ad also mentions a related phenomenon that COVID didn’t cause but did increase: the use of third-party delivery companies. During the height of the pandemic when most restaurants’ sit-down dining was paused, more and more people started getting restaurant food delivered to their homes and offices by providers like Grubhub, Uber Eats, and DoorDash.

Although selling food, whether for dine-in or delivery, seems like a good thing for restaurants, apparently the math doesn’t work well when third-party delivery companies are involved. Irene Li, another restaurant owner interviewed in Domino’s ad, affirms the profit predicament: “[Third-party delivery fees] take a huge chunk of our bottom line; all of that comes out of our pocket and goes to them.”

Others have echoed her concern, including NPR, which reported that apps often charge commissions of 17% or more, in addition to delivery fees. Likewise, the LA Times found that one local restaurant paid $35,000, or roughly a third of its annual rent, in delivery fees, which led the Times to recommend, “The next time you order takeout, call the restaurant [directly].”

Domino’s suggestion that delivery apps wreak havoc on restaurants’ bottom-lines is on-point; however, the pizza chain is also very well-known for doing its own deliveries. Does that mean that Domino’s is selflessly looking out for others? Not exactly.

Apparently, some of the many people who have grown accustomed to the third-party apps for food delivery have also used them to place orders for pizza, doing to Domino’s the same fiscal damage described above. In fact, another Domino’s ad has suggested such delivery difficulties, warning consumers that third party delivery firms charge “surprise fees,” but it will reward certain loyal customers who use its app with “surprise frees,” or, free food.”

Likewise, during an interview on CNBC’s Mad Money, Domino’s President and CEO Ritch Allision suggested that third-party delivery apps have, to some extent, stunted the company’s growth.

All this to say, by buying and giving away other restaurants’ gift cards, Domino’s has brought added attention to an issue that doesn’t just hurt its local restaurant competitors. It also bruises Domino’s own bottom line.

The question, then, becomes, Is it right for Domino’s to help itself while helping others?

Before considering the ethics of this query, it’s worth noting that Domino’s strategy does seem to be effective marketing. The unconventional approach gains attention, and the corporate social responsibility builds goodwill.

What’s more, because delivery is both the focus of the ad and a key component of the company’s value proposition, the promotion is more meaningful and memorable. When people consider Domino’s brand, the company wants them to think of food delivery, which the commercial accomplishes.

So, what about the marketing’s morality? One consideration could be the amount Domino’s spent on the gift cards ($100K+) versus how much it’s paid for the ads. Excluding production expenses, U.S. television broadcasting costs alone, average about $115,000 per 30-second spot, which means the campaign’s promotional budget certainly far exceeded the value of the gift cards.

The extreme imbalance may make some rightly question the company’s motives. Although Domino’s franchisees did assume some risk by giving other restaurant’s gift cards to their own customers, most people who eat out probably patronize multiple restaurants, making it unlikely that Domino’s lost business. In fact, free gift cards may have led some of their recipients to reciprocate by buying more pizza.

All said, it’ hard to paint Domino’s promotion as selfless: The company benefited from the tactics as did the other restaurants and those who scored the free gift cards. So, is such mutual benefit problematic?

Most business exchanges result in win-win outcomes. From the clothes we wear to the computers on which we type, we’re usually very glad we have those products and not the money we paid for them. Meanwhile, the marketers are grateful for our money and don’t want back their products.

Mutually beneficial exchange, in commercial and noncommercial contexts, is a very good thing. Some may argue that such a philosophy shouldn’t extend to corporate social responsibility, but why not?

Several years ago, two colleagues and I conducted research in which we identified three unique types of corporate social responsibility: donation, volunteerism, and operational integration. In the study we affirmed that helping others was very good, but implementing philanthropic acts that simultaneously furthered the economic goals of the organization was even better. The positive response to this article and another like it suggests that many others share the same viewpoint.

The reality outside business isn’t much different. When individuals give of their time, money, etc., benevolence in some form usually comes back to them. The stories found in the Go Giver artfully describe that phenomenon.

Domino’s did a good thing by buying and giving away other restaurants’ gift cards. Although it wasn’t a major act of corporate social responsibility, it was a meaningful one. The fact that the philanthropy also benefited the pizza chain, doesn’t stop the strategy from being "Mindful Marketing."

Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out Mindful Marketing Ads and Vote your Mind!

2 Comments

Are Apple AirTags Too Risky?

12/19/2021

0 Comments

by David Hagenbuch - professor of Marketing at Messiah University -
author of Honorable Influence - founder of Mindful Marketing

Most of us played ‘tag’ as a kid and loved the simple thrill of chasing others around and trying not to get tagged. Thanks to Apple’s advanced tech, the game has graduated to adulthood; however, criminals are increasingly “it, ” and the stakes are much higher for those being chased.

So, if you’re wondering what to buy for that childhood friend-turned-felon this holiday season, Apple has the perfect present: AirTags--The gift that keeps on taking. This dark humor aims to underscore some disturbing news: More criminals are finding that AirTags are a convenient way to pilfer the valuable property of others or even worse, to stalk people.

Apple introduced the small electronic tracking devices this past April to help individuals more easily locate products they’re apt to misplace like keys and bags. The company’s website explains how the 1.26” diameter tags work:

“Your AirTag sends out a secure Bluetooth signal that can be detected by nearby devices in the Find My network. These devices send the location of your AirTag to iCloud — then you can go to the Find My app and see it on a map.”

Given that this location system leverages a vast network of strangers’ devices, Apple has made privacy a top priority. The company ensures that only the AirTag’s owner can see where their AirTag is, and its location data and history, which are always encrypted, “are never stored on the AirTag itself.”

These measures appear effective in protecting the property owner, i.e., the person who places the AirTag on their own phone, in their own bag, etc.; however, it seems that a major security risk remains, namely preventing those with ignoble intentions from attaching AirTags to the possessions of others.

Of course, most people would notice if an AirTag inexplicably appeared on their coat or keychain, but they’d probably never see one affixed to the underside of their automobile. Unfortunately, it didn’t take long for car thieves to realize AirTags’ wonderful potential for pilfering.

Various news media have reported the troubling trend in which thieves see sought-after vehicles in public places like mall parking lots, attach an AirTag to the car in an inconspicuous spot, and track the vehicle to a more private place, like the owner’s driveway, where it can be stolen more easily.

The notion of ‘auto theft made simple’ is disconcerting, but even more disturbing is the idea that criminals could use AirTags to stalk people. What if you’re in a public place and someone inconspicuously slides one into a bag you’re carrying? The wrongdoer could show up at your home anytime.

Fortunately, Apple claims there are measures to thwart such chilling contingencies; its website explains:

“AirTag is designed to discourage unwanted tracking. If someone else’s AirTag finds its way into your stuff, your iPhone will notice it’s traveling with you and send you an alert. After a while, if you still haven’t found it, the AirTag will start playing a sound to let you know it’s there. Of course, if you happen to be with a friend who has an AirTag, or on a train with a whole bunch of people with AirTag, don’t worry. These alerts are triggered only when an AirTag is separated from its owner.”

These precautions do help ally some concerns; yet, a few questions remain, for example:

What if the person who’s unknowingly been ‘tagged’ doesn’t own an iPhone or have it with them, in which case they wouldn’t receive the alert?
How long does it take for the alert to be triggered?
How far does an AirTag need to be from its owner in order for the alert to be sent?

In keeping with the last question, if a person has an AirTag in a key chain that she hangs in a first-floor entryway, she won’t want an alert to sound each time she takes her iPhone to her second-floor bedroom. All this to say, AirTags’ security features give some significant reasons for pause.

Geoffrey Fowler, a columnist for the Washington Post, substantiated such concerns when he asked a colleague to pretend to stalk him for a week “from across San Francisco Bay.” He found that it took three days for the alert to sound, which amounted to “just 15 seconds of light chirping.” What’s more, if he didn’t own an iPhone, he wouldn’t have received any notification.

Although Fowler credits Apple for trying to do more to keep people safe than other tracking device makers, like Tile, have done, his experience still leads him to conclude that AirTags are “a new means of inexpensive, effective stalking.”

So, should Apple stop selling AirTags? Base on Fowler’s experiment, a natural conclusion is ‘yes.’ However, as it is with so many products that offer both positive and negative outcomes, the answer is not that easy.

For instance, many of us travel in automobiles each day to go to work, school, shopping etc. Tragically, more than 38,000 U.S. residents die in car crashes each year, and many more are injured. Also, we’ve unfortunately seen some use cars maliciously to kill others.

However, such incidents don't make many of us think twice about climbing into a car or crossing streets where others are driving them. Although the potential negative outcomes of injury and death are daunting, the great individual and collective benefits of car use overshadow those remote probabilities.

Similar rationale can be applied to many other products from kitchen knives to prescription drugs. We welcome their use because in the vast majority of cases they help people, not harm them.

Still, it’s fair to ask if AirTags offer a high enough risk-to-reward ratio. Yes, misplacing one’s car keys is annoying and can even be very frustrating, but we usually find them. How do we weigh the convenience of finding lost keys against the use of the devices to track others’ property or people themselves?

Those risks, especially if they become more common, likely don’t outweigh the rewards of quicker key recovery. However, there are several other, potentially more critical functions that AirTags can serve. Writing for Gadget Hacks, Jake Peterson identifies several of those uses, which include:

Lifesaver Beacons: People with severe allergic reactions can place AirTags on life-saving medications like EpiPens.
Location Trackers for Children: Parents can put the devices in their children’s backpacks or pockets and hopefully avoid experiencing their worst nightmare—a lost child.
Location Trackers for People with Dementia: At the other end of the age spectrum, some individuals beset by mental decline wander off. AirTags can make it easier to find them quickly.
Beacons for the Visually Impaired: The Find My app can help people with limited or no sight precisely locate important objects within their homes.
Location Trackers for Pets: An AirTag can help ensure that a beloved animal is found, without needing to insert a microchip into the pet.

Do the benefits of these latter applications outweigh the risks of unscrupulous AirTag use? They probably do, provided that Apple continues to improve AirTag security and that the deviant behavior remains isolated. Assuming those two ‘tag rules,’ AirTags can be useful for many people, helping to make the tracking devices “Mindful Marketing.”

Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out Mindful Marketing Ads and Vote your Mind!

0 Comments

A Bad Sign: Macy's vs. Amazon Billboard Battle

12/4/2021

22 Comments

by David Hagenbuch - professor of Marketing at Messiah University -
author of Honorable Influence - founder of Mindful Marketing

With the holiday shopping season in full swing, many consumers are unaware of two titan retailers’ battle over a billboard, the results of which could impact how and where shoppers buy gifts for years to come. The clash also could impact what businesses come to accept as moral behavior.

The site of the showdown is the corner of 34th Street and Broadway, New York City, at the center of U.S. commerce. It’s there that Macy’s, which once boasted “the worlds’ largest retail store,” is taking what could be a final stand against the encroachment of Earth’s fastest-growing retailer, and one of nature’s most irrepressible forces: Amazon.

Macy’s has filed a lawsuit against Amazon, hoping to keep its close competitor from commandeering a 2,200 square foot billboard that adjoins Macy’s flagship Herald Square store. It’s a signage space Macy’s has leased for nearly 60 years.

The huge billboard, which features Macy’s iconic star and logo typeface set against the familiar bright red background, serves as a beacon for millions of pedestrians and potential shoppers as they walk north on Broadway and west on 34th Street. Millions more see the sign every November in countless camera shots during the retailer’s world-renowned Thanksgiving Day Parade.

Amazon, an organization that can send astronauts into orbit, is capable of just about anything, but how could even it endeavor to place its name on a billboard on the side of such a storied competitor’s flagship store?

Key to the controversy is the fact that Macy’s doesn’t own the building on which the billboard rests; the sign is actually attached to a small separate edifice situated just between the retailer’s massive 2.2 million sq. ft. store and the intersection. The owner of the tiny architectural interloper and its very valuable billboard is Kaufman Realty Corp.

With the contract it signed in 1963 expiring, Macy’s asked Kaufman to renew its billboard ad, but the company told its long-standing tenant that it intended to rent the space to a “prominent online retailer”—one who apparently has deep pockets and who most believe is Amazon.

Of course, both Macy’s and Amazon have physical stores and virtual ones; yet, Macy’s is in many ways the quintessential brick-and-mortar retailer while Amazon practically owns online shopping.

In a very real way, therefore, the billboard battle represents a titanic clash of competing marketing channels and business models, the results of which could impact consumer shopping behavior for years to come, as well as set important moral precedent.

Macy’s firmly believes that its loss of the advertising space, next to its flagship store, would be disastrous, as the suit it filed states, “The damages to Macy's customer goodwill, image, reputation and brand, should a 'prominent online retailer' (especially Amazon) advertise on the billboard are impossible to calculate.”

With net income that’s exceeded $1 billion for eight of the last ten years, Macy’s is doing well compared to many retailers, especially those that filed for bankruptcy over the last 18 months, e.g., Lord & Taylor, J.C. Penney, J Crew, Neiman Marcus, and Pier 1.

However, Macy’s profit margin for 2020 was a modest 2.9%. Amazon, in contrast, had net income of $21.3 billion on revenue of $386 billion, giving it not only much greater earnings but also a significantly higher rate of return—5.5%.

So, although Macy’s is not quite on the cusp, it’s certainly not operating from a position of power versus Amazon, and it truly can’t afford to see its flagship store, which it’s described as its “most valuable asset,” take a serious financial hit.

However, a hit on Macy’s Herald Square store and its effect on the future of retail is only one concern of the billboard battle: Amazon’s aggressive competitive tactic is also a breach of business’s moral bulwark.

Of course, Amazon has a right to buy any billboard it wants, but a key question is why the firm needs to buy that one.

According to Statista, there are over 340,000 billboards, or “big format outdoor displays,” in the United States. Just a ten-minute walk north of Herald Square lies Time Square, which has probably the greatest display of outdoor advertising in the world.

Granted, a sign in this spectacle of commercialism comes at a very high cost: between $5,000 and $50,000 a day, which could mean as much as $18.25 million a year. Still, that amount of money is almost immaterial to the one of the world’s richest companies.

As of December 31, 2020, Amazon’s balance sheet showed cash and cash equivalents of $41.2 billion. Even a $50,000-a-day billboard would represent less than half of one percent of those liquid assets (just 0.0445%).

So, if hundreds of thousands of large outdoor signs are available and Amazon can afford to rent any billboard it wants, why does it have to have the one in Herald Square that’s adjacent to one of its biggest competitor’s flagship stores?

It’s reasonable to infer an intent to attack the heart of Macy’s operations, to steal shoppers from in front of its landmark store, and perhaps even to embarrass the firm before its own customers.

Some might respond to such assertions of over-the-top aggression with, “That’s business,” or “Amazon is just being competitive,” or “The company is playing to win.” There’s a difference, though, between working hard to win and trying menacingly to make others lose. Unfortunately, Amazon’s billboard-buy seems like the latter.

Growing up, I loved to play sports and considered myself a pretty competitive person—I wanted to win and tried my hardest to do so. Although I didn’t like losing, I could tolerate it—it wasn’t the end of the world—especially if I played my best and the other person/team simply outperformed me.

By the same token, I never liked the idea of trying to sabotage or subvert opposing players’ performance. Instead, I thought, “Let them do their best, and I’ll do my best, and whosever best is better deserves to win.” I didn’t have to come out on top every time; I could ‘share the podium.’ Part of competing was knowing how to win and lose graciously.

In contrast, some individuals and organizations compete as if it’s all or nothing, and they have to have it all, all the time. They’ve no sense that ‘the market's big, so there’s plenty of business for everyone.’

Maybe it’s because of the holidays that this self-obsessed way of thinking reminds me of the Christmas classic It’s a Wonderful Life--specifically the film’s antagonist, the greedy and scheming Mr. Potter. Although he and his bank already own half of Bedford Falls, he won’t rest until it’s all under his control, not tolerating even a minor amount of competition from George Bailey’s small Building & Loan. No one else can win; he has to have it all.

My guess is that Mr. Potter would be proud of Amazon’s attempt to pry the Herald Square billboard lease away from Macy’s.

Macy’s is no real threat to Amazon, which can afford any outdoor advertising it wants and doesn’t need to have that specific sign. So, why go after it? It seems like Amazon doesn’t want anyone else to win; it has to have it all.

Macy’s lawsuit claims that all past and present agreements have prohibited the billboard’s owner from ever leasing the space to any other “establishment selling at retail or directly to any consumer.” If that claim is true and Macy’s is offering Kaufman Realty fair compensation for the lease, Macy’s has even more reason to believe its treatment is unreasonable.

Competition is not only necessary, it’s desirable, as it both benefits consumers and sharpens industry rivals. However, when organizations like Amazon enlist predatory business practices, their strategies are a sign of “Single-Minded Marketing.”

Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out Mindful Marketing Ads and Vote your Mind!

22 Comments

Four Behaviors of a Peacemaking Brand

9/25/2021

1 Comment

by David Hagenbuch - professor of Marketing at Messiah University -
author of Honorable Influence - founder of Mindful Marketing

In one of my favorite commercials, Liberty Mutual spotlighted acts of kindness that inspired others to pay the good deeds forward. Most people want a kinder, gentler world, but in a society awash in antagonism, how many of us think seriously about whether our daily actions encourage peace?

There are many ways for both personal and organizational brands to support serenity. Top-of-mind for me and accessible for all are four peacemaking behaviors that coincidentally all begin with the letter ‘L’:

1) Listen: Anyone who has dealt successfully with dissatisfied customers knows that first and foremost they want to be heard. More often than not, just listening to and acknowledging their frustration allays their anger.

Brands that genuinely listen, for instance, through other-focused interactions on social media, model humility, which according to Mother Teresa, is an important precursor to peace: “Only humility will lead us to unity, and unity will lead to peace.”

2) Learn: When we genuinely listen, we naturally learn. When that learning is aimed at appreciating and understanding others, interpersonal and interorganizational peace often result.

Most of us have experienced situations in which our exacerbation with coworkers, classmates, or others was largely due to not knowing them well or understanding their circumstances. However, after learning both, our appreciation grew, our annoyance subsided, and a more peaceful relationship ensued.

3) Laugh: Two research colleagues and I recently completed a study about playful teasing in advertising in which we learned that good-natured ribbing builds social bonds. Not only is laughter the best medicine, it’s a great peacemaker.

As a young aspiring athlete, I enjoyed playing basketball at local playgrounds with friends. One day an older, bigger boy, known to be a ‘rough character,’ asked to join our game—with trepidation, we obliged. Tension ran high as we worried about doing something to set him off, then one of my friends playfully teased the older boy, making some ridiculous comment about him playing professional baseball. I gasped, wondering how the short-fused guy would react—he burst out laughing, the mood lightened, and gratefully the game ended without incident.

4) Love: The best way any of us can promote peace is to show others love. It’s difficult to be at odds with those who treat us charitably. Although they might cringe at calling it love, companies are often able to act compassionately on levels that individuals cannot, as this extraordinary example illustrates.

A major meat processor had a smaller competitor whose plant became submerged from unprecedented flooding. While many firms would seize the opportunity to gain market share and eliminate an adversary, the larger company showed compassion, first sending some of its own employees to help clean up the water-logged facility then, unimaginably, lending equipment so the challenger could continue to fulfill orders.

The two competitors eventually returned to vying for business but likely with uncommon mutual appreciation and respect. Like the good Samaritans in the Liberty Mutual ad, these companies remind us that reconciliation isn’t someone else’s responsibility. Every individual and organizational brand can practice peace by listening, learning, laughing, and loving, which ultimately make for “Mindful Marketing.”

Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out Mindful Marketing Ads and Vote your Mind!

1 Comment

Gen Z Students Teach Their Professor About Thrifting

9/10/2021

28 Comments

by David Hagenbuch - professor of Marketing at Messiah University -
author of Honorable Influence - founder of Mindful Marketing

Remember the excitement of your first time wearing a new jacket or pair of shoes? Did you wonder how the original owner felt when they wore them? You probably didn’t unless you’ve been part of one of the hottest consumer trends--thrifting. For a variety of reasons, it’s now fashionable, especially among Generation Z, to shop secondhand, but this Gen X marketing professor wonders if it’s smart for the apparel industry to embrace a fad that may dissuade people from purchasing its new products.

Scanning my marketing news feeds a couple of months ago, a headline caught my eye, “Letter from Gen Z: Why thrifting is the future of fashion.” Thinking it was a bold prediction, I saved the article to discuss with my fall classes. The semester started, I shared the piece, and I’m stunned how passionate so many students are about thrifting!

However, on the first day of Personal Selling class, before I even mentioned the article, I asked each person to ‘sell us on something important to you.’ With great enthusiasm, a student named Brooke shared how much she enjoyed thrifting. Her tremendous passion for the practice was obvious to all, and very surprising to me.

My impression had long been that shopping for secondhand items was something mostly people on very limited budgets did out of necessity, to save money. Similarly, those who did frequent aftermarket sellers certainly wouldn’t brag about what they’d bought. Apparently, that stigma has subsided, and college students, some of whom come from affluent families, are among those most active in propagating thrifting’s new-found popularity.

To get a better picture of thrifting behavior among college students, I created a brief online survey that I shared with my four classes; about 70 students completed it. The results revealed some surprising behavior, for instance:

70.4% of students had purchased used clothing three or more times, and 54.9% had done so seven or more times.
The most likely places to purchase used clothing were traditional thrift stores like Goodwill and Salvation Army (39.4%), followed by retailers and brands that sell both new and used clothes, such as H&M and Levi’s (33.8%), then consignment stores (22.5%), and finally flea-markets (7.1%).
The strongest motivations for buying used clothing were cost (49.3%), followed by fashion (16.9%), then desire for old/vintage (11.27%), then impact of influencers (2.8%), and last environmental concerns (1.4%).

Before the survey, I didn’t think that so many college students were actively thrifting. To my surprise, only 9.9% of those who responded, said they’ve never purchased used clothing. I was also surprised that the places they thrift are rather evenly distributed.

Comparing the two different findings, it’s remarkable that the percentage of those who are very likely to frequent even the least popular thrifting place, flea-markets (7.1%), is not much lower than the portion of people who have never thrifted (9.9%).

On one hand, seeing cost emerge as the top motivator for thrifting was not surprising; however, I had expected its percentage to be even higher, e.g., 90% or more—again, I always thought that saving money was the only reason people purchased used clothing.

As it turns out, the desires to be fashionable and to own old/vintage clothing were also very compelling. Along those lines, I realized that my simple survey failed to ask about what may be one of the most important motivations!

At the end of the survey, an open-ended question invited respondents to share any other thoughts about thrifting. Seventeen students seized the opportunity and offered responses that included the following:

“I love it so much!”
“I love to thrift and over half of my closet is thrifted.”
“Very cheap way of finding trendy clothes”
“It’s how I get 90% of my clothes.”
“I love that I can find articles of clothing that no one else is likely to have. Thrift finds are one of a kind. I also buy clothes from stores like Target, but my purchases [there] are not as unique [emphasis added] because other people have the ability to buy the same thing. Thrifting grants me a more unique [emphasis added] wardrobe!”
At least 50% of my clothes are thrifted, I absolutely love thrifting - both because it limits waste in the fashion industry and because it’s fun! [emphasis added]

The last two comments contained two words that were both eye-opening and full of marketing implications:

1) Unique: I remember, not long ago, when young people wanted to look like everyone else. To be one of the few people who didn’t have the popular brands of sneakers or jeans was often an ostracizing experience.

Now it seems that many Gen Zers want to own clothing that not everyone else is wearing. Moreover, items that are one-of-a-kind, like those that can be found through thrifting, are even better, as they help express individual identity, which mass marketed products can’t easily accomplish.

2) Fun: In my thrifting survey, I kind of included a question about wanting unique clothing (“old/vintage”), but I completely overlooked the idea that members of Gen Z thrift because they enjoy the thrill of the experience.

For many, thrifting is a kind of treasure hunt in which they may or may not know exactly what they’re looking for, and what they find may be a complete surprise. It’s exciting for almost anyone to come across something special that others are unlikely to locate.

Both of these motives, as well as some of the others, are instrumental to the thrifting behavior of Brooke, introduced above, who has been buying secondhand products for 3-4 years and goes thrifting once every two or three weeks. In those outings, Brooke has found used bargains on everything from American Eagle clothing, to Ugg boots, to Vera Bradley bookbags.

Cost is certainly a motivation for Brooke; in fact, she says she loves saving money and showing people the great buys she gets for ¾ of regular retail prices. She also says that she now has “a hard time spending full price on clothing at retail stores.” However, Brooke also enjoys the excitement of thrifting:

“I get a thrill in not knowing what I’m going to find. You don’t know if you’ll walk in and find brand new Nike shoes for $40 or Lululemon leggings for $30, and that’s the fun in thrift shopping, the unknowns.”

There’s little question that many members of Gen Z enjoy thrifting for a variety of reasons, but what can/should marketers do with that consumption behavior? After all, most clothing brands are in the business of selling new clothes, not used ones. Some, however, have found ways to do both, and apparently make money.

One of those brands is the iconic blue jean maker Levi’s, which has made an entire enterprise out of buying back and reselling its used denim. The company runs a well-developed website, Levi’s SecondHand where it resells its classic jeans, jean shorts, denim jackets, and more.

Even though they’re used, the items aren’t cheap. For instance, the site sells preowned men’s original fit 501 jeans for $38. On a recent Labor Day sale, Macy’s offered the same jeans new for $41.70, or less than $4 more. Levi’s used product site also sells Vintage 501 Shorts for a pricey $78 a pair.

However, a webpage that describes Levi’s SecondHand explains why someone would want to pay a premium for preowned: “Denim from past seasons that’s already beat-up and broken in. In other words, perfect.”—That sentiment is very similar to the survey finding mentioned above about generation Z liking clothes that are old, vintage, and unique.

The company also touts several other advantages of SecondHand, especially sustainability:

“If everybody bought one used item this year, instead of buying new, it would save 449 million pounds of waste.”

“Levi’s SecondHand keeps coveted pieces in circulation. It’s all about connecting people to timeless styles they otherwise may not have found, and most importantly, saving clothing from going into a landfill. Old denim has never looked better.”

A big question that remains is if selling secondhand is sustainable for Levi’s. Sure, used denim may be what consumers want and what the environment needs, but can the company make money in the clothing aftermarket? If not, the program has little potential.

Levi’s SecondHand isn’t yet a year old, so longevity is still not the best indicator. However, if the company is successful selling some used products for only a few dollars less than they sell for new, and others for even more, it seems likely that the firm, free from manufacturing costs and with relatively little added overhead, must make a healthy margin on each piece and turn a profit on the program as a whole. Interestingly, over the past year Levi’s stock price has increased significantly, from $12/share on September 21, 2020, to $26.50/share on September 6, 2021.

Can other clothing companies pull off a secondhand program like Levi’s? Few have the history and brand equity that the iconic jean maker enjoys; however, consumers’ appetite for used clothing and the favorable cashflow suggested above serve as an invitation to other suppliers. Furthermore, the fact that those who have entered the aftermarket include clothing retailers J.C. Penney, Macy’s, Madewell, and Nordstrom, as well as the furniture behemoth IKEA, suggests the viability of selling secondhand.

When you think about it, it’s not unusual for manufacturers and new product retailers to sell used products. Auto dealerships have been doing so for a century or more. Part of the reason people are willing to pay so much for new cars is that they know when they’re done driving them, someone else will buy them. Whether it’s Levi’s or Lexus, high resale value is a hallmark of a strong brand.

Still, an important moral issue remains, which a second member of Gen Z brought to my attention. Katie, also a marketing student of mine, helped me see that consumers have a responsibility to ‘thrift ethically.’ Inspired by a variety of posts she’d seen on Instagram and a visit to a thrift store in Colorado, Katie suggested that consumers shouldn’t shop in “low-volume, high-populated areas” and that they should avoid patronizing secondhand places “outside of their fiscal demographic."

The overarching reason for these sensitivities is that some desirable-brand item that we buy in a thrift shop as a ‘little luxury’ might be the same item that a more impoverished person would buy out of necessity. As consumers, we are often accustomed to there being plenty of products for everyone, but Katie reminded me that what we buy secondhand may be taking something away from someone who needs it more.

Of course, not every product lends itself to a profitable aftermarket, but many do. Consequently, for the sake of environmental, financial, and social stewardship, more companies and consumers should consider how they might responsively market and purchase preowned products. Whether new or used, items that offer value to buyers and profit to sellers, can be considered “Mindful Marketing.”

Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out Mindful Marketing Ads and Vote your Mind!

28 Comments

Help Wanted, Marketing to Prospective Employees

7/31/2021

8 Comments

by David Hagenbuch - professor of Marketing at Messiah University -
author of Honorable Influence - founder of Mindful Marketing

While eating lunch at a favorite restaurant recently, my son and I noticed that the menu was much shorter than before. The Italian eatery was no longer even offering one of its standard selections, pizza! After our meal, I asked our waitress about the simpler spread. She explained it was because they couldn’t hire enough cooks to prepare additional entrées.

You’ve likely seen signs in restaurants, ads from retailers, and posts on social media from other service providers announcing pressing needs for more employees. While the recent labor shortage has been a boon to job seekers, it’s been a bummer for many businesses that find themselves perpetually understaffed. However, firms can turn their current recruitment challenges into opportunities if they rethink how they market to prospective employees.

Like many professors, I’ve invested considerable time helping students get jobs, both internships during college and career positions after graduation. What has for decades been largely an employer-oriented sellers’ market has suddenly shifted. Now employers are increasingly competing for new hires. As a result, it behooves businesses to go back to school and brush up on their marketing, not to attract customers but to contract employees.

In a few days, I'll participate on a panel for that purpose, joining three others to engage employers in a discussion of how to recruit college students and recent grads more effectively.

Being both a marketer and a college faculty member, I hope to offer a unique perspective, mainly based on two-plus decades helping get students gainfully employed. I’m fairly familiar with Gen Z’s preferences in the recruiting process. So, in case there’s any overlap between the panel audience and this one--spoiler alert! I’m sharing below my recommendations for more effective marketing to prospective employees.

It’s probably not surprising that this marketer’s suggestions flow from the 4 Ps. Although there are several strategies I could encourage for each marketing mix component, I’ve singled out two for each, not because they’re necessarily the most important ones but because they’re the features/benefits that young prospective employees increasingly seek, which means they’re ones upon which employers need to double down:

Product

Social Responsibility: Gen Z’s desire to align themselves with organizations that make a difference is well-documented. Its members want to have a positive impact on the world, and one of the best ways to do so is to work for “purpose-driven companies.” Firms should be able to communicate clearly and concisely to prospective employees how they help people and the planet.

Attractive Organizational Culture: Decades ago, when I was entering the job market for the first time, company culture was not on my radar screen. Now most new hires want to know 'what it will be like' to work for a firm. I often hear them offer desired descriptors like “low-stress,” “friendly,” and even “fun.” Interviewers should be prepared to talk about their organization’s culture and point to specific examples. They also need to model it in their interactions with prospects.

Place

Work On-Line: Through the pandemic, where work occurs has become an increasingly important point of interest. Many people with whom I’ve spoken have suggested that they’ve enjoyed working from home; in fact, they’d like to continue to work remotely at least some of the time. As might be expected, most Gen Zs are extremely comfortable with digital technology and very used to interacting with others virtually.
Work In-person: At the same time, people also mention that they miss the impromptu interactions that would occur in office hallways and around the proverbial watercooler. In taking jobs, many new grads move away from family and friends, so they’re hoping to make new, meaningful connections. One recent graduate told me it’s harder for her to develop those relationships just from online interactions. So, it seems that employers should provide at least some opportunities for face-to-face interaction.

Promotion

Timely Communication: This past spring a senior student of mine was interviewing with an organization. The process was going well, but more than once he expressed concern, e.g., “It’s been almost two weeks since my second interview and I haven’t heard from them.” Granted, two weeks is not an unreasonable wait, but employers should be sensitive to the fact that more job seekers today have multiple options. So, to not miss the opportunity to make a great hire, firms should at a minimum make clear their timeframe for follow-up communication and even better, move the recruiting process along a little more quickly than it has gone in the past.
Transparent Communication: In keeping with the previous imperative, many college students tell me how much they value transparent communication. Sometimes I push back and ask, “Do you really want to know everything an organization does?” They reply, “No, but we don’t like when they hide important things or try to put a positive spin on something negative.” In short, they want organizations to be open, honest, and genuine. Companies should be careful to model these values in their communication with prospective employees.

Price

Appropriate Pay: Professional sports fans often hear of pro athletes wanting to “get paid.” It’s usually when a star’s current contract doesn’t compensate them in proportion to their productivity. College-age prospective employees don’t have contracts, but they should ‘get paid’ in the sense that they shouldn’t be lowballed; rather, they should be offered competitive salaries and benefits at if not above market averages. These young people aren’t looking to squeeze out every dollar they can, but they do have debt to pay and don’t want to have to live paycheck-to-paycheck. Similarly, unpaid internships should be a thing of the past.
Work-Life Balance: The greatest resource employees give organizations is their time. Although the prospective employees with whom I speak are very willing to work hard, they rightly want to have sufficient time for other needs and interests outside of the office. Employers should monitor and encourage healthy work-life balance. They also should be ready to tell prospective employees about their systems for maintaining an agreeable life equilibrium.

Some sectors, like healthcare, already know well the challenges of employee recruitment and retention: For years, hospitals have labored to hire enough doctors and nurses. Now, many employers share their pain. The above prescriptions can bring some recruitment relief while also helping firms feel better, knowing that they’re practicing “Mindful Marketing.”

Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out Mindful Marketing Ads and Vote your Mind!

8 Comments

Is Space Tourism an Unnecessary Splurge?

7/17/2021

1 Comment

by David Hagenbuch - professor of Marketing at Messiah University -
author of Honorable Influence - founder of Mindful Marketing

It’s interesting to see how much people are willing to pay to travel from point A to point B: Is $50 too much for a 15-minute Uber to the airport; is $500 reasonable for a one-way flight from JFK to LAX? For a few hundred thousand dollars, today’s trendiest travel just takes a person from point A and back, but it does include a brief stop in the stratosphere. So, is consumer space travel worth its astronomical price?

For Jeff Bezos, Richard Branson, and Elon Musk, the answer is, of course, “yes.” These three billionaires not only want to be astronauts, they want others to share the celestial experience, provided they can ante up the soaring prices.

On July 11, Branson, founder of Virgin Galactic and a variety of other Virgin companies, became the first of the execs to experience outer space when his corporation’s SpaceShipTwo carried him and a small crew to an altitude 9.5 miles above the earth.

The two other tycoons are expected soon to follow suit, the next being Bezos in his company’s Blue Origin craft on July 20. Interestingly, Musk reportedly bought a ticket on Virgin Galactic about 15 years ago; he likely will also fly on one of his own SpaceX ships someday.

It shouldn’t be long before prosperous private citizens will be boarding spacecrafts and floating in zero gravity. With already over 600 tickets sold to individuals that reportedly include Justin Bieber and Leonardo DiCaprio, Virgin Galactic appears to be leading the space tourism race. However, its competitors are also reserving spots, such as a seat that SpaceX sold to a Japanese billionaire for a trip around the moon.

So, how much does a flight into space set a person back? Seats on Virgin Galactic have been selling for $250K each. and will probably increase after its successful maiden voyage. Still, a few hundred thousand dollars is a bargain compared to a ticket for the upcoming Blue Origin flight with Bezos, which cost the winning bidder a staggering $28 million; although, Blue Origin’s suborbital capsule travels over 62 miles above earth compared to Virgin Galactic’s 9.5.

Those are enormous amounts of money spent on an activity that is essentially entertainment, i.e., there doesn’t seem to be a reason why an ordinary person has to fly on a rocket ship. It just seems like something someone would choose to do for the thrill of it or to claim the one-of-a-kind experience.

However, before anyone starts pointing a finger too vigorously at these affluent amateur astronauts, it’s helpful to recognize that many people regularly indulge in expensive, and often short-lived, entertainment experiences. For some it’s hundreds of dollars to see a sporting event or a Broadway show; for others it’s thousands of dollars to travel to a special destination for skiing or scuba diving. I've been among the indulgers.

A little over a decade ago, a research paper I’d written was accepted for presentation at a conference in Honolulu, and fortunately my wife was able to join me on this first-time trip to Hawaii. Given the unique opportunity, we took a few extra days to visit Kauai, “the Garden Island,” where we decided to splurge on a very special flight of our own—a helicopter tour of the isle, including passes over stunning Waimea Canyon and the spectacular Napali Coast.

I believe at the time tickets cost us nearly $200 each, which before the ride seemed like an extraordinary amount of money for 50-minutes, but we rationalized that it was a once-in-a-lifetime experience, which it was. If there are a few places in the world that are worth a helicopter tour, Kauai is one of them.

Still, with all the needs in the world, it’s worth asking if money spent on such momentary pleasures should be used in other ways. Maybe a $200 helicopter tour doesn’t matter as much because it’s a fraction of the cost of a ride into space, which for most people, whether they can afford it or not, probably more easily crosses the line into what they’d consider to be unnecessary and excessive consumption.

One person who’s made that suggestion is senator Bernie Sanders. During a New York Times interview, he questioned the value of the space tourism race, saying, “You have the richest guys in the world who are not particularly worried about earth anymore.” His accusation reminded me of Oliver Wendell Holmes’ maxim, “Some people are so heavenly minded, they’re of no earthly good.” Are Bezos, Branson, and Musk too “heavenly minded”?

Perhaps Sanders has a point—maybe the cost of space tourism shouldn’t only be measured by its direct costs but also in terms of its opportunity costs, or how money spent on space tourism could otherwise be used. Swiss bank UBS has estimated that space tourism could be a $3 billion industry by 2029. There’s a lot of good that those billions of dollars could do.

On the other hand, perhaps some people are looking at the industry’s impact too narrowly. Maybe space tourism is doing and can do more earthly-good than many realize.

Already, SpaceX’s Dragon spacecraft has lent a big hand by delivering supplies and crew to the International Space Station. Although those are professional astronauts not tourists, the potential payoff from a large end-consumer market has often encouraged companies in certain industries to invest more of their expertise and resources to develop technology and perfect products that benefit others.

Airplanes and computers are two examples. Military pilots flew many flights before there was commercial aviation. Likewise, businesses used mainframe computers long before individuals used personal ones. In these cases, emerging consumer demand attracted competitors into the market, which helped to improve technology and lower prices. The same will likely happen with space travel.

At the same time, there are also examples of earthly-good that the space tourism industry is accomplishing already:

Blue Origin is donating $19 million of the $28 million winning bid for the seat on its New Shepard rocket; the beneficiaries are 19 different space-related nonprofits.
There are likely hundreds if not thousands of people whose jobs are currently tied to space tourism, and that number will continue to rise as the industry ascends.
According to SpaceX, point-to-point space travel, accomplished by leaving earth’s orbit, could soon make possible a 40-minute flight from New York City to Shanghai. In other words, space tourism is leading to a new era of travel for more utilitarian reasons.

Perhaps the greatest thing that space tourism is doing is inspiring the next generation of creative thinkers and risk takers. On his recent galactic journey, Branson spoke excitedly of how space captivated him as a child and how he hopes young people today will take inspiration from his stellar endeavors:

“To all you kids down there. I was once a child with a dream, looking up to the stars. Now I’m an adult in a spaceship with lots of other wonderful adults looking down to our beautiful, beautiful earth. To the next generation of dreamers, if we can do this, just imagine what you can do.”

Launching anyone into space, including ordinary people, is a risky proposition for all involved, in more ways than one. However, current and future benefits to humanity appear to outdistance those costs, making space tourism a stellar example of “Mindful Marketing.”

Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out Mindful Marketing Ads and Vote your Mind!

1 Comment

College Athletes Must Get in Condition for Commercialism

7/5/2021

3 Comments

by David Hagenbuch - professor of Marketing at Messiah University -
author of Honorable Influence - founder of Mindful Marketing

College students enjoy talking about ads, especially ones that feature top athletes like Tom Brady, Serena Williams, and Lebron James. The NCAA’s momentous decision to allow college athletes to become paid spokespeople has leveled the promotional playing field, but are young, soon-to-be endorsers ready for the pressures they’ll face in a different kind of game?

In a landmark decision on June 30, the NCAA lifted its long-standing rules prohibiting organizations from paying student athletes to endorse their products. Now athletes in all three divisions can profit by leasing their names, images, and likenesses (N.I.L.) to the highest, first, or only bidder.

The rationale behind the NCAA’s prior rulings was to preserve amateurism and the purity of competition, uncontaminated by commercialism. The point of this piece is not to debate the pros and cons of paying student athletes, which many others have already done. Instead, it’s past time to ask if these young people are prepared for the new opportunities and challenges that come with being paid endorsers.

Already, many of the same college athletes who had simply enjoyed watching professional spokespeople now find that they are professional spokespeople, but is paid promotion a game they’re ready to play?

The clock had barely turned midnight on June 30, when several college athletes began to monetize their new marketability. The first was apparently Auburn University quarterback Bo Nix who signed a deal with Milo’s sweet tea at 12:02 am, July 1. Two others who quickly followed suit were twin sisters Haley and Hanna Cavinder, basketball players at Fresno State University, who inked an agreement with Boost Mobile.

For the Cavinders, the leap to professional endorsers should be a fairly smooth one. They are business marketing majors, but even more, they are already social media stars with over 3 million followers on TikTok and about 4 million across all platforms.

However, for other newly minted marketers with less knowledge and experience, the transition will likely be more challenging. Here are five things college athletes should understand in order to do well and good in their new commercial competition:

1) Marketing: One wouldn’t jump into a serious game of basketball, football, etc. without knowing the sport. Similarly, one shouldn’t enter paid endorsement without understanding marketing. Beyond an appreciation of the discipline as a whole (e.g., the four Ps), two concepts that every paid endorser should comprehend are target market and branding.

The sponsoring organization and its advertising agent should be aware of the target market they’re trying to reach in terms of its demographics, psychographics, and any other identifying criteria. Endorsers should have the same understanding so they can make their own assessment of personality-audience fit and use that knowledge to tailor their communication.

Closely related, an endorser should have a clear picture of the unique identity, or brand, they’re building for themselves and the branding of the sponsoring company. Although these personal and organizational brands will never be identical, they should be complementary. For instance, individuals trying to build their brands as ‘sophisticated and exclusive,’ probably shouldn’t endorse brands that are seen as ‘low-budget and casual.’

2) Contracts: Sponsorship deals are typically bound by contracts that specify the rights and duties of all parties, including those of the spokespeople. As such, college athletes should understand basic contract terms like offer, acceptance, breach, indemnification, and exclusivity. The last term is especially important in that contract terms might prohibit an athlete from signing sponsorship deals with other organizations, particularly competitors.

Another special provision often found in endorsement contacts is a character or morals clause, which “allows the sponsor either to suspend or terminate a sponsorship agreement in the event that the athlete, celebrity or other endorser violates the clause [because of] behavior that is criminal, that is scandalous, or that might tarnish the advertiser’s brand.” Most people have better sense than Ryan Lochte showed after the 2016 Rio Olympics; still, it behooves every college athlete to understand that by signing an endorsement contract they become more accountable for their actions, including their social media posts, than they ever were before.

3) Personal finance: Although those who feel they don’t have enough money may disagree, research study results support the premise that more money can mean more problems, at least in terms of added stress. A former NCAA athlete who now works in banking, believes that newly earned endorsement income can become a burden for college athletes who lack sufficient financial acumen and discipline.

A little over a year ago, Hunter Brindle was captain of Messiah University’s baseball team while he completed majors in economics and marketing. Now an investment advisor, he expresses concern that college-age spokespeople may not manage their endorsement money wisely, leading to unsustainable spending habits they’ll regret later in life unless they are financially informed:

“When your housing, utilities, and meals are all covered by a scholarship, loan, or your parents in one large payment, you develop the mindset that every dollar that enters your bank account is there for spending. Therefore, I believe it will be very common to see many college athletes spending any endorsement dollars as fast as they are coming in without realizing the potential future benefit those dollars could provide when they are someday trying to figure out how to put a down payment on a house. Because of this, I believe it could be extremely beneficial for athletes to participate in some sort of financial counseling as they enter college where the reality of real-life expenses is laid out before them.”

4) Time-management: College places time pressure on every student, but regular practices, workouts, and games, mean that athletes must work even harder to balance their schedules. Messiah University’s men’s soccer coach Brad McCarty, who has led his teams to five NCAA Division III Championships, believes the addition of endorsements makes athletes’ time management all-the-more critical:

“One of the biggest challenges student-athletes face is the balance of time and resources. Regardless of the level—D1, D2, or D3—NCAA athletes are having to juggle homework, exams, study groups, practice, games, lifting, fitness, nutrition, sleep, relationships with teammates, dating relationships, spiritual development, social media, jobs, etc. College athletes interested in finding ways to be a paid endorser takes time/energy, but they already don’t have a lot of margin in their lives.”

McCarty goes on to say that athletic departments will be important players in helping their athletes navigate the new commercial environment.

5) Respect for others: The first four items college athletes need to understand are squarely in their own self-interest. However, they also should be cognizant of the impact their endorsement decisions may have on others, including some already inferred above:

Teams: Athletes who are good enough to receive sponsorship deals are naturally among the best on their teams, which means their coaches and fellow players must depend on them to avoid distractions and perform at high levels in order to help the team succeed.
Universities: Any organization’s brand is partly a function of the personal brands of its leaders and other members, e.g., Apple and Steve Jobs; Tesla and Elon Musk. College athletes must realize, therefore, that their endorsement decisions reflect on their institutions, which is why Brigham Young University has adopted an N.I.L. policy that prohibits its athletes from endorsing products like alcohol, tobacco, gambling, and adult entertainment.
Society: College athletes already serve as role models for many people, especially young fans. As they evolve into multimedia influencers, athletes should be aware that many more people will emulate their words and actions in ways that can produce broad positive or negative impact in areas such as physical health, mental well-being, interpersonal relationships, and environmental sustainability.

The five preceding prescriptions can challenge anyone, including young athletes who lack certain life experience and who need to focus on their sports and their education. As such, these new endorsers will require the guidance of many others, including their coaches, athletic departments, and institutions, as well as other individuals who can offer them informed and unbiased perspectives on personal branding and integrated marketing communication.

College athletes are some of the most gifted individuals in the world. With the support of others and their own self-discipline, they can continue to excel in their sports and in the classroom will also becoming producers of “Mindful Marketing.”

Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out Mindful Marketing Ads and Vote your Mind!

3 Comments

A Promotion Unlike Any Other

4/23/2021

8 Comments

by David Hagenbuch - professor of Marketing at Messiah University -
author of Honorable Influence - founder of Mindful Marketing

Fans of The Office know that whenever Michael Scott attended another person’s party, wedding, or baby’s baptism, he would inevitably steal the spotlight, making the event about him. That kind of social sabotage makes for great TV comedy, but does a recent impromptu endorsement on golf’s greatest green signal that real life self-promotion is off the fairway?

The recent Masters Tournament seemed like a success, including that it crowned its first Asian-born champion, Hideki Matsuyama of Japan. However, “a tradition unlike any other” also showcased some cringe-worthy commercialism that led to the son of an all-time golf great losing permanent access to Augusta.

Perpetuating the Tournament's prestige, Masters’ organizers invited three of golf’s living legends to serve as honorary starters: nine-time major champion Gary Player, 18-time major champion Jack Nicklaus, and Lee Elder, the first African American to play in the Masters. It was at that ceremonial tee shot when the uninvited endorsement occurred:

“While Elder was receiving the accolades of Augusta National and surrounding patrons, Wayne Player, serving as his father's caddie, stood behind Elder clearly holding a sleeve of OnCore golf balls in such a way as to give the logo maximum visibility.”

Wayne Player has a relationship with OnCore Golf that includes serving as Tour Commissioner of the Player Amateur Tour, for which the golf ball brand is the title sponsor.

Social media quickly condemned Wayne Player’s “guerilla marketing,” calling the tactic “an embarrassment” and “undignified,” and suggesting he hijacked a special moment to “sneak in a free ad for golf balls.” Masters organizers apparently didn’t like the ambush advertising either: They’ve reportedly banned Wayne Player from the Tournament for life.

Those are harsh criticisms and consequences, especially given that considerable commercialism already surrounds the Professional Golfers’ Association of America (PGA) and the Masters.

The PGA’s Partners’ webpage reads like a Who’s Who List of corporate sponsors. “Official Partners” include the likes of AIG, Charles Schwab, Cadillac, John Deere, KitchenAid, KPMG, and Rolex. Then, there’s a whole other list of “Golf Retirement Plus Partners.” In total, 54 companies can claim they support the PGA.

For its part, the Masters Tournament’s website contains logos and links for its three marquee sponsors, AT&T, IBM, and Mercedes, who reportedly treat invited guests to an incredibly indulgent tournament experience, all charged to their corporate accounts.

What may be even more noteworthy is that the golf balls Wayne Player held were far from the only promotion present at the ceremonial tee shot. Gary Player wore a PXG hat, whose golf clubs he endorses, and a Black Knight shirt—his own signature brand. Similarly, Nicklaus came outfitted in a bright yellow sweater and matching hat, both bearing his Golden Bear brand. Elder also wore branded apparel: a PNG hat and a TravisMathew shirt—the latter is part of a formal partnership with Elder that the company announced just days before the Masters.

Given all of the corporate/self-promotion already present at the starting tee, what was wrong with Player strategically displaying one small sleeve of golf balls?

There are two main reasons Player’s product placement was ill-advised:

It was unnatural: It’s typical for golfers and others to will wear branded apparel on golf courses and elsewhere. It’s strange, however, to see someone hold steadily a sleeve of golf balls precisely so its logo appears prominently in camera shots. That’s why when product placement is done well in movies and TV shows, the products don’t draw attention to themselves; rather, viewers simply see them as part of the scene, if they notice them at all.
It was uninvited: The very unique Masters moment belonged to Gary Player, to Nicklaus, and especially to Elder. No person or thing should have stolen the spotlight from them, at least not without the Masters’ express permission. Ultimately, Wayne Player pulled a Michael Scott, showing little social awareness and, instead, surmising that the situation should be about him, not just the others.

So, the next time you’re a caddie at the Masters . . . of course, that’s a situation most of us will never experience, which makes it even more tempting to point a finger at Wayne Player, shake our heads, and wonder how he could act so insensitively. The problem, though, is that the proliferation of social media has made it exceedingly easy for any individual or organization to do the same sort of thing and steal others’ spotlights.

On a corporate level, such commandeering might take the form of a company donating $10,000 to a worthy social cause, then spending $100K to brag about its kind-hearted contribution in TV commercials, print ads, and other media.

Individuals also are not immune. We should be especially careful not to steal the spotlight with one upmanship. For instance, when a friend or colleague shares a special accomplishment on social media, we shouldn’t ‘congratulate’ them with a reply like, “I’m so happy for you. I remember when I completed my first 5K three years ago. Now I’m getting ready to run my fourth marathon.”

A few years ago, the American Marketing Association published a piece I wrote about the “Three C’s of personal branding.” In the article I argued that communication, which is what many people solely associate with branding, should only be the “icing on the cake.” A strong personal brand, or corporate brand, must first include a foundation of “cake”: character and competencies.

When we steal another’s spotlight and try to make their moment ours, we not only misplace our personal marketing communication, we reveal the serious character flaw of callous self-absorption, which is very destructive to any brand.

No self-promotion should come at others’ expense. In fact, the best self-promotion actually benefits others.

It’s easy to argue that Wayne Player’s golf ball product placement at the Masters was a bad idea. It’s also easy for any of us to succumb to similar temptations in everyday situations and make another’s moment our own. Pulling a Wayne Player, or a Michael Scott, makes any of us guilty of “Mindless Marketing.”

Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out Mindful Marketing Ads and Vote your Mind!

8 Comments

Is It Right to Sell Others Short?

4/10/2021

8 Comments

by David Hagenbuch - professor of Marketing at Messiah University -
author of Honorable Influence - founder of Mindful Marketing

You’re a basketball player whose team just won the NCAA Division I national championship! You run courtside to celebrate with family but your mother is visibly upset. “Mom, what’s the matter? “I’m sorry,” she stammers. “It’s just that . . . I bet against you.”

No athlete, or anyone, likes to be picked to lose. However, life is full of potential successes and failures that people need to predict. For some, those predictions offer significant money-making opportunities. But, is it right to earn a living betting against others?

As for many, the practice of short selling stocks burst onto my radar screen when GameStop’s shares took their rollercoaster ride several weeks ago. With more than a casual interest, I followed the ensuing events, including Robinhood CEO Vlad Tenev’s testimony before Congress. Along the way, I gained a better grasp of what short selling is, but ever since, I’ve been wondering whether anyone should be doing it.

In case you’ve forgotten how short selling works: Investor A borrows from a broker 100 shares of XYZ at $100 per share and sells the stock to Investor B at the same prevailing market price, or $10,000 total. Over the next week, XYZ’s stock price drops to $75. Investor A then buys 100 shares of XYZ for $7,500 and returns them to the broker, pocketing $2,500 in the process, less any interest and commissions the broker has charged.

The Securities and Exchange Commission (SEC) has made short selling legal. However, even with this regulatory approval, the practice should raise at least two red flags, or moral concerns, that lead one to ask: Is short selling ethical?

Before addressing the two concerns, I imagine some may be wondering what short selling has to do with marketing—the other half of this blog’s two-pronged focus. Short selling is marketing in that many stockbrokers, including very well-known ones like Interactive Brokers, TD Ameritrade, and Charles Schwab, market short selling among their investment services, or ‘products.’

For instance, Interactive Brokers’ website contains a Shortable Instruments (SLB) Search tool: “a fully electronic, self-service utility that lets clients search for availability of shortable securities from within [the firm’s] Client Portal account management platform.” The relative ease with which an investor can sell short makes its moral implications all-the-more important.

First Red Flag

‘Selling something that one doesn’t own’ was the short selling issue that initially gave me pause. Peddling another’s property certainly appears problematic, until one begins to consider the many ways in which such leveraged transactions regularly occur: from apartment subleases, to bank loans, to consignment clothing. Individuals and organizations often sell others’ property on consignment.

Of course, just because consignment occurs doesn’t mean it should. Still, the fact that all parties involved 1) willingly participate and 2) typically benefit are good signs that most of these activities are above-board.

Second Red Flag

The prior examples differ from short selling, however, in the second of the two ways: While the participants in apartment subleasing, etc., generally rise and fall together financially, a short seller’s success comes courtesy of two others’ failures, namely 1) those of the company whose stock the short seller has borrowed and 2) the person who buys the stock from the short seller. The short seller makes money when the other two parties lose theirs.

In contrast, consider again the clothing consignment example: If I take an unwanted suit to a consignment shop, both the consignor and I will want a high price when the suit is sold. Conceivably, the suit’s maker also would like its aftermarket products purchased for higher prices because such resale value reflects favorably on the brand, not unlike the way higher vehicle resale prices benefit automobile manufacturers’ brands.

On the other hand, the suit’s buyer would like to pay a lower price, but even he really doesn’t want the price to be too low, since perceptions of the brand are tied, at least in part, to the price that he and others are willing to pay for the suit. Most importantly, each time he wears the suit, he extracts value from it.

The suit is this example is analogous to the stock. Whereas everyone ‘invested’ in the suit seems to want it to retain its value, investors who short stocks clearly want the value of those securities to decline. Short sellers are betting against the very companies whose financial instruments they have borrowed and sold, as well as the individuals on the receiving end of those stocks.

The zero-sum game, or winner-loser outcome, that underlies short selling is certainly atypical of most economic exchanges, but it’s not without precedent. Casinos win when their customers lose, as do many “rent-to-owe” retailers like Rent-A-Center and Aaron's. Any kind of predatory lender falls under the same unseemly umbrella, including certain credit card companies that don’t make money unless people fail to pay off their account balances and become locked into an endless cycle of exorbitant monthly interest payments.

However, many argue that short selling does not do anything nearly so destructive. In fact, some contend that the practice produces several important economic benefits, the primary one being liquidity, “the efficiency or ease with which an asset or security can be converted into ready cash . . . . ”

In my research, I found market liquidity to be the factor cited first and most often in the defense of short selling. However, at least one financial markets expert suggests that advantage is exaggerated.

Dwayne Safer is a chartered financial analyst (CFA) whose career has included significant roles in investment banking, corporate finance, and strategy. For the last five years, he’s been a professor of finance and my colleague at Messiah University. When asked about short selling and market liquidity, he offers a contrarian analysis: “the liquidity offered by short selling for most stocks is negligible.”

Safer supports his suggestion by sharing a Bloomberg Terminal screenshot (below) that shows that shares sold short represent only about 3.5% of trading volume on the New York Stock Exchange (NYSE). He also cites an example from the financial crisis in late 2008, when the SEC temporarily banned the short selling of financial stocks “without any noticeable degradation of liquidity in those stocks.”

Safer recognizes that there may be some “modest liquidity benefit” for certain heavily shorted stocks; for instance, at the time we spoke, 21% of Dick’s Sporting Goods’ shares available for trading were short. Still, he affirms: “If shorting wasn’t permissible, liquidity would be brought into the market by the broker-dealers and market makers who would stand ready to buy and sell shares of a given company to generate trading revenue.”

So, does the elimination of liquidity as a main benefit of short selling leave no morally tenable ground on which short sellers can stand? Not necessarily.

Safer continues by saying that although he doesn’t agree with conventional wisdom that short selling adds significant market liquidity, he does believe short selling offers other meaningful market benefits:

It provides the ability to hedge/protect a portfolio from downward movement in stock prices, mitigating portfolio volatility.
The in-depth research short sellers often conduct can expose fraudulent companies. For example, short selling hedge funds warned about the frauds at Enron, Tyco, Fannie Mae and more recently Luckin Coffee and Nikola.
Shorting helps prevent overinflated securities prices that waste valuable capital and harm investors, as occurred in the dot-com bust in 2001. Former SEC chairman Christopher Cox once stated, "We need the shorts in the market for balance so we don't have bubbles.”

Before beginning to write this piece, I was unaware of these important benefits of short selling. Still, how do we reconcile such consequences with the moral principle of respect, or as my second red flag/concern described: not betting against another person.

That moral principle certainly has merit, but my earlier discussion probably represented too narrow a view of short selling. Safer’s observations have helped me see that there are other factors to consider and parties to take into account, e.g., other investors, firms’ customers and employees, and the economy as a whole.

I’m also helped by remembering a story I heard just a few days ago: A guest speaker in our capstone marketing course mentioned that a former client of his used to tell him, “I pray for my competitors.” This very successful business owner was not being sarcastic—he truly wanted his competitors to succeed both because he genuinely cared about them and because he understood that “a rising tide lifts all boats.”

Returning to the basketball metaphor that began this piece, no serious athlete wants to be on the winning side of a forfeit. Basketball players need competitors, who also happen to have fans rooting for them.

However, choosing loyalties isn’t unique to picking stocks or selecting sports teams. Each day we make dozens of similar decisions when choosing what clothes to buy and where to order takeout. Each selection of a company is essentially a vote against another; however, other people are voting for the competitors. In fact, the next time one of those ‘other’ votes may be ours.

Meanwhile, a ‘no vote’ conveys valuable information to all who are willing to listen and learn from it. When companies assimilate such negative feedback, they make themselves better, their industries stronger, and stock markets more stable.

It’s very unlikely that a mother bets against her own daughter or son for anything, but other ‘no votes’ are not necessarily bad. Short selling a company’s stock can be a good or bad bet for the investor. It also can be “Mindful Marketing.”

Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out Mindful Marketing Ads and Vote your Mind!

8 Comments

<<Previous

Should Social Responsibility be Selfless?

Are Apple AirTags Too Risky?

A Bad Sign: Macy's vs. Amazon Billboard Battle

Four Behaviors of a Peacemaking Brand

Gen Z Students Teach Their Professor About Thrifting

Help Wanted, Marketing to Prospective Employees

Is Space Tourism an Unnecessary Splurge?

College Athletes Must Get in Condition for Commercialism

A Promotion Unlike Any Other

Is It Right to Sell Others Short?

Editor

Archives

Categories